Draft Offshore Combustion Installations (Prevention and Control of Pollution) Regulations 2001

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Mr. Andrew Stunell (Hazel Grove): I begin by declaring that I paid a visit to a North sea oil rig with the all-party energy studies group. I welcome the Minister, who is giving us the first dose of his new responsibility for regulatory matters.

The Liberal Democrats will not oppose the regulations. We accept that the issue must be tackled and that the regulations provide a suitable framework for doing that. There are significant emissions of greenhouse gases, so the UK Government should seek to regulate them within their jurisdiction.

There are one or two procedural matters on which I seek the Minister's reassurance. The original Act was extremely open-ended—a critic might even say vague—as to its implementation. During the passage of the legislation, some time was devoted to consultation about onshore regulations. Offshore regulations were dealt with much later in the process, and had to be bundled up with the debate in the House of Lords. Perhaps, some of that consultation was a little hurried and compressed. That places the onus on the Minister to reassure the Committee that the regulations meet the needs of not only pollution control, but those of the industry itself, which is trying to generate profit as well as giving added value to the United Kingdom.

The issue of significant change is another procedural matter, which the Minister touched on, but which he can perhaps amplify a little more. I hope that he will not think me unkind when I remind him that he said that it was defined as negative impact and that that was about as far as he could go. One man's negative impact is another's profit margin. We need to have a clearer idea of the sort of factors that the Minister has in mind, and that, in interpreting negative impact, he would be favourably inclined towards the needs of industry. I hope that I am not distorting his words and meaning. However, the Minister is the third to have responsibility for energy in four years, so who is to say what a future Minister might do? We need to have details in the Official Report of precisely how he, as Minister for Energy and Competitiveness in Europe, and his Department, after he has moved on to higher and greater things yet again, will interpret these regulations. In their current form, they are almost as vague as the Act was, when originally drafted. What is the plain meaning of the words, and how does the Minister intend the regulations to be implemented?

The hon. Member for Bognor Regis and Littlehampton (Mr. Gibb) raised a number of points on the practical implications that I had intended to address, not least because we both received the same briefing from the industry. A few issues need to be examined, such as the cost of implementation and the degree to which the Government have done their multiplication. They may have undertaken an assessment for an installation, but what will be the overall cost to the industry, and over what period? The Minister referred to implementation by 2007 and talked about the rate of upgrading or renewals of plant. If I were considering investing in the general upgrade of an oil platform, which might include enhancing the capacity to generate, it could be a disincentive if I realised that by altering my generation equipment, I would be subject to the regulations and liable for additional costs. From the perspective of protecting the environment, necessary improvements to efficiency might be delayed because of the way in which the regulations will come to bear. The cost of implementation and the way in which it is multiplied to produce a cost to the industry would be helpful.

I am also concerned about the issue of appealing if something is not right. There is a regulatory body for onshore producers and generators. If producers do not like what the regulatory body has decreed, appeals can be made to the Secretary of State, followed by a judicial review if they are still not happy. It should be emphasised that judicial review is usually on a narrow point, rather than on the generality of the decision.

For offshore producers, the first appeal is to the Secretary of State. There is no intervening regulatory body. Bearing in mind that a judicial review can be on only a narrow point of law, the Secretary of State is the judge and the jury on regulatory questions, which returns me to the issue of significant change. I would not mind betting—perhaps one makes an assessment in Committee—that the questions that will come to the Secretary of State for determination under the appeals system are likely to include significant change. However, he will already have judged that, and he will also judge the appeal. I ask the Minister to consider whether natural justice will be properly served and whether the industry is getting a fair crack of the whip.

Liberal Democrat Members will not oppose the regulations, but we hope that the Minister can offer reassurance on the issues that I have raised.

10.50 am

Mr. Hain: I am grateful for the support that both Opposition parties have given to the order. I acknowledge the expert interest that the hon. Member for Bognor Regis and Littlehampton takes in the offshore oil industry. I echo his enthusiasm for travelling to offshore rigs, but when I visited one it entailed travelling by helicopter for an hour from Aberdeen, which is especially boring because one cannot see anything except sea and mist. I note that he is an avid reader of negative impact assessments, which must make him unique in the House of Commons, but I commend him on that. I thank the hon. Member for Hazel Grove (Mr. Stunell) for both his comments and his support for the regulations.

The hon. Member for Bognor Regis and Littlehampton asked whether we would be flexible in our discussions with the industry—the answer is yes. We consulted extensively during two periods of extensive discussion with the industry. We understand that the industry is content with the regulations because we used collaboration and consensus rather than diktat.

The hon. Members for Bognor Regis and Littlehampton and for Hazel Grove asked about the right of appeal. Giving a citizen the right of appeal does not preclude a collaborative approach to avoid reaching that situation, which is something that we would all prefer. However, the right of appeal exists and is defined in regulation 17.

In applying and finding the best available techniques not only do we examine whether they are cost effective and are at an advanced stage of development, but whether they can be implemented under economically and technically viable conditions.

Guidance is being produced on the interpretation of detailed questions about negative impact. There is a danger in defining terms too narrowly because that can lead to a lack of flexibility and an inability to react to circumstances. The hon. Member for Bognor Regis and Littlehampton made several detailed points on that subject that I shall write to him about when I have consulted the record.

Some substantial and important points were raised about costs. The small fee for each application is £2,000, which reflects the estimated administrative cost to my Department of processing applications. I agree that the cost to the industry is substantial, although the fee was calculated in accordance with Treasury guidance. However, it must be considered in the context of overall turnover and the enormous profits that have recently been declared. I acknowledge that a few years ago profits ranged from narrow to non-existent.

Costs have been discussed extensively with the industry and its trade association, the United Kingdom Offshore Operators Association, and we estimate that they will be between £150 million and £300 million, depending on the future development of technology.The regulatory impact assessment suggested that they could be anything from £2 million per turbine to as much as £15 million, depending on the age of the turbine and its condition.

I acknowledge that there will be extensive costs for the industry, but it agrees that the provision is necessary and both Opposition parties agree that the environment in which the turbines operate offshore needs much greater protection. The purpose of the regulations is to achieve that protection sensitively, flexibly and co-operatively. I commend the draft regulations to the Committee.

Question put and agreed to.

Resolved,

    That the Committee has considered the draft Offshore Combustion Installations (Prevention and Control of Pollution) Regulations 2001.

Committee rose at five minutes to Eleven o'clock.

The following Members attended the Committee:
O'Hara, Mr. Eddie (Chairman)
Brown , Mr. Russell
Burgon, Mr.
Cunningham, Dr. Jack
Flint, Caroline
Gibb, Mr.
Gray, Mr.
Hain, Mr.
Horam, Mr.
Humble, Mrs.
Pope, Mr.
Savidge, Mr.
Stunell, Mr.

The following also attended, pursuant to Standing Order No. 118(2):

Strang, Dr. Gavin (Edinburgh, East and Musselburgh)

 
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Prepared 13 March 2001