Oxford Martin School climate experts brief UK House of Lords on forthcoming Energy Bill

09 September 2015

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Oxford Martin School academics Professor Myles Allen and Professor Cameron Hepburn, with Scottish Carbon Capture and Storage, the University of Edinburgh, and collaborators from the Tyndall Centre for Climate Change Research, University of East Anglia, have been extensively briefing Peers in advance of this week’s Committee Stage of the Energy Bill [House of Lords] 2015-2016. The Bill is mainly tasked to create the Oil and Gas Authority (OGA). In addition the Bill creates responsibilities for the OGA regarding Carbon Capture and Storage (CCS) licensing.

Most importantly, the Bill raises the opportunity for a discussion of how the envisaged development of CCS will be paid for. At present, the funding model involves significant taxpayer support through the CCS competition and levy control framework on electricity. The researchers make a simple proposal that would remove this burden of Government support, and spread the cost of CCS development and deployment across the entire fossil fuel sector through a Certificate scheme that would rely only on data already reported to Government and the OGA, thus minimising the costs of compliance.

They argue their approach requires no taxpayer subsidy, no contracts for difference or other price support mechanisms, and no taxes or permit auctions. It places the burden of CCS development and deployment where it should be: on the owners of fossil fuel assets. Additionally, it would help to place the UK at the very forefront of the development of a technology that is known to be required at large scales to limiting global warming to two degrees and in which the UK has considerable natural and historical advantages afforded by our highly successful offshore oil and gas industry. In the shorter term, it would also provide the part of the industry undertaking CCS with a predictable new revenue stream.

The following briefing note explains the benefits of a Carbon Certificate scheme. This also includes an amendment suggested to propose this different approach in the current Energy Bill.

The authors argue their proposal merits serious attention if we are to both maximise the economic output of the North Sea natural resources and at the same time meet our legally binding emissions reduction targets under the Climate Change Act, and are actively briefing members of both Houses on the benefits of such a scheme.

A probing amendment to initiate discussion of this idea was put forward on Wednesday, 9 September 2015, by Lord Oxburgh and Baroness Worthington. The Hansard record (the relevant section of which starts at column 1445) can be viewed here.

The briefing note is available here.