Baroness Sheehan (LD)
My Lords, on behalf of my friend the noble Lord, Lord Ravensdale, and with his permission, I beg leave to ask the Question standing in his name on the Order Paper.
The Parliamentary Under-Secretary of State, Department for Business, Energy and Industrial Strategy (Lord Callanan) (Con)
My Lords, the Government are confident that the policies and programmes set out in the net-zero strategy and the British energy security strategy will deliver our ambition to decarbonise electricity generation in line with net zero while enhancing security of supply and keeping energy affordable.
Baroness Sheehan (LD)
My Lords, I thank the Minister for his reply and will now read the supplementary question from the noble Lord, Lord Ravensdale. The fundamental problem is that we are not building anywhere near enough low-carbon energy capacity or grid infrastructure to allow us to meet the 2035 target. One of the priority recommendations of the Climate Change Committee’s 2022 progress report is that we need a delivery plan to provide visibility and confidence for private sector investors to reduce costs and to build up supply chains. There is a key gap here, in comparison with other sectors, because, while we have the heat and building strategy and the transport decarbonisation plan, we do not have a plan for electricity decarbonisation, despite it being so important as an enabler for those other plans. Does the Minister agree that it needs urgently to be brought forward?
Lord Callanan (Con)
We will be setting out further plans on the matter in due course. I remind the noble Baroness that, during 2021, almost 55% of electricity generated in the UK came from low-carbon sources. We have an ambitious target of rolling out 50 gigawatts of offshore wind by 2030, and we have an excellent record in this area.
Viscount Hanworth (Lab)
Have the Government thought further about small modular nuclear reactors, which could come online much sooner than the EPR nuclear reactor proposed for Sizewell? Moreover, SMRs could have significant export potential if they were to materialise in good time.
Lord Callanan (Con)
The noble Viscount is absolutely right—SMR technology is something that we are supporting. We have given hundreds of millions of pounds-worth of support to Rolls-Royce, which is looking actively at how it can roll that out. It has great potential for the future, both in this country and in its export capacity.
Baroness Meacher (CB)
Germany and France use compulsion to ensure that large buildings and building complexes such as car parks, industrial estates and retail parks install solar panels on their huge roofs. I do not think that we want compulsion in this country, but can the Minister assure the House that the department has a policy to ensure that this incredibly valuable opportunity to help save the planet is actually used across the nation, perhaps with incentives such as feed-in tariffs or grants?
Lord Callanan (Con)
I remind the noble Baroness that we have the smart export guarantee scheme to encourage precisely that. The good news is that we have already 14 gigawatts of solar installed capacity in the UK and a fourth CfD allocation round for another 2 gigawatts of ground-mounted solar awarded contracts. The Chancellor recently removed VAT on solar panels, and on solar panel and storage packages. We are doing a lot in this area. Solar is a cheap and versatile source of power, which we should encourage.
Lord Moylan (Con)
My Lords, to have a strategy for decarbonising electricity, the Government have to be able to say what will make up the supply when the wind is not blowing or the sun is not shining. I have looked high and low, but I have not found a strategy that will set that out, be it through the use of batteries or hydraulic pumps. I have not found a document that sets out the Government’s strategy for meeting that intermittency. Can my noble friend help me by pointing to one?
Lord Callanan (Con)
We have a number of energy strategies, including the energy security strategy and the net zero strategy. As I said, we will set out further plans in this area. My noble friend is right that intermittency is a problem, but I remind him that we have just invested more than £600 million in a new nuclear power station at Sizewell, and abated gas power will also be available.
Baroness Whitaker (Lab)
My Lords, before asking my question, I first congratulate the Minister on the Government’s recent announcement earlier this month that the Government are proposing to offer guaranteed prices via contracts for difference for wave power, to enable this important technology to get off the ground. Perhaps that is a small answer to the question from by the noble Lord, Lord Moylan. Can the Minister say more about government support for energy generated by community enterprises, including via the Procurement Bill?
Lord Callanan (Con)
I thank the noble Baroness for her support. She is right in that we allocated CfD support of 40 megawatts of wave and tidal stream power in the last CfD round. We want to encourage community energy and we will do all that we can, working with Ofgem, to make sure that it is supported, because it is an important form of generation that we want to secure.
Lord Birt (CB)
My Lords, by 2035, we shall need a lot more electricity to power the growth in both EVs and heat pumps installed in homes and buildings. As a multiple of current demand for electricity, could the Minister tell us what is the Government’s forecast of demand in 2035?
Lord Callanan (Con)
The noble Lord is right that we will need a lot more electricity both for EVs and for the electrification of heat. I cannot give him an exact figure at this stage—it depends on a number of different factors, not least of which is the success of our demand reduction policies.
Baroness Altmann (Con)
My Lords, another barrier to the delivery of net zero was the disappointing announcement on 14 December on the green taxonomy. Unlike the answer given by our noble friend Lady Penn on 3 November in this House, it suggested that the work might be delayed or even cancelled. Does my noble friend not agree that taxonomy of sustainable business services could help the financial services industry to identify appropriate activities to support decarbonisation of the power sector and move us to net zero?
Lord Callanan (Con)
The noble Baroness is right that green taxonomy is an important component. She will also be aware that the work is being taken forward by the Treasury, with support from BEIS and Defra. I think it is fair to say that it has a mixed record in other parts of the world, but it is certainly something that we are looking at closely.
Lord Bassam of Brighton (Lab)
My Lords, just to bring us back to the core issue, in its progress report in June the Climate Change Committee highlighted several risks that remain in meeting the emissions reductions required by 2035—particularly highlighting how supply-side focused the Government’s energy security strategy was. The Minister said earlier that plans would be brought forward in due course, but can he tell us when the Government will finally deliver the energy efficiency improvements necessary to reduce demand for fossil fuels to achieve net zero and to cut the energy bills that consumers are currently struggling with?
Lord Callanan (Con)
The noble Lord is right—energy efficiency is extremely important, which is why we are spending £6.6 billion this Parliament on various energy efficiency strategies. The Chancellor in his Budget announced another £6 billion from 2025 for energy efficiency projects. We have an ambitious target; a new task force is being set up to deliver a 15% reduction by 2030.
Lord Mountevans (CB)
My Lords, the Minister has already mentioned the support that the Government have given to Rolls-Royce in developing the small modular reactor. What plans do the Government have to assist Rolls-Royce to move this exciting British technology towards domestic delivery?
Lord Callanan (Con)
As the noble Lord said, we are supporting it. It has exciting potential, but it is in the very early stages at the moment. The designs are still being approved, but we will want to ensure that appropriate support is given to roll it out domestically—and then there is its tremendous export potential as well.
Baroness Bennett of Manor Castle (GP)
My Lords, given that it is Christmas, I—
Baroness Sheehan (LD)
Could I ask the Minister what estimate his Government or department have made of the additional costs to communities of their inefficient energy policies?
Lord Callanan (Con)
I apologise to the noble Baroness, but I really did not catch most of what her question was.