My Lords, I thank all noble Lords, in particular my noble friends Lord Borwick, Lord Teverson and Lord Jenkin, for their support for the amendments. The debate has been informative and measured. I hope, in responding to the amendments, that I can reassure noble Lords and address some of the concerns that have been raised. If I do not satisfy noble Lords today I will read Hansard and write back to them in fuller detail.
The amendment in the name of the noble Baroness, Lady Young of Old Scone, would exclude these proposals at a range of locations, including national parks, the Broads and areas of outstanding natural beauty. She called them the jewels of our great country. Companies will still need all their other permissions to be in place before accessing underground land. Sensitive areas would be protected in exactly the same way as they are now. The Government have recently clarified the strong protections that exist for these areas. Where applications represent major development, planning permission can and should be refused in national parks, the Broads and areas of outstanding natural beauty except in exceptional circumstances where it can be demonstrated they are in the public interest.
Applicants for licences will also have to show that they understand the environmental sensitivities of the area applied for and are ready and geared up to address them. They will have to consider the implications of the new planning guidance. We do not intend to include any exemptions to these in our proposals, because we believe that the existing regimes have already been clarified to allow for these sensitivities.
The noble Baroness also asked whether this clause would lead to water shortages. Where water for fracking operations has been provided by local water companies, they are obligated to produce and update every five years a long-term plan that has contingency reserves in case of drought. Therefore, water companies will always assess the amount of water available before providing it to operators. The Environment Agency has said that it will not license abstraction above environmentally sustainable levels. The amount of water used for fracking is controlled by an abstraction licence specifying the maximum amount that can be used.
My noble friend Lord Jenkin very eloquently laid out the potential of geothermal—far better than I did. His amendment proposes to extend the right to use deep-level land for geothermal energy where the main use of that energy is, or will be, the generation of heat, as well as electricity. He also asked about Scotland. My noble friend the Duke of Montrose was able to respond to and answer that question for me by saying that the amendment includes geothermal energy for the purpose of electricity generation because, under the Scotland Act 1998, generation is a reserved matter. So the use of deep geothermal energy for other purposes is devolved to the Scottish Government and, for that reason, we have had to exclude it from clauses; however, we are in discussion with the Scottish Government as to whether they wish to extend the scope to cover this area of heat generation.
My noble friend Lord Borwick asked why we used the word “petroleum”. Licences to exploit oil and gas in the UK are awarded under Section 3 of the Petroleum Act 1998, and that Act permits the Department of Energy and Climate Change to grant licences to search for, bore for and get petroleum. So we use “petroleum” in the context of the Bill because the licences granted to operators are petroleum licences under the 1998 Act.
I turn to the amendments of the noble Baroness, Lady Worthington, to which the noble Lord, Lord Davies, has put his name. The purpose is the production of a report on fugitive greenhouse gas emissions from onshore energy extraction, and that the report be produced six months after the passing of this Bill, and will include,
“monitoring, reporting and managing of existing and future fugitive emissions”.
I draw noble Lords’ attention to the fact that these fugitive emissions are reported already at a national level on an annual basis, as part of the UK Greenhouse Gas Inventory. The detailed methodologies and data sources used to inform these emission estimates are provided in that report, which is publicly available.
The noble Baroness of course raises the concerns of certain groups, and we should take all concerns raised by all people very seriously. However, we must remain committed to ensuring that we work absolutely to the
rigour of the regulators. As I set out in my opening remarks, fracking will enable us to reduce our carbon footprint. I know that both the noble Baroness and I share concerns about environmental impact, and we work hard and closely together. I am very pleased that the Opposition agree that we want to ensure, first and foremost, that it is environmentally acceptable to reduce our carbon footprint and work towards reducing carbon emissions. I have certainly never felt that the Government have seen fracking as the silver bullet. What I have seen and heard many times over is that it is part of the wider energy mix that we need to have in our country to ensure that we have energy security and less dependency on outsourcing it from international markets.
I turn to the amendment proposed by the noble Lord, Lord Whitty, for the establishment of a contingency fund by undertakings engaged in the onshore oil and gas industry in order to meet the cost of any environmental or economic damage caused as a result of onshore oil or gas activities. Let me make it clear that the operator is liable for the shale gas well and any damage or pollution it may cause. When operations finish, the operator is responsible for safe decommissioning of the well and for restoring the site to its previous state or suitable condition for reuse. Regulators and controls are in place to minimise risks and any impact on landowners. Any one of these regulators will consider individual concerns about impacts, as far as they fall within their responsibilities. If any environmental damage were to occur, then, in accordance with statutory requirements and government policy, remediation of the damage would be dealt with under the main regimes for dealing with contamination. These regimes provide for the remediation of environmental damage and contaminated land, including water, and apply to the extraction of both petroleum and deep geothermal energy. Taken together, if a company causes damage, harm or pollution to the environment, companies can be required under these regimes to remediate the effects and prevent further damage or pollution. This is the same approach that applies to other industries and we believe that the existing law is robust.
At present, if a shale gas operator becomes insolvent and no rescue mechanism for the company can be found, in limited circumstances the liability could ultimately pass to the landowner. Environmental regulators and planning authorities have the power to require upfront financial bonds to address this risk wherever they deem this necessary. This is more expensive for companies than a group scheme would be but it provides the reassurance that neither taxpayers nor landowners will be left to foot the bill. As a less expensive alternative to upfront bonds, my department has been working with the industry’s trade body, the UKOOG, the onshore operators group, to ensure the development of an industry scheme that will step in and pay for the liabilities in this situation and any other where the liable company cannot be identified.
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The noble Lord, Lord Whitty, also asked how the regulators would be funded. The HSE and the Environment Agency have confirmed that they have sufficient specialist inspectors to deliver the regime for which they are responsible during the current shale
gas exploratory phase. If a large number of wells are drilled in order to produce shale gas, the HSE and the Environment Agency may need to increase the number of inspectors accordingly, but there are plans in place to review their resources at relevant times. There is no risk of production increasing too quickly for regulators to keep pace, as has happened in some cases in the US. Before activities can begin, the operator will need to have received the relevant permits from the regulators, so any excess applications would be held until the regulator was able to take a decision.
The noble Lord also asked about long-term ownership and therefore liability. A study conducted by the ReFINE group identified a large number of wells where it was not clear who the operator was, but the majority dated from the 1940s or earlier, so this would no longer be the case.
I hope that my reassurances to my noble friend and to noble Lords have been sufficient and that the noble Baroness will feel able to withdraw her amendment.