Grand Committee
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Arrangement of Business
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The Deputy Chairman of Committees (Baroness Healy of Primrose Hill) (Lab)
My Lords, Members are encouraged to leave some distance between themselves and others and to wear a face covering when not speaking. If there is a Division in the Chamber while we are sitting, this Committee will adjourn as soon as the Division Bells are rung and resume after 10 minutes.
Revised Energy National Policy Statements
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Lord Callanan
That the Grand Committee takes note of the draft Revised Energy National Policy Statements laid before the House on 11 October 2021.
The Parliamentary Under-Secretary of State, Department for Business, Energy and Industrial Strategy (Lord Callanan) (Con)
My Lords, our purpose here today is to consider updated energy national policy statements, which we propose to designate later this year, subject of course to the outcome of a public consultation and parliamentary scrutiny.
NPSs for all types of nationally significant infra- structure should comprise clear guidance on the legal, policy and technical issues that project sponsors need to consider as part of their applications for planning consent under the Planning Act 2008. They enable the Planning Inspectorate to examine the application before any recommendations are sent to the Secretary of State for determination, and underpin the delivery of legally robust and timely planning decisions by the Secretary of State. Importantly, where the need for a type of nationally significant infrastructure is established in an NPS, that need cannot then be questioned on an individual application for development consent.
The NPS framework is complemented by two supporting assessments: the appraisal of sustainability and the habitats regulations assessment. The appraisal of sustainability ensures that the likely national environmental and socioeconomic effects of the national policy statement are identified and evaluated. The habitats regulations assessment identifies and assesses the likely effects of the national policy statement on nature conservation and specially protected sites.
The suite of energy NPSs was first designated in 2011. They set out national energy policy and form the framework for decision-making on applications for development consent for nationally significant energy infrastructure projects. The overarching strategic national policy statement, EN-1, sets out the need case for certain energy infrastructure and general assessment principles. The other five NPSs set out technology-specific assessment principles. The Government published their energy White Paper, Powering Our Net Zero Future, in December 2020. The White Paper presents our vision of how we make the transition to clean energy by 2050, building on the Prime Minister’s 10-point plan.
Of course, since the energy White Paper, the Government have published the Net Zero Strategy. This sets out clear policies and proposals for keeping us on track for our coming carbon budgets and for our vision for a decarbonised economy in 2050. The strategy raises our ambitions to hit our climate targets, as well as delivering our goals to create new jobs and industries as we capitalise on green economic opportunities. The energy NPSs need to reflect this scale of ambition.
The agenda established through the energy White Paper and net-zero strategy mark the start of a decisive shift away from unabated fossil fuels to clean energy technologies. This means renewables, nuclear, CCUS and new technology options such as low-carbon hydrogen. Deploying a range of low-carbon technology options keeps us in line with our objective to ensure that our supply of energy always remains secure, reliable, affordable and consistent with our net-zero target.
The Government decided that it was appropriate to review the existing energy national policy statements to ensure that they reflect the policies set out in the energy White Paper. The review would ensure that we continue to have a planning policy framework which can deliver the investment required to build the infra- structure needed for the transition to a clean energy system.
I should be clear that updating the NPSs is not the only way that we will satisfy our infrastructure needs. Through the national infrastructure strategy, the Government have committed to a major reform programme to refresh how the nationally significant infrastructure project regime operates. This reform programme will make the planning regime more effective and bring government departments together to deliver more certainty in the process and faster outcomes. The Department for Levelling Up, Housing and Communities will be providing further information on how it is taking the NSIP reform programme forward later this year.
The draft revised energy NPSs, which we have consulted on, reflect our policy that a diverse mix of technologies will be required to deliver on our energy objectives. However, where a technology no longer meets our objectives, it is right that this is removed from the mix, and the NPSs are clear that there is no longer any role for new nationally significant coal or oil-fired electricity generation. We believe that the market is best placed to determine the best solutions for very low emissions and reliable supply, at a low cost to consumers. This means that we should use the NPSs not to deliver specific amounts or limit any form of electricity infrastructure, but rather to set out the framework under which they can be consented. This approach facilitates competition and spurs both investment and innovation in technologies which are cheaper and more efficient.
We will need a significant amount of new energy infrastructure. Electricity demand is set to double as we electrify heating and transport. Networks need to adapt for the future electricity system. We will also need oil and gas to support a smooth and orderly transition to a clean energy future and to ensure security of supply. Natural gas will still be needed for heating homes and workplaces, until we are able to deploy low-carbon alternatives, so we need infrastructure to support the importation, storage and transmission of oil and gas. Natural gas infrastructure might also be repurposed in the future for use by other gases required to deliver a net-zero economy, such as low-carbon hydrogen or for transportation of carbon dioxide to storage.
The nuclear power generation NPS, EN-6, was reviewed but not amended as there are no changes material to the limited circumstances in which it will have effect. However, it would not be appropriate to withdraw the NPS at this time given that the information that it contains may be relevant to development consent order applications under examination and the need to maintain a stable nuclear planning and consent regime. The Government went out to consultation with an updated energy NPS last September. The consultation closed in November. The draft energy NPS has been scrutinised by the BEIS Select Committee in another place; its report and recommendations are due to be published shortly, I am told. We will consider the recommendations and responses to the consultation, and publish our response in due course.
National policy statements for energy must be clear about the urgent need for new energy infrastructure, to meet our climate change commitments and continue to ensure a secure and affordable supply of energy. They must also identify the potentially negative impacts of such infrastructure at a local level to enable planning decisions to be taken which weigh up this national need against potential impacts, based on expert evidence and with full stakeholder involvement. The documents that we have consulted on strike the right balance between these factors. I appreciate that there are many views on this, and I look forward to hearing all the contributions to today’s debate. I beg to move.
Lord Whitty (Lab)
My Lords, I thank the Minister, particularly for explaining the relationship of these documents to planning decisions at both national and local level. Last night, I took home all the documents that are piled up over there, together with the energy policy White Paper and hydrogen White Paper, and tried to make sense of them. I failed utterly, although the Minister’s explanation has made it slightly clearer. Nevertheless, I shall bore the Committee with my reflections, looking at the totality of the papers before us.
I note in the present draft that the Government frequently use nuanced forms of modal verbs—namely, could or can rather than should or will. That is perhaps too loose a form of words for the immense task that we have before us in meeting our net-zero targets in particular. As the Minister said, those net-zero targets have a direct impact on not only what are traditionally regarded as nationally significant developments but the local effects that those developments will have on their areas and populations.
Therefore, the final version needs to be a little more definitive than the one before us. The key target here is clearly that for 2035. Decisions taken in planning now will not see fruition for at least three or four years and, in many cases, much longer. The 10-year run-up to 2035—meeting the 78% reduction, I think in emissions by that date— therefore depends on crucial decisions to be made in the next two or three years. That requires clearer guidance in the overriding policy statement, less freedom of manoeuvre and less nuance in the guidance given, otherwise we will have inconsistent decisions.
I take just four examples of where we need a clearer decision on the basis for any national or local decisions before they can be taken. The Minister will be familiar with the arguments in many areas—we debated nuclear yesterday and have debated other aspects—but I shall go through them quickly.
The first is obviously the replacement of natural gas heating for homes and buildings. On that, we need clear decisions on whether a hydrogen-based system can meet most of our gas needs, whether we will have enough hydrogen and how it will be produced—presumably, it will be green hydrogen. The hydrogen strategy itself, although very useful, leaves a lot of questions unanswered. We need to know whether there will be differential impacts in different parts of the country. If we are to have large-scale hydrogen for industrial and domestic purposes, heating may well extend only to the area within a few miles and everybody else will have to rely on transferring on to the national grid for direct electrification of their heating or, in the more rural and suburban areas, probably heat pumps. So there will be different impacts of that decision but if what is currently natural gas heating, which heats 80% of our homes and buildings, is to be replaced, we must be clear how it will be, and in what parts of the country it may be replaced by different forms of lower-carbon heating.
My second example is related, because one of the replacements for our gas grid proposed for our domestic heating has been district heating—effectively, local networks. If we are to have local networks on a major scale, we cannot rely on a planning process which takes propositions for development, retrofitting or individual buildings on a one-by-one basis. You have to designate substantial domestic or industrial building areas to be obliged to take the form of district heating that is given planning permission on the grounds that it is nationally significant. If we are to see district heating—I am in principle in favour of it, as long as its consumers are protected, because clearly there is no competition in those circumstances—we need to ensure that we have powers to designate the whole area, otherwise, by and large, it will not work. That includes not only new developments but the retrofitting of existing buildings and factories.
Thirdly, there is the issue of offshore wind. It has been a huge success and, in the period between now and 2035, will continue to be one of the major contributors to reducing our total carbon emissions. However, the development of offshore wind has been somewhat haphazard. By and large, a single array has a single landing point onshore and each is owned by different companies or consortia. There are planning considerations, usually addressed locally to start with, of how you bring offshore wind onshore and what the connections look like, because they will also be mostly in areas of natural beauty or other rural areas which do not like the disturbance. If every array has an individual landing point, that is a huge number of planning decisions if we are to meet the objectives in the energy White Paper.
If, however, there were to be an offshore network so that several arrays could be connected, some engineers argue that we could reduce the number of landing points by something above two-thirds. That requires a government intervention to ensure that we have an onshore and offshore network that limits the number of onshore connection points. That is a key strategic decision and, if decisions on new or enhanced offshore arrays are taken on a one-off basis, we will never reach the decision to amalgamate them into an offshore grid.
My second-to-last point relates to nuclear, which we discussed at some length yesterday. It is also important that we have early government decisions on a number of nuclear aspects, particularly the designation of nuclear reactor sites—a project that successive Governments have utterly failed at over the past 20 or 30 years. Any sizeable nuclear reactor will create significant planning effects on the surrounding area and there will be strong political pressures as well. That means that, if we are to go for a new generation of nuclear power—by and large, I am in favour of that, whether on the size of Sizewell or on a smaller size facilitated by the Rolls-Royce developments on small modular reactors, et cetera—we need to know where it will go and all the planning hurdles have to be overcome. That will again require a much clearer government decision on where those sites will be.
Of course, the most acute and difficult decision for the Government, and for all of us, is the issue of the storage of waste and waste disposal. We already have a historic legacy of waste from now-closed reactor. If we are to have a new generation of nuclear, while it will be much more efficient, there will be high-radioactivity waste to be disposed of. We need a decision on that urgently.
I hope that the final version of the statement indicates that there are key decisions that the Government have already taken, or are about to take, which will define the parameters of any subsequent decisions, even on relatively large-scale projects. I hope that those will be addressed.
My final point is that as far as I could see, certainly in the overriding document, there is a major omission on carbon reduction. As I understood it, the National Infrastructure Commission indicated that the energy efficiency project, to insulate and otherwise improve the energy efficiency of our homes, should be regarded as a nationally significant project. That is operated street by street, at best, but it is still in totality a major contribution towards meeting our net-zero targets. It should really be dealt with in the same way as these other single-site projects. I hope that the Minister, and the final version, will take that into account and that it will be somewhat shorter and more to the point than the present document, so that all protagonists can understand where we stand on that and where their own projects stand.
Baroness Neville-Rolfe (Con)
My Lords, energy is a serious topic, as we have been forcefully reminded very recently. Indeed, my own house in Wiltshire was cut off from the electricity grid as a result of recent storms for two days. Since our village has no gas supply, that brought real discomfort to all, but especially of course to the very old and infirm. Luckily, the village has an emergency generator, started up by supportive volunteers who learnt who and how to help across our community during Covid.
My first point is a simple one. It is the responsibility of any Government to ensure that energy is supplied as required both to domestic customers and to enterprises of all kinds. Any Government who fail in that task will be judged harshly and might well not be a Government for very long. No amount of enthusiastic rhetoric on sustainability, climate change or habitat enrichment will serve as an effective excuse. I am not sure that the document before us is as unequivocal in recognising this reality as it could, and ought, to be. Keeping the lights on, literally and metaphorically, is the number one priority in energy policy. All other aspects are secondary to that.
Having said that, it is sensible to have documents of the kind before us today to help with planning and other decisions. Naturally, there will be a need for constant revision, since the world changes more quickly than we sometimes recognise. Twenty-five years ago—less than a third of the average lifetime—most countries, including this one, relied heavily on coal. Indeed, a recent UK Prime Minister was heavily criticised by some politicians for allegedly devastating the UK coalmining industry. Now the same people are critical of any attempt to retain any coal mining at all in the UK, even if the objective is to retain one or two heritage railway lines, as some may recall from our debates on the Environment Bill and my vain efforts to save the Thomas the Tank Engines. How the world changes! Coal was once the epitome of virtue to some; now it represents the devil to the same people.
Personally, I favour a more nuanced and balanced approach to energy policy. I would add that gas is a very important part of any transition to net zero, and that shale has played a major part in the transition in the US, and indeed in its growth. So we need to see regular textual revisions to these documents every few years, as policies change and innovations come through. The noble Lord, Lord Whitty, has rightly just talked about the potential role of hydrogen and town heating systems, as well as of nuclear, where I think we are on more common ground. On this question of revisions, I very much hope my noble friend the Minister can indicate how often he envisages that changes might be made.
My other main point is to emphasise how much investment there will need to be in infrastructure if the presently expected move towards electrification, including electric vehicles, comes to pass. That has two major implications. First, we need to be clear how and where the investment will be made. We need to be assured that those concerned with the grid and other electrical infrastructure have a viable plan to achieve this investment. I am not clear that we can yet feel confident on that point. Secondly, we need to know from whence the very large sums needed are to come. I note that a main method of financing green investments so far has been to impose green levies on consumers. That is one approach, but I note that it has quickly come into question now that electricity prices have risen steeply and inflation has taken off sharply. Some argue, rightly I think, for moderation, but all this certainly needs more thought.
Finally, I return to the storms and what they have taught me. Despite the advent of the 105 number, which I remember launching a few years ago when I was fortunate enough to be in the Minister’s position, consumers are in serious trouble when their power lines go down. We also need more thought about how people might prepare. Perhaps retailers could start selling first-aid style kits, with candles, matches, gloves, woolly hats, primus stoves and an old-fashioned phone that plugs in when the wi-fi and cordless phones do not work. This of course is not an issue for the statements before us, but we always need to think about how to make life easier and bearable for the consumer. Throughout history, too much of the energy debate has been provider and government-led, and that concerns me. I was therefore glad to hear that our Economic Affairs Committee will be looking at some of these knotty issues. I hope it will be able to help tackle the problems, including those that hit the poorest in the country, old and young.
Lord Teverson (LD)
My Lords, I welcome this document. I remember some 10 years ago sitting here and going through all six of the previous documents. It does not seem so long ago, which is a sad fact, but there we are. It is right that a lot has changed since the statements first came out during the coalition Government.
I do not want to talk particularly about net zero; I want to talk about the other emergency that we have and ask a number of questions on it: the biodiversity emergency, and how that relates to the national policy statement. There are some specific questions that I want to ask at the end. I welcome the fact that biodiversity is mentioned quite a bit—I have mainly gone through the overarching document—but I do not understand how the Environment Act that we passed at the end of last year relates to biodiversity net gain in terms of nationally significant infrastructure projects. Paragraph 4.5.2 of the overarching document states:
“Although achieving biodiversity net gain is not an obligation for projects under the Planning Act 2008, energy NSIP proposals should seek opportunities to contribute to and enhance the natural environment by providing net gains for biodiversity.”
Yet Schedule 14 to the Environment Bill, which is about biodiversity net gain, states:
“The biodiversity gain objective is met in relation to development for which planning permission is granted if the biodiversity value”
is attributable to the percentage, which, as we know, in the Environment Act is 10%. Given that the Environment Act, primary legislation passed only at the end of last year, relates biodiversity net gain to a planning permission —and I understand that NSIP is a planning permission— does the 10% net gain apply to such projects? Is that true also of marine projects? In any case, even if the Environment Act does not apply to them, does the Secretary of State expect that marine projects will also create biodiversity net gain?
It is great to go on about biodiversity net gain, but, as we know, there is a requirement in the Environment Act that such net gain be protected for at least 30 years. That has to be done by local authorities, as I understand it from the Environment Act, but when it comes to NSIPs, who is going to make sure that net gain that is promised as part of NSIPs’ planning permissions is actually delivered through that period of at least 30 years? If that policing and enforcement do not take place, we know that it will not happen or will disappear along with everybody’s corporate memory of the original agreement. I would be very interested to understand the Minister’s idea of that. I am sure that both he and I have exactly the same objectives in that area.
On a similar environmental theme, I could find no mention within the documents of the circular economy. This is one of the other areas that government is starting to get involved in and where it is starting to see that, rather than a linear economy, we should move to a circular economy in terms of global resources. How will the Government start to look at that in terms particularly of renewable energy as well as all the other areas that there are? On renewable energy, we have got as far as looking at wind turbine blades, but that is about as far as it goes, and I do not think that the industry has been fully responsible yet in that area.
On waste disposal, the noble Lord, Lord Whitty, was absolutely right. I know that the Government are doing a study on networks of offshore wind pipelines and energy cables; it is particularly important, as development starts in the west, in the Celtic Sea, to understand what is going to happen, so that we do not have the sort of spaghetti junction that we have in the North Sea.
I also want to comment briefly on nuclear waste. I was disappointed that EN-6 was not actually updated. I think that the Minister may reply by saying that it is in process, which, if so, is fair enough. But on page 16 of the original EN-6, the footnote, which I thought was a typing error when I first read it, says:
“Geological disposal of higher activity waste from new nuclear power stations is currently programmed to be available from around”—
wait for it—“2130”. That is still 120 years away, and I wonder whether the Government would like to reconsider that and maybe bring it a little forward. The document does say at the end, to give it its due, that they—this is the coalition Government—might see
“potential to bring forward this date”.
I shall put it in my diary to check if it happens by then, but it would be great if we could bring it forward.
Lastly, I again checked “energy security” on a phrase checker, and it came up with “text not found”. The document does mention energy security, but only in relation to two things. One is the capacity market, all around the area that the noble Baroness, Lady Neville-Rolfe, mentioned—keeping the lights on—which the capacity market is very much about. The other area is cyberattacks, which as we know are very topical and important. But there is nothing on what we would understand more broadly as energy security in this overall document, and I find that quite an interesting omission.
I look forward to the Minister’s reply, particularly in the area of who is responsible for making sure that biological and biodiversity net gain actually happens over the next 30 years for this level of project.
Lord Moynihan (Con)
My Lords, I declare my interests. My commitment to the environment came with me into my first ministerial job in the 1980s, and the energy world provided me with a second opportunity of ministerial office. Since then, I have regularly worked in both sectors. I was privileged to be elected the first president of the British Wind Energy Association, and I introduced the first competitive market framework for renewables in the UK, the non-fossil fuel obligation in 1990. Since then, as set out in the register, I have continued to work in the energy sector, culminating in my current chairmanship of Buckthorn Partners, which works in energy transition.
This short debate, particularly well set out in EN-4 before the Committee, and the wider strategy referred to by my noble friend the Minister, provides us with the opportunity to discuss the issues set out admirably by the noble Lord, Lord Whitty. Looked at rhetorically, the current high watermark of the relentless destructive attack on the oil and gas industry, with John Kerry citing the May 2021 International Energy Agency report as evidence that there should be no more new oil and gas investment anywhere in the world, is foolish and ultimately destructive. That is so in political terms, as it ignores the transitional pain inflicted on families and industries around the world, and it is counterintuitive, as it encourages highly polluting coal to be used in electricity generation, thus causing yet further pollution to our planet.
However, today, at least in this Committee, we have a more moderate, sensible and civilised energy debate, as the documents before us highlight. We vitally need to produce gas within a regime of strict environmental standards against the chorus of politicians clamouring to inflict windfall taxes on North Sea producers to help struggling families, who are struggling primarily because of eye-wateringly expensive energy policies. This came as we brought to a close a record year of low investment on the UK continental shelf. This has to change.
We all watch European customers, both residential and industrial, facing the extreme post-Covid pain of record power prices and gas prices, at some $200 per barrel of oil equivalent, which means that a European fertiliser producer, or any European industrialist using natural gas as a feedstock, is now paying eight to 10 times more for energy than a US or Middle Eastern competitor, and nearly 15 times more than a Russian competitor, due to the unprecedented differential between global spot prices, at some $200 per barrel of oil equivalent and much lower market gas prices in self-sufficient countries such as the US, Russia, et cetera. Europe, including the UK, could now lose a significant proportion of its industrial base to “home fire” very quickly indeed if this energy crisis continues.
We also anguished in 2021 at the all-benevolent coal-to-gas switch, the most effective atmospheric cleansing policy yet devised, being reversed in China and other parts of Asia as they burned more coal again due to gas prices reaching levels exceeding $300 per barrel of oil equivalent. Now we all sit on the precipice watching if the stability-threatening energy price tsunami will sweep away many industries before it, or whether the tide will turn the turn as the political elite of the West confronts its poorest citizens being crippled by the energy crisis imposed on them. Are the hopeful recent reports that—long overdue—the EU will include gas in its taxonomy of green energy a sign of energy sanity returning, or is this a false dawn, with Germany’s new Government showing ever more radical eco-credentials?
A wise voice in this debate to whom every Government should turn for advice is Philip Lambert, who, leading Lambert Energy Advisory, has continued to highlight the critical role of gas, as mentioned by my noble friends Lady Neville-Rolfe and the Minister, if the world is to pursue accelerated decarbonisation and create a responsible energy mix that balances affordability, reliability, energy security and environmental needs. With consistency in his approach to energy policy in recent debates, Lambert continues to emphasise that gas plus renewables, as so obviously on offer in the UK with its strong offshore gas plus offshore wind resource blend, are complementary partners and able to lead the phase-out of coal, as well as supporting blue/green hydrogen buildout efforts.
Recently, Lambert set out the problem in a rather innovative way, saying that it is very simple to understand if one uses a stark medical analogy. The climate doctors of the western world, who gathered at Glasgow for COP 26 in November, have decided, with very little real democratic debate or scrutiny that the global patient, threatened by the “certainty” of extreme and catastrophic climate change, now needs an accelerated transfusion of the “fossil fuel” portion of the global energy lifeblood which courses through the global economic body every day, underpinning the heartbeat of our modern life of mobility, health, domestic living, food production and industrial process. The climate doctors’ prognosis, as underpinned in the IEA paper of May 2021, is a “net zero world” by 2050, the ongoing “capital starvation” and progressive transfusion of 80% of the current energy lifeblood of the world—the 101 million barrels of oil equivalent per day of oil, 66 million barrels of oil equivalent per day of gas and 70 million barrels of oil equivalent per day of coal.
In this incredible medical transfusion experiment, we need to dispense as quickly as possible with 80% of the world’s energy lifeblood. But as any responsible medical doctor will testify, no transfusion process should happen unless the patient can receive with complete certainty instant similar amounts of “clean bloodstream” —ie, new clean energy blood of 237 million barrels of oil equivalent per day—otherwise, the patient will literally die. Yet breathtakingly, the climate doctors currently have only developed small, highly uncertain and intermittent—albeit very welcome—“new blood sources” to transfuse back into the body. After 20 years and nearly $5 trillion of investment into “new energy blood”, the world has only 15 million barrels of oil equivalent per day of wind and solar, against the 237 million barrels of oil equivalent per day required—and this bloodstream flows, as 2021 has demonstrated, only sporadically to the heart when the wind blows or the sun shines. Moreover, the all-in cost of intermittent renewables into power systems is rising not falling, due to the high cost of system balancing and legacy subsidy and government guarantee costs.
Our journey to this began 40 years ago exactly, and we have reached a global position of 15 million barrels of oil a day equivalent of renewables against the necessary 237 million, but instead of recognising that we are entering a vital stage of transition, many demonise gas—which, if revoked from the energy equation, as so many campaigners would have us do immediately, will unquestionably damage the world economy. Of course it is right to invest heavily in solutions to take us to net zero, but this should be done alongside acceptance of gas as a critical component of the energy mix in the UK as we move towards net zero and welcome ESG approaches. Setting an arbitrary date of 2050 is little wiser today than forecasting the date of storms in the UK next winter.
I should add that most of the rest of the energy lifeblood is made up of biomass, which entails burning primarily wood at higher carbon intensity than coal at a time when the world should be protecting all existing forests and planting billions of new trees, not cutting them down, especially as the tree is still the most effective carbon capture and storage process in today’s world, with the carbon abatement costs still 10 times cheaper than a human-manufactured CCS plant. So the climate leaders have been ironically highly successful at starving the global gas machine of essential investment needed to overcome natural global gas production declines of 3% per annum, let alone allow gas productive capacity to increase to beyond its current level of 66 million barrels of oil equivalent per day to facilitate the all-important environmental initiative: the global coal-to-gas switch.
We are therefore waking up to the nightmare that high gas prices may in 2022 imperil the very viability of mass renewable rollout, because the back-up needed to create a firm power product out of intermittent renewable production relies basically on gas—or coal if gas is too expensive. The real nightmare for renewables producers is new obligations on them—rather than energy customers or taxpayers—to pay the full costs of back-up supplies. This, plus a rise in interest rates to challenge their leveraged model, could push some renewable energy players in 2022 into the same difficulties as faced recently by the mass bankrupted energy suppliers in the UK, who promised “100% renewable electricity” and other seemingly attractive product brands but then faced the full storm of reality when wholesale gas/power prices soared and the questionable irresponsibility of the UK Government’s populist “price cap” policy was fully revealed, and they may well end up in the same place. I foresee many of the current wind operators facing financial difficulty. Certainly, a new generation of companies will take over but the next five years are going to produce harrowing headlines around the world along with calls for significant nationalisation.
Policymakers must cease their rhetorical attack on natural gas, realising that for a responsible energy transition to occur, a solid partnership between best-in-class renewables such as offshore wind in the UK or solar in India and best-in-class gas—zero methane leakage, environmentally responsible and cheap—is required. That means tax-effective measures to extend the life of fields in the North Sea, postpone decommissioning, bring onstream new gas fields and maximise recovery rates within a clear and certain framework of strong, environmentally responsible policies. This surely is the great window of opportunity for the UK so we can produce a clean, firm power product via our integrated and environmentally responsible gas/renewables/trading model into the market, which will begin to wake up to the fact that firm power is a premium product, not a cheap, guaranteed given.
Maybe the last word should be left to our Chancellor, Rishi Sunak, who recently commented that North Sea gas
“plays an important part of our transition to net zero.”
He added:
“I want to make sure that people acknowledge that we should also exploit our domestic resources. We have resources in the North Sea, and we want to encourage investment in that because we’re going to need natural gas as part of our transition to getting to net zero. And in the process of getting from here to there, if we can get investment in the North Sea that supports British jobs, that’s a good thing. So that has to be part of the mix as well.”
Baroness Sheehan (LD)
My Lords, it was good last September to finally have sight of the draft updates for the range of energy-related national policy statements, first introduced a decade ago in 2011. I will restrict my remarks today to the infrastructure that we need to deliver net zero with regard to our shorter-term horizons —for example, the rollout of electric vehicles—and will not be tempted to talk about gas and its phase-out.
These updates, according to the Government, focus on regulatory, policy and technology changes to guide those involved in determining development applications for major infrastructure projects in England and Wales. As the noble Baroness, Lady Neville-Rolfe, pointed out, National Grid is going to be crucial in delivering this. It sits at the heart of Britain’s energy system. It is fully behind the net-zero ambitions and is committed to playing a leading role in enabling the transition, as indeed it must, because without its wholehearted commitment the transition would not be realisable. In its briefing, however, it states that while it was looking forward to the reviewed national policy statements, it has been left rather disappointed. In its view—I would say a rather well-informed one—current drafting does not provide the step change needed to deliver the scale and pace of nationally significant infrastructure development that will be needed to meet the Government’s own net-zero ambition.
That should really give the Government cause for concern. There is no sense of urgency or appreciation of the scale or pace of change needed to deliver nationally significant infrastructure development, which lies at the core of what we are trying to achieve here. I wonder whether BEIS is aware of its concerns and is taking them seriously. We are otherwise in real danger of falling short of meeting the challenging targets that the Government have set on electric vehicle ownership, as an example. These cars will need electricity—a lot of it, as the Minister himself said. The current grid, however, cannot supply what we will need. As an aside, and as the noble Lord, Lord Whitty, mentioned, the Government have to take on board the imperative of reducing demand. One quite effective way of doing that, and one that there is growing public concern about, is to make homes more energy efficient. That would take a lot of demand off the national grid, so I feel that is a real missed opportunity here.
There is also concern about what we are hearing from industry leaders about the importance of BEIS’s offshore transmission network review, which is producing a blueprint known as an holistic network design for the onshore and offshore infrastructure required to connect the Government’s target of 40 gigawatts of offshore wind by 2030. Why is the crucial work of the OTNR and the HND not explicitly referenced in the draft NPSs?
Another point of concern is that delivering the scale of nationally significant infrastructure needed will inevitably impact on the local communities and environments that host this infrastructure. Industry must have clear guidance from government on the levels of mitigation and compensation that developers are expected to deliver locally. On the flip side, the communities affected must also have some idea of what they will be up against. Communication with industry and local communities is going to be key. I wonder whether BEIS has taken that on board. Unfortunately, the draft NPSs are silent on these points. Again, can the Minister address that, as it will be really important if the infrastructure behind these policy statements is to be successful?
I add that Energy UK, the trade association for the energy industry, also has real concerns about the lack of a strong focus on net zero. In particular, there is real concern about the fast pace, flexibility and adaptability that will be needed to realise net-zero ambitions. The energy NPSs will therefore need to be revised and updated regularly, certainly more frequently than once a decade, so I ask the Minister: how often will the Government review these NPSs?
Baroness McIntosh of Pickering (Con)
My Lords, I am delighted to follow the noble Baroness. I refer to my interests as declared in the register: I am the honorary president of the advisory board of National Energy Action and, perhaps of more relevance, I was delighted to undertake a placement with BP as part of the Industry and Parliament Trust and had the privilege of visiting a North Sea oilfield.
I welcome today’s debate on the documents and thank my noble friend the Minister for bringing them to us. I want to ask a series of questions. As there are a number of them, I will quite understand if my noble friend might find it easier to respond in writing.
Following the critical floods of 2007, the Pitt review concluded that there should be an audit of critical infrastructure, most of which seemed to be energy substations that were at serious risk of flooding. How regularly does such an audit take place and when was the last one performed?
In the principal policy statement before us today, EN-1, there is welcome reference to climate change adaptation. Is there any reason—perhaps I have missed it—why mitigation has been left out? Many of the references that are made would cover mitigation as well as adaptation. I welcome in particular paragraph 4.9.11, which states:
“If any adaptation measures give rise to consequential impacts (for example on flooding, water resources or coastal change) the Secretary of State should consider the impact of the latter in relation to the application as a whole and the impacts guidance set out in Part 5 of this NPS.”
I think that, somehow, the Minister is secretly aware of my fixation and passion for SUDS, or sustainable urban drainage; I am also an honorary vice-president of the Association of Drainage Authorities, which apply to the lower drainage areas, of which we have plenty in North Yorkshire. I am therefore delighted that, on pages 93 and 95, there is reference to the reduction of flood risk and, in particular, the “hierarchy of drainage options” in relation to sustainable drainage systems and other green infrastructure. That is very welcome, and I hope that my noble friend will be able to expand on those points.
My background gives me a real concern about how energy is generated, transmitted and distributed in rural areas. My noble friend Lady Neville-Rolfe had a similar experience to my own, where a family home was without electricity for six days and included a particularly elderly population who had no such luck as to have a generator. That was during Storm Arwen, and we have seen many others since then. Rural areas are often off grid and face particular challenges in receiving fuel. They tend to be dependent on LPG, solid fuel and oil to heat homes. As my noble friend the Minister will be aware, these are not covered by the price cap and those areas face an even higher increase in costs, particularly because of activities this week in Ukraine—today there has been an additional spike. To what extent will the NPS reflect this and look to rural-proof any nationally significant infrastructure that is envisaged under the proposals before us today?
I for one particularly accept and welcome the nuclear energy mix. My noble friend said yesterday in the debate on the Bill that 85% of our UK nuclear capacity is to go out of commission by 2028. If, as I understand it, the national policy statement for nuclear power generation, EN-6, is not part of the package before us today, what would be the timetable for its review, and would it be subject to a further debate here and looked at separately by the BEIS Select Committee in the other place? I think that we are going to be increasingly dependent on nuclear and, obviously, 15% is not going to hack it after 2028.
The noble Lord, Lord Whitty, in his remarks, made reference to hydrogen and heat pumps as two separate issues. I, for one, do not understand how hydrogen will work and what the use of hydrogen will be, but I was particularly relieved that fracking did not happen in north Yorkshire, for the very simple reason that it would not only be difficult to fund but there was no way that the wastewater could be safely taken away and disposed of. Fracking and hydrogen, as I understand it, will have remarkably large uses of water. I certainly welcome a greater understanding of how we would deal with that.
I leave the Minister with the thought that we need a coherent, well-thought-out and consistent policy, and I for one would argue that we should not penalise those who live in rural areas. I would be interested to learn how we are going to rural-proof any energy policy, particularly regarding significant national infrastructure as it comes out.
The noble Lord, Lord Whitty, also referred to district heating, which is closely linked to energy from waste. I do not understand why we are not using more energy from waste or, indeed, combined heat and power. I remember going to visit SELCHP, the south-east London combined heat and power scheme, before it actually became the combined heat and power scheme. It seems that we solve two problems in one go, if we go down the path of energy from waste and combined heat and power. We are disposing of hard to get rid of rubbish; we want to incinerate it, because we cannot get rid of it in landfill—it is very hard to get rid of. North Yorkshire and I think probably most local authorities are exporting this rubbish to countries such as Holland, where it is burned and goes into the local network. I hope that my noble friend and the department will learn from the Danes and other Scandinavians, as well as the Austrians and Germans, who use this, as my aunt and uncle in Denmark have enjoyed over a period of time, to reduce their heating and hot water costs by feeding the energy from waste into the local grid, so the local community benefits.
I shall say a word on renewables. Under the excellent and skilful chairmanship of the noble Lord, Lord Teverson, we looked at offshore wind farms and received very powerful evidence to show that there are significant threats to sea mammals and sea wildlife through the use of offshore wind, which should be explored before there is a further rollout of offshore wind and arrays, to which the noble Lord, Lord Whitty referred. The most significant thing for rural areas that causes me alarm is that, once the energy generated reaches shore from an offshore wind farm, it has to be transmitted almost entirely by overhead powerlines and pylons. My noble friend and I suffered a loss of electricity, as did thousands more in the two recent storms—and any reduction of transmitting power by overhead powerlines and pylons would be welcome. It is not generally understood that we lose 30% of our electricity through transmitting energy in this way, so it is wasteful, not sustainable, and that must be addressed. I welcome my noble friend’s response as to how we can better transport the energy from offshore wind farms when it reaches shore. I support the call of the noble Lord, Lord Whitty, for limiting the number of onshore connections in that regard.
Like my noble friend Lady Neville-Rolfe, I am a keen supporter of heritage railways, and that is something that my noble friend might like to address in his remarks —whether they will be able to source their coal. I speak as the honorary president of the most-visited tourist venue in north Yorkshire, the North Yorkshire Moors Railway. I hope that my noble friend will ensure that we can continue to enjoy heritage railways sourced by locally produced coal.
In conclusion, I ask my noble friend how he intends to address energy efficiency to stop wasteful transmission, as I described; how to make electricity more sustainable and resilient; how to future-proof the increasing demands and how the Government will meet the additional electricity required to power electric vehicles. In particular, I ask, as have others, how often the Government will review the national energy policy statements and, finally, what plans he has to rural-proof the national policy statements and how we expect the department to do that.
Baroness Jones of Moulsecoomb (GP)
I wish the Minister had shown me his speech before he gave it today, because I could have gone through it with a red pen. Repeating wishful thinking does not make it happen. “May” and “might” is not a policy, and I shall now describe what the Government’s energy policy should be. I am really happy to send it directly to the Minister, in case he is in any doubt about what I am saying.
If we had insulated Britain, people would not be choosing between heating and eating. If we had not “cut the green crap”, as Cameron said, over the past decade, we would be saving £2.5 billion off energy bills. If we had not had a Tory Government for the past 12 years, we would be doing a lot better than we are now.
Renewable energy was cheaper to produce than gas even before the big explosion of oil and gas prices in recent months. There is now a huge gap between what it costs to produce renewable energy and what it is sold for as part of the national grid. If renewables now dominated the energy sector in the UK, everyone would be buying electric hobs and ovens as gas prices soared and electricity prices continued to go down. Rich and poor would all be better off, and the planet would be better off; the only people not better off would be the fossil fuel companies such as Shell—but I think we can manage without their doing particularly well, personally.
We have the perverse situation where green consumers who want green energy are paying extra because we have an energy system dominated by fossil fuels. For example, if someone is selling electricity to the national grid, why are they getting only 5½p per kilowatt hour, when it is being sold back to them for 21p per kilowatt hour? I understand that operators have costs to pay, but those small-scale producers, those homeowners, ought to be getting at least twice what they are now. I have a lot of questions; that is the first.
If gas producers are pushing up the price of electricity, why are households with renewables not getting more for their investment? Why are the fossil fuel giants the ones being rewarded for destroying the planet and ripping off consumers? That is another question.
I know that the Conservative Party receives millions of pounds in donations from the oil and gas industry; we have discussed that in this Chamber before. For example, the Prime Minister got something like £2 million in donations from Russians, possibly oil and gas producers, since he became Prime Minister. The case for a dirty fuel tax is overwhelming, and I wish everyone in this House and this debate would support a move that benefits this planet and consumers. Perhaps that is another question: why not have a dirty fuel tax?
Unfortunately, we have a Government in the pay of the oil and gas industry who have agreed the price cap for consumers going up by 50% in April. By contrast, households in the feed-in tariff scheme selling electricity to the national grid are tied to the retail price index, which will go up by 7.5%. That is a decision by the Government; why is that?
The potential for solar on the rooves of houses, warehouses and shops is absolutely massive, and this is the year when the Government should be giving it the biggest push by upping the amount that people are paid. Getting solar panels on more rooftops could make us far less reliant on gas in future years. Removing the planning block on wind farms supported by their local community would stop reliance on foreign gas. In fact, bringing back all the “green crap” would make us more independent and energy secure.
It is progress—I will give the Government this credit—that the Government have removed the arbitrary cap on how large solar farms can be, but why are we still building new houses and warehouses without basics such as solar panels? Why are there any new houses being built that are not net producers of energy? That is another question. We know how to do it. We know that new houses in the decades to come will have to be built that way or retrofitted, so why do we not do it now? The clever engineers at the national grid say that they can be ready for net zero by 2025, so why cannot we make this happen sooner rather than later? That is another question.
Why can we not use the technology that we have to make renewables the dominant source of our electricity within the next three years? That is another question. Why can we not scale up the use of emerging technologies of battery storage and hydrogen production to capture all that renewable energy in a form we can use to power vehicles, houses and factories when we need it? If we show that solar panels are an investment that really pays off, then more people will see the logic of heat pumps earning them money back. Making Britain independent of foreign gas supplies is a side-benefit of going renewable, the main reason obviously being the climate crisis.
Greens are often accused of wishful thinking, but in my view, and in that of an increasing number of people, we are the realists. The reality is that we have the technology to reach net-zero carbon emissions in the next few years; what we do not have is the political will. The Government’s wishful thinking is that they can keep using oil and gas, even beyond 2050. Instead of using all the potential sources of renewables, they rely on non-existent “greenhouse gas removal technologies” —more wishful thinking—to square this circle in reaching net zero. This is the wishful thinking of politicians who have taken dirty money from the dirty-fuel industries. I am sure the Minister knows that Germany has just cancelled the Nord Stream 2 undersea natural gas pipeline and is saying that it will overhaul its energy supply strategy. I would so love the Government to do this, and I would give them full credit for it.
Another bit of wishful thinking is the Government’s approach to waste incineration, which has driven me mad since I was a councillor. It is good that the Government state:
“The amount of electricity that can be generated from EfW”—
or energy from waste—
“is constrained by the availability of its feedstock, which is set to reduce further by 2035 as a result of government policy.”
However, unless they stop local authorities building an excess of new incinerators across the country and signing up to legally binding contracts for the next 25 or even 35 years, the words have no meaning. Money talks, and the contracts require councils to burn and not recycle. In some areas, the amount of recycling is going down because of the incinerator contracts that councils have signed. Burning waste instead of recycling is bad for air pollution and, obviously, bad for the climate. Can the Government commit that they will not allow the import of waste from abroad for burning in UK incinerators?
I know that we had the debate on nuclear yesterday, where my noble friend Lady Bennett of Manor Castle demolished the Government’s arguments for it, but I will say now that nuclear is not needed. We are developing tidal and wave power. Houses leak less heat when they are insulated. We have more efficient batteries as well as the conversion to hydrogen gas. The storage of energy is becoming an everyday thing, whether that is in a car or a battery on the side of the house. In the coming decades, more and more houses and communities will become net producers of energy. Are we seriously expecting them to buy nuclear energy from Hinkley at three or four times the price they are producing it for themselves?
Nuclear is dangerous. It leaks; it produces waste that we do not know how to dispose of; and, above all, we have to build new plants on the coast in an age of rising tides. Every single IPCC report since 2007 has increased the worst-case scenario for sea levels. Sizewell C has a massive sea defence system at the height of 18 metres based on the 2018 IPCC analysis, but that worst-case scenario is already out of date this year. If we build nuclear stations, they will become islands awash with sea water.
The Government’s energy strategy needs to abandon the idea of balance based on dirty fuels, whether fossil or nuclear. It needs to do its bit to mitigate the climate emergency by fast-tracking the cheaper solutions of renewables and insulation. It needs to show some bravery and create a dirty-profits tax that will encourage clean energy. In short, the Green national policy on energy would be good for the planet, good for consumers and independent of Russian gas and the flux of world prices.
Baroness Foster of Oxton (Con)
My Lords, black gold powered the industrial revolution. Where would we be today without it? Thank goodness the noble Baroness opposite, the noble Baroness, Lady Jones, was not around at the time. To produce enough firewood in the 1860s equivalent in energy terms for domestic consumption would have needed 25 million acres of land a year—nearly the entire farmland of England.
Mining was dirty and dangerous, but it became acceptable because we needed the energy. In fact, my late grandfather was a coal miner in the Cronton colliery, which had its share of disasters. A hundred and sixty years on, we are in a very different place, because geopolitics is determining what we should do next; the debate has been taking place today in the other place. This is about not just energy supply but energy security. Successive Governments did not really see this coming. In fact, you could say that they did not see the wood for the trees. North Sea oil and gas lulled us into a false sense of security, and we should never have allowed our nuclear programme to practically wither and die. In 1997, the Blair Government failed to carry out their plans to renew four nuclear generators that we needed. A few years later, Gordon Brown sold off our new nuclear capability to Japan.
It was an interesting debate yesterday, and I welcomed the information from my noble friend the Minister on our plans to push ahead with Hinkley Point and our nuclear programme in general. I also believe that the contribution by Rolls-Royce for the mini nuclear pods is a fantastic step forward, but we need to go further. However, there is an elephant in the room that needs to be discussed. A few years ago, we thought it worth while to drill for shale gas in Lancashire—just one area out of many across the UK. It was estimated that there were 37 trillion cubic metres of gas in the Bowland fields, and extracting just 10% would have been enough for us to be self-sufficient for the next 50 years. The programme would have regenerated a number of areas and could have created 75,000 pretty skilled jobs. That is what you call a real step in levelling up, and it is only the tip of the iceberg. But it does not suit the agenda of many of the more extreme activists of the green lobby. Misinformation on safety and relentless lobbying—mostly by those who did not even live in the surrounding area—stopped the programme.
It is astonishing that our energy policy can be determined by Extinction Rebellion, Insulate Britain and others who would like to take us back centuries. The irony is that those same people expect a roof over their head, central heating, hot water, mobile phones, iPads, washing machines, a dishwasher, a car and everything else that we all expect these days, as well as clean water and food on their plate. All that requires energy, which renewables alone will never be able to provide. As we know, we import 50% of our gas from abroad, mainly from Qatar and Norway, with some from Russia. If we continue along that road, by the end of the decade that will have risen to 70%. This winter, we imported shale gas from the USA, which this year will sink 19,000 wells—up from 16,000 only two years ago. The hypocrisy is nauseating, when you come to think of it.
Is fracking dangerous? No more than other extraction processes. Will there be the odd tremor? Well, probably, but technology has moved on in leaps and bounds, and there were many more tremors and much worse happened from deep coal mining, as I highlighted. To fill in those wells is positively absurd, and to carry on increasing our reliance on energy from abroad is equally absurd when it is beneath our feet.
I have welcomed the great strides that we have made for clean and green energy provision, and I echo and welcome the detailed analysis of the situation by my noble friends Lady Neville-Rolfe and Lord Moynihan, but we need to look outside the box and keep an open mind on how we move forward. I therefore I ask my noble friend the Minister to take back these comments and to let us have a debate on the specific issue sooner rather than later.
Lord Naseby (Con)
My Lords, I apologise for speaking in the gap, but I had not realised that we had to have a list in the Moses Room. I shall be brief. I spent a number of years on the Select Committee on Energy in the other place. I very much welcome this framework, this document and the associated ones. As my noble friend just said, since Brexit we are on our own and therefore security of supply is vital.
I will make four key points. I was pleased by yesterday’s debate in our own House on nuclear. That is part of the way forward, and the very exciting bit is the development by Rolls-Royce of the mini-plant concept.
Unfortunately, solar is becoming a little controversial in rural England. The estimate given is that 150,000 acres of good farming land is being taken up every year. On top of the fact that nearly 100,000 acres are already going for other uses, industrial and so on, one has to ask, with regard to the planning decisions that are being made, whether there should be a clause or a requirement for the protection of the national interest. My noble friend may or may not know, but there is certainly considerable concern over the Mallard Pass and Cottam solar farms, and the Sunnica solar farm near Newmarket.
I have one suggestion to make, which was prompted by driving down from Northampton earlier today. There are now hundreds of warehouses across the nation and they all have flat roofs. Every one of those warehouses is an opportunity for solar. We should look at that urgently, put it into the planning requirement for any new ones and put some persuasive methodology ahead for those which have already been built.
On offshore, my noble friend Lord Moynihan covered most of that. However, I went out to offshore when I was in the Commons, and we have to make sure that we continue to explore and use those resources properly.
Finally, on the domestic front, heat pumps are not the perfect answer. They are extremely expensive. Quite frankly, I have talked to some people who have heat pumps and they are not exactly a source of warmth that most people would expect. The answer must lie in low-carbon hydrogen. I know that it is at its very early stages, but we need to move forward with research on that area, both in universities and in other research institutes. We need to give some major incentives to take it forward so that we can neutralise the gas emissions from the 70%-plus of homes that have gas-fired heating.
Lord Oates (LD)
My Lords, the Liberal Democrats welcome the fact that the Government have set an ambitious net-zero target for 2050 and have recognised that that requires a 2035 decarbonisation target for the climate sector. We also welcome the target of 40 gigawatts of offshore wind for 2030. All this ambition is welcome, and we welcome the recognition in the Overarching National Policy Statement that wholesale transformation is required in our energy system. However, we remain unconvinced that the Government recognise what they have to do to achieve those targets. These national policy statements underline the gap between rhetoric and the detailed application and clarity that are required.
The net-zero target must be the overwhelming priority and challenge for the energy sector and for government as a whole. However, these documents simply do not supply the clarity and detail that the energy industry, the planners and other decision-takers will need. To have any chance of meeting the 2030, 2035 or 2050 targets, we need a much more joined-up approach across government and industry.
The national policy statements seem to be, at best, nodding acquaintances of the Energy White Paper, the 10-point plan, the offshore transmission review and the holistic network design policy—and, at times, almost complete strangers to them. The NPSs need to be clear about how the various policy documents should be taken into account by promoters and decision-takers, because the lack of integration threatens to fatally undermine the Government’s ambitions. If we are to deliver 40 gigawatts of offshore wind by 2030, we need the transmission infrastructure to deliver it to where it is needed. As the noble Lord, Lord Whitty, said, we must address the issue of an offshore grid and how we bring it onshore. The noble Baroness, Lady McIntosh, made the startling point that we lose 30% of power in transmission, so we must think about a much smarter and more locally distributed grid.
We must think much differenter—if that is a word—about the whole way we deal with the energy system. It is not a word, by the way. As a result of all this new infrastructure, there will have to be new substations, cables and so on. It is important that we think about how the impact on communities is mitigated. What is the Government’s approach to undergrounding cables, particularly in some rural areas? What is their approach to the mitigations that communities need? Industry needs clarity on this, because it has to plan, but it does not get that from these documents.
Energy storage and release will also be critical in the new energy system that we will need. The NPS needs to be much clearer about the scale of what is required. EN2 talks about pumped hydro storage and it is welcome that it does, although it gives little detail, but there is nothing about using green hydrogen as a storage vector. The Minister will correct me but I think that, in the past year, about £1 billion was paid to abate wind. This is crazy: that wind power could be creating green hydrogen, which could then be used where we need it in the energy system. We need much more about that. That is one of the points we were discussing in the debate yesterday on the Nuclear Energy (Financing) Bill. The Government must think much more creatively about how we deliver power.
The noble Lord, Lord Whitty, and a number of others stressed the importance of energy efficiency—the noble Baroness, Lady Jones, in particular. That is critical. It is crazy that so much of the energy we consume at the moment is going not to heat us, but straight out of the roof or the windows. We need a national plan for energy efficiency. Again, we discussed this yesterday. The Minister protested that much was being done and agreed with the noble Lord, Lord West, that it was also all terribly difficult. Some of it certainly is difficult, but a lot actually is not.
What makes even the relatively easy quite hard, however, is that there is a real lack of skills. For instance, if you want exterior wall insulation on your house and are in London or the south-east, good luck with that, because the few people who can deliver it are up to their eyeballs in work—and loads of them have just given up. There have been various government projects, such as the green homes grant scheme, and previously, under the coalition, the Green Deal scheme. But the industry invests, the schemes are then scrapped and now those people are fed up.
We have a massive skills shortage and there must be a plan to deal with it. If the Government care about levelling up, one of the best ways they could deliver jobs all around this country would be to reduce the energy we consume and how much we pollute our planet. We know that the Treasury is always behind these schemes going wrong, so I have a lot of sympathy with the Minister because it always thinks in the short term and these schemes can be delivered only in the long term.
Some noble Lords who spoke in this debate did so as if the climate emergency was a concept that we could choose either to believe in or not. I can only assume that the noble Baroness, Lady Foster, has not read the IPCC report on the impacts that are coming from climate change because there was certainly no mention of them whatever in her speech or, I think, of climate change at all. We heard a lot about what she regarded as absurd, but what is really absurd is that we are still building houses that leak energy. We should have had a standard in place from 2016; one was put in place by the coalition Government but scrapped by the Government who came after them. We should not be building homes that leak energy or have no national plan for the energy efficiency of our building stock. We should never have done what the Government who came in after the coalition did, which was effectively to ban onshore wind.
The noble Baroness, Lady Neville-Rolfe, raised the issue of green levies—the noble Lord, Lord Forsyth, raised it in the Chamber earlier. We really need to be clear that it is not green levies that are pushing up energy bills at the moment but the staggering cost of fossil fuels. The sooner we move off them, the better. That is what we need to be doing. In fact, total household expenditure on energy bills fell between 2010 and 2020. It did so in large part because of the energy efficiency measures that were funded through the green levies, so we should not allow this misnomer to take hold.
My noble friend Lady Sheehan raised the concerns of the energy industry about the policy statements. I hope the Minister will answer some of the very legitimate questions that the industry posed, particularly on how the various government policy documents should be taken into account by decision-takers. Also, what is expected from industry on community mitigation and why is the work of the offshore transmission review and holistic network design not properly addressed in the NPSs? How will those statements be expanded to include hydrogen and CCS, in line with government policy?
I was struck by my noble friend Lord Teverson’s question about when the geological disposal facility will come online, and whether the date in the original nuclear planning statement for operation of the GDF from 2130 was correct. I must say that it seemed like the first realistic statement I have heard about that geological disposal facility, because we have been told decade after decade that it is just around the corner. I hope the Minister can clarify that.
As I said at the outset, we welcome the Government’s ambitious targets but we need the detail about how they will be met. These national policy statements fall short in doing that.
Lord Lennie (Lab)
My Lords, I thank the Minister for his comprehensive introductory statement and all other noble Lords for their contributions to this debate. My noble friend Lord Whitty made it plain that there is not enough imperative in these statements. They need, I guess, to be more inclined towards planning consents rather than against, or a balanced view. The noble Baroness, Lady Neville-Rolfe, reminded us that it is about keeping the lights on at the right price. The noble Lord, Lord Teverson, reminded us about avoiding silo thinking. The noble Lord, Lord Moynihan, was on about prices and costs, as a gas advocate.
The noble Baroness, Lady Sheehan, asked how often this policy and these NPSs would be reviewed. The noble Baroness, Lady McIntosh, talked about the rural effect and rural-proofing future policy, while the noble Baroness, Lady Jones, talked about replacing the whole policy, in her usual fashion. The noble Baroness, Lady Foster, advocated fracking, rather than importing fracking from the United States. The noble Lord, Lord Naseby, supported nuclear fuel, as we do as well, and advocated solar as a future-proofing of warehouses. Then we came to the noble Lord, Lord Oates, who introduced the whole concept of “differenter” to all of us, a new language for us all to grasp.
This national policy statement updates the Liberal Democrat Minister’s statement in 2011 in the coalition Government. I may be wrong, but I think that it was a Liberal Democrat Minister at the time. It will form the framework within which the Secretary of State will take decisions on the nationally significant energy infrastructure developments under the Planning Act. As we have heard, it is accompanied by a series of specific statements which in combination establish the criteria that will be taken into account when considering energy planning applications. The need for the update, as we have heard, is explained by the Government announcing the move to net zero, to be brought forward and achieved by 2050, and the marker, that we will have moved three-quarters of the way towards this by 2035. They are both confirmed in the NPS.
The dash for gas has screeched to a halt and is replaced by a reaching out for renewables. What we have is the establishing of a prime market in energy of wind, solar and nuclear fuels, with only a back-up residual use of carbon fuels as a supplement. This policy shift is welcome—but is it entirely believable? Currently, almost 80% of UK energy is fossil-fuel generated, and there are reports that the Government are about to announce, or have already announced, the licensing of six new oil and gas fields in the North Sea. The Times on Monday carried an interview with Greg Hands in which he confirmed, or appeared to confirm, that the North Sea fields would be developed as a new prime market develops. Is that true and, if so, do the Government believe that it is consistent with the prioritising of renewables in the NPS? What message do they think that it would send out to the energy market and the energy sector overall?
On timing, the need to speed up the planning process and decision making is essential, given the rightful hastening of the net-zero target. Evidence given to the BEIS Select Committee reveals that, while it takes only a year to build an offshore wind farm, it takes about eight years to get planning consents through the process. The NPS establishes a new legal framework for planning decisions, balancing the need for infrastructure against its impact on communities. If it takes eight years to gain approval for new infrastructure to support renewable energy production, it is unlikely that any approvals will be achieved before the next likely review of this NPS. Is the Minister concerned about the timescale, can it be shortened—and, if so, what evidence can the Government point to in support of that? The energy sector needs answers to these questions before risking capital on major infrastructure projects.
That leads to the whole question of costs and prices of energy. The NPS makes passing reference to the costs of energy, but does not focus on it, despite the fact that it is clearly the number one issue facing household budgets. The Chancellor has announced that households will be forced to take a loan from the energy companies in the short term, to be to be paid back in the medium term, but has not offered any longer-term solution to the problem of these high energy costs, other than the prospect of repeated compulsory loans across the board. The NPS skirts around this. It talks about energy at affordable cost, but does not put forward any proposals about how that will be achieved. Does the Minister see the issue of costs as a short-term one or as a strategic problem and, if the latter, how does he feel it should be addressed, and does he think it should be addressed in this NPS?
A decarbonised future should make the UK less reliant on the importing of energy; 79% of energy is currently fossil-fuel generated. Currently, the UK imports about half of its gas-fired energy; it is therefore significantly subject to world price movements, over which the Government remind us they have little influence or control. But the Government of the nearest neighbour, France, have announced a 5% increase, while here in the UK we face a 50% price hike in the Ofgem price cap review.
The Labour Party has no doubt that nuclear energy should play an increasingly significant part in the energy mix of the UK’s decarbonised future. Parliament debated yesterday the financing of nuclear energy, and strategically the two are interconnected—so the absence of any strategic proposal in the NPS is all the more surprising. About half of UK gas is imported, and about one-third of UK energy is gas-fired, so it is a big number when considering the fuel costs that the industry has little control over. Does the Minister see a future when UK energy cost and prices are in the main controlled by decarbonised UK energy markets? If so, when is that likely to happen, and by when will the UK no longer be reliant on importing a significant proportion of its energy?
Onshore wind development has been removed from the NPS—maybe it was in 2016, I am not sure. That appears to show a lack of confidence in that form of energy. I do not know whether it does not meet the de minimis level for inclusion in the NPS, but why was that decision taken and what impact has it had on onshore wind development? Is it because of its not meeting the de minimis levels, or other factors?
The NPS sets out a series of factors that will be taken into account by the Secretary of State in reaching his decisions about approvals of infrastructure projects. How many consents have been made since the last NPS was published? Does the Minister believe that it will increase significantly in the period before the next review? While we are on that subject, when does the Minister feel that the next review should be? Should it be in five years, as discussed in the evidence sessions before the statement was released, or in 10 years, as is the case with this NPS update from the last one? The pace of change and development in energy supply and infrastructure will be exponential in the next period, if we are to meet net zero, and the NPS needs to future-proof to reflect this. Government policy appears to be “wait and see” before judging planning applications, which will almost certainly mean that we do not meet our net-zero ambitions.
Lord Lennie (Lab)
The planning process for renewables and low-carbon development such as hydrogen and CCS should ensure support for infrastructure projects such as aviation over and above competing interests. The inclusion of emerging technologies alongside renewables that will contribute to net zero—hydrogen, CCS, biomass—as well as the infrastructure and storage necessary, should be advanced and advocated by the NPS. A presumption in favour of them in the planning process should be the watchword of the NPS, not neutrality as it currently appears; I think the noble Lord, Lord Whitty, made that point.
The long timescale between this and previous NPSs has resulted in policy falling significantly behind current thinking and technological advance. Keeping NPSs under ongoing review and updating them as required would be more likely to reflect advances in technological development and would therefore more likely play an important part in our move to net zero.
Lord Callanan (Con)
My Lords, I thank everyone who contributed to this debate. As always, it has been interesting and informative, if not all directly related to the subject under discussion—I am looking at the noble Baroness, Lady Jones; I will come on to that in a minute. I will address many of the points made in turn, but first I will bring the Committee back to the subject under discussion and will talk about the energy national policy statements.
Our world-leading agenda to transform the energy system requires a planning framework for nationally significant infrastructure which can process the pace and scale of planning decisions in line with this transformation. Updated energy NPSs are critical to achieving this. The review will make the policy framework for the provision of energy infrastructure clearer and more up to date.
In the context of the wider reform programme for nationally significant infrastructure, up-to-date energy NPSs will support project sponsors, the Planning Inspectorate and ultimately the Secretary of State in timely consideration and decisions over when and how to provide significant to critical infrastructure.
We believe that the documents we have consulted on and which are being examined by the committee of the other House at the moment strike the right balance between the need for new energy infrastructure and the impact that such infrastructure will have, and they will enable planning decisions to be taken at the required pace.
I thank the noble Lord, Lord Whitty, and many other noble Lords who have used this debate to make some interesting and wide-ranging comments on energy policy. However, I repeat that our purpose today is to consider whether the NPSs are fit for purpose in performing their critical purpose, which is to provide a legal framework for planning decisions on nationally significant energy infrastructure.
I thank my noble friend Lady Neville-Rolfe for her comments on timing and security of supply. Within that, the NPS establishes the need for the infrastructure required to deliver the energy objectives. This includes ensuring that we have a supply that is secure and reliable as well as consistent with our net-zero ambitions.
A number of noble Lords, including my noble friends Lady Neville-Rolfe and Lady McIntosh, the noble Baroness, Lady Sheehan, and the noble Lord, Lord Lennie, asked me about the timetable for future reviews. Of course, there will be change over time, and we will review the documents when appropriate—so I do not want to give an absolute commitment to a specific time; we will do it as required. The exact timing of a review will depend on the specific circumstances that apply in the case of each national policy statement, but it is expected that a public announcement on whether a review is required should be made at least every five years. This reflects the position that was set out in the Government’s published guidance.
I thank the noble Lord, Lord Teverson, for his comments on biodiversity. He will be aware that Schedule 15 to the Environment Act 2021 introduced specific requirements for biodiversity net gain in relation to NSIP development. This schedule is not yet in force, and Defra is currently consulting on exactly how it will be implemented. Of course, the NPS will be amended to bring it in line with the Environment Act before it is designated.
I welcome the comments from my noble friend Lord Moynihan and my noble friend Lady Foster’s support for the energy NPS. I can assure both of them that the NPS recognises the need for continued investment in oil and gas infrastructure during the transition to clean energy. It was recognised also by the climate change committee that we will continue to need oil and gas infrastructure during the transition. I think some of the simplistic exponents sometimes miss the point that this is a long-term transition. Unless we want to unplug people’s boilers or stop them putting petrol in their car tomorrow, there is an ongoing requirement for investment, and it makes more sense to obtain oil and gas from our own reserves than to import it from Russia, Qatar, Saudi Arabia or American shale gas reserves through the medium of LPG.
I say in response to the noble Baroness, Lady Sheehan, that we believe that the draft NPS strikes the right balance between clarity on the need for the types of infrastructure required to deliver on our climate commitments and retaining security of supply and identifying the potentially negative impacts of such infrastructure at local level. This enables planning decisions to be taken which weigh this national need against these potential impacts, based on expert evidence and, of course, on full stakeholder involvement. Of course, there will always be different views on whether we have got this balance right, and we are currently analysing the responses to the public consultation. We will take account of these and any resolutions or recommendations from the parliamentary scrutiny process before issuing our final response.
The draft NPS reflects the work of the offshore transmission network review and the policy is written to support that work. Future changes will depend on the outcome of the OTNR. The urgency and scale of offshore wind farm development—I remind the Committee that there is to be a fourfold increase by 2030—mean that radial routes to shore are in many cases not viable given the environmental and community impacts.
I say to my noble friend Lady McIntosh that we recognise the desire for a settled siting policy for new nuclear and we are seeking to deliver a robust and comprehensive framework. Three years is the rough working estimate to develop, consult and deliver on an NPS. I can assure my noble friend that a new nuclear NPS will be subject to the same requirements of public consultation and parliamentary scrutiny as these energy NPSs. I can also assure her that the NPSs cover climate change adaptation and mitigation—mitigation is covered by part 2 and new section 5.2 of EN-1.
The noble Baroness, Lady Jones—where to start? In her wide-ranging contribution, I lost count of the number of questions that she asked me. I think I got up to about 25 before I lost count. The noble Baroness will, of course, appreciate that in the context of this short debate it is not possible to answer all her points. I am sure that we will have lots of debates and questions on these subjects in future. Of course, I do not think that any of her questions had anything to do with the subject of this debate, which is on the NPS. I am afraid that the noble Baroness knows that we disagree over this. A lot of her solutions sound great, but they are overly simplistic nonsense in most cases.
In many respects, I agree with the noble Baroness. Of course, we want to see more renewables. We have the largest offshore renewable capacity in the world—and we going to increase it fourfold. It has been a British success story; the price of new offshore wind is now at record low levels. It is a good thing, but it is inherently intermittent. During the recent stormy weather, we saw that wind generation for the UK was up to almost 50% of our capacity, which is great, but a few months ago, when we had a weather depression, we saw wind capacity at about 2% to 3% of our national energy needs. We need a diverse mix of supply—so we need nuclear and existing oil and gas infrastructure and supply and, yes, we need renewables as well.
I do not disagree with the noble Baroness. Of course, we want to see energy efficiency schemes, as energy efficiency is by far the best form of generation; the energy that you do not use is required. We are spending £9.2 billion over this Parliament on energy efficiency and insulation schemes. I am proud of our record. Of course, we can have an argument over whether we should be spending even more, but as regards our levels of investment compared to any previous Government, we are spending record sums on environmental schemes. On ECO alone, the contribution that we are making to that is going up to £1 billion a year, starting in March this year, in addition to the £9.2 billion that we are investing through direct government support. The vast majority of that is going to help fuel-poor households and those on lower incomes to benefit from increased investment and increased energy efficiency in their homes, to make their bills smaller and their homes warmer. That is a key point.
I assure the noble Baroness that we will have time to debate all her many questions and points in future, but I hope that she will forgive me if I do not address all those issues now, because it is not a matter for today’s debate.
In response to my noble friend Lord Naseby, of course we need to preserve our most productive farmland as best we can, which is why the draft NPS continues to advise that the effective use of land is prioritised by focusing large-scale solar farms on previously developed and non-agricultural land, provided that it is not of high environmental value. It also suggests that, when a proposal involves greenfield land, poorer-quality land should be used in preference to higher-quality land.
In response to the noble Lord, Lord Oates, the draft energy NPS set out the Government’s policy for delivering nationally significant energy infrastructure and providing a legal framework for planning decisions at the national level. This includes balancing the need for new infrastructure against the impacts of such infrastructure. It will provide guidance on some of the issues that the noble Lord raised, such as the presumption in favour of underground cables in areas of natural beauty, but many of the important issues raised by the noble Lord, such as energy efficiency and housing, are outside the scope of these documents.
Lord Oates (LD)
I am grateful for the Minister’s response, but could he address one specific question that I asked about guidance on community mitigation? This is something that the industry is really clear on—that it needs to have guidance, because it is going to have to bring onshore lots of cable and lots of new energy infrastructure. It really needs clarity from government about what it should be doing there. I would be grateful if the Minister could address that point.
Lord Callanan (Con)
During the planning process itself, community mitigations will be taken into account, providing the national framework to enable local planning decisions to be taken. Community mitigations of course play an important part in the planning process.
As I said earlier in response to the noble Baroness, Lady Jones, improving the energy efficiency of homes is the most effective way to permanently reduce energy bills by reducing the amount of energy required to heat the home, and it can tackle fuel poverty in the long term. I covered all the schemes that we have, including ECO, home upgrade grants, the local authority delivery scheme, the public sector decarbonisation scheme and the social housing decarbonisation scheme—myriad different schemes, all contributing quietly and in the background to upping the energy performance of the homes that we all live in.
The noble Lord also mentioned the need for clarity in the approach to CCUS and hydrogen. The NPS establishes the need for CCUS and hydrogen infrastructure, but we do not want prematurely to introduce detailed guidance before we know more about the impact of such projects. We will consider whether to develop a technology-specific NPS for CCUS and hydrogen infrastructure as the technology and the project landscape evolves.
The noble Lord, Lord Lennie, asked how many consent decisions have been made under the current regime. The answer is that 65 decisions on energy projects have been made under the existing suite of energy NPSs. We are, of course, expecting a significant increase in the number of applications as the transition to net zero continues. He also asked about onshore wind. It was removed from the NSIP regime in 2016 through amendments to the Planning Act 2008. This means that all planning applications for onshore wind turbines in England are made to the local planning authority, or to the Welsh Government in Wales. As national policy statements are statutory guidance, and as onshore wind is now not included in the 2008 Act, it was no longer appropriate for the national policy statements to provide specific policies in relation to onshore wind.
Finally, to reply to my noble friend Lady Foster’s point about fracking, it is important to realise that Lancashire is not Texas. The UK is a relatively densely populated island compared to most parts of the US. Although we are not in principle against the idea of fracking, it must be done with the consent of local communities and we need to be aware of its environmental impact. Also, as we discussed during Questions in the House a few weeks ago, it is not the short-term answer that many people think it is. Even if we managed to overcome all the environmental objections, and even if we managed to progress the scheme, it would be many years, if not a decade, before we got meaningful quantities of shale gas out of the ground. Even then, the quantities that we would be able to produce in this country would have no meaningful impact on the overall gas price level. We continue to keep these matters under review, but it does not represent the easy solution that we might like to think it would in this circumstance.
Baroness Neville-Rolfe (Con)
I am grateful to my noble friend for answering all our points so clearly and fully. I asked a question about coal for heritage railways. He may not be aware of it, but in the debates on the Environment Act we were told that it would be fine because we could get coal from Russia. He may want to take the point away. Perhaps he could update us, because I assume that we will not now be getting coal from Russia. Also, I wanted clarification on an issue to do with planning. I think he said that some kind of planning for renewable infrastructure would take three years, but somebody—maybe it was the noble Lord, Lord Teverson, or the noble Lord, Lord Oates—said that it took one year to build an offshore wind turbine and eight years to get planning. Clearly, we have to speed planning up for necessary infrastructure; that has come through very strongly in the work that I have been doing in the Built Environment Committee. To have an answer on what we can now expect—how long planning applications of different types will take—either today or on another occasion would be very helpful.
Lord Callanan (Con)
The whole purpose of these national policy statements is to try to speed up the planning process in the first place by setting a national framework within which the local decisions can be taken. As with all these things, it is a question of getting the balance right. Of course we want to try to speed up the process, but the problem with energy policy is that it takes many years, if not decades, to put the infrastructure in place.
We are announcing, we hope, some progress on new nuclear and passing new legislation in the next few months to enable it but we will not see the fruits of that until the early 2030s. The process for the infrastructure which we see in place now was put in place 10 or 12 years ago. The reason that we have a problem with nuclear now—I am sorry to bring it back to party politics—was because when Labour came into office in 1997, that Government ruled out new nuclear. Tony Blair said in the manifesto “We see no case for new nuclear”. Now, that is a party-political point and I think many Labour Members now think that was a mistake—maybe it was right in the context of the time but it was probably a mistake. Correcting these mistakes takes many decades in order to get the infrastructure in place.
Lord Lennie (Lab)
If I may reinforce the point I made, if it takes eight years to get consent for something, that is eight years before the first brick is laid, as it were. If that period can be foreshortened, the fruits of the labour can be brought forward accordingly.
Lord Callanan (Con)
We are always open to finding new ways of speeding these things up, but you also have to take into account the concerns of local communities which have to put up with this infrastructure and try to mitigate the effects on them.
I return to the point that my noble friend Lady Neville-Rolfe asked me about heritage coal. I am very well aware of this issue; I am told that my noble friend Lady Bloomfield is a hero in the heritage railway community because she was able to write to them to say that heritage coal would still be available to them to operate their railways. There are many sources of coal apart from Russia. Significant quantities of coal are still produced in Germany and Poland, so I am confident that they will still be able to get the coal to power their excellent machines. I do not think anybody, even the most committed climate zealot, would object to the relatively small quantities that they would use for their heritage equipment.
Baroness Foster of Oxton (Con)
I did not raise the issue of fracking necessarily as a short-term measure. With any energy, we know that it takes a long lead-in time to come to some sort of results. One of my key points was the fact that we are already importing 50%; by the end of the decade, that will rise to 70%. Neither am I talking about doing things without the consent of people who live locally. Of course, you must have the appropriate places to do these things. I have raised this issue so that we can start looking at it. It may be feasible in the not-too-distant future. because we just do not know at the moment what is going to happen.
Lord Callanan (Con)
My noble friend makes a good point. Supplies of gas from the North Sea are slowly declining. We will still have a need for fossil fuels, gas in particular, but of course the long-term trajectory of gas use will fall as we decarbonise the power supply and heating in homes. We might well not be importing larger quantities; so it would be a larger proportion of the smaller amount that we will require in future. However, we keep all these things under review and if all the environmental objections can be overcome and the difficult engineering processes solved, we are of course open to considering that. I just caution my noble friend that the difficulties are considerable and there are no easy solutions in this.
With that, I think I have dealt with most of the points that were on the subject of the national policy statements. I thank all noble Lords for their contributions.