Energy Bill [HL]

Tuesday 12th April 2016 Lords Chamber

Commons Amendments

17:39

[Lord Taylor of Holbeach (Con)]

My Lords, I have it in command from Her Majesty the Queen and His Royal Highness the Prince of Wales to acquaint the House that they, having been informed of the purport of the Energy Bill, have consented to place their prerogative and interest, so far as they are affected by the Bill, at the disposal of Parliament for the purposes of the Bill.

Motion on Commons Amendment 1

Moved by

[Lord Bourne of Aberystwyth]

That this House do agree with the Commons in their Amendment 1.

1: Clause 2, page 2, line 37, at end insert—
“( ) Schedule 1 to the Oil Taxation Act 1975,”

[The Parliamentary Under-Secretary of State, Department of Energy and Climate Change and Wales Office (Lord Bourne of Aberystwyth) (Con)]

My Lords, the amendments in this group add the relevant provisions of the Oil Taxation Act 1975 and the Corporation Tax Act 2010 to the legislation listed at Clause 2(6), which contains the Secretary of State’s relevant oil and gas functions. This ensures that the functions provided for by these Acts fall within the definition of “relevant functions” and can be transferred from the Secretary of State to the Oil and Gas Authority by regulations made under Clause 2(2).

Schedule 1 to the Oil Taxation Act 1975 and Part 8 of the Corporation Tax Act 2010 contain the important oil and gas functions of determining oil fields, cluster areas and whether an oil field project is materially complete. These functions form the basis of oil taxation and are currently undertaken by the Oil and Gas Authority in its capacity as an executive agency. Amendment 2A to Commons Amendment 2 simply seeks to ensure that the function of determining whether an oil field project is materially complete is also transferable to the OGA.

These amendments are technical in nature and simply seek to put it beyond doubt that these key functions can be transferred to the OGA once it becomes a government company, as we have always intended. I beg to move.

Commons Amendment 1 agreed.

Motion on Commons Amendment 2

Moved by

[Lord Bourne of Aberystwyth]

That this House do agree with the Commons in their Amendment 2.

2: Clause 2, page 2, line 39, at end insert—
“( ) Chapter 9 of Part 8 of the Corporation Tax Act 2010,”

Amendment 2A (as an amendment to Commons Amendment 2)

Moved by

[Lord Bourne of Aberystwyth]

2A: Line 2, leave out “Chapter 9 of”

Amendment 2A agreed.

Commons Amendment 2, as amended, agreed.

Motion on Commons Amendment 3

Moved by

[Lord Bourne of Aberystwyth]

That this House do agree with the Commons in their Amendment 3.

3: Clause 8 page 5, line 29, leave out Clause 8

[Lord Bourne of Aberystwyth]

My Lords, following a Division on Report in this House, a new clause was added to the Bill. This new clause rewrote the OGA’s principal objective in three significant ways. First, it removed the Wood review’s central premise to maximise the economic recovery of UK petroleum within Part 1A of the Petroleum Act, and replaced it with an objective to maximise the economic return of UK petroleum. Secondly, it imposed on the OGA an obligation to retain oversight of the decommissioning of oil and gas infrastructure. Finally, it imposed an obligation on the OGA to secure oil and gas infrastructure for reuse for the transportation and storage of greenhouse gases. Noble Lords will know that these changes were reversed in Committee in the other place.

The OGA has important functions in respect of both decommissioning and the storage of carbon dioxide. However, the change to the principal objective made on Report detracts from the OGA’s focus on maximising economic recovery and is damaging to the North Sea. This is unacceptable—particularly at a time of unprecedented challenge for the oil and gas industry. The OGA should remain focused on maximising economic recovery, and anything other than this risks seriously weakening its ability to provide crucial and urgent support to our oil and gas industry.

The amendment made at Lords Report stage had significant potential knock-on effects. By diluting the OGA’s principal objective, it would not only risk the premature decommissioning of key North Sea infrastructure but seriously jeopardise vital skills and experience, including those that could help to promote the longevity of the industry through carbon storage projects. From this perspective, the amendment is self- defeating.

17:45

Furthermore, the MER UK strategy has now been published and is in force. This strategy is focused on the delivery of maximising economic recovery, and any amendment to the principal objective would undo the significant amount of work that has been undertaken with industry. It would also require the OGA to revise this strategy to take into account the expansion in the principal objective.

The Government firmly agree that decommissioning and CCS are of significant importance. It is clearly evident from the provisions currently included in the Bill that we wholeheartedly stand behind the development of these industries and recognise the role the OGA will play in supporting them for the future benefit of the United Kingdom continental shelf. Importantly, the provisions as they stand are substantive and measured, and are welcomed by both the oil and gas and CCS industries. They strike the right balance between ensuring the OGA can deliver what is needed to support the oil and gas industry at this time while keeping its eye firmly on the potential future benefits of CCS.

It is imperative that the OGA’s focus be on maximising economic recovery of oil and gas from United Kingdom waters. At this time, industry urgently requires a regulator with—as the honourable Member for Aberdeen South in the other place termed it—a “laser-like focus” on this objective. The OGA is working very closely with government and industry to do all it can to support the North Sea. It is focused on delivering key pieces of work in 2016 with the aim of making the basin more attractive to investment. These include: stimulating exploration in both frontier and mature areas; making new seismic data freely available; introducing regional development plans to protect key hubs and infrastructure; and progressing a technology strategy to make new fields more viable.

We must support the OGA’s crucial mission to protect our domestic energy mix and to support jobs. This can be achieved only through supporting the OGA’s principal objective—to maximise economic recovery. I hope I have provided noble Lords with clear and strong reasons why it was right for the Commons to remove the clause, thereby restoring the principal objective to that envisaged by Sir Ian Wood in his independent review. I beg to move.

[Baroness Featherstone (LD)]

My Lords, it is our view on these Benches that carbon capture and storage and transportation should have been woven into the principal objective of the OGA. I hear what the Minister says, but it leaves me some concerns. Although the Government have made many arguments and given many assurances about the importance of carbon capture and storage, we on these Benches are not completely convinced.

I wish to raise with the Government some points which still give us great concern about the level of commitment to carbon capture and storage and indeed about their ability to deliver on our legally binding targets. If CCS is not going to be integral to the principal objective and functions of the OGA, we might have had more confidence and assurance if Her Majesty’s Government had agreed to an earlier amendment in the name of the noble Lord, Lord Oxburgh, to which my noble friend Lord Teverson added his name, which would have required the Government to undertake and develop a national strategy for carbon capture and storage. CCS is such a vital part of decarbonisation for the period when carbon is still being produced that we have grave concerns in this regard.

On Report in this House, the Minister made great efforts to assure the House of the Government’s commitment to carbon capture and storage and about the money invested—£130 million since 2011 to support research, development and innovations to foster the next generation of CCS technologies. In Committee, the Minister assured us:

“It is not as though no work is happening on carbon capture and storage. We are committed to a competition with up to £1 billion capital—that is current, and we will make an announcement on it early in 2016”.—[Official Report, 7/9/15; col. 1230.]

That was on 7 September 2015. On 25 November 2015, Her Majesty’s Government cancelled that £1 billion Conservative manifesto pledge, as was stated in this House.

I simply say to the Minister that actions speak louder than words, so perhaps he will understand that we on these Benches would like to trust the Government’s words, but they have made it somewhat difficult. Time will, of course, tell, but I remind the Minister that carbon capture and storage is a vital component of our ability to meet our carbon emissions targets. The establishment of the OGA was an opportunity to embed proper regard and action on transportation and storage. That is now an opportunity lost.

[Baroness Liddell of Coatdyke (Lab)]

My Lords, I will not delay the House unduly, and I draw attention to my entry in the Register of Members’ Interests as the new president of the Carbon Capture and Storage Association. I have some very big boots to fill in the shape of the noble Lord, Lord Oxburgh.

I do not want to replay what has happened to development proposals for carbon capture and storage, I say to the Minister only that there are great opportunities with it, but investors and the industry now need reassurance from the Government. There are interesting developments, not least within our regions. The Dutch are increasing their interest in carbon capture and storage. As we come to the closing stages of the Bill, I ask the Minister to regroup on the issue, to give us back some reassurance and to look to the positive opportunities that lie ahead. Britain can lead in this technology, but it will take some commitment from the Government and the industry. The key thing needed at the moment is reassurance to the industry.

[Baroness Worthington (Lab)]

My Lords, I, too, express some concerns about the removal of the amendment in the Commons. Although I have listened to the argument that it would detract from the intention behind the OGA, I seriously hope that the Government will look back at the primary objectives that they have given it and conduct a timely review—I know that that will happen.

Since we last considered the amendment, we have had two important events. The first was referred to by the noble Baroness, Lady Featherstone: the cancellation of the carbon capture and storage project. I do not intend to debate the whys and wherefores of that, but it is clear that there has been a significant dent in investor confidence. People have invested in good faith in this technology knowing that, to meet our long-term climate targets, we need a form of capture and storage for certain sectors of our industry.

The second big event is the signing of the Paris agreement, when the Government and the Secretary of State, Amber Rudd, played an enormous role in making it the success that it was. That states a very clear target for the world: that we must get our anthropogenic sources, our sources of carbon emissions, matched and cancelled by anthropogenic sinks. That largely means capturing and storing carbon and putting it underground. We need to take that Paris equation seriously.

[Viscount Ridley (Con)]

I suggest to the noble Baroness that a third event has happened—we have the early results from the Canadian carbon capture and storage project, which is by far the most advanced in the world. They are very disappointing in terms of the amount of carbon dioxide reduction and the cost that it has taken to achieve it.

[Baroness Worthington]

I note that, but I would just say that we are not Canada and we are very fortunate to have the North Sea as a reserve to use, which I believe would make it more cost efficient if we could do it in a timely fashion—obviously, not wanting to gold-plate anything, but making the best of the resource that we have in this nation. As I said, we need some reassurances from the Government. I am part of the group that the noble Lord, Lord Oxburgh, has now set up, which is looking at the whole issue afresh. We do not want to push carbon capture and storage for its own sake, but only in so far as it gives us options to decarbonise at least cost. I hope that the Minister will be able to say some words of reassurance about that process and the seriousness with which the Government will take the recommendations of that group.

[Lord Howell of Guildford (Con)]

My Lords, I agree that carbon capture is one of the keys to the future of energy and climate policy, because, if it can be done commercially and successfully, it will allow us to continue burning fossil fuels but in ways where the carbon is extracted. This is the case for continuing with fossil fuels, and perhaps slightly undermines the case of those who want to abolish fossil fuels altogether, because the whole point is that you can carry on if you have the technology.

Through your Lordships, I ask the noble Baroness who just spoke from the Liberal Democrat Benches whether they have thought about alternative and cheaper carbon removal technologies. There is carbon capture utilisation, which is developing in all sorts of new areas. It is beginning to look as though it can undermine the vast costs of piping carbon away into the North Sea. As we heard from the Minister, that would set back the problems in the North Sea, which are enormous and one hesitates to add any burdens to them, however important one may think the technology. So if there are cheaper ways of going forward, surely we should be going those ways.

That makes sense of what I understand from my noble friend to be the Government’s strategy, which is that the experimental efforts with carbon capture and storage in its full glory, with piping, transmission, finding places in the North Sea and overcoming all the vast technical and cost problems, can be replaced by something rather more imaginative. We may be moving in the right direction. My question is whether the Liberal Democrats have thought about those alternatives before pressing something which will obviously hurt the oil and gas industry in the North Sea at a time when it is already hurt very considerably.

[Baroness Featherstone]

I am happy to answer the noble Lord’s question. The Liberal Democrats keep an open mind on all technologies which can advance our climate change agenda. However, in Peterhead, for example, projects were well advanced and should have been continued.

[Viscount Younger of Leckie (Con)]

My Lords, I am sorry to interrupt, but at this stage of the Bill noble Lords are not allowed to speak more than once.

[The Lord Bishop of Chester]

My Lords, speaking briefly from these Benches but entirely personally, because bishops take different views on this, I welcome the realism that lies behind the Commons amendment. Following on from the contribution of the noble Lord, Lord Howell, it may well be that nature’s way of carbon capture and storage is some sort of vegetation. That may be the solution, but it is hardly a function for the Oil and Gas Authority to supervise. The great cost of extracting carbon dioxide—which can be done perfectly easily, technically—and then transporting it under the North Sea would increase energy prices in this country to an extent that would make the recent threat to our steel industry look like simply the foothills. It would have a major impact in raising energy costs. So the Commons amendment limiting the function of the Oil and Gas Authority is realistic and entirely supportable.

[Lord Bourne of Aberystwyth]

My Lords, I thank noble Lords for participating in the debate on this amendment. I will try to cover the points raised and do justice to some very important ones. First, there is nothing inconsistent in having a laser-like focus on the development of the North Sea as a principal objective set out by the Government and developing CCS. I reassure noble Lords who raised the issue—the noble Baronesses, Lady Featherstone, Lady Liddell and Lady Worthington—that the Government are very much wedded to the importance of CCS. As the noble Baroness, Lady Worthington, said, we set up an advisory committee chaired by the noble Lord, Lord Oxburgh, who I do not think is in his place. He brings to this task great expertise. It has cross-party representation, with all principal parties here represented and also the Scottish nationalists from another place. We will be responding to the advice that we receive from the committee, which I think will come in a timely way at the end of the summer or the beginning of the autumn. I know that the committee has met at least three times already and is driving this agenda very hard.

I will mention what we are doing on CCS to reassure noble Lords. There is collaboration with key partners who are also developing CCS; we are sharing data and research with them. Officials in the department are working on CCS; this is not an area where there is no activity. Our science and innovation budget has been increased, and we are looking at how we can usefully use it. There are developments on Teesside with industrial CCS, which is important. My noble friend Lord Howell made a valid point about carbon capture usage, which is also a key part of what we are looking at—but these things are best done together.

I thank my noble friend Lord Ridley for mentioning the issue of Canada; we study progress there very closely. I also thank the right reverend Prelate the Bishop of Chester for injecting some realism about the importance of having that laser-like focus on the North Sea, but, at the same time, as has rightly been accentuated and stressed by other noble Lords in the debate, developing a CCS strategy. With that, I commend the amendment.

Commons Amendment 3 agreed.

18:00

Motion on Commons Amendments 4 and 5

[Lord Bourne of Aberystwyth]

Moved by

That this House do agree with the Commons in their Amendments 4 and 5.

4: Clause 17, page 12, line 7, leave out “one year” and insert “three years”

5: Clause 17, page 12, line 12, leave out “one year” and insert “three years”

[Lord Bourne of Aberystwyth]

My Lords, Commons Amendments 4 and 5 overturn amendments made at Lords Report stage. They reinstate the original wording of Clause 17, to require the Secretary of State to carry out reviews of the OGA’s performance and functions on a no more than three-yearly, ongoing basis. There is broad consensus that measures are needed to ensure that the OGA remains well equipped to address the diverse challenges faced by the oil and gas industry. Its role and scope, including in relation to the storage of carbon dioxide, needs to be appropriate, sufficient and regularly evaluated. As such, the Government introduced provisions requiring review of the OGA’s effectiveness in exercising its functions, as well as review of the fitness for purpose and scope of such functions.

However, requiring an initial review to take place no later than one year after the Bill comes into force, and then annually for subsequent reviews thereafter, would be an incredibly onerous process for government, the OGA and industry. Moreover, it would likely have myriad unintended consequences. It would require the almost continuous evaluation of the effectiveness of the OGA, with very little time to implement the recommendations from each review. Reviews would be extensive, needing to cover both statutory and non-statutory functions, and an assessment of effectiveness against external factors, such as changes in the regulatory landscape, operational practices across the UK continental shelf and environmental and economic factors.

All this would be required as part of the review to enable the Secretary of State to produce a report setting out the findings of the review which is to be laid before Parliament. This would create significant resource burdens both for the OGA and government, and risk obstructing the work of the OGA. This process would be inefficient and likely to result in an ineffective review. It would weaken the OGA’s ability to act as an independent regulator free from government intervention. It would also create a review process significantly out of step with other regulators.

There will be other mechanisms in place to ensure that the OGA’s performance and functions are appropriate. The OGA will publish, on an annual basis, a refreshed five-year business plan and an annual report and accounts. The need for an arm’s-length body charged with effective stewardship and regulation of the UK continental shelf was a central recommendation of the Wood review. I believe that the original three-year review periods introduced by government must be reinstated to avoid conflict with that recommendation. I beg to move.

Commons Amendments 4 and 5 agreed.

Motion on Commons Amendment 6

[Lord Bourne of Aberystwyth]

Moved by

That this House do agree with the Commons in their Amendment 6.

6: After Clause 79, insert the following new Clause—
“Onshore wind power: closure of renewables obligation on 31 March 2016
(1) In Part 1 of the Electricity Act 1989 (electricity supply), after section 32LB insert—
“32LC Onshore wind generating stations: closure of renewables obligation
(1) No renewables obligation certificates are to be issued under a renewables obligation order in respect of electricity generated after 31 March 2016 by an onshore wind generating station.
(2) Subsection (1) does not apply to electricity generated in the circumstances set out in any one or more of sections 32LD to 32LL.
(3) In this section and sections 32LD to 32LL “onshore wind generating station” means a generating station that—
(a) generates electricity from wind, and
(b) is situated in England, Wales or Scotland, but not in waters in or adjacent to England, Wales or Scotland up to the seaward limits of the territorial sea.
(4) The reference in subsection (1) to a renewables obligation order is to any renewables obligation order made under section 32 (whenever made, and whether or not made by the Secretary of State).
(5) Power to make provision in a renewables obligation order or a renewables obligation closure order (and any provision contained in such an order) is subject to subsection (1) and sections 32LD to 32LL.
(6) This section is not otherwise to be taken as affecting power to make provision in a renewables obligation order or renewables obligation closure order.”
(2) The Renewables Obligation Closure Order 2014 (S.I. 2014/2388) is amended as follows.
(3) In article 2(1) (interpretation), after the definition of “network operator” insert—
““onshore wind generating station” means a generating station that—
(a) generates electricity from wind, and
(b) is situated in England, Wales or Scotland, but not in waters in or adjacent to England, Wales or Scotland up to the seaward limits of the territorial sea;”.
(4) In article 3 (closure of renewables obligation on 31st March 2017)—
(a) in the heading, after “solar pv stations” insert “or onshore wind generating stations”;
(b) in paragraph (1), after “solar pv station” insert “or an onshore wind generating station”.”

[Lord Bourne of Aberystwyth]

My Lords, the Government remain committed to delivering our manifesto pledge to end new subsidies for onshore wind. To deliver on this commitment the Government are intent on bringing forward the closure of the renewables obligation to new onshore wind in Great Britain. It is the Government’s view that all the government amendments in this group are consequential on each other.

Commons Amendment 6 reinserts the early closure clause removed at Lords Report stage. It gives effect to the manifesto commitment to end new subsidies for onshore wind. As I set out during our earlier debates, the Government have engaged widely on their intention and have considered in detail each of the proposals that have been raised, not only by noble Lords and Members in the other place but by many valued industry stakeholders during the passage of the Bill. The Government are committed to protecting consumers from the rising costs of energy bills while also protecting investor confidence. It is the Government’s opinion that the new clauses presented here do exactly this.

To protect investor confidence, the Government have proposed a grace period for those projects, meeting certain conditions as at 18 June last year, as outlined in the Statement on that date by my right honourable friend the Secretary of State for Energy and Climate Change, Amber Rudd. The grace period conditions set out in Commons Amendment 7 are intended to protect those projects which already had the following as at 18 June last year: first, relevant planning consents; secondly, a grid connection offer and acceptance of that offer, or confirmation that no grid connection is required; and, thirdly, access to land rights.

In addition, and to address feedback from industry, certain projects which have been granted planning permission following a successful appeal will also be eligible for the grace period. This will include those projects which have, as a result of a judicial review or an appeal, had a negative planning decision which was made on or before 18 June last year subsequently overturned.

The Government have also taken on board concerns raised by industry about an investment freeze. Following industry engagement after the 18 June announcement last year, we have seen evidence that certain projects have been experiencing difficulty securing funding due to legislative uncertainty caused by the Bill’s passage through Parliament. We have, therefore, sought to address this through the investment freezing condition. This will ensure that projects which meet the approved development condition, and which would otherwise have been able to commission and accredit under the RO by the original closure date, 31 March 2017, are not frozen out of the process. This investment-freezing condition has been designed specifically to protect the projects that were intended to be able to access the grace period as proposed on 18 June last year but which have been unable to secure debt funding pending Royal Assent due to legislative uncertainty. Indeed, feedback from industry suggests that it supports and welcomes such a measure.

The Government want to take a consistent approach to all onshore wind projects eligible to accredit under the RO. The Commons amendments therefore also seek to ensure that an existing grace period for delays caused by grid or radar works will continue to apply. Let me reiterate so no ambiguity remains: this is a manifesto commitment based on plans which we signalled well before the election. The honourable Member for Coatbridge, Chryston and Bellshill, Mr Philip Boswell, said at Committee stage in the other place:

“We agree that swift passage of the Bill with clear and consistent RO grace period provisions is needed in order to provide certainty to investors in the onshore wind sector as quickly as possible. The renewables industry fears that the longer legislative uncertainty over RO closure persists, the greater the risk of otherwise eligible projects running out of time to deliver under the proposed grace periods”.—[Official Report, Commons, Energy Bill Committee, 2/2/16; col. 127.]

On Commons Amendment 8, the Government would like to see an equivalent approach to closure of the RO to onshore wind taken across the UK. Commons Amendment 8 gives the Secretary of State a power to make regulations, which, if made, would prevent suppliers in Great Britain using Northern Ireland renewables obligation certificates. These would relate to electricity generated by new onshore wind stations and any additional capacity added to existing wind stations after the onshore wind closure date. This power allows for circumstances to be specified in regulations when such Northern Ireland renewable obligation certificates may still be used, and for the setting of a later date than the onshore wind closure date. The power has been included with an intention to protect consumers in Great Britain from the costs of any additional support which Northern Ireland chooses to provide.

This is a backstop power; it would be used only if Northern Ireland does not close its renewable obligation to new onshore wind on equivalent terms to the rest of the United Kingdom. As my honourable friend the Minister of State Andrea Leadsom confirmed in the other place, this power would be used only in relation to new onshore wind stations and additional capacity in Northern Ireland that do not meet closure conditions equivalent to those in Great Britain.

I am pleased to say that renewable obligation in Northern Ireland has now closed to large-scale new onshore wind stations with a capacity above 5 megawatts with effect from 1 April 2016, and that Northern Ireland is currently consulting on closing stations at 5 megawatts and below on equivalent terms to the rest of the United Kingdom. The Government continue to engage with Northern Ireland with a view to effecting closure on equivalent terms to Great Britain through Northern Irish legislation, but this backstop power is included with a view to delivering on our manifesto commitment across the whole of the United Kingdom.

Amendment 10 seeks to ensure simply that the provisions set out in Commons Amendments 6, 7 and 8—that is, the early closure of the RO to new onshore wind in Great Britain, together with the related grace-period provisions, and the backstop power relating to the RO in Northern Ireland—will come into force on Royal Assent. As my honourable friend the Minister of State Andrea Leadsom set out in the other place, the Government intend the provisions implementing the early closure of the RO to come into force on the date of Royal Assent and do not intend to backdate these provisions.

Government amendments to Commons Amendments 6, 7 and 8 further clarify that the onshore wind closure date will be the date on which the Bill achieves Royal Assent. These changes are set out in government Amendments 6A, 6B, 7A to 7S, 7AJ to 7AL and 8A to 8C. The amendments also include a number of consequential changes to the investment-freezing condition, extending it by one month to account for the additional period of legislative uncertainty. The amendments further ensure that projects seeking to access the grid or radar delay condition would continue to have an additional 12 months to accredit where they satisfy the relevant eligibility requirements. The Government are making these changes to provide clarity and certainty for the industry, and our policy makes it clear that we are taking steps to protect consumer bills while also balancing the interests of industry. I beg to move.

[Lord Foulkes of Cumnock (Lab)]

I shall speak to Amendments 7U, 7V, 7W, 7Y, 7AC, 7AD and 7AE which are in my name. The Minister is a good friend of mine, and I have great respect for him. Before he became a Minister, he and I used to work together on the great issue of devolution of powers to Scotland and Wales. We worked very well together, so I want to reassure him that I have every interest in him continuing in his post. I do not want him to do anything that would threaten his future. That is why I want to reassure him that everything that I am suggesting is in line with the Conservative election manifesto pledge.

[Lord O'Neill of Clackmannan (Lab)]

That is a first.

[Lord Foulkes of Cumnock]

It is indeed. Absolutely. As my noble friend Lord O’Neill said, it is unusual—exceptional—for me to do that.

[Lord Hain (Lab)]

Unprecedented.

[Lord Foulkes of Cumnock]

It is unprecedented, as my noble friend Lord Hain says. I also want to reassure the Minister that no constituencies of English Conservative MPs will be affected by this because I know some of them are genuinely worried about the effect on their constituencies. What I am suggesting in my amendments and what others are suggesting in theirs deals with proposals principally in Scotland and with very important community projects in Scotland. Two categories are dealt with in my amendments. The first category is those covered by Section 75 which are unable to go ahead not because they do not have planning permission —they have managed to get that—but because of some technicality. We are suggesting that that technicality is creating huge problems for them. The other category is in relation to grid connections. There is a particular problem in Scotland with the transmission and distribution grids not necessarily being as easily available as south of the border and having different arrangements. Some projects have fallen foul of these regulations.

If we put the schemes together, they amount to only just under 90 megawatts of generation. It is not a huge amount we are asking for. It is a relatively small amount. They all have the democratic consent of the local council, which is one of the matters raised in the Conservative election manifesto. I shall give the House a couple of examples. There is a scheme in Sorbie, a working dairy farm in Ardrossan in north Ayrshire, that has full planning consent and for which bank finance has been secured, a turbine contract has been agreed and design work has been started. Nearly £1 million has been spent on the scheme by the people concerned. The family-run working dairy farm is already suffering because of the low price of milk. If this project were to be cancelled because of the Government not accepting the amendments being put forward today, it would be in real difficulty. That is the kind of problem that is being faced.

18:15

The Minister said that representations from stakeholders were considered. With respect to the noble Lord—as I said, I do have respect for him—I do not think that the representations put forward on behalf of these small, independent projects have been properly considered. They have been frozen out. The Minister quoted the honourable Member for Coatbridge, Chryston and Bellshill about concern about uncertainty. I say to him, and to the honourable Member, that uncertainty can arise in different ways. There can be uncertainty because Parliament has not come to a decision, but if the Minister were to accept our amendment, that uncertainty would go completely. It would be gone, there would be no problem in relation to that uncertainty, and Sorbie would go ahead.

I shall give another example, that of Inverclyde. It is another wind farm project. The earliest available grid connection date for it is November 2016, which has been accepted, albeit after the 18 June cut-off date. The connection distance to the grid is less than 100 metres, hence the extremely quick connection date, and in this instance there is a very limited requirement for additional infrastructure. At present, Inverclyde would not qualify because a grid connection offer had not been accepted as at 18 June 2015. That is another technicality. Again, we have a number of projects—not a large number, a small number—which lose out because of technicalities. I hope that the Minister will seriously consider this because it is important for Ayrshire, an area I used to represent, for Lanarkshire and indeed for Dumfriesshire in the constituency of the Secretary of State for Scotland. My understanding—and I hope the Minister will confirm this—is that Mr Mundell is strongly in favour of this scheme going ahead.

I have spoken long enough. I hope that the Minister will give this serious consideration. It is not going to be a problem. It is not in conflict with the Tory election manifesto pledge; it is not going to upset Tory MPs in England. Apart from one, all the projects are in Scotland, and they are losing out because of technicalities. To make sure that they do not suffer as a result of the Government’s arbitrary decision, I hope that the Minister will genuinely and sincerely consider accepting, if not my amendment, then the amendment tabled by my noble friend Lord Grantchester, before we come to a Division today.

[Lord Hardie (CB)]

My Lords, on Report I drew attention to the unfair effect upon a development on Skye. The original provisions about the date upon which the guillotine would fall on new onshore wind farms discriminated against a development at Glen Ullinish in Skye which had planning permission, control of the land, the support of the local community and an agreement to link to the grid; the developers were paying money to the grid in fulfilment of that agreement. The only reason why the development could not go ahead was that the grid had to be upgraded, and that could not be achieved within the appropriate time.

I voted with the amendment that removed the clause from the Bill, but afterwards I wrote to the Minister to explain that that was the only option I had. I called on him and the Secretary of State to consider accommodating this unusual situation. I am grateful to the Minister, the Secretary of State and officials in the department for giving this matter consideration. Unlike the noble Lord, Lord Foulkes of Cumnock, I read the new Clause 32LL as a solution to the difficulty that there is a grid or radar delay condition. I seek confirmation from the Minister that I am reading it correctly, but I genuinely think it has enabled the development at Glen Ullinish to proceed. As I indicated in my letter, if that problem were resolved and a clause were brought back that accommodated this issue, I would support it, subject to the Minister’s confirmation that my understanding of Clause 32LL is correct.

[Lord Hain (Lab)]

My Lords, I tabled Amendment 7T and took the liberty of giving the Minister a copy of my draft speech in advance, in the hope of his co-operation and acceptance of the amendment. The Bill as it stands puts at risk a multimillion pound investment in Wales in and around my home area of Neath Port Talbot, which is already facing massive economic haemorrhage resulting from the threat to Tata Steel. The issue at stake relates to an already consented project, Gamesa’s Llynfi Afan renewable energy project, which has had its planning condition varied through a Section 73 consent to allow for a different road access route. The project is ready to start construction, and some of the major work is going to local businesses, with obvious positive implications for jobs, which in that area is welcome.

On 27 August 2013, the Llynfi Afan renewable energy project was granted consent by Neath Port Talbot County Borough Council. Previous consent had already been granted by two other local authorities, Bridgend County Borough Council on 18 July 2013 and Rhondda Cynon Taff on 13 October 2011. However, due to a change in the proposed site access route, the developer, Gamesa, successfully applied for variation of two conditions of the Neath Port Talbot permission by way of Section 73 consent. I stress that the variations dealt solely with the access route for turbine component deliveries to the site of the consented generating station itself, and its capacity will remain unaltered. As such, the impact on the DECC budget is neutral.

The variations were approved on 24 February 2016 by Neath Port Talbot County Borough Council. As I understand it, where an application under Section 73 is granted, the effect of the Planning Act 1990 is the issue of a new planning permission, with a new decision date, sitting alongside the original permission, which remains intact and unamended. The consent and conditions of the original consent are preserved, as is the implementation date by which the construction of the generating station should have been started. On Report in the House of Lords, the noble Lord, Lord Bourne, said:

“Where consent is granted for development on or before 18 June and is subsequently varied”,—[Official Report, 21/10/15; col. 668.]

in this way, it will continue to fall within the approved development condition.

While that is very welcome and positive for this project, regrettably, his statement by itself has proved insufficient to achieve adequate investor confidence. That is because the renewable obligation certificate is awarded after the wind farm has been built and has proven to be exporting electricity to the grid. Investors therefore need certainty before construction, otherwise there is a risk that the project could be built but not receive the required support. As a result, investors wish for certainty reflected in the legislation, and without the amendment the project will be put at risk. The amendment therefore aims to resolve the issue and ensure that the project can go ahead, matching government intent and delivering investment in the local community. My understanding is that without the amendment, such variation permissions as Section 73 would not qualify under the Government’s grace period condition.

The investors’ legal advisers have said that, as the Energy Bill currently stands, it fails to reflect the position that variation consents are fresh planning permissions as a matter of law, as used to be the case. They assert that without an amendment, such variation permissions would not qualify under the Government’s grace period condition. Amending the Bill would make it absolutely clear and avoid any additional funding being added other than what the Government have already allowed for.

In the particular case of Llynfi Afan Renewable Energy Park, tens of millions of pounds will be invested in the construction and operational phases. The communities have widely supported Gamesa’s Section 73 application, as they support the project and wish to see it happen. The local community stands to gain substantially in community benefits, and in terms of business rates and direct and indirect local employment opportunities. Gamesa is in the final stages of appointing a contractor who will be responsible for building the wind farm and, as such, will require employment and services from the locality. It has been Gamesa’s aim to work wherever possible with local companies, involving local jobs, and will continue to do so during the construction and operational phases.

I appeal to the Minister to agree to the amendment. If he finds some technical fault with it—although it is not obvious to me what that might be—will he agree to write a letter to the developers explaining why the Bill as it stands, without the amendment, meets their objectives and that they will be able to proceed, notwithstanding the fact that this amendment may not be accepted by the House?

[Lord Wallace of Tankerness (LD)]

My Lords, the Minister has moved Amendment 6 and spoken to Amendment 7, and I want to speak principally to my amendments to Amendment 7. My noble friend Lady Featherstone may say something about the wider issue of the early closure of the renewables obligation in respect of onshore wind generating stations. The Minister has repeated the Conservative Party manifesto commitment that there will be no new subsidies for onshore wind, but I well recall the comment from the noble Baroness, Lady Worthington, that it is difficult to think that a new subsidy is actually the early closure of a long-existing subsidy. The Minister repeats that again and again, but no one is seeking to overturn the early closure. However, the grounds he has stated— that it is a manifesto commitment—are somewhat doubtful.

I have yet to find many people in the industry who think this is a very wise move at all. It is not simply about what is being done with onshore wind; as we have already heard in this debate, a large amount of the investment made in developments over a long period will be cut off at a fairly arbitrary date. The Government’s capriciously cutting off developments in the way proposed affects the confidence of those who want to invest not only in onshore wind renewables but in the entire renewables industry and, indeed, in other infrastructure developments.

Turning to the amendments, I begin by thanking the Minister for his willingness to engage through exchanges of letters and in meetings. One reason why we on these Benches were very happy to support the move to take out the principal clause in the original Bill was not that we did not expect the Government to try to bring back the clause, but that we felt that it would give them an opportunity to reflect on and try to improve the grace periods. Although they were welcome as far as they went, they certainly fell far short of what many people in the industry—I would say almost universally—thought was required.

What has been disappointing, and perhaps not in keeping with the way this House operates when we ask the Government to think again, is that we have absolutely no sense that they are willing to compromise in any way whatever. They have said that there is no compromise, and that is why the amendments that I have tabled—particularly Amendment 7X—embody quite a number of the changes which the industry wants to see and on which we have had representations. I invite your Lordships to support that amendment. I hope that if that measure is brought back in—after all, the Bill has to go back to the Commons because the Government have brought forward amendments to their own amendments—there will be a further opportunity for the kind of engagement that is part and parcel of the way this House operates. Certainly, when I had the privilege of sitting on the Front Bench and dealing with amendments, I tried to find some means of compromise when there were Lords defeats.

18:30

Perhaps I may go through the amendments, although I do not want to rehearse at great length the arguments that have been made before. Amendment 7X relates to proposed new Section 32LJ in Commons Amendment 7 and concerns the consent condition. The purpose underlying proposed new paragraph (d) in my amendment is that we believe that there have been cases where the local planning authority has resolved to grant planning permission on or before 18 June 2015 further to a planning committee consent, but the formal rubber-stamping has not taken place until after 18 June 2015. In those circumstances, it seems that where a reasonable expectation of consent has been raised, it should be carried through.

I turn to proposed new paragraph (e) in the amendment. The Government have argued that if a local authority had taken the decision in time and it had been the right one, it would be unfair to the developer not to have an opportunity to have it backdated just because the matter was called in. However, our proposal would take account of circumstances in which developers had been working alongside the community, the 16 weeks had elapsed and they had not run to the Secretary of State or Scottish Ministers and said, “They haven’t given us a decision. We want you to call this in now for Ministers to make the decision”. In fact, in many respects that would run totally counter to what the Conservative Party has been preaching about local decision-making. That would be a decision taken centrally or nationally and not left to local determination.

Therefore, with this proposed new paragraph we seek to allow decisions where there has been local engagement and an extension of the period, and the discussions have continued—that is, engagement not just with the local planning authority but with local communities. We know of a number of cases where that has happened. In these circumstances, it seems only fair and reasonable to allow a decision to be made where the local community has been consulted and brought into the picture, and subsequent to 18 June a favourable planning decision has been made. When we debated this matter in Grand Committee, I gave details of the Binn Eco Park wind farm, which I think is in Perthshire—it is in Perth and Kinross Council. The application was made on 7 November 2014 and there had been considerable discussions since 1 May. Binn Eco had completed everything technically to meet the cut-off date and the matter was ready to be considered at a local planning committee meeting, but in fact the planning committee did not meet until 15 July—after 18 June. Therefore, in a development where every effort had been made to engage, the local community lost out because of the planning committee’s cycle of meetings. Again, that did not seem particularly fair.

Proposed new paragraph (f) concerns Scotland being in a different position from the rest of Great Britain. When this Parliament decided to raise the threshold of megawattage capacity for planning applications in England and Wales above 50 megawatts, which was the position in the Electricity Act 1989—this is not a consequence of devolution—it chose not to do so for Scotland. I am glad to say that when we debated this matter during the passage of the Scotland Bill, the Parliamentary Under-Secretary of State, the noble Lord, Lord Dunlop, said that the Government were prepared to look at this to see whether there should be proper further devolution.

A 65-megawatt development is proposed on the border between East Lothian and Scottish Borders. A year after the application was put in, a decision was taken by East Lothian Council and Scottish Borders Council to object. They did not have the statutory role—that was for Scottish Ministers—but the consequence of their objection was that the application then went to Scottish Ministers, who ordered an inquiry. The outcome of the inquiry is still awaited. We will probably have to wait until after the Scottish parliamentary elections before the decision can be announced, but quite clearly it will not be announced until well after 18 June. However, had that development been 50 miles further south in Northumbria, it would have been dealt with by Northumberland County Council. Having decided that they did not like the application, the councils, rather than just stating a statutory objection, would have been able to refuse the application in March last year. That would have been the subject of an appeal. If, following an inquiry, the appeal had been successful, the application would have qualified under the provisions here.

As I said, that is not a consequence of devolution; it is a consequence of different planning rules north and south of the border. What are otherwise identical developments do not get treated in the same way. This is not a hypothetical situation. It occurred to me that there might be an issue of hybridity here and today I wrote to the Clerk of Legislation. The Companion says that hybrid Bills are,

“public bills which are considered to affect specific private or local interests, in a manner different from the private or local interests of other persons or bodies of the same class, thus attracting the provisions of the Standing Orders applicable to private business”.

Clearly here we have the private interest of a developer in Scotland. There could be an equivalent developer in England in exactly the same position, but the one in Scotland is treated differently and does not get the same appeal rights or the same access to grace period rights as the one south of the border. I gave the clerk very little time in which to respond. He spoke to me this afternoon and said that he could understand why I had raised the point—so I was certainly in the ballpark—but he did not think that regional variations qualified. However, if it is not a legal hybrid, I think that there is a moral hybrid there. It is fundamentally unfair that after a substantial amount of money and effort has been put into this development it should fall foul in that way.

Proposed new paragraph (g) refers to an application for planning permission having been made before 18 June 2014, and its purpose is to show that these matters have a long lead time. A lot of money, time and energy are expended, yet if for some reason planning permission is not granted by 18 June all that effort can go to naught.

Proposed new paragraph (h) has already been referred to by the noble Lord, Lord Foulkes of Cumnock, and it is also the subject matter of the amendment in the name of the noble Lord, Lord Grantchester. It concerns a situation where for all intents and purposes a planning decision has been made and planning permission has been granted, but it has been subject in Scotland to a Section 75 agreement or in England and Wales a Section 106 agreement. The Government’s unwillingness to move on this has bewildered the industry. Many people in the renewables industry cannot recall a situation where such relevant agreements have not been forthcoming. As someone in the industry said to me, it is rather like passing all your exams but then being refused a graduation certificate.

In practice, the council and the applicant work together to ensure that the project report that goes to the council committee for a decision covers all the issues that may need bonding or other legally binding commitments so that the committee is minded to consent. The “minded to consent” notice is issued and has conditions attached to it. Those conditions are known to be deliverable, because any other practice would be a waste of everyone’s time. The industry has had over 15 years of refining the process along with local government. That process has now matured and is well understood. Examples of projects that have failed to be issued with a final consent after a committee has been minded to approve, subject to the signing of a Section 75 or Section 106 agreement, are rare, if they exist at all.

An interesting example of this is the Twentyshilling Hill wind farm in the constituency of the right honourable Secretary of State for Scotland. That planning application was made on 15 May 2013. Dumfries and Galloway Council’s planning committee approved the application, subject to Section 75 agreement, on 16 December 2014. Almost six months before the cut-off date the planning committee approved the application. It was not until four months later that Dumfries and Galloway Council appointed external lawyers to act for it on the matter of Section 75. I do not know why that four months elapsed, but it was a crucial four months and may well have had nothing to do with the power of the developers. The following month, a draft Section 75 agreement was circulated by solicitors and, on 17 June, the Section 75 agreement was agreed and circulated for signature. On 18 June, it was signed by the landowner and the developer and, also on 18 June, Dumfries and Galloway Council issued a letter of comfort to Element Power stating that a minuted decision of the council’s applications in committee appears on the council’s website, and that it is a public document and a clear statement of the committee’s decision on this planning application—an agreement signed on 19 June by Dumfries and Galloway Council. The planning notice was issued on 1 July.

Was there ever such an example of where the capricious date of 18 June has had such a fundamental impact, through no fault of the developers? Of all the amendments, this is probably the one that the industry would set most store by. I can see no good reason why the Government have been unable to show any willingness at all to agree to that.

New Section 32LJ(5) relates to the grid connection. I am led to believe that what we propose—the noble Lord, Lord Foulkes of Cumnock, spoke to this very clearly—reflects the reality of what the industry experience is as regards grid connections and is an improvement on what the Government are proposing. I am interested to hear the Minister’s response to the point raised by the noble and learned Lord, Lord Hardie.

Amendment 7AF picks up the point that the noble Lord, Lord Hain, spoke to with great power, on variations. I too have received representation, including from the developers of a project similar to the one that he referred to. Again, substantial amounts of money are involved and no confidence or clarity has been found in what has been said so far by the Government that any variation will in fact allow them to qualify. I raised this point with the noble Lord the Minister and he replied by letter earlier this month. Obviously, he has made statements, his honourable friend Andrea Leadsom has made statements, and there is something in the Ofgem consultation document. But in his letter the noble Lord said:

“I hope that the following information will help to clarify your concerns, as I am aware that the legislative regime underpinning the different consents is complex. As you are aware, the Bill provisions define ‘planning permission’ to include: planning permission under the Town and Country Planning Act 1990”.

There is a line missing from the copy I have with me, but he also referred to the Scottish legislation of 1997, and continued:

“Each of these statutory regimes provides an existing consent to be varied, via the following routes: an existing (England and Wales) 1990 Act permission can be varied under section 73 (variations to conditions), 96A (non-material changes), 97 (modification and revocations) and 68 (modification and revocation by the Secretary of State) of the 1990 Act”.

He goes on to say that there are similar arrangements with regard to 1997 Scottish Act permissions, consents under Section 36 of the Electricity Act 1989, and development consents under the Planning Act 2008, and that:

“For the purposes of the ‘approved development condition’, a developer needs to demonstrate that the generating station which it is seeking to accredit had planning permission in place (for that station) on or before 18 June 2015. We understand that varying an existing planning consent under any of these routes set out above generally results in a determination by the relevant decision-maker that makes clear reference to the original consent. Should the developer/project wish to make a change to their planning consent to such an extent that a new planning consent is issued—with no reference to the original consent—and that consent is granted after 18 June 2015—this would no longer meet the grace period criteria”.

I have shared that letter with those in the industry, and they think that it is better than anything that has yet been said on the record. It would be very helpful if, first, the Minister was to respond positively to the points made by the noble Lord, Lord Hain, and, secondly, if he could place on record from the Dispatch Box what he said to me in his letter of last week on variations. In fairness, those in the industry have found it a more helpful and clearer exposition of what the position is as regards variations than anything that they had heard beforehand.

I turn now to the question of the investment freeze. There is a lot in this and a lot of people have made representations, so it is only fair that they get the chance to have their argument made. It would be far easier if the Government had conceded on a lot of these things, but I intend to persevere with this because these are important points—I am not going to be bullied. The investment freezing condition is one which, rightly, the Government have responded to. But as the Minister well knows, we do not feel that it has gone far enough and important bodies have been left out, including Triodos, a body regulated by the Financial Conduct Authority and the Prudential Regulation Authority, with more than 25 years’ experience of financing renewable energy; Temporis Capital, which is currently supporting a development with funds provided by the Green Investment Bank; and Abundance. These bodies have track records in supporting developments and we have heard no good reason from the Minister or the Government other than that he is concerned about gaming. However, these are reputable institutions and there is no suggestion that any of them is gaming.

18:45

Finally, I turn to my other amendments, Amendments 7AA and 7AM. These have been drawn to the attention of myself and the noble Earl, Lord Lindsay, by 3R Energy Solutions Ltd in respect of a development at Douglas West and Dalquhandy in South Lanarkshire—again, I think, in the constituency of the Secretary of State for Scotland. They relate to a 45-megawatt development which, crucially, has been promoted by a community group. Community groups have considerable disadvantages compared to larger developers. The pre-start funding process can take considerable time before they can even start the planning process. This particular development is located on an ex-opencast coal mine in an area with a legacy of deprivation and unemployment due to lack of jobs and poor housing. That is a legacy of the closure of the mining industry, but here is an opportunity to replace an old energy industry with a new energy industry. It is true that the planning application did not go in until after 18 June. However, in February last year the requirement to carry out pre-application consultation did start, and that is an important step on the way.

The Minister will readily recognise that community groups take longer to raise funds and that they have to go through all these other things. This group has proceeded in a way that has engaged its community and needed the time required to consult with others. The project enjoys local support and, indeed, 100% of the stakeholders in the Dalquhandy renewable energy project have their personal residence within 10 miles of the location. It seems very unfair to a community group that has put so much effort into a project that will generate jobs and income for a depressed and deprived community that it should fall foul of what was a somewhat arbitrary date. Perhaps the noble Earl, Lord Lindsay, will say more about that. However, the group made a very compelling case that it set in motion the formal statutory procedures some four or five months before 18 June and therefore should not be prejudiced in this regard.

I conclude by reminding the Minister of what he said when he moved the statutory instrument with regard to the early closure of the renewable obligation for solar below 5 megawatts:

“One of the grace periods was designed to protect developers who could show that a significant financial commitment had been made on or before the date on which the proposals were announced. This required evidence that a planning application had been made, among other things, as a proxy for the financial commitment”.—[Official Report, 16/3/16; col. 1916.]

That was a significant commitment, and one which was right. He justified it on the grounds that it was also done for those above 5 megawatts. It has now been done for two early closures and it should be done for this one as well, recognising the significant financial commitments made by communities and developers. We have heard nothing so far but I hope that tonight we will hear some encouragement from the Minister. I also hope that the Official Opposition will be prepared to back us in trying to get some movement from the Government on this important issue.

[Baroness Quin (Lab)]

My Lords, I would like just very briefly to seek clarification on something that has arisen from our debates. I do not know whether I am alone in not being sure of the implications of what we are discussing here. However, I would like to know from the Minister, or indeed from those who tabled the amendments, how many schemes are affected, where they are, and whether any of the schemes that might be affected by the amendments are ones where the local communities have very much opposed the developments that are taking place.

I feel in something of quandary in approaching these amendments, because I do not want schemes which have a lot of public support, referred to by my noble friends Lord Foulkes of Cumnock and Lord Hain, to be prevented from going ahead, but at the same time I hope that what is proposed would not allow schemes to go ahead in my own county of Northumberland, where a large number of schemes have been introduced against the wishes of local people and local communities. I would not like them to go ahead because of changes that we are considering introducing here via amendments.

The Minister knows that I have a lot of sympathy with the Government’s approach, in that a lot of schemes have been inflicted on local communities in sensitive landscapes and in areas where we are trying to develop tourism. It has been a real issue in Northumberland, which has twice as much onshore wind capacity as any other English county. I would simply like to hear from the Minister and others whether there are implications for Northumberland in what is proposed today.

[Baroness Worthington]

My Lords, I was not intending to speak on this amendment, but, as the noble and learned Lord, Lord Wallace, was kind enough to refer to me, I want to ask a simple question. I want also to pay tribute to the commitment shown by the noble and learned Lord in the detailed way in which he has approached this question and sought to canvass a wide section of views on this clearly still controversial topic.

My question is more about the future. The Government are doing what they wish to do and it is clear that we need to see a pathway towards all renewables standing on their own two feet, supported, one hopes, by a carbon price which makes investment in cleaner technologies a sensible way forward. My question is in relation to another event that has taken place since we last considered this matter, which is the announcement about the auctions of CFDs. I understand that onshore wind will not be eligible for CFDs. I wonder whether there has been representation from Scotland in that decision-making process, since many questions about eligibility for the RO could be alleviated if there was access for Scottish wind farms to a CFD or equivalent that Scotland could determine. That is my question. It is less about the detail looking backwards over this government statement than about the Government saying something reassuring about repatriating an element of energy control to Scotland to enable it to persevere with this industry, which is clearly very important to it.

[The Earl of Lindsay (Con)]

My Lords, I support the amendments in the name of the noble Lord, Lord Foulkes, and of the noble and learned Lord, Lord Wallace of Tankerness. In particular, I want to speak to Amendments 7AA and 7AM in the name of the noble and learned Lord.

As the noble and learned Lord said, there are two important realities that these amendments seek to address. The first is that planning regulations in Scotland, unlike in England, require a set period of pre-engagement. This means that the submission of a major planning application can take place only once a statutory three or more months of consultation have taken place. In Scotland, therefore, between three and six months is added to the equivalent statutory period that applies in England. In effect, the lodging of this proposal of application notice in Scotland is at exactly the same point in the process as the lodging of a planning application in England. In other words, it is the start of the formal planning process either side of the border.

The second reality that the noble and learned Lord’s amendment seeks to address is that projects involving community equity are inherently disadvantaged alongside established developers in terms of the speed with which they can develop their projects, the level of finance that they have available, the time it takes them to get the requisite level of finance and the relative risks they take in getting a project to a particular stage by a particular date. Securing the initial funding for a community stake takes valuable time before the actual planning process can even be initiated.

As a result of these two realities, the Scottish planning regulations and the challenges facing community projects, this Bill would lead to the following scenario. A community-based project could be stopped dead in its tracks despite a significant investment involving a community shareholding having been committed well before 18 June, despite that project having been firmly and formally within the Scottish planning process since well before 18 June and despite all other grace period criteria having been met. Such a scenario would be a regrettable and, I believe, unintended consequence, especially given the importance that the Government attach to the involvement of local communities in, and their support for, onshore renewable projects. As the noble Lord, Lord Foulkes, said, that aspiration was expressed in the Conservative manifesto.

On the concerns expressed by the noble Baroness, Lady Quin, at the same time as such a community project would be stopped dead in its tracks, other cases that were refused planning permission before 18 June by the local planning authority—in other words, they did not have local support—but were subsequently granted on appeal would be able to accredit under the grace periods, while a genuinely community project which is fully committed by 18 June, with full local support and equity ownership, would not. The noble Baroness has therefore raised a very serious concern.

Such a scenario would be addressed by Amendments 7AA and 7AM in the name of the noble and learned Lord, Lord Wallace of Tankerness. They would ensure that community projects that had committed significant financial resources, that had been in the formal planning process well before 18 June and that now had permission and accorded with all the other grace period requirements were given a reasonable grace period to deliver.

Like other Members of this House, I have been grateful to the Minister for his willingness to correspond and engage on the issues relating to this Bill, and I am grateful for the correspondence that I have had with him about the issues behind the amendments. I want to reassure him on two concerns that he raised with me. The first was a concern that, in accepting these amendments, there would be significant additional deployment. This is not the case. Research through RenewableUK data demonstrates that the amendment would lead to an additional deployment of only 45 megawatts, as the noble and learned Lord, Lord Wallace, said. That is less than 0.1%—that is, 1/10th of 1%—of the current annual ROC spend.

My noble friend the Minister also expressed the view that the amendments run counter to policy intent. I can reassure him that they do not. They are about improving in a very precise and limited way the flexibility in how the Bill would apply, especially in Scotland. The amendments are modest in their intent and negligible in their cost and therefore in their impact on the ROC budget, yet, as we have heard from other noble Lords and especially the noble and learned Lord, Lord Wallace, they would deliver significant local benefits.

I hope that the House and especially my noble friend the Minister will support the amendments or at least consider them constructively. They deal with the very lengthy pre-application consultation requirements in the Scottish planning system and with the challenges that community projects face. I will listen carefully to my noble friend’s response, and hope it is a positive one.

19:00

[Lord Grantchester (Lab)]

My Lords, I shall speak to Amendment 7AB, tabled in my name. The Energy Bill started in your Lordships’ House shortly after the generally unexpected Conservative majority in the general election last year. It focuses primarily on the setting-up of the Oil and Gas Authority. Into the Bill, the new Conservative Government thrust two new clauses on onshore wind, closing down early, to a date of 18 June, the renewables obligation. Hurriedly, the Government agreed to consider exceptions, as grace periods, to allow schemes to complete as they had travelled a long way through the development stage, in good faith and at considerable cost.

While understanding that the Government have to draw a new line somewhere to give effect to this measure, your Lordships’ House was not content that sufficient logic had been applied and passed the Bill to the Commons with these two clauses omitted from it. These clauses now return to your Lordships’ House but without material amendment having being made in the Commons to these grace period proposals.

Amendment 7AB proposes a logical, consistent, clear, honest and fair extension to the exceptions agreed by the Government. The wider onshore wind industry has come to a consensus and supports this single, narrow extension to the existing renewables grace period criteria. The proposed change is for projects that have achieved democratic local consent for their development at a planning committee on or before 18 June 2015 but received Section 75 in Scotland and Section 106 in England and Wales agreement after that date. At present they are excluded.

This cannot be said to be against Conservative Party policy. It is widely considered that a decision made by a democratically elected local planning committee embodies the principle of giving local people the final say. To deny this extension is to deny and prevent local people having the final say on wind farm applications.

The publication of a resolution to grant permission is considered by both developers and local authorities to be a procedural step and that planning permission is to follow—in effect, agreement is all but made. The industry is not aware of any commercial project that received local community consent at planning committee and was not awarded a written decision because of a failure to complete a Section 75/106 agreement. Continuing to proceed on the basis that planning consent is secured, developers have greater sunk costs at this stage. Formal notice is expected because a resolution by a planning committee is a real and substantial commitment.

The lack of logic in the Government’s position arises from the concession they have granted to projects refused permission at 18 June but subsequently agreed on appeal. Projects refused on 18 June, although overturned, can qualify, whereas agreements resolved on 18 June and subsequently fulfilled cannot. This is a bizarre interpretation. The legal advice that the industry has received categorically states that there is as much “legal right” to a planning permission resolved at local level as there is to a permission subsequently granted on appeal following a refusal by a planning committee. As I have said, the Government are content to allow these successful appeals to proceed.

Grace period concessions for anomalies and complexities around the criteria should allow for projects which have local consent but missed the cut-off date due to the time needed for a planning authority to complete a Section 75/106 agreement and issue a decision notice. It would comply with Conservative policy that locally approved wind farms be enabled to go ahead.

To allow this concession will not open—I will not say floodgates—a gale of projects coming forward. I understand the industry has put forward a list of projects that received resolution for approval but where formal permission was issued after 18 June. The list totals seven projects—six in Scotland and one in England. This totals just under 90 megawatts. To put this into context, 90 megawatts would power 50,000 households—a mere fifth of 1% of more than 26 million households and about 1% of the present onshore wind capacity of over 8,500 megawatts. Surely the Minister cannot contend this to be a major concession.

As to the amendments tabled by the noble and learned Lord, Lord Wallace of Tankerness, he has worked tirelessly on trying to get a fair outcome for projects started in good faith by people who have committed substantial time and assets to bring forward onshore wind developments—which, after all, will be the least-cost technology providing low-carbon power. He has worked extensively, engaging with industry and the Government, to get a resolution that does the decent thing by these developers.

This measure closing down the renewable obligation has been one of the many taken by this Government that has done severe damage to investor confidence and led to a Commons departmental committee issuing a report on investor confidence in the UK energy sector.

I do not doubt that the amendments the noble and learned Lord has tabled are thought through with good intentions. However, I have targeted this side of the House’s focus specifically on the very minimum that could be considered reasonable, given that onshore wind developments are likely to be coming to an end in any case. His Amendment 7X, in part, supports my case. Yes, we want to be fair where we can, considering that the provision can be said to be in the Conservative Party manifesto, and the Commons has expressed its decision. We ask the Government to think again on the small measure I propose, at the very least, and show some consistency

I thank my noble friend Lord Hain for bringing this situation and his amendment to the attention of the House today. It allows me to underline just how destructive the Government’s arbitrary cut-off date of projects has been. A great amount of uncertainty now exists throughout the renewables sector and I urge the Minister and his department to open a dialogue with their Welsh counterparts to resolve this anomaly as quickly as possible.

I turn now to the amendments in the name of my noble friend Lord Foulkes of Cumnock and supported by my noble friend Lady Liddell and others. My noble friend’s Amendment 7Y, in part, also supports the case that I have made. Unfortunately, he includes other provisions that go beyond the small, narrow extension to the Government’s concessions. The fact that six of the seven projects arising from this extension are in Scotland shows the importance of wind power for jobs and enterprise there. He has identified the effect on schemes locally in Scotland in his remarks. It is unfortunate that the Government have brought back the renewables obligation scheme to be solely under the reserve of the Westminster Parliament by withdrawing it from being a devolved matter.

From the amendments that have come forward, I consider it reasonable to press ahead with the amendments that I propose.

[Lord Bourne of Aberystwyth]

My Lords, we have had a wide-ranging debate on the opposition amendments which I shall try to cover in my response. I shall take the speeches in the order in which they were made.

I acknowledge the great efforts that have been made by the noble and learned Lord, Lord Wallace, the noble Lords, Lord Foulkes, Lord Grantchester and Lord Hain, and the noble Earl, Lord Lindsay, and I thank them for their comprehensive suggestions and the detailed drafting of the amendments. I also thank them for their hard work and forensic skill—particularly that of the noble and learned Lord, Lord Wallace—in putting them forward.

I understand the points that are being made. There is, by and large, a doctrinal difference in attitudes to onshore wind between the Opposition and the Government. Hence it was in our manifesto and not in those of other parties. That should be our starting point.

I should make one thing clear that I hope I do not need to make clear. There were many references to my right honourable friend the Secretary of State for Scotland and projects being in his constituency and I hope no one was suggesting that there should be special treatment in that regard. Let me make it clear that there will not be—nor would the right honourable member for Dumfriesshire, Clydesdale and Tweeddale expect such.

I thank the noble Lord, Lord Foulkes, for his unusual, unprecedented and almost unique accolades. We go back a long way on devolution and, as he knows, I have the greatest respect for him. I am about to damage him with his Benches in the same way as he damaged me with mine but I thank him for his contribution. I contest the point he is making about these being mere technicalities—they are much more than that.

As noble Lords will appreciate, I cannot respond to all of the detailed projects because I do not have knowledge of every single one. Of those I do, I will endeavour to say what I can on them, but I cannot specifically carry the knowledge of where we are on them all. I certainly would encourage noble Lords and the developers to be in touch with the department because officials are keen to engage, to be helpful, and to give clarity in relation to these different projects.

I pay tribute to the noble Lord, who I know makes great efforts on behalf of his part of Scotland and the area he used to represent, and he has put forward a powerful case. I shall pick up on a point made by the noble Baroness, Lady Quin, and say that of course there would be an impact on deployment. Obviously if we alter the law it will not be just in relation to Scotland, it will apply to the whole of the country. It will not be laser-like on a particular area, so it will increase deployment, as the noble Lord, Lord Grantchester, indicated in his remarks. His figure was higher than that suggested by my noble friend Lord Lindsay. Further, as has been indicated, we have undertaken extensive consultation.

I turn to the points made by the noble Lord, Lord Hain, and I thank him very much indeed for making me aware of what he was going to say in relation to Llynfi Afan in the Afan Valley and the Gamesa project there. As he knows, DECC officials have already been engaged with the developer and they are happy to continue to do that. I am also certainly happy to write to Gamesa, as he indicated. From what I gather, this is not a difficulty with the Welsh Government, as has just been suggested. I do not think that that is the case at all. This project has planning permission so we will certainly take a close look at it and clarify the position. If I can help in that regard, of course I will.

I turn to the points made by the noble and learned Lord, Lord Hardie, on the issue of the grid and radar delay as set out in the letter that we sent to him. If I can, I will get officials to contact him again in case there is a lack of clarity on that or if there is an ambiguity; I do not think there is. I know that it is an issue that matters to other noble Lords as well.

I turn to the noble and learned Lord, Lord Wallace, who raised many points with forensic skill, as he does. As he has been around the legal block a bit he will know that cut-off dates are always a problem. It can be suggested that they are capricious or arbitrary, but virtually all legislation has cut-off points in it, and there will always be someone on the other side of them who you wish you could help. But in reality a cut-off point has to be set, and that is what we have done. I can understand that it does not appeal to some people, but of course it is arbitrary only in the sense that any date is arbitrary, so even if we moved in the way he has suggested, there would be other projects that would fall just the other side of the line.

I think that the noble and learned Lord’s ultimate conclusion was that there is no hybridity in this Bill. If that was his conclusion, I agree with him; this is not an issue about hybridity. Scottish developers are subject to Scottish planning law and those in England and Wales are subject to English and Welsh planning law. It is not unusual for differences in law to arise on either side of the border these days, and indeed it is now happening more and more in relation to Wales as well, producing different practical results. I do not think that that causes hybridity unless a specific private interest is affected, but I do not see that being the case here. So, with regret, I do not think that I can move on any of the points he has raised. We have made our position very clear.

Perhaps I may just say in response to some of the matters that have been brought up in relation to Scotland—I understand the particular interest in Scotland because of the massive deployment there; it has benefited massively, there is no doubt about that—that it was not a significant issue in the House of Commons. I did not think it was and so I double-checked it. That is not to say that it is not a matter that needs to be addressed, but it is interesting to note that it did not seem to be a massive issue in another place.

The noble Baroness, Lady Worthington, set out a position in relation to CFDs and the Scottish Government. We have set the rules for CFDs and we have said that they will not be considered for the round of CFDs in this year, but I am very willing to ensure that we engage with the Scottish Government, as we do on energy issues, to see if there is anything that we can do in relation to future CFD rounds. I will take that away and look at it.

The noble and learned Lord, Lord Wallace, raised an issue about what he saw as the improved clarity set out in the letter that I sent to him. That is the correct position, and we will ensure that the letter is circulated to noble Lords who have participated in the debate and we will make use of it too if it is helpful to developers, as indeed we do. The correct position is set out in it, so I will be happy to do that.

The noble Lord, Lord Grantchester, spoke kindly about our unexpected election victory as he saw it, and he also said quite rightly, for which I thank him, that one has to draw the line somewhere. That is a very realistic position. We can take different views as to where the line should be drawn. He talked about democratic control, but I would make the point that this does not stop wind farms deploying onshore, it ends the subsidy. People need to grasp that. The position is that we do not want to carry on subsidising where there is no continued need for subsidy. That is the basis on which we are moving and one of the prime reasons for this provision.

19:15

[Lord Bruce of Bennachie (LD)]

My Lords, I apologise for not being here at the beginning of the Bill, having only joined the House since then. On the basis of what was said by my noble and learned friend Lord Wallace and the noble Earl, Lord Lindsay, like the noble Baroness, Lady Quin, I represented an area which had an awful lot of applications, but we found that the big developers got in very quickly and were able to process their applications, whereas the small community proposals took a lot longer and found it more difficult, so they were later in the field. They have been caught by this. Does the Minister not recognise that the Government could find themselves in a situation where they are seen to have gone against communities in favour of big business? That just compounds the difficulty and the ideological divide that the Government are pursuing.

[Lord Bourne of Aberystwyth]

The noble Lord is wrong on the issue because, with the grace period and with the investment-freeze conditions, we have allowed for movement on these issues. I take the point that he is making but I do not agree with it.

I am just double-checking, but I hope that I have now done full justice to the comments that have been made.

[Lord Wallace of Tankerness]

My Lords, I do not think that the Minister has addressed two points, one of which is the investment-freeze conditions and green organisations such as Triodos, which do not appear to qualify. Even at this late stage, would he be prepared to look at this again? I also refer to the points made by the noble Earl, Lord Lindsay, and myself with regard to community investments. I do not think that the Minister has specifically addressed that issue as regards the Dalquhandy and West Douglas development.

[Lord Bourne of Aberystwyth]

Taking the latter point first, I think that I did so in response to the comments made by the noble Lord, Lord Bruce. We do not see any reason for distinguishing between community projects and others. That would only give rise to difficulties.

On the investment-freeze conditions, I think that the noble and learned Lord is pursuing the lenders point. There is no intention to alter the list. It is something that I think could be done in the future without primary legislation, but there is no proposal to change that. I apologise for not covering it earlier.

I think that I have covered all the main points, and with that, I ask noble Lords to withdraw their amendments.

Amendments 6A and 6B (as amendments to Commons Amendment 6)

Moved by

[Lord Bourne of Aberystwyth]

6A: Line 9, leave out “31 March 2016” and insert “the onshore wind closure date”

6B: Line 12, after “32LL” insert “—
“the onshore wind closure date” means the date on which the Energy Act 2016 is passed;”

Amendments 6A and 6B, as amendments to Commons Amendment 6, agreed.

Commons Amendment 6, as amended, agreed.

Motion on Commons Amendment 7

Moved by

[Lord Bourne of Aberystwyth]

That this House do agree with the Commons in their Amendment 7.

7: Insert the following new Clause—
“Onshore wind power: circumstances in which certificates may be issued after 31 March 2016
(1) Part 1 of the Electricity Act 1989 (electricity supply) is amended as follows. (2) After section 32LC (inserted by section [Onshore wind power: closure of renewables obligation on 31 March 2016] of this Act) insert—
“32LD Onshore wind generating stations accredited, or additional capacity added, on or before 31 March 2016
The circumstances set out in this section are where the electricity is—
(a) generated by an onshore wind generating station which was accredited on or before 31 March 2016, and
(b) generated using—
(i) the original capacity of the station, or
(ii) additional capacity which in the Authority’s view first formed part of the station on or before 31 March 2016.
32LE Onshore wind generating stations accredited, or additional capacity added, between 1 April 2016 and 31 March 2017: grid or radar delay condition met
The circumstances set out in this section are where the electricity is—
(a) generated using the original capacity of an onshore wind generating station—
(i) which was accredited during the period beginning with 1 April 2016 and ending with 31 March 2017, and
(ii) in respect of which the grid or radar delay condition is met, or
(b) generated using additional capacity of an onshore wind generating station, where—
(i) the station was accredited on or before 31 March 2016,
(ii) in the Authority’s view, the additional capacity first formed part of the station during the period beginning with 1 April 2016 and ending with 31 March 2017, and
(iii) the grid or radar delay condition is met in respect of the additional capacity.
32LF Onshore wind generating stations accredited, or additional capacity added, on or before 31 March 2017: approved development condition met
The circumstances set out in this section are where the electricity is—
(a) generated using the original capacity of an onshore wind generating station—
(i) which was accredited on or before 31 March 2017, and
(ii) in respect of which the approved development condition is met, or
(b) generated using additional capacity of an onshore wind generating station, where—
(i) the station was accredited on or before 31 March 2016,
(ii) in the Authority’s view, the additional capacity first formed part of the station on or before 31 March 2017, and
(iii) the approved development condition is met in respect of the additional capacity.
32LG Onshore wind generating stations accredited, or additional capacity added, between 1 April 2017 and 31 March 2018: grid or radar delay condition met
The circumstances set out in this section are where the electricity is—
(a) generated using the original capacity of an onshore wind generating station—
(i) which was accredited during the period beginning with 1 April 2017 and ending with 31 March 2018,
(ii) in respect of which the approved development condition is met, and
(iii) in respect of which the grid or radar delay condition is met, or
(b) generated using additional capacity of an onshore wind generating station, where—
(i) the station was accredited on or before 31 March 2016,
(ii) in the Authority’s view, the additional capacity first formed part of the station during the period beginning with 1 April 2017 and ending with 31 March 2018,
(iii) the approved development condition is met in respect of the additional capacity, and
(iv) the grid or radar delay condition is met in respect of the additional capacity.
32LH Onshore wind generating stations accredited, or additional capacity added, between 1 April 2017 and 31 December 2017: investment freezing condition met
The circumstances set out in this section are where the electricity is—
(a) generated using the original capacity of an onshore wind generating station—
(i) which was accredited during the period beginning with 1 April 2017 and ending with 31 December 2017, and
(ii) in respect of which both the approved development condition and the investment freezing condition are met, or
(b) generated using additional capacity of an onshore wind generating station, where—
(i) the station was accredited on or before 31 March 2016,
(ii) in the Authority’s view, the additional capacity first formed part of the station during the period beginning with 1 April 2017 and ending with 31 December 2017, and
(iii) both the approved development condition and the investment freezing condition are met in respect of the additional capacity.
32LI Onshore wind generating stations accredited, or additional capacity added, between 1 January 2018 and 31 December 2018: grid or radar delay condition met
The circumstances set out in this section are where the electricity is—
(a) generated using the original capacity of an onshore wind generating station—
(i) which was accredited during the period beginning with 1 January 2018 and ending with 31 December 2018,
(ii) in respect of which both the approved development condition and the investment freezing condition are met, and
(iii) in respect of which the grid or radar delay condition is met, or
(b) generated using additional capacity of an onshore wind generating station, where—
(i) the station was accredited on or before 31 March 2016,
(ii) in the Authority’s view, the additional capacity first formed part of the station during the period beginning with 1 January 2018 and ending with 31 December 2018,
(iii) both the approved development condition and the investment freezing condition are met in respect of the additional capacity, and
(iv) the grid or radar delay condition is met in respect of the additional capacity.
32LJ The approved development condition
(1) This section applies for the purposes of sections 32LF to 32LI.
(2) The approved development condition is met in respect of an onshore wind generating station if the documents specified in subsections (4), (5) and (6) were provided to the Authority with the application for accreditation of the station.
(3) The approved development condition is met in respect of additional capacity if the documents specified in subsections (4), (5) and (6) were provided to the Authority on or before the date on which the Authority made its decision that the additional capacity could form part of an onshore wind generating station.
(4) The documents specified in this subsection are—
(a) evidence that—
(i) planning permission for the station or additional capacity was granted on or before 18 June 2015, and
(ii) any conditions as to the time period within which the development to which the permission relates must be begun have not been breached,
(b) evidence that—
(i) planning permission for the station or additional capacity was refused on or before 18 June 2015, but granted after that date following an appeal or judicial review, and
(ii) any conditions as to the time period within which the development to which the permission relates must be begun have not been breached,
(c) evidence that—
(i) an application for 1990 Act permission or 1997 Act permission was made on or before 18 June 2015 for the station or additional capacity,
(ii) the period allowed under section 78(2) of the 1990 Act or (as the case may be) section 47(2) of the 1997
Act ended on or before 18 June 2015 without any of the things mentioned in section 78(2)(a) to (b) of the 1990 Act or section 47(2)(a) to (c) of the 1997 Act being done in respect of the application,
(iii) the application was not referred to the Secretary of State, Welsh Ministers or Scottish Ministers in accordance with directions given under section 77 of the 1990 Act or section 46 of the 1997 Act,
(iv) 1990 Act permission or 1997 Act permission was granted after 18 June 2015 following an appeal, and
(v) any conditions as to the time period within which the development to which the permission relates must be begun have not been breached, or
(d) a declaration by the operator of the station that, to the best of the operator’s knowledge and belief, planning permission is not required for the station or additional capacity.
(5) The documents specified in this subsection are—
(a) a copy of an offer from a licensed network operator made on or before 18 June 2015 to carry out grid works in relation to the station or additional capacity, and evidence that the offer was accepted on or before that date (whether or not the acceptance was subject to any conditions or other terms), or
(b) a declaration by the operator of the station that, to the best of the operator’s knowledge and belief, no grid works were required to be carried out by a licensed network operator in order to enable the station to be commissioned or the additional capacity to form part of the station.
(6) The documents specified in this subsection are a declaration by the operator of the station that, to the best of the operator’s knowledge and belief, as at 18 June 2015 a relevant developer of the station or additional capacity (or a person connected, within the meaning of section 1122 of the Corporation Tax Act 2010, with a relevant developer of the station or additional capacity)—
(a) was an owner or lessee of the land on which the station or additional capacity is situated,
(b) had entered into an agreement to purchase or lease the land on which the station or additional capacity is situated,
(c) had an option to purchase or to lease the land on which the station or additional capacity is situated, or
(d) was a party to an exclusivity agreement in relation to the land on which the station or additional capacity is situated.
(7) In this section—
“the 1990 Act” means the Town and Country Planning Act 1990;
“1990 Act permission” means planning permission under the 1990 Act (except outline planning permission, within the meaning of section 92 of that Act);
“the 1997 Act” means the Town and Country Planning (Scotland) Act 1997;
“1997 Act permission” means planning permission under the 1997 Act (except planning permission in principle, within the meaning of section 59 of that Act);
“exclusivity agreement”, in relation to land, means an agreement by the owner or a lessee of the land not to permit any person (other than the persons identified in the agreement) to construct an onshore wind generating station on the land;
“planning permission” means—
(a) consent under section 36 of this Act,
(b) 1990 Act permission,
(c) 1997 Act permission, or
(d) development consent under the Planning Act 2008.
32LK The investment freezing condition
(1) This section applies for the purposes of sections 32LH and 32LI.
(2) The investment freezing condition is met in respect of an onshore wind generating station if the documents specified in subsection (4) were provided to the Authority with the application for accreditation of the station.
(3) The investment freezing condition is met in respect of additional capacity if the documents specified in subsection (4) were provided to the Authority on or before the date on which the Authority made its decision that the additional capacity could form part of an onshore wind generating station.
(4) The documents specified in this subsection are—
(a) a declaration by the operator of the station that, to the best of the operator’s knowledge and belief, as at the Royal Assent date—
(i) the relevant developer required funding from a recognised lender before the station could be commissioned or additional capacity could form part of the station,
(ii) a recognised lender was not prepared to provide that funding until enactment of the Energy Act 2016, because of uncertainty over whether the Act would be enacted or its wording if enacted, and
(iii) the station would have been commissioned, or the additional capacity would have formed part of the station, on or before 31 March 2017 if the funding had been provided before the Royal Assent date, and
(b) a letter or other document, dated on or before the date which is 28 days after the Royal Assent date, from a recognised lender confirming (whether or not the confirmation is subject to any conditions or other terms) that the lender was not prepared to provide funding in respect of the station or additional capacity until enactment of the Energy Act 2016, because of uncertainty over whether the Act would be enacted or its wording if enacted.
(5) In this section—
“recognised lender” means a provider of debt finance which has been issued with an investment grade credit rating by a registered credit rating agency;
“the Royal Assent date” means the date on which the Energy Act 2016 is passed.
(6) For the purposes of the definition of “recognised lender” in subsection (5)—
“investment grade credit rating” means a credit rating commonly understood by registered credit rating agencies to be investment grade;
“registered credit rating agency” means a credit rating agency registered in accordance with Regulation (EC) No 1060/2009 of the European Parliament and the Council of 16 September 2009 on credit rating agencies.
32LL The grid or radar delay condition
(1) This section applies for the purposes of sections 32LE, 32LG and 32LI.
(2) The grid or radar delay condition is met in respect of an onshore wind generating station if, on or before the date on which the Authority made its decision to accredit the station, the documents specified in subsection (4), (5) or (6) were—
(a) submitted by the operator of the station, and
(b) received by the Authority.
(3) The grid or radar delay condition is met in respect of additional capacity if, on or before the date on which the Authority made its decision that the additional capacity could form part of an onshore wind generating station, the documents specified in subsection (4), (5) or (6) were—
(a) submitted by the operator of the station, and
(b) received by the Authority.
(4) The documents specified in this subsection are—
(a) evidence of an agreement with a network operator (“the relevant network operator”) to carry out grid works in relation to the station or additional capacity (“the relevant grid works”);
(b) a copy of a document written by, or on behalf of, the relevant network operator which estimated or set a date for completion of the relevant grid works (“the planned grid works completion date”) which was no later than the primary date;
(c) a letter from the relevant network operator confirming (whether or not such confirmation is subject to any conditions or other terms) that—
(i) the relevant grid works were completed after the planned grid works completion date, and
(ii) in the relevant network operator’s opinion, the failure to complete the relevant grid works on or before the planned grid works completion date was not due to any breach by a generating station developer of any agreement with the relevant network operator; and
(d) a declaration by the operator of the station that, to the best of the operator’s knowledge and belief, the station would have been commissioned, or the additional capacity would have formed part of the station, on or before the primary date if the relevant grid works had been completed on or before the planned grid works completion date.
(5) The documents specified in this subsection are—
(a) evidence of an agreement between a generating station developer and a person who is not a generating station developer (“the radar works agreement”) for the carrying out of radar works (“the relevant radar works”);
(b) a copy of a document written by, or on behalf of, a party to the radar works agreement (other than a generating station developer) which estimated or set a date for completion of the relevant radar works (“the planned radar works completion date”) which was no later than the primary date;
(c) a letter from a party to the radar works agreement (other than a generating station developer) confirming, whether or not such confirmation is subject to any conditions or other terms, that—
(i) the relevant radar works were completed after the planned radar works completion date, and
(ii) in that party’s opinion, the failure to complete the relevant radar works on or before the planned radar works completion date was not due to any breach of the radar works agreement by a generating station developer; and
(d) a declaration by the operator of the station that, to the best of the operator’s knowledge and belief, the station would have been commissioned, or the additional capacity would have formed part of the station, on or before the primary date if the relevant radar works had been completed on or before the planned radar works completion date.
(6) The documents specified in this subsection are—
(a) the documents specified in subsection (4)(a), (b) and (c);
(b) the documents specified in subsection (5)(a), (b) and (c); and (c) a declaration by the operator of the station that, to the best of the operator’s knowledge and belief, the station would have been commissioned, or the additional capacity would have formed part of the station, on or before the primary date if—
(i) the relevant grid works had been completed on or before the planned grid works completion date, and
(ii) the relevant radar works had been completed on or before the planned radar works completion date.
(7) In this section “the primary date” means—
(a) in a case within section 32LE(a)(i) or (b)(i) and (ii), 31 March 2016;
(b) in a case within section 32LG(a)(i) and (ii) or (b)(i) to (iii), 31 March 2017;
(c) in a case within section 32LI(a)(i) and (ii) or (b)(i) to (iii), 31 December 2017.”
(3) In section 32M (interpretation of sections 32 to 32M)—
(a) in subsection (1), for “32LB” substitute “32LL”;
(b) at the appropriate places insert the following definitions—
““accredited”, in relation to an onshore wind generating station, means accredited by the Authority as a generating station which is capable of generating electricity from renewable sources; and “accredit” and “accreditation” are to be construed accordingly;”;
““additional capacity”, in relation to an onshore wind generating station, means any generating capacity which does not form part of the original capacity of the station;”;
““commissioned”, in relation to an onshore wind generating station, means having completed such procedures and tests in relation to the station as constitute, at the time they are undertaken, the usual industry standards and practices for commissioning that type of generating station in order to demonstrate that it is capable of commercial operation;”;
““generating station developer”, in relation to an onshore wind generating station or additional capacity, means—
(a) the operator of the station, or
(b) a person who arranged for the construction of the station or additional capacity;”;
““grid works”, in relation to an onshore wind generating station, means—
(a) the construction of a connection between the station and a transmission or distribution system for the purpose of enabling electricity to be conveyed from the station to the system, or
(b) the carrying out of modifications to a connection between the station and a transmission or distribution system for the purpose of enabling an increase in the amount of electricity that can be conveyed over that connection from the station to the system;”;
““licensed network operator” means a distribution licence holder or a transmission licence holder;”; ““network operator” means a distribution exemption holder, a distribution licence holder or a transmission licence holder;”;
““onshore wind generating station” has the meaning given by section 32LC(3);”;
““original capacity”, in relation to an onshore wind generating station, means the generating capacity of the station as accredited;”;
““radar works” means—
(a) the construction of a radar station, (b) the installation of radar equipment,
(c) the carrying out of modifications to a radar station or radar equipment, or
(d) the testing of a radar station or radar equipment;”;
““relevant developer”, in relation to an onshore wind generating station or additional capacity, means a person who—
(a) applied for planning permission for the station or additional capacity,
(b) arranged for grid works to be carried out in relation to the station or additional capacity,
(c) arranged for the construction of any part of the station or additional capacity,
(d) constructed any part of the station or additional capacity, or
(e) operates, or proposes to operate, the station;”.”

Amendments 7A to 7S (as amendments to Commons Amendment 7)

Moved by

[Lord Bourne of Aberystwyth]

7A: Line 8, leave out “31 March 2016” and insert “the onshore wind closure date”

7B: Line 11, leave out “31 March 2016” and insert “the onshore wind closure date”

7C: Line 15, leave out “31 March 2016” and insert “the onshore wind closure date”

7D: Line 18, leave out “between 1 April 2016 and 31 March 2017” and insert “in the year after the onshore wind closure date”

7E: Line 24, leave out “with 1 April 2016 and ending with 31 March 2017” and insert “immediately after the onshore wind closure date and ending with the first anniversary of the onshore wind closure date”

7F: Line 30, leave out “31 March 2016” and insert “the onshore wind closure date”

7G: Line 34, leave out “with 1 April 2016 and ending with 31 March 2017” and insert “immediately after the onshore wind closure date and ending with the first anniversary of the onshore wind closure date”

7H: Line 50, leave out “31 March 2016” and insert “the onshore wind closure date”

7J: Line 71, leave out “31 March 2016” and insert “the onshore wind closure date”

7K: Line 82, leave out “December 2017” and insert “January 2018”

7L: Line 88, leave out “December 2017” and insert “January 2018”

7M: Line 95, leave out “31 March 2016” and insert “the onshore wind closure date”

7N: Line 100, leave out “December 2017” and insert “January 2018”

17P: Line 105, leave out “January 2018 and 31 December 2018” and insert “February
2018 and 31 January 2019”

7Q: Line 111, leave out “January 2018 and ending with 31 December 2018” and insert
“February 2018 and ending with 31 January 2019”

7R: Line 120, leave out “31 March 2016” and insert “the onshore wind closure date”

7S: Line 120, leave out “31 March 2016” and insert “the onshore wind closure date”

Amendments 7A to 7S, as amendments to Commons Amendment 7, agreed.

Amendment 7T (as an amendment to Commons Amendment 7)

Tabled by

[Lord Hain]

7T: Line 145, after “2015,” insert “regardless of whether it was varied after that date by any planning permission, consent or development consent issued under section 73 of the Town and Country Planning Act 1990 (determination of applications to develop land without compliance with conditions previously attached), section 42 of the Town and Country Planning (Scotland) Act 1997 (determination of applications to develop land without compliance with conditions previously attached), section 36C of this Act (variation of consents under section 36) or under the Planning Act 2008,”

[Lord Hain]

My Lords, on the basis of the Minister’s kind offer to write to the developer, I will not move the amendment.

Amendment 7T, as an amendment to Commons Amendment 7, not moved.

Amendments 7U to 7W, as amendments to Commons Amendment 7, not moved.

Amendment 7X (as an amendment to Commons Amendment 7)

Moved by

[Lord Wallace of Tankerness]

7X: Leave out lines 176 to 185 and insert—
“(d) evidence that—
(i) an application for 1990 Act permission or 1997 Act permission was made before 18 June 2015 for the station or for additional capacity,
(ii) the relevant planning authority resolved to grant 1990 Act permission or 1997 Act permission on or before 18 June 2015, and
(iii) planning permission was granted after 18 June 2015, and
(iv) any conditions as to the time period within which the development to which the permission relates must be begun have not been breached, or
(e) evidence that—
(i) an application for 1990 Act permission or 1997 Act permission was made on or before 18 June 2015 for the station or additional capacity,
(ii) the period allowed under section 78(2) of the 1990 Act (or as the case may be) section 47(2) of the 1997 Act ended on or before 18 June 2015 without any of the things mentioned in section 78(2)(a) to (b) of the 1990 Act or section 47(2)(a) to (c) of the 1997 Act being done in respect of the application, except than an extended period has been agreed in writing between the applicant and planning authority for the purposes of section 78(2) of the 1990 Act or section 47(2) of the 1997 Act,
(iii) the application was not referred to the Secretary of State, Welsh Ministers or Scottish Ministers in accordance with directions given under section 77 of the 1990 Act or section 46 of the 1997 Act,
(iv) planning permission was granted after 18 June 2015, and
(v) any conditions as to the time period within which the development to which the permission relates must be begun have not been breached, or
(f) evidence that—
(i) an application for consent for the station or additional capacity was made under section 36 and the consultation period prescribed by regulations made under paragraph 2(3) of Schedule 8 had expired prior to 18 June 2015,
(ii) during the consultation period, the relevant planning authority had notified the Secretary of State that they had objected to the application and their objection had not been withdrawn,
(iii) the Secretary of State caused a public inquiry to be held,
(iv) following consideration of the objection and the report of the person who held the inquiry, the Secretary of State granted consent and deemed planning permission after 18 June 2015, and
(v) any conditions as to the time period within which the development relates must be begun have not been breached, or
(g) evidence that—
(i) an application for 1990 Act permission or 1997 Act permission was made on or before 18 June 2014 for the station or additional capacity,
(ii) planning permission was granted after 18 June 2015, and
(iii) any conditions as to the time period within which the development to which the permission relates must be begun have not been breached, or
(h) evidence that on or before 18 June 2015 the relevant planning authority made a decision to grant planning permission for the station or additional capacity, or made a decision to grant or to intend to grant planning permission for the station or additional capacity, subject to an agreement under section 106 of the 1990 Act (planning obligations) or section 75 of the 1997 Act (agreements regulating development or use of land); and such an agreement is concluded before the onshore wind closure date, or
(i) a declaration by the operator of the station that, to the best of the operator’s knowledge and belief, planning permission is not required for the station or additional capacity.
(5) The documents specified in this subsection are—
(a) a copy of an offer from a licensed network operator made on or before 18 June 2015 to carry out grid works in relation to the station or additional capacity, and evidence that the offer was accepted on or before that date (whether or not the acceptance was subject to any conditions or other terms);
(b) a copy of—
(i) an application for an offer to carry out grid works in relation to the station or additional capacity submitted to a licensed network operator on or before 18 June 2015; and
(ii) an offer from a licenced network operator made after 18 June 2015 to carry out grid works in relation to the station or additional capacity and evidence that the offer was accepted after 18 June 2015 (whether or not the acceptance was subject to any conditions or other terms); or
(c) evidence that planning permission for the station or additional capacity was refused on or before 18 June 2015 and an appeal was determined as at 18 June 2015;
(d) a copy of an application for an offer to carry out grid works in relation to the station or additional capacity submitted to a licensed network operator on or after 18 June 2015; and
(e) an offer from a licensed network operator made after 18 June 2015 to carry out grid works in relation to the station or additional capacity and evidence that the offer was accepted before 31 December 2015 (whether or not the acceptance was subject to any conditions or other terms),”

[Lord Wallace of Tankerness]

My Lords, in view of the fact that the Minister has given no concession whatever, I beg to move and then test the opinion of the House.

[The Deputy Speaker]

I should inform the House that if Amendment 7X is agreed to, I will be unable to call Amendments 7Y, 7AA and 7AB by reason of pre-emption.

19:19

Division 3

Ayes: 88

---

Liberal Democrat: 76
Crossbench: 8
Green Party: 1
Independent: 1
Plaid Cymru: 1

Noes: 192

---

Conservative: 174
Crossbench: 14
Ulster Unionist Party: 2
Democratic Unionist Party: 1
Independent: 1

Amendment 7Y not moved.

Amendment 7AA (as an amendment to Commons Amendment 7)

Moved by

[Lord Wallace of Tankerness]

7AA: Line 179, at end insert “, or
“(e) evidence that—
(i) the requirements of section 61W of the 1990 Act or section 35B(2) to (6) of the 1997 Act were met on or before 18 June 2015 for the station or the additional capacity and planning permission for the station or the additional capacity was subsequently granted before this section came into force,
(ii) any conditions as to the time period within which the development to which the permission relates must be begun have not been breached, and
(iii) the station or additional capacity was being developed by a community organisation or an equity shareholding in the station or the additional capacity had been committed to a community organisation(s) on or before 18 June 2015.”

19:30

Division 4

Ayes: 78

---

Liberal Democrat: 71
Crossbench: 3
Green Party: 1
Independent: 1
Plaid Cymru: 1

Noes: 181

---

Conservative: 165
Crossbench: 11
Ulster Unionist Party: 2
Democratic Unionist Party: 1
Independent: 1

19:41

Amendment 7AB (as an amendment to Commons Amendment 7)

Moved by

[Lord Grantchester]

7AB: Line 179, at end insert “, or
(e) evidence that—
(i) an application for 1990 Act permission or 1997 Act permission was made on or before 18 June 2015 for the station or for additional capacity,
(ii) a grant of planning permission was resolved by the relevant planning authority on or before 18 June 2015,
(iii) planning permission was granted after 18 June 2015, and
(iv) any conditions as to the time period within which the development to which the permission relates must be begun have not been breached.”

19:42

Division 5

Ayes: 182

---

Labour: 99
Liberal Democrat: 68
Crossbench: 8
Independent: 4
Green Party: 1
Plaid Cymru: 1

Noes: 178

---

Conservative: 164
Crossbench: 10
Ulster Unionist Party: 2
Democratic Unionist Party: 1

19:52

Amendments 7AC to 7AH (as amendments to Commons Amendment 7) not moved.

Amendments 7AJ to 7AL (as amendments to Commons Amendment 7)

Moved by

[Lord Bourne of Aberystwyth]

7AJ: Line 360, leave out “31 March 2016” and insert “the onshore wind closure date”

7AK: Line 365, leave out “December 2017” and insert “January 2018”

7AL: Line 416, at end insert—
“““the onshore wind closure date” has the meaning given by section 32LC(3);”;”

Amendments 7AJ to 7AL (as amendments to Commons Amendment 7) agreed.

Amendment 7AM (as an amendment to Commons Amendment 7) not moved.

Commons Amendment 7, as amended, agreed.

Motion on Commons Amendment 8

Moved by

[Lord Bourne of Aberystwyth]

That this House do agree with the Commons in their Amendment 8.

8: Insert the following new Clause—
“Onshore wind power: use of Northern Ireland certificates
(1) The Electricity Act 1989 is amended as follows. (2) Before section 32M insert—
“32LM Use of Northern Ireland certificates: onshore wind power
(1) The Secretary of State may make regulations providing that an electricity supplier may not discharge its renewables obligation (or its obligation in relation to a particular period) by the production to the Authority of a relevant Northern Ireland certificate, except in the circumstances, and to the extent, specified in the regulations.
(2) A “relevant Northern Ireland certificate” is a Northern Ireland certificate issued in respect of electricity generated after 31 March 2016 (or any later date specified in the regulations)—
(a) using the original capacity of a Northern Ireland onshore wind generating station accredited after 31 March 2016 (or any later date so specified), or
(b) using additional capacity of a Northern Ireland onshore wind generating station, where in the Authority’s view the additional capacity first formed part of the station after 31 March 2016 (or any later date so specified).
(3) In this section—
“NIRO Order” means any order made under Articles 52 to 55F of the Energy (Northern Ireland) Order 2003;
“Northern Ireland certificate” means a renewables obligation certificate issued by the Northern Ireland authority under the Energy (Northern Ireland) Order 2003 and pursuant to a NIRO Order;
“Northern Ireland onshore wind generating station” means a generating station that—
(a) generates electricity from wind, and
(b) is situated in Northern Ireland, but not in waters in or adjacent to Northern Ireland up to the seaward limits of the territorial sea.
(4) Power to make provision in a renewables obligation order by virtue of section 32F (and any provision contained in such an order) is subject to provision contained in regulations under this section.
(5) This section is not otherwise to be taken as affecting power to make provision in a renewables obligation order.
(6) Regulations under this section may amend a renewables obligation order.
(7) Section 32K applies in relation to regulations under this section as it applies in relation to a renewables obligation order.”
(3) In section 32M (interpretation)—
(a) in subsection (1), for “32LB” substitute “32LM”;
(b) in subsection (7), for “32L” substitute “32LM”.”

Amendments 8A to 8C (as amendments to Commons Amendment 8)

Moved by

[Lord Bourne of Aberystwyth]

8A: Line 12, leave out “31 March 2016” and insert “the onshore wind closure date”

8B: Line 15, leave out “31 March 2016” and insert “the onshore wind closure date”

8C: Line 19, leave out “31 March 2016” and insert “the onshore wind closure date”

Amendments 8A to 8C (as amendments to Commons Amendment 8) agreed.

Commons Amendment 8, as amended, agreed.

Motion on Commons Amendment 9

Moved by

[Lord Bourne of Aberystwyth]

That this House do agree with the Commons in their Amendment 9.

9: Clause 80, page 47, line 3, leave out Clause 80

[Lord Bourne of Aberystwyth]

My Lords, Commons Amendment 9 removes a clause that was inserted on Report in this House. This aspect of carbon accounting has been debated throughout the passage of the Bill, with amendments tabled in this House and the other place. I am sure many noble Lords will recall the debates; I will briefly go through the carbon accounting technicalities.

The Climate Change Act sets a target for the United Kingdom to reduce emissions by 80% by 2050, compared to 1990 levels. It also requires the Government to set intermediate targets to reduce emissions along the way—these are the carbon budgets. Carbon budgets are a cap on the emissions allowed over successive five-year periods. For example, the first carbon budget covered the period 2008 to 2012, and we met this budget with 36 million tonnes of carbon dioxide equivalent to spare. We set these carbon budgets 12 years in advance, so by 30 June this year we will be setting the fifth carbon budget, covering the period 2028 to 2032.

As well as setting each carbon budget, we also make regulations which set carbon accounting rules for each budget period. These rules, in addition to what is set out in the Climate Change Act, tell us how to calculate those budgets and, therefore, whether we have met them. Under the current rules, we count the United Kingdom’s actual emissions for some sectors, and for other sectors we reflect how the EU emissions trading system works. For transport, buildings, agriculture, light manufacturing and some other areas we count the UK’s actual emissions. For the power sector and heavy industry, we effectively reflect how the EU ETS works, instead of counting the UK’s actual emissions.

The EU ETS is a scheme in which emissions from power and heavy industry are capped and reduced at an EU level. Emissions are reduced by issuing a declining number of emissions allowances to member states which are then traded by power stations and industrial sites across the EU. Our current carbon accounting rules tell us to count the UK share of the EU ETS emissions cap for the purpose of carbon budgets. In this way, carbon budgets reflect how the EU ETS works. Noble Lords will recall that the previous amendments tabled in both Houses would have stopped us from reflecting how the EU ETS works in our accounting from carbon budget 5 onwards. We have been clear on the reasons why we cannot accept this approach at this time.

In short, this is a very complex issue. There are arguments for and against different accounting methods, and weighing these up needs careful consideration of a number of factors, such as potential impacts on consumers, businesses and industry, and cutting emissions at least cost. At the moment, we are focused on setting the fifth carbon budget, and doing that by 30 June this year, as required by the Climate Change Act. We are doing this on the basis that it will be permissible to adopt the current accounting framework. Including these provisions in the Bill would have risked delaying setting the fifth carbon budget. It would have therefore risked missing the statutory deadline and not complying with the Climate Change Act.

Commons Amendment 12 is a technical amendment that reflects the fact that the clause on the United Kingdom carbon account was removed in Committee in the other place. It amends the Long Title of the Bill accordingly. I beg to move.

Lord Grantchester’s Amendment to the Motion on Commons Amendment 9

Moved by

[Lord Grantchester]

As an amendment to the Motion that this House do agree with the Commons in their Amendment 9, at end insert “, and do propose Amendments 9A to 9D in lieu of the words so left out of the Bill”.

9A: Clause 80, insert the following new Clause—
Review of calculation of net UK carbon account
(1) The Secretary of State must carry out a review of whether it is appropriate for the calculation of the net UK carbon account for the 2028—2032 budgetary period, and subsequent budgetary periods, to take into account the crediting and debiting of carbon units as a result of the operation of—
(a) the European Union Emissions Trading Scheme, or
(b) any amendment of, or replacement for, that scheme that the Secretary of State considers may have effect for the budgetary periods to which the review relates.
(2) When carrying out the review the Secretary of State must take into account—
(a) any representations made by the other national authorities,
(b) scientific knowledge about climate change,
(c) technology relevant to climate change,
(d) economic circumstances,
(e) fiscal circumstances,
(f) social circumstances,
(g) energy policy, and
(h) circumstances at European and international level.
(3) Nothing in subsection (2) is to be read as restricting the matters that the Secretary of State may take into account.
(4) The review must be published, in such manner as the Secretary of State considers appropriate, no later than 31 December 2016.
(5) In this section “European Union Emissions Trading Scheme” means the scheme established under Directive 2003/87/EC of the European Parliament and of the Council establishing a scheme for greenhouse gas emission allowance trading within the Community and amending Council Directive 96/61/EC, as implemented by the Greenhouse Gas Emissions Trading Scheme Regulations 2012 (S.I. 2012/3038).
(6) Expressions used in this section and in Part 1 of the Climate Change Act 2008 have the same meanings as in that Part.”

9B: Clause 83, page 48, line 3, leave out “Part 4 comes” and insert “Parts 4 and 6 come”

9C: Clause 84, page 48, line 12, at end insert—
“(2A) Part 6 extends to England and Wales only.”

9D: Page 48, line 13, leave out “subsection (2)” and insert “subsections (2) and (2A)”

[Lord Grantchester]

My Lords, I will speak to Amendments 9A to 9D in my name, regarding the UK carbon account. A clause on carbon accounting was added to the Bill under consideration in your Lordships’ House before passing to the other place. This was reversed and the clause deleted by votes on Report in the other place. I had thought to retable the amendment on the Bill’s return to your Lordship’s House. However, in view of the fact that this would have been opposed by the Government, consideration has been given to how best to present this long-term issue so that a serious assessment would be made of it.

There is no doubt that climate change is the single most important long-term threat to be faced across the world. Its importance, and the need to get positive responses from the world’s governments, was highlighted at the Paris conference. Yet there is a weakness in the way carbon budgets are assessed and, therefore, how measures to combat climate change will be implemented. If the UK is to continue to be at the forefront of global efforts to reduce greenhouse gas emissions, the UK needs carbon budgets that are clear and certain and which drive emissions reductions in all sectors of the economy. At present, they do not meet this standard, as they can be misleading about what emissions are covered. They impose targets in the traded sector of the EU emissions trading scheme, which mean very little, and in the non-traded sector, which are subject to arbitrary change.

In June this year, the Government must set the UK’s fifth carbon budget for emissions for the years 2028 to 2032. These proposed new clauses ask the Government to commit to a review to reassess the accounting rules and to critically examine the issue, especially as the Committee on Climate Change has commented that it will provide new advice on the appropriate level of the fifth carbon budget should the rules be changed to take account of the improvements which Labour has proposed.

Currently, the carbon accounting regulations allow the Government to ignore emissions from the electricity sector and heavy industry, which are covered by the EU ETS, while determining whether the carbon budgets have been met. This makes the Government responsible for only half the carbon budgets: those residual parts not under the scope of the EU ETS, such as transport and heat. The Committee on Climate Change has expressed its dissatisfaction with the current accounting rules. The UK’s carbon budgets fail to provide a framework that offers investors confidence in the UK power sector that the necessary measures to decarbonise will be put in place.

The amendment proposes that the Government now seriously undertake their own assessment and report back by the end of this year. It is drafted to bring forward views that need to be taken into account from as wide an audience as possible.

Finally, Amendment 12A is consequential and merely amends the Long Title to include this in the provisions of the Bill. I beg to move.

20:00

[Baroness Worthington]

My Lords, Amendment 9E is in my name. Our previous debate on this took place in October, before the historic climate agreement in Paris, which, for the first time, saw virtually all countries agreeing to take action together to avert the growing risk of global climate change. The significant breakthrough that made Paris a success was that countries are now individually responsible for coming forward with nationally determined targets and measures, while being guided by an overarching collective goal.

That process places the responsibility on countries to do what they can, with a view to ratcheting up ambition over time. The UK already has its own nationally determined commitments and we have been at the forefront of international leadership on climate change domestically and internationally for well over a decade. Again, I pay tribute to Secretary of State Amber Rudd, who deserves great credit for the role she and her team played in making Paris the success that it was.

Now, as we enter the final stages of this Energy Bill, which we have been considering since last July, the question we face is: how will we as the United Kingdom want to continue in that climate leadership role by demonstrating our commitment to domestic action, leading by example and forging a path that others can follow? We can and must do this, I believe, by reviewing and reforming an important aspect of our ground-breaking Climate Change Act; that is, how we measure progress.

As things stand, how we do this is complicated and unclear, made ever more complex by a decision introduced in secondary legislation and taken after the Bill was agreed that we should use European emissions allowances as the basis for accounting for our emissions in the power and industrial sectors. This is how things work currently but it cannot continue in this way for much longer. We must start counting our actual domestic emissions, guided by a common international goal set at the European and global level.

Our original amendment, agreed to in this House, sought to make this change in primary legislation, but since I have no desire to upset the timetable for setting the fifth carbon budget, which, as the Minister pointed out, we expect to be set before 30 June, and the process is now well under way, I have not retabled the amendment that was agreed in October. Instead, we have proposed what we believe is a constructive way forward and have listened carefully to the comments made by the Minister in the other place, which were constructive and talked about the timing being the main issue of opposition from the Government.

But there still is a fundamental question at stake here: do we wish to meet our carbon budgets in a way that we determine—for example, through policies and measures that we deem appropriate for our circumstances—or are we happy to have half our budgets set for us on the basis of ever-more complex rules agreed in Brussels? At the moment, as our decision to implement a carbon price support policy shows, we are taking our own path. We add an extra £18 to every tonne emitted in the UK and we are pursuing our own policies to decarbonise. Ahead of Paris, the Secretary of State made a historic commitment to phase out coal for power generation in the UK by 2025. She was rightly praised for this commitment because it sends an important signal to investors at home and to other countries struggling to reduce emissions from coal, including Germany and Holland.

Given that this is our chosen option—that we are pursuing leadership and taking our own path—it seems illogical that our carbon budgets should not reflect our own circumstances. Working on the basis of our own accounting would enable us to make sensible decisions about which sectors to move forward on more quickly and which to give more time to; for example, we could provide more of a budget to sectors that are hard to decarbonise, such as heavy goods vehicle transportation or farming, while moving faster on the power sector, where we are currently overdelivering, as the Minister said. There are 36 million tonnes of overdelivery coming from the power sector. We should be able to use that and redistribute it to other sectors, but as things stand that is not possible.

There are very good reasons why our original amendment made sense, but as I listened to the considered words of the Minister in the other place, I concluded she was right not to accept that amendment at this time, as we are only weeks away from publishing the fifth carbon budget. We hope and assume that this number will follow the advice of the CCC and we expect that to help restore some confidence in the industry. But once that is in place, we should then determine how we will meet that ambition and part of that determination should be: what counts towards compliance with that budget? The amendment in my name, in lieu of our original amendment, sets out a process by which the Government can decide how we measure our progress and how we plan to meet our targets, including a deadline of the end of 2017 by which the matter should be resolved in secondary legislation. With the budget and the rules in place, we will then be in a position to develop a long-term plan to comply with those targets and lead by example.

Unfortunately, short-term thinking is endemic in our political system. More attention is paid to fleeting headlines and passing trends on Twitter than to the important details of often complex policy areas, such as energy, which are so necessary to drive investor confidence in growing our economy. Climate change is a long-term crisis that is slowly unfolding on our watch. Record losses in sea ice, massive coral bleaching in the Great Barrier Reef, unexplained spikes in methane emissions—these are the warnings that are going off around us. We owe it to ourselves and to all future generations to do all within our ability to act and to cause others to act to mitigate this crisis.

What we in this Chamber can do, what opposition parties can do and what the Government can do is try to pass good laws that provide sensible, long-term frameworks to drive down emissions in least-cost ways. The Climate Change Act was agreed on that basis and it works, but it is now in need of review. I urge the Minister to consider this amendment carefully and if he feels it is within his power to accept it, I hope he will do so, so that we can embark on a process of proper reflection and review over a reasonable timescale, and then we can make the changes that are needed to repatriate the way we meet our most necessary climate obligations.

[Lord Howell of Guildford]

My Lords, I have only one question about this amendment, and it is aimed at both sides of your Lordships’ House. As my noble friend rightly said, this is an extremely complex matter. I sometimes feel that the noble Baroness, Lady Worthington, is the only living person who fully understands the complexities of it all. It seems to me that if one looks behind the thoughts and motivations, the bottom line is whether additional pressures are put on consumers, on the nation, on industry and on activities of every kind to complete the carbon budgets, what weight we give to absolute, precise completion of the established carbon budgets—or indeed the next one we decide—and what contribution that will make worldwide to combating global warming.

My question is simply to ask why the noble Lord, Lord Grantchester, has tabled this amendment, when in the Climate Change Act, with which the noble Baroness, Lady Worthington, had so much to do, there is a specific provision—Section 10(2)(h)—which warns and advises the Government and Ministers to have account of,

“circumstances at European and international level”.

The intention behind that was quite clear: to establish that if we got very badly out of line with neighbouring countries on our carbon budgets and on the provisions required to keep to them, the matter would be looked at again and, if necessary, changes would be made. My only question is: why are we not doing that now? Electricity costs between German and British steel have got out of alignment. Everyone knows that. We all know that theirs are 40% less and that we are paying £80 per megawatt-hour for steel-making in Britain, of which some £34 may be in additional green charges and levies. I accept that some of those are absolutely necessary, but some obviously take us out of line with our European neighbours, with the devastating results which we have all seen in the last few weeks. These things can be brushed aside, but everyone knows that this is one of the very powerful reasons why we are in some difficulties over the steel industry. I do not think that that can be denied.

[Baroness Worthington]

On that point about the steel industry, one point I was trying to convey is that if we take control of our own carbon budgets then we would decide how to allocate emissions to the steel sector, for example, rather than it being dictated by the EU ETS credits. We could then make our budgets and be more flexible to allow for those sectors that need to retain emissions for longer and push down further on the power sector, which is overdelivering by a substantial margin. We could use that to move that allocation around and protect those industries that we choose to protect for slightly longer.

[Lord Howell of Guildford]

The question is: why are we not using the flexibility in the Climate Change Act to amend it, to ease some of the obvious and immediate pressures that are making the problems of the steel industry—but not only the steel industry—so very difficult because we are too far out of line? Anxious as we are to create a good example, which I fully accept, we are too far out of line with our direct competitors. People are being hurt and jobs are being lost. Why are we not amending our own Climate Change Act now, as we are allowed to do, to meet the new conditions? Is this to be part of the strategy, which we clearly need and which we talked about earlier today, to recover our own commercial and viable steel industries? My simple question to the noble Lord, Lord Grantchester—it is a bit to my noble friend Lord Bourne and the Government, too—is: why are we not following the precepts and guidance of the Climate Change Act itself and meeting the obvious needs of industry at this moment in some towns and areas, where many people are being thrown out of work?

[Lord Teverson (LD)]

My Lords, I rise to speak to the amendment in the name of the noble Baroness, Lady Worthington. Perhaps I can reassure the noble Lord, Lord Howell, as she has, that this amendment does not specifically help the steel industry or, necessarily, the size of the budget from the Climate Change Act. I guess that an amendment back on Report would have been needed to do that. This amendment would make sure that we repatriate entirely the powers to create our own carbon budget. So in fact it is a step towards what the noble Lord, Lord Howell, would want. Ironically, when we debated the Climate Change Bill I raised this matter specifically a number of times, but unfortunately the Labour Government of the time did not want to hear about it. I do not think that they necessarily understood it themselves. However, we now need to make a change. This should not be a party- political issue at all. It is about making a budget something that we could set ourselves and measure against our national performance. That is what we are trying to do.

In a way, I regret that we are not debating the original amendment, perhaps understandably amended to exclude the fifth carbon budget, for the reasons that have been explained. When we are tackling climate change and trying to get everybody to help, it is really important to make measuring our carbon emissions transparent, straightforward and easy, so that they mean what most people would understand them to mean: that the carbon emissions we create within the boundaries of the United Kingdom from products, services and industry are what our carbon budget measures. At the moment, that is not the case: it is only so for about half of it. The rest of it just reflects the European Emissions Trading Scheme settlement.

I fully support this amendment and hope that the Government will accept it as a way forward. There is no party angle to it whatever. All it would do is ensure that our UK emissions count against our UK carbon budget under the Climate Change Act. It would make government policy on climate change simple, straight- forward and manageable.

20:15

[Lord Bourne of Aberystwyth]

My Lords, I thank noble Lords who have participated in the debate on the carbon accounting process and in particular the noble Baroness, Lady Worthington, who I know feels strongly about this issue. She will know that we have spoken about it at some length and probably have a measure of agreement on many of the principles. I will perhaps not go into the details of why we are not able to move forward in some respects, although we feel that her amendment as drafted, requiring regulations on carbon accounting by the end of 2017, is impractical because of the understandable obligations to consult with the devolved Administrations and so on. There are issues with the detail. I will not go into other aspects of it, except to say that we certainly recognise the need to address some of these concerns. There are other issues with carbon accounting that distort, as things stand, such as international aviation and international marine.

Let me address some of the points made by my noble friend Lord Howell. I do not want to get sidetracked on to steel because that issue was addressed yesterday in a Statement. Electricity costs are certainly an issue and a factor, but of course it goes far beyond that, as I am sure that my noble friend would acknowledge. Tata in Port Talbot has a blast furnace, so the electricity costs are less significant there than they would be if it were an arc furnace, which is one of the issues to be looked at. The Government are looking at that in the round to see what we can do there, but again it is not simple. It is not just about altering the carbon accounting rules, as there are issues obviously about state aid, the World Trade Organization and so on. It is a complex issue. I hope that I have been able to cover why we are unable to accept the amendments to the Motion at this time.

[Baroness Worthington]

Before the Minister sits down, could he be a bit clearer about this? We have obviously taken on board the very sensible comments of the Minister of State in the other place, having looked at the debate in detail. We do not wish to pre-empt the outcome of a review but we do think that, taken in the round, this Energy Bill does not seem to be in keeping with its time and place in history. It is many months after Paris, where we committed to trying to get this big issue of the global climate back on track. Can the Minister not just look again at this and precisely give us the reason why?

[Lord Bourne of Aberystwyth]

I think the noble Baroness is aware of the reasons why. I do not want to be provoked into going into some of the discussions we have had, but it is not as if she is unaware of some of the reasons why we cannot progress. I do not want to go into those in any detail except to say—

[Lord Teverson]

My Lords—

[Lord Bourne of Aberystwyth]

Let me just finish this point. We are not unsympathetic to the principle of looking at this—I think I have made that clear—but we do not feel it is timely to do it at the moment in the way suggested. I do not really want to go any further than that.

[Lord Teverson]

My Lords, I thank the Minister for giving way and I do not wish to take up the time of the House, but I interrupt because it is not reasonable—

[Viscount Younger of Leckie]

I am sorry to interrupt the noble Lord but he may need to be reminded that, at this stage of the Bill, only one speech is permitted.

[Lord Teverson]

I am sorry, but I do not think it is right procedurally for the Minister to say that he has had a private conversation with another Member of the House or that that is a sufficient answer when the rest of the House is not privy to that conversation. That is not reasonable.

[Lord Bourne of Aberystwyth]

It is perfectly in order for me to have discussions with other Members. I have indicated that there is some sympathy for looking at the accounting principles—but not, as I indicated in my speech, at this time. I have indicated that the timetable is unrealistic. I hope that in the future we can look at these issues, but the Government do not feel it is timely to do it in the way suggested. That is something that has been shared with other Members: there is no great secrecy about that.

[Lord Grantchester]

I thank all noble Lords who have spoken this afternoon and thank the Minister for the considered way he has responded to issues. On reflection, following the wider debate, I conclude it would be best to press the Government more strongly to be more certain about the outcome of the review. I will therefore not press the amendment in my name, but instead support the amendment in the name of my noble friend Lady Worthington. She is a recognised expert on climate change and a very forceful advocate that the UK must take strong, decisive action to reduce emissions to mitigate its effects.

Lord Grantchester’s Amendment withdrawn.

Baroness Worthington’s Amendment to the Motion on Commons Amendment 9

Moved by

[Baroness Worthington]

As an amendment to the Motion that this House do agree with the Commons in their Amendment 9, at end insert “, and do propose Amendment 9E in lieu of the words so left out of the Bill”.

9E: Clause 80, insert the following new Clause—
“Review of calculation of net UK carbon account (No. 2)
(1) The Secretary of State must lay before Parliament revised regulations relating to carbon accounting under section 27(3) of the Climate Change Act 2008.
(2) Before laying such regulations the Secretary of State must carry out a review of whether it is appropriate for the calculation of the net UK carbon account for the 2028-2032 budgetary period, and subsequent budgetary periods, to take into account the crediting and debiting of carbon units as a result of the operation of—
(a) the European Union Emissions Trading Scheme, or
(b) any amendment of, or replacement for, that scheme that the Secretary of State considers may have effect for the budgetary periods to which the review relates.
(3) When carrying out the review the Secretary of State must take into account—
(a) advice from the Committee on Climate Change,
(b) any representations made by the other national authorities, (c) scientific knowledge about climate change,
(d) technology relevant to climate change,
(e) economic circumstances,
(f) fiscal circumstances,
(g) social circumstances,
(h) energy policy, and
(i) circumstances at European and international level.
(4) Nothing in subsection (3) is to be read as restricting the matters that the Secretary of State may take into account.
(5) The review must be published, in such manner as the Secretary of State considers appropriate, no later than one year after the passing of this Act.
(6) The Secretary of State must lay the regulations under subsection (1) no later than 31 December 2017.
(7) A statutory instrument containing regulations under subsection (1) may not be made unless a draft of the instrument has been laid before, and approved by a resolution of, each House of Parliament.”

[Baroness Worthington]

My Lords, I beg to move my amendment to the Motion. I would like to test the opinion of the House.

20:21

Division 6

Ayes: 141

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Labour: 72
Liberal Democrat: 58
Crossbench: 7
Green Party: 1
Independent: 1
Plaid Cymru: 1

Noes: 169

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Conservative: 158
Crossbench: 7
Ulster Unionist Party: 2
Democratic Unionist Party: 1

20:33

Motion agreed.

Motion on Commons Amendment 10

[Lord Bourne of Aberystwyth]

Moved by

That this House do agree with the Commons in their Amendment 10.

10: Clause 83, page 48, line 2, leave out “This Part comes” and insert “Sections [Onshore wind power: closure of renewables obligation on 31 March 2016], [Onshore wind power: circumstances in which certificates may be issued after 31 March 2016] and [Use of Northern Ireland certificates: onshore wind power] and this Part come”

Commons Amendment 10 agreed.

Motion on Commons Amendment 11

[Lord Bourne of Aberystwyth]

Moved by

That this House do agree with the Commons in their Amendment 11.

11: Clause 84, page 48, line 14, leave out subsection (4)

[Lord Bourne of Aberystwyth]

My Lords, Commons Amendment 11 is a technical amendment that was inserted to avoid infringing the financial privileges of the other place. Now that the money and ways and means Motions have been passed, the short title of the Bill can accordingly be amended. I beg to move.

Commons Amendment 11 agreed.

Motion on Commons Amendment 12

[Lord Bourne of Aberystwyth]

Moved by

That this House do agree with the Commons in their Amendment 12.

12: In the Title, line 8, leave out from “power;” to “and” in line 10

Amendment to the Motion on Commons Amendment 12 not moved.

Motion agreed.