Monday 16th January 2023
(1 year, 10 months ago)
Grand CommitteeEnergy Act 2023 View all Energy Act 2023 Debates Read Hansard Text Read Debate Ministerial Extracts Amendment Paper: HL Bill 39-VI(a) Amendment for Grand Committee (Supplementary to the Sixth Marshalled List) - (13 Jan 2023)
The Deputy Chairman of Committees (Lord Faulkner of Worcester) (Lab)
Good afternoon, and welcome to the Grand Committee. I should remind the committee that if there is a Division in the Chamber while the committee is sitting it will adjourn as soon as the Division Bells are rung and resume after 10 minutes.
Clause 203: “Core fuel sector activity” and other key concepts
Amendment 213
Lord Ravensdale
Lord Ravensdale (CB)
My Lords, I rise to move this amendment in place of my noble friend Lady Worthington—who has just arrived, so I will leave it there.
Baroness Worthington (CB)
My Lords, I must start with an apology. My train was delayed for 45 minutes and many others were cancelled, so I am just about here on time. I thank my noble friend Lord Ravensdale for stepping in just as we started.
I am delighted to be here to speak to the amendments in this group which relate to the part of the Bill that seeks to take further powers to ensure that we have fuel resilience in our country. Amendments 213 to 219 seek to extend the scope of the Government’s proposals so that we have a more inclusive definition of fuel resilience beyond oil and liquid biofuels that includes gas.
The measures in this clause are a set of broad powers to allow the Government to ensure that economic activity in the United Kingdom is not adversely affected by disruption to core fuel sector activities, reducing the risk of emergencies affecting fuel suppliers. They give powers to the Government to issue directions for the purposes of managing risk, reducing potential adverse impacts and facilitating recovery from disruptions to core fuel sector activities.
The powers given to the Government by the Bill are extremely wide and potentially concerning, but I will come on to that. In essence they allow the Secretary of State to direct any core fuel sector participant to do anything for these purposes. More reasonably, they also allow the Secretary of State to require information and that certain types of incidents be reported. Leaving aside the wide-ranging nature of the powers for now, we have tabled these amendments to inquire why the definition of fuels excludes gas from the resilience proposals. I am sure I will be told that a draft version of the Bill was shared with the BEIS Select Committee, that no reference was made to gas as a core fuel and no complaints were made at that point. However comments from the committee in November 2021 were informed by the fuel shortages of autumn 2021 and since then we have seen a sharp spike in gas prices and some constraints on the supply of gas, which were exacerbated by the invasion of Ukraine. I should note that in 2021 the UK imported around 60% of its gas for use in all sectors. Although we have North Sea gas, we are by no means self-sufficient, so interruptions to fuel supplies raise problems. Gas is the sector where we remain very exposed—but that is certainly not true of biofuels. If we compare the two, the volumes are completely different and it seems odd to include biofuels but exclude gas.
Helen Thomas wrote last week in the Financial Times:
“The Rough offshore gas storage facility, partially reopened … by Centrica”
last year after having been closed for five years,
“has been steadily withdrawing gas … At about 54 per cent full … it is far from the 80 per cent-plus levels on the continent. And European storage capacity … is about 25 per cent of annual consumption compared with less than 1 per cent for the UK”.
That is equivalent to only three days, so we can see how tight some of these margins might be if there are disruptions. That could have left the country very short, especially had this winter’s weather been harsher than it has been.
Rough is not being refilled because the facility is being operated on a merchant basis rather than the strategic one which the Government might perhaps prefer. Whereas Governments in Europe can mandate storage, here, we are relying on Centrica to find a place where future prices make sense to it commercially to take storage into Rough, and it is of course looking for a decent return rather than strategic fuel resilience. The journalist added that no one thinks that storage operated on this basis will provide security of supply, and I tend to agree. I would be interested in the Minister’s thoughts on this question and on what more the Government could and should be doing to include gas in their fuel resilience strategy and indeed in this legislation.
It seems sensible that we would want the same powers, should we need them, to issue directions and to require reporting of incidents and the provision of information. Had we experienced a more severe winter, we could have come seriously unstuck, and I would like to understand how the Government would have intervened to ensure that critical businesses and households were prioritised. That is obviously an issue of some concern to the Government, given that these powers are being taken. Do the Government already have the necessary powers? If so, where are they and how would they work? I would be interested to hear more about that.
I have tabled Amendments 220 and 221 because I am seeking clarification and expressing concern about the wide-ranging nature of the types of financial assistance the Bill will allow. Certain types may be required, but why does the Secretary of State need powers to make grants, effectively, to firms involved in refining, transporting and storing fuels that are commercially very lucrative? We have all seen the headlines about how much money these companies are making, and it seems odd to take such a broad power, which could mean that public money was being spent with no requirement to pay it back to the public purse. It seems unnecessarily broad, providing the equivalent of a grant, and I would like to understand the justification for it. When looking ahead to the transition to net zero, we have described how we need to provide more public money, but it is right to say that investors in the current fossil-fuel-based energy system should have enough resources to ensure that they can meet regulations set by government without the need for further public money. That is a point that needs answering.
This is also arguably a sector that we would expect to go into managed decline as we look to electrify most of the demand being met by the current provision of these fuels, so it may be appropriate for assistance to be given. Transition loans, guarantees or even the Government taking a stake could be required to make the transition happen swiftly and in an orderly fashion, but simply giving out public money with no strings attached seems rather reckless. I would like to understand the specific circumstances and conditions under which a grant would be appropriate. If that cannot be dealt with in detail here, I would be happy to receive a letter outlining a case study that could justify this use of public money, given the economic climate we find ourselves in.
Finally, Amendment 222 is a modest proposal relating to the reporting of such financial assistance to Parliament. I could not see any reference in the Bill to the notification of Parliament in relation to these financial forms of assistance—only in relation to the scrutiny of statutory instruments or guidance. Is it really the Minister’s intention that this assistance would not be made public until BEIS’s accounts are published, which would obviously be after the horse has bolted and we would have to comb through the footnotes to understand what forms of financial assistance had been given under Clause 222? I feel quite strongly that, if it is important enough to have its own separate regime, it should be important enough to brief Parliament and there should be a protocol for notifying us of the intention to use these powers.
I have drafted an amendment that I hope the Minister will accept. If not, I look forward to assurances from the Dispatch Box about how and when Parliament will be notified before the expenditure is committed. With those remarks, I beg to move.
Lord Lennie (Lab)
My Lords, we on these Benches are generally supportive of the amendments in the name of the noble Baroness, Lady Worthington, but I would like to ask the Minister about some specifics.
Three key powers are taken under the Bill: the direction-making power, the information power and the financial assistance power. I am particularly interested in the information power. The government fact sheet states:
“The information required from industry will be limited to what is necessary and Government will work with industry to minimise any administrative burden incurred.”
What practical protections will be in place to ensure that this information is limited in this way, and what, in practice, is meant by:
“Government will work with industry to minimise any administrative burden incurred”?
I would welcome a response to those questions. If the Minister cannot answer today, writing will do.
Baroness Bloomfield of Hinton Waldrist (Con)
I thank the noble Baroness, Lady Worthington, for her amendments. I start by reminding noble Lords that this part of the Bill was published in draft and scrutinised by the BEIS Select Committee.
Amendments 213 to 219 seek to include gas under the definitions of core fuels and core fuel sector activity. These measures broadly seek to address threats to the security of fuel supply by introducing powers to ensure fuel supply resilience for the core fuel sector. They capture companies involved in oil-based products, which include heating oil, liquefied petroleum gas and gas oil, also known as red diesel.
I understand the reasoning for gas to be included in these definitions, given that it is utilised for heating and cooking in homes as well as fuelling power stations that provide electricity and contribute to overall energy security. Some forms of gas are, however, already included in this measure, such as liquefied petroleum gases—propane and butane.
I believe that my noble friend the Minister has previously written to the noble Baroness to highlight that the way gas is transported, handled and stored is different from oil, which operates under a separate regulatory regime. For the benefit of your Lordships’ House: gas is transported and handled across the country through a network of pressurised pipelines that connect gas terminals to the distribution network, and this infrastructure is owned by the national grid. I also highlight that the measures in the Bill are limited to the resilience and continued operation of the core fuel sector, which we traditionally refer to as the downstream oil sector.
The inclusion of gas generally would significantly widen the scope of this part and bring a wide range of stakeholders who are already heavily regulated into the scope of the Bill. The level of regulation and resilience in place for the gas industry is significantly higher than that of the oil sector and I caution against adding further regulation to the sector of the kind outlined by these amendments.
I assure the noble Baroness that the gas system is resilient and we have a highly diverse source of gas supply in Great Britain to rely on. It includes pipelines from the UK and Norwegian continental shelves, interconnection with the European continent and three liquefied natural gas—LNG—terminals, providing Great Britain with one of the largest LNG import infrastructures in Europe. I am sure the noble Baroness is aware that last summer the UK was responsible for providing a significant amount of natural gas to mainland Europe through this land bridge.
National Grid Gas has robust, long-standing emergency procedures in place for the extremely unlikely event of an emergency on the gas network. The Government continue to work closely with Ofgem, National Grid Gas and other key industry organisations to monitor the gas supply horizon and prepare for the winter. The overarching aim is that fuel supply is maintained as we transition to a net-zero economy, and I assure noble Lords that the department is also exploring the longer-term options for gas storage and other clean energy, such as hydrogen.
I turn now to Amendments 220, 221 and 222, which relate to the financial assistance measures under Clause 222. It is important to highlight that the Government currently have no dedicated powers to enable spending for the purpose of core fuel resilience. I must emphasise that existing spending powers are limited in terms of their application. Current powers do not apply to providing financial assistance for the purpose of improving or maintaining the resilience of the core fuel sector.
Baroness Worthington (CB)
I thank the noble Baroness for her response. I will indeed study her reply in detail; I am grateful for the information provided.
In the recently published net-zero review by Chris Skidmore, there was a statement that we would review the regulatory regime to make sure that it is fit for a net-zero transition. I wonder if some of the points made about how we traditionally define core fuels need perhaps to be thought about in the light of the transition that we are about to go through. It is clear that rising electrification and reducing demand for chemical fuels could cause unexpected consequences and shortages in the future. In fact, if we had had a different set of circumstances this winter, with less wind, more cold snaps and greater demand for gas across the continent—where it has been unusually warm—we could have found ourselves in a situation where we may well have had a very efficient gas transportation network owned by National Grid, but would have been reliant on access to a sufficient source of fuel to be transported through the network.
That is where storage comes in, which is why the focus has been on that rough storage site and what would now appear to be the rather reckless commercial decision not to keep that as part of our infrastructure. That is what I am trying to get at: are we seeing resilience as a holistic system-wide measure? It is clear that these things all interrelate. We cannot take the traditional view that there is a downstream fuel sector that relates just to oil and transportation needs and not consider chemical fuels being used for other vital sources of security and health—heating our homes, keeping ourselves safe and well through the winter months and other needs throughout the year.
I thank the noble Baroness for her response, but I would like to reconsider. Of course, at this stage I will not press those amendments.
On the question of public money, I am somewhat reassured that there “may” be a requirement to make it public that this sort of assistance is being granted, through transparency rules. I will look at them to interpret that “may”, because it is a rather weak word. It would be good if it was a requirement. These are potentially untrivial amounts of money going to a sector which, as has been described, is not short of resources to meet its needs. We need to be very careful in taking these broad powers.
If anything, the noble Baroness has worried me slightly further in saying that this is a non-exhaustive list and that it could happen anyway without these powers. I will give that further consideration and definitely look at the examples of housing and regeneration, but we are talking about a unique sector that is tied to our health, prosperity and security. We need to take a systems approach to resilience—the interconnectedness between all the different fuels and the electricity that will be a growing part of our energy system as it replaces these fuels over time. With thanks again for the response of the noble Baroness, I beg leave to withdraw the amendment.
Lord Callanan
“Chapter 1Offshore wind electricity generationMeaning of “relevant offshore wind project”In this Chapter, “relevant offshore wind project” means a project involving the planning, construction, operation or decommissioning of—(a) a generating station in the UK marine area, that generates electricity from wind, or(b) infrastructure, in the UK marine area, used or intended for use in connection with a generating station within paragraph (a).”Member's explanatory statement
This new Clause, to be inserted as the beginning of a Chapter 1 for Part 11 of the Bill about offshore wind electricity generation, defines what is meant by “relevant offshore wind project”.
The Parliamentary Under-Secretary of State, Department for Business, Energy and Industrial Strategy (Lord Callanan) (Con)
My Lords, I will also speak to Amendments 222ZB, 222ZC, 222ZD, 222ZE, 222ZF, 242I and 246A in my name. They will deliver on commitments we made in the British Energy Security Strategy to support the simplification of the offshore wind consenting process while continuing to protect our marine environment and meet our international conservation obligations.
The UK is a leader in offshore wind—we have the most installed capacity in Europe, as the Committee will be bored of hearing me say. Our ambition is shared across the devolved Administrations and we recognise the key role of Scottish projects in particular, as well as Welsh projects in the Celtic Sea. We will continue to work with the devolved Administrations as the Bill progresses through Parliament and as we develop subsequent secondary legislation to ensure a streamlined and efficient consenting process across the whole of the United Kingdom.
Amendment 222ZA sets out definitions for the subsequent clauses and Amendment 222ZB allows the use of strategic compensation measures to discharge obligations under the habitats regulations, the Marine and Coastal Access Act 2009 and the Scottish and Northern Irish equivalents. If all feasible options to avoid, reduce or mitigate any adverse impact on protected sites have been exhausted, the consenting authority may decide that an offshore wind project is in the public interest. However, it must first satisfy itself that sufficient compensatory measures are taken or secured before granting consent.
Identifying ecologically robust and securable compensatory measures in the marine environment frequently causes delays to project consent. To date, these measures have been delivered on a project-by-project basis. This is likely to become increasingly challenging. This amendment will enable earlier identification and agreement of suitable compensatory measures on a larger scale across multiple projects, which will help to support quicker decision-making on consents. Ministers in the devolved Administrations will retain their current roles in consenting. This amendment will ensure that they are also able to agree and secure strategic compensatory measures to satisfy compensation obligations for projects to which they consent.
Amendment 222ZC will enable the creation, operation and management of one or more marine recovery fund. The funds, once established, will be an optional mechanism for offshore wind developers to discharge a specified consenting condition that will help to compensate for damage to a protected site by paying into the fund. The Secretary of State will be able to delegate functions connected with the marine recovery fund. It is our intention to delegate the functions necessary for devolved Administrations to operate their own funds where appropriate, so that their Ministers may choose to use a marine recovery fund to undertake the delivery of measures related to projects to which they consent.
Amendment 222ZD will help to speed up the consenting process by streamlining assessments, including the habitats regulations assessment process. It will do this by enabling future regulations to address environmental protection of all protected marine sites early enough in the pre-application planning process to inform adequate and ecologically robust mitigation measures. This amendment also allows the Government to consider enabling developers to provide compensatory measures that improve wider marine ecosystems. I must emphasise that this broader approach would be considered only where developers have already avoided and mitigated their environmental impacts, and where like-for-like measures are not possible. Consent decisions will remain subject to advice from Defra’s statutory nature conservation bodies and their equivalents in the devolved Administrations.
Amendment 222ZE requires the Government and the devolved Administrations to consult each other, as well as statutory nature conservation bodies and marine regulatory bodies, on changes to the process prior to making regulations on environmental assessments.
In addition to Amendment 222ZA, Amendment 222ZF sets out some key definitions for the purposes of these new clauses. Amendment 242I ensures that the provision about affirmative procedures in the UK Parliament does not apply to regulations made by the Scottish Ministers under Amendment 222ZD, which will instead be subject to affirmative procedure in the Scottish Parliament. Amendment 246A sets out the commencement date of the clauses in this chapter. With that, I beg to move.
Baroness McIntosh of Pickering (Con)
My Lords, it would be churlish of me not to congratulate and thank my noble friend the Minister and the department on bringing forward the amendments to which he just referred. He promised these at Second Reading and they form part of a package, from April 2020, in the British energy security strategy. So far, so good. However, as I mentioned at Second Reading, in the EU Energy and Environment Sub-Committee some two or three years ago we took evidence to the effect that there should be a moratorium, particularly given the scale of the programme, the numbers involved and the massive area to be covered by offshore wind development; as my noble friend said, that is a very ambitious programme. However, the government amendments are flouting the mitigation hierarchy that I am sure he would wish to sign up to. The amendments seem to be proceeding to the end stage, which is only meant to be a last resort in law: that is, mitigation and compensation.
Baroness Young of Old Scone (Lab)
My Lords, I shall speak to the government amendments, the accompanying policy statement and Amendment 242D in the name of the noble Baroness, Lady McIntosh.
There is absolutely a need for a real balance when it comes to the speed of getting both onshore and offshore wind online. There is no point in reaching net zero if behind us is the other threat that the ecosystems on which we all depend have started to collapse. The Environmental Audit Committee in the other place has already said that the planned fourteenfold increase in offshore energy production risks sensitive marine and onshore environments, so we really have to look carefully at how we get the balance between the two drivers. I share the view already put that some of the safeguards in the policy statement need to be toughened up and put in primary legislation, in a Bill.
The amendments give Ministers pretty broad powers. Although I am sure this Minister is wholly trustworthy, Ministers come and go. In common with the noble Baroness, I ask the Minister to support some strengthening of his amendments. First, there should be the clear presumption against development in protected areas, particularly marine protected areas, by avoiding those at all costs for renewable energy developments, rather than relying on shutting the stable door after the horse has gone by providing compensation. The mitigation hierarchy that the noble Baroness, Lady McIntosh, outlined is fundamental to that. Its principles are, first, avoid; if you cannot avoid, then reduce and mitigate impact; and then, only as a very last resort, compensate. That needs to be enshrined in law, and I look forward to the Minister’s response on where the mitigation hierarchy is in legal terms.
There is a message that the Government need to give to developers of offshore and onshore wind and associated infrastructure: that, to be honest, avoiding protected areas, particularly MPAs, means avoiding hassle. If it looks too easy to focus on protected areas as part of the area available without too much hassle because that is all downstream, developers will not make the effort.
The second issue is compensation and making sure that it does not damage the coherence of the marine protected area network. There is an Environment Act target to have 70% of MPAs in a favourable condition by 2042; they will not be in a favourable condition if they have wind farms on them. We need a joining up of government, so that the left hand and the right hand are aware of what each is doing. Distressingly, we see that not happening from time to time in the relationship between BEIS, DLUHC and Defra. Perhaps we can urge the Minister to get the rest of government to walk, talk and chew gum at the same time. We need to make sure that there is a process for measuring the intentions of the compensation, reviewing that periodically and, if it is not working, doing something different.
The third thing that needs to be toughened is the clause—of which I am deeply suspicious—that makes it possible for Ministers to override the protections of the habitats regulations and the Marine and Coastal Access Act. I understand that the Minister will say that the imperative reason of the overriding public interest test will be used and compensation will be available, but that is no substitute for the statutory protections that have revolutionised biodiversity and ecosystem protection over the last 30 years. It would be greatly detrimental and, in my view, the thin edge of the wedge if we saw that diminution happening. We are going to have this argument in bucketloads on the retained EU legislation Bill. The reality is that these pieces of legislation have proved very effective and anything that undermines them would be a backward step. As I have said before, policy statements and ministerial commitments come and go.
Can the Minister tell us how his amendments can be strengthened to give statutory assurances that there will be no weakening of protection for designated marine sites? There is a lot of space and a lot of wind out there at sea; putting wind power sites in areas not long designated for protection—it is comparatively recently that all these marine protected areas have been declared—is not something we should see going forward. Can the Minister assure us that he will consider these concerns and come back with a way forward before Report?
Baroness Worthington (CB)
My Lords, I congratulate the Government on bringing forward these amendments to help us to reduce the delays that are often commonplace when it comes to investment in our offshore wind industry, which has been one of the crown jewels of the UK’s energy transition. We can all look back and say that it was a wise group of civil servants and Ministers who understood the sheer potential of that transition to a wind-based economy in the North Sea. Many of the jobs that have shifted from our offshore oil and gas sector in maintaining the oil rigs are now being deployed in the maintenance of this very important part of our new and clean energy system.
It is very rare that I deviate from the noble Baroness, Lady Young, in my belief in preserving the wildlife, countryside and marine environment that we all enjoy—indeed, I started my career in conservation and it is a very deeply felt passion of mine. I therefore have sympathy for the amendment from the noble Baroness, Lady McIntosh of Pickering, but—and this may seem a little heretical, I am afraid—I feel that we must take a systematic and holistic view of this. If we are going to start enshrining mitigation hierarchies in legislation, the very first place that we should apply those is to the fossil fuel industry, which this Bill largely concerns itself with. It would be disproportionate to introduce this merely for offshore wind in this part of the Bill. We should be seeking to avoid and mitigate before we compensate—certainly before we give money out to the oil and gas industry for fuel security reasons. It would be disproportionate to simply apply it to the offshore wind industry which, let us be honest, is part of the solution.
If we care about the marine environment and marine mammals specifically, the damage being wrought on those species and habitats from the existing fossil-fuel-based energy system should be first and foremost in our minds. We have no real evidence for why cetaceans are beaching. The noble Baroness, Lady McIntosh of Pickering, infers that it could be because of wind farms. We do not have evidence of that; what we have evidence of is the build-up of toxic chemicals in these mammals.
Baroness Young of Old Scone (Lab)
I just want to address the Minister on what the noble Baroness has just said. She has made an admirable case for marine protected areas being protected from all sorts of things. The opportunity in front of us is to do that job as the legislation is going through on offshore wind. I absolutely make the case that saying, “Let me be good, but not yet” is not in the interests of marine conservation and some of the hugely important ecosystems that are under threat from all sorts of other things. If we wait for all of them to be addressed before addressing offshore wind, we will wait for ever, and they will be gone.
Baroness Worthington (CB)
Since we are having this conversation, it is not a question of putting off these measures but of proportionality and ranking those impacts according to the scale on which they are occurring today, taking into account the positive impacts of offshore wind on no-take zones and the artificial reefs they create, as well as the advances in technology that mean that floating platforms will be more common.
Then there is subsea cabling. The noble Baroness, Lady McIntosh, did not pick up on the fact that the 30% loss she cited is very old data. We do not see those losses now, with modern technology. Subsea cabling will be the future of connections into existing places where there are already reinforced grids, thanks to the closing down of thermal plants. I do not see that we should be unduly raising issues and putting more and more barriers in the way of clean technologies delivering great reductions in emissions, as well as providing energy security and jobs. I support the Government’s amendments and I am sorry that I cannot be more supportive of the amendment proposed by the noble Baroness, Lady McIntosh of Pickering.
Lord Teverson (LD)
My Lords, before I start, as we may talk about energy storage later, I declare my interest as a director of Aldustria Limited, which is into energy storage. I am also chair of the Cornwall and Isles of Scilly Local Nature Partnership.
First, I congratulate the Government on the Chris Skidmore report that has just come out. It is one of the best reports sponsored by the Government, and I look forward to hearing their reaction to its recommendations. There is some really good stuff in there that must be applauded.
Generally, I welcome these amendments. We know that we have to decarbonise our energy and, in particular, our electricity system; the Government have committed to do so completely by 2035. To do that, we have to make sure that we can deliver. Probably pretty well everybody agrees that methods of implementation, planning and getting wind farms into the gestation period all need to happen quicker, but we also know that there is a biodiversity crisis.
I say to the noble Baroness, Lady Worthington, that I deal a lot with the Wildlife Trusts, and it is about nature recovery, not stopping stuff. No other organisation is more into pointing out that we have been in retreat, we continue to retreat and that we need to reverse that—and the ways of doing so, primarily through agriculture but also, in the marine environment, various other ways as well.
I get a bit involved in the Celtic Sea development, which, I am pleased to say, the Minister mentioned. Down in the south-west we have been saying that there needs to be a holistic look at the effects of that programme on the environment—marine and terrestrially, where it comes on board—and that the research needs to be done in advance. That should quicken it, in that it is done in one whole system rather than by individual planning applications for individual farms or floating facilities, and so on. Through that, there is not necessarily a conflict between the two.
I very much support the exposition of the noble Baroness, Lady McIntosh, about the hierarchy, because I am certain that, as we know from onshore and things we have talked about before, off-setting as we knew it is an excuse, mainly for developers—I declare that I have a developer role. It is sometimes too easy to push the problem somewhere else and not confront it where you are actually causing the damage. One of the problems is enforcement and making sure that those things actually happen.
As I said, I generally welcome these amendments and trying to speed up the process, which is necessary, but, like the noble Baroness, Lady Young, I am concerned that we need to make sure that the powers given under these amendments are restricted to environmental improvement, in that they do not detract from that. I am particularly interested in how this compensation might work. The mitigation hierarchy absolutely needs to be put in primary legislation, but I want to understand from the Minister whether it is the Government’s intent that mitigation elsewhere should be a last resort. That is the fundamental question, and I would be very interested to hear the answer.
On the voluntary marine recovery fund, the idea of a voluntary fund seems very strange to me. What does it mean? I would like to understand from the Minister whether it means that, ultimately, it is voluntary. Is it voluntary for a developer that cannot do mitigation as we would all wish to contribute to this fund, or is it, at that point, compulsory? I do not get it. If it is voluntary, I am heavily concerned.
In addition, who will manage it in England? I understand well and I agree that it should be farmed out to the devolved authorities, but who will be the manager of that fund? I assume that it would involve rather large amounts of money, so how it is managed will be particularly important.
I also understand, although I do not think it is in the amendments, that there will be offshore wind environmental standards; I think that is in part of the briefing. I presume that these will have to be done by Defra. Defra is absolutely useless at doing environmental standards anything like on time. It has the whole of the EU repeal legislation Bill to do; I think the Defra Minister, Richard—
Lord Teverson (LD)
Yes; the noble Lord, Lord Benyon, said that there were 1,200 pieces of legislation. I am therefore very concerned about how those standards will be produced and when. Perhaps the Minister could just give us an idea of those deadlines. I have a concern about enforcement generally but I am sure that the Minister will say, “They will be enforced.”
I have a further question in this area, which is around making sure in future that we have much better co-ordination on new developments and sharing infrastructure. I know this has come up in the Bill, but can the Minister assure us that this will be much better managed than in the past and that it will be a network rather than point to point? I again congratulate the Government on their agreement with the EU last month on the North Seas Energy Cooperation forum, which the UK has now joined. That makes complete sense to me. I will be interested to hear from the Minister what the next step on that co-operation is.
Baroness Blake of Leeds (Lab)
I start by thanking the Minister for his full explanation of the amendments in this group. I also thank all those who have contributed to the discussion so far and I very much look forward to the answers the Minister will give to the relevant questions that have been asked.
Obviously, the Government’s ambition of delivering up to 50 gigawatts of offshore wind by 2030, including up to five gigawatts of innovative floating offshore wind generation, is to be welcomed. However, as we have heard, this is a challenge in terms of delivery and obviously, it poses questions about the impact on the wildlife in the areas where these installations will go.
I understand that Denmark is well advanced in this respect, particularly on innovative floating offshore developments. Are we in dialogue with Denmark about its experience in this area? What has it learned, and does it have the same measures in place? It does not seem that we need to be setting this out if some of these challenges have already been met or understood, or indeed through implementation. I know that one of Denmark’s real concerns is moving the energy off the island and how that will be achieved, but also energy storage. Perhaps the Minister could enlighten us as to the thinking on putting in these installations and how we will get the maximum benefit from them without losing, as we have heard, some of the valuable energy delivered through the process.
Lord Callanan (Con)
My Lords, I thank all noble Lords for their contributions to this debate and the broad support for the government amendments. I congratulate the noble Baroness, Lady Worthington, on summarising quite well the dilemma that we all face in these matters: we can spend lots of time doing lots of very detailed environmental assessments and take everything into account, but the practical effect is that we continue with the existing power generation system that we know is damaging. I am not pretending that any of these issues is easy, but we think that we have provided a balance.
I start by providing reassurance that these amendments will not change the level of environmental protection, only the responsibility for delivering those actions, to ensure that they are implemented at the earliest opportunity and across a broader area than planned.
I thank my noble friend Lady McIntosh for her Amendments 242C and 242D on the impact of offshore wind farms on wildlife and marine habitats. On her first amendment, I reassure her that the Government already have in place rigorous environmental protection processes which each offshore wind development must undergo. These include a requirement for the Secretary of State to consult the relevant statutory nature conservation body and an examination of each application by an examining authority—in this case the Planning Inspectorate—which makes an independent recommendation to the Secretary of State. When developers submit their applications, they are required to provide information to enable the competent authority—in this case the Secretary of State—to undertake various assessments, including an environmental impact assessment and, where relevant, a marine conservation zone assessment and/or a habitats regulation assessment. These evaluate the impacts that the projects will have on the environment throughout their operational life cycle, from construction right through to eventual decommissioning.
Turning to Amendment 242D, I welcome my noble friend’s interest in our marine protected areas network. The current planning and legislative frameworks already ensure that offshore wind developments undergo rigorous scrutiny to identify impacts on marine protected areas, including the environmental assessments that I have just outlined. If at any stage of its life cycle the offshore wind farm would have impacts on protected sites and those impacts cannot be avoided, reduced or mitigated, but at the same time the project is considered to be in the public interest, then the Secretary of State, as the appropriate authority, has a duty to ensure that the necessary compensatory measures are put in place.
Defra is currently leading work with the offshore wind industry and other stakeholders to develop a library of ecologically robust and commercially feasible strategic compensation measures. Those compensation measures within the library will have had their effectiveness and feasibility tested before they are ever placed in that library. We also intend to introduce a set of offshore wind environmental standards for offshore wind farms, including a noise standard. The standards will apply across the industry and will, we hope, reduce the overall environmental impact of the sector.
It should not be automatically assumed that offshore wind developments will necessarily be harmful to marine protected areas. In many cases, such developments, as the noble Baroness, Lady Worthington said, may be compatible with the conservation objectives of the marine protected area in question. In any event, the Secretary of State cannot provide consent for an offshore wind development unless they are satisfied that the sequential legislative tests have been met.
Baroness McIntosh of Pickering (Con)
I understand that in Norway oil and gas firms are required to publish the environmental data that they hold. Would my noble friend see fit to ensure that the same happened here? What sort of environmental impact assessment is done before planning is given?
Lord Callanan (Con)
I have just outlined to my noble friend all the different assessments that are carried out before permission is given. The Planning Inspectorate makes a recommendation to the Secretary of State, and all those documents are published when relevant consents or others are given. If that is not the case, I will correct that for my noble friend, but as far as I am aware they are all published.
In respect of the comments that were made about the onshore grid, the amendments here apply only to the offshore elements of the wind farm development, which are the generation station itself and the offshore transmission. The building and the upgrade of the onshore network infrastructure—I am well aware that that is a very controversial subject in certain parts of the country, particularly East Anglia, at the moment—will always be subject to separate planning applications from National Grid, which is undertaking that work.
I reassure my noble friend that the wider offshore wind environmental improvement package has an evidence programme looking at all environmental impacts of offshore wind and how to address them, including a workstream on the impact of noise on marine mammals. The offshore wind environmental standards will use that evidence base to suggest any appropriate mitigation measures that developers can take. With that explanation, I hope my noble friend is reassured that existing legislation provides for robust protection for wildlife and for our marine habitats, and will therefore feel able to not press her amendments.
I turn to the question from the noble Lord, Lord Teverson, about whether the fund is voluntary. The marine recovery fund will be an optional framework through which developers could discharge a condition of their consent, to compensate for any adverse environmental effects on a protected site or sites that cannot otherwise be avoided or mitigated. Developers will of course retain the ability to deliver compensation outside the MRF. Again, Defra is currently looking at a range of potential operators for the fund. We will set out further details in the regulations when they are tabled, and I am sure we will have further debates on that important subject. I thank noble Lords for their contributions to the debate.
Baroness McIntosh of Pickering (Con)
Would my noble friend explain the status of the mitigation package, with compensation coming last and mitigation, recovery and all the other aspects coming first? What is its status in law?
Lord Callanan (Con)
Yes, of course, mitigation avoidance will always come first. It is only as a last resort, if it cannot be avoided or mitigated, that compensation will be looked at as an alternative—only at the very last stage.
Baroness Worthington (CB)
Has the Minister considered whether, if the development is actually increasing biodiversity because of the no-take effect, it should get credits, and maybe money back?
Lord Callanan (Con)
That is a very interesting point from the noble Baroness, which we will take into account.
Lord Callanan
“Strategic compensation for adverse environmental effects(1) This section applies where a public authority is subject to one or more environmental compensation obligations in relation to one or more relevant offshore wind projects. (2) “Environmental compensation obligation” means—(a) a statutory duty (however expressed) to secure that measures are taken to compensate for adverse environmental effects of a project, or(b) a statutory condition (however expressed) requiring a public authority, before granting consent for the doing of an act by a person (“P”) in connection with a project, to be satisfied that P will take or secure the taking of measures to compensate for adverse environmental effects of the act.(3) The public authority may determine that—(a) measures taken or secured by the authority in the exercise of any of its functions, or(b) measures to be taken or secured by the authority in the exercise of any of its functions,are to count towards discharging the environmental compensation obligation or obligations to which the authority is subject.(4) In this Chapter, “adverse environmental effect” means—(a) anything that adversely affects the integrity of any site comprised in the national site network, or(b) anything that hinders the achievement of the conservation objectives stated for a protected marine area.(5) The measures referred to in subsection (3) may be measures taken at the site or sites of the project or projects to which the measures relate or elsewhere.(6) In this section—“act” includes omission;“the national site network” has the same meaning as in the Conservation of Habitats and Species Regulations 2017 (S.I. 2017/1012);“protected marine area” means an area designated under—(a) section 116 of the Marine and Coastal Access Act 2009 or section 13 of the Marine Act (Northern Ireland) 2013 (c. 10 (N.I.)) (marine conservation zones), or(b) section 67(1)(a) of the Marine (Scotland) Act 2010 (asp 5) (marine protected areas);“statutory” , in relation to a duty or condition, means imposed by or under primary legislation.(7) For the purposes of subsection (3), a public authority (“authority A”) may, with the consent of another public authority (“authority B”), treat measures taken or secured (or to be taken or secured) by authority B as taken or secured (or to be taken or secured) by authority A in the exercise of any of its functions.(8) In subsection (4)(b), the reference to the conservation objectives stated for a protected marine area is a reference to the conservation objectives stated for the area pursuant to (as the case may be) section 117(2)(b) of the Marine and Coastal Access Act 2009, section 14(2)(b) of the Marine Act (Northern Ireland) 2013 or section 68(3)(b) of the Marine (Scotland) Act 2010.”Member's explanatory statement
This new Clause provides that where a public authority is under obligations relating to the provision of environmental compensation in relation to one or more relevant offshore wind projects, the authority may allocate measures taken or secured by the authority towards the discharge of those obligations.
“Marine recovery fund(1) The Secretary of State may by regulations make provision for the establishment, operation and management of one or more marine recovery funds.(2) A marine recovery fund is a fund— (a) into which payments may be made in respect of relevant offshore wind projects, and(b) out of which payments may be made towards expenditure on measures to compensate for adverse environmental effects of one or more relevant offshore wind projects.(3) The following provisions of this section are without prejudice to the generality of subsection (1).(4) Regulations under this section may make provision—(a) for and in connection with the determination of the extent to which a payment into the fund discharges a compensation condition imposed on a person in connection with the granting of consent in respect of a relevant offshore wind project;(b) for a payment into the fund to be treated as discharging a compensation condition to the extent determined by virtue of paragraph (a).(5) “Compensation condition”, in relation to a person, means a condition requiring the person to take measures to compensate for adverse environmental effects of a relevant offshore wind project.(6) Regulations under this section may make provision—(a) enabling payments to be made out of the fund towards expenditure described in subsection (2)(b);(b) about the persons to whom such a payment may be made;(c) enabling conditions to be imposed on a person to whom such a payment is made in connection with the taking of measures described in subsection (2)(b).(7) Regulations under this section may make provision—(a) about the recovery of costs incurred in connection with the exercise of functions conferred by the regulations;(b) conferring functions, including functions involving the exercise of a discretion, on the Secretary of State;(c) for the delegation of functions conferred on the Secretary of State.(8) Regulations made by virtue of subsection (7)(c) may provide that a function may be delegated—(a) to a Scottish public authority only if the function relates to the taking or securing of measures in Scotland;(b) to a Welsh public authority only if the function relates to the taking or securing of measures in Wales;(c) to a Northern Ireland public authority only if the function relates to the taking or securing of measures in Northern Ireland.(9) Regulations made by virtue of subsection (7)(c) must provide that the delegation of a function—(a) may be cancelled by the Secretary of State in accordance with the regulations;(b) does not prevent the Secretary of State from carrying out any function delegated.(10) Regulations under this section are subject to the negative procedure.(11) References in this section to a Scottish public authority, a Welsh public authority or a Northern Ireland public authority are to a public authority whose functions are exercisable only or mainly in or as regards Scotland, Wales or Northern Ireland (as the case may be).”Member's explanatory statement
This amendment provides for the establishment by regulations of one or more marine recovery funds, out of which payments may be made towards environmental compensation measures required as a result of relevant offshore wind projects.
“Assessment of environmental effects etc(1) The appropriate authority may by regulations make—(a) provision for and in connection with the assessment of the environmental effects of relevant offshore wind projects in relation to protected sites;(b) provision about the taking or securing of measures by a public authority in compensation for any adverse environmental effects of a relevant offshore wind project in relation to protected sites (“compensatory measures”).(2) The appropriate authority is the Secretary of State, subject to paragraphs (a) to (c)—(a) the Scottish Ministers are the appropriate authority in relation to relevant offshore wind projects in the Scottish inshore region, other than in relation to qualifying Secretary of State functions;(b) the Welsh Ministers are the appropriate authority in relation to relevant offshore wind projects in the Welsh inshore region, subject to subsection (3) and other than in relation to qualifying Secretary of State functions;(c) DAERA is the appropriate authority in relation to relevant offshore wind projects in the Northern Ireland inshore region, other than in relation to qualifying Secretary of State functions.(3) In subsection (2)(b), “relevant offshore wind project” does not include a project relating to a generating station that has a capacity such that the construction or extension of the generating station would be a nationally significant infrastructure project (within the meaning given by sections 14 and 15 of the Planning Act 2008).(4) The provision that may be made by virtue of subsection (1) includes provision—(a) specifying the matters to be dealt with by an assessment;(b) about the procedure to be followed in carrying out an assessment, including when an assessment must be carried out and matters that must be taken into account;(c) specifying the person by whom an assessment, or a specified kind of assessment, must be carried out;(d) requiring an assessment to be carried out by a specified person in specified circumstances;(e) authorising or requiring the supply of information (including information the supply of which would not otherwise be permitted) for the purposes of an assessment;(f) enabling a person carrying out an assessment (an “assessor”) to require a person who has applied for consent to provide the assessor with assistance for the purposes of or in connection with the assessment;(g) prohibiting the granting of consent in respect of a project where an assessment has not been carried out in accordance with the regulations;(h) about when or how compensatory measures must or may be provided;(i) disapplying or otherwise modifying, whether generally or in specified circumstances or subject to specified conditions—(i) any of the provisions listed in subsection (5)(a), (b), (c) or (d) (as the case may be);(ii) any relevant Habitats Directive rights.(5) The provisions referred to in subsection (4)(i)(i) are—(a) in the case of regulations made by the Secretary of State—(i) section 126 of the Marine and Coastal Access Act 2009; (ii) regulations 9 and 10 and Part 6 of the Conservation of Habitats and Species Regulations 2017 (S.I. 2017/1012);(iii) regulations 6, 27, 28 and 30 to 37 of the Conservation of Offshore Marine Habitats and Species Regulations 2017 (S.I. 2017/1013);(iv) any other provision that relates to the taking or securing of compensatory measures, where the provision is made by or under an Act;(b) in the case of regulations made by the Scottish Ministers—(i) section 83 of the Marine (Scotland) Act 2010 (asp 5);(ii) regulations 3 and 3A and Part 4 of the Conservation (Natural Habitats, &c.) Regulations 1994 (S.I. 1994/2716);(iii) regulations 9 and 10 and Part 6 of the Conservation of Habitats and Species Regulations 2017 (S.I. 2017/1012);(iv) any other provision that relates to the taking or securing of compensatory measures in or in relation to the Scottish inshore region, where the provision is made by or under an Act of the Scottish Parliament;(c) in the case of regulations made by the Welsh Ministers—(i) section 126 of the Marine and Coastal Access Act 2009;(ii) regulations 9 and 10 and Part 6 of the Conservation of Habitats and Species Regulations 2017 (S.I. 2017/1012);(iii) any other provision that relates to the taking or securing of compensatory measures, where the provision is made by or under an Act or Measure of Senedd Cymru;(d) in the case of regulations made by DAERA—(i) section 23 of the Marine Act (Northern Ireland) 2013;(ii) regulations 3 and 3A and Part 4 of the Conservation (Natural Habitats, etc.) Regulations (Northern Ireland) 1995 (S.R. (N.I.) 1995 No. 380);(iii) regulations 9 and 10 and Part 6 of the Conservation of Habitats and Species Regulations 2017 (S.I. 2017/1012);(iv) any other provision that relates to the taking or securing of compensatory measures in or in relation to the Northern Ireland inshore region, where the provision is made by or under Northern Ireland legislation.(6) But regulations under this section may not disapply or otherwise modify, or make provision which could undermine or circumvent—(a) section 126(7)(a) or (b) of the Marine and Coastal Access Act 2009, section 83(4)(b)(i) or (ii) of the Marine (Scotland) Act 2010 or section 23(7)(a) or (b) of the Marine Act (Northern Ireland) 2013,(b) regulation 64 of the Conservation of Habitats and Species Regulations 2017,(c) regulation 29 of the Conservation of Offshore Marine Habitats and Species Regulations 2017,(d) regulation 49 of the Conservation (Natural Habitats, &c.) Regulations 1994,(e) regulation 44 of the Conservation (Natural Habitats, etc.) Regulations (Northern Ireland) 1995, or(f) any provision about qualifying Secretary of State functions (unless the regulations are made by the Secretary of State). (7) Regulations under this section may make provision—(a) enabling the appropriate authority to direct a person to take steps or to refrain from taking steps;(b) requiring a person given such a direction to comply with it.(8) Regulations under this section may require the appropriate authority or a specified person—(a) to give guidance about specified matters;(b) to consult specified persons, or persons of a specified description, before giving guidance by virtue of paragraph (a).(9) Regulations under this section may confer functions, including functions involving the exercise of a discretion—(a) in the case of regulations made by the Secretary State, on any person;(b) in any other case, on a person other than a Minister of the Crown.(10) The functions that may be conferred on a person by virtue of subsection (9) include a function of giving advice in relation to the application or exercise of any other function, whether exercisable by that or another person, under or by virtue of regulations under this section.(11) In this section—“protected site” has the meaning determined in accordance with regulations under this section; and those regulations—(a) must be framed so that protected sites consist of natural habitats or habitats of species, and(b) must in particular include protected marine areas;“qualifying Secretary of State functions” means functions of the Secretary of State in relation to relevant offshore wind projects in (as the case may be) the Scottish inshore region, the Welsh inshore region or the Northern Ireland inshore region;“relevant Habitats Directive rights” means rights, powers, liabilities, obligations, restrictions, remedies and procedures that continue to be recognised and available in domestic law by virtue of section 4 of the European Union (Withdrawal) Act 2018 (including as they are modified by domestic law from time to time), so far as derived from Article 6 of Council Directive 92/43/EEC of 21 May 1992 on the conservation of natural habitats and of wild fauna and flora;“specified” means specified in regulations under this section.”Member's explanatory statement
This new Clause enables the Secretary of State, the Scottish and Welsh Ministers and the Department of Agriculture, Environment and Rural Affairs in Northern Ireland to make regulations about the assessment of environmental effects of relevant offshore wind projects and about environmental compensation.
“Regulations under section (Assessment of environmental effects etc): consultation and procedure(1) The Secretary of State must, before making regulations under section (Assessment of environmental effects etc), consult—(a) the Marine Management Organisation,(b) the Joint Nature Conservation Committee,(c) Natural England,(d) the Scottish Ministers and Scottish Natural Heritage, so far as the regulations relate to relevant offshore wind projects or protected sites in Scotland, (e) the Welsh Ministers and the Natural Resources Body for Wales, so far as the regulations relate to relevant offshore wind projects or protected sites in Wales,(f) DAERA, so far as the regulations relate to protected sites in Northern Ireland, and(g) such other persons as the Secretary of State considers appropriate.(2) Regulations made by the Secretary of State under section (Assessment of environmental effects etc) are subject to the affirmative procedure.(3) The Scottish Ministers must, before making regulations under section (Assessment of environmental effects etc), consult—(a) the Secretary of State,(b) the Marine Management Organisation, so far as the regulations relate to protected sites in England or the Northern Ireland offshore region,(c) Natural England, so far as the regulations relate to protected sites in England,(d) the Joint Nature Conservation Committee, so far as the regulations relate to protected sites in such part of the UK marine area as is beyond the seaward limits of the territorial sea,(e) Scottish Natural Heritage, so far as the regulations relate to protected sites in Scotland,(f) the Welsh Ministers and the Natural Resources Body for Wales, so far as the regulations relate to protected sites in Wales,(g) DAERA, so far as the regulations relate to protected sites in Northern Ireland, and(h) such other persons as they consider appropriate.(4) Regulations made by the Scottish Ministers under section (Assessment of environmental effects etc) are subject to the affirmative procedure (see section 29 of the Interpretation and Legislative Reform (Scotland) Act 2010 (asp 10)).(5) The Welsh Ministers must, before making regulations under section (Assessment of environmental effects etc), consult—(a) the Secretary of State;(b) the Marine Management Organisation, so far as the regulations relate to protected sites in England or the Northern Ireland offshore region,(c) Natural England, so far as the regulations relate to protected sites in England,(d) the Joint Nature Conservation Committee, so far as the regulations relate to protected sites in such part of the UK marine area as is beyond the seaward limits of the territorial sea,(e) the Scottish Ministers and Scottish Natural Heritage, so far as the regulations relate to protected sites in Scotland,(f) the Natural Resources Body for Wales, so far as the regulations relate to protected sites in Wales,(g) DAERA, so far as the regulations relate to protected sites in Northern Ireland, and(h) such other persons as they consider appropriate.(6) The power of the Welsh Ministers to make regulations under section (Assessment of environmental effects etc) is exercisable by statutory instrument.(7) A statutory instrument containing regulations made by the Welsh Ministers under section (Assessment of environmental effects etc) may not be made unless a draft of the instrument has been laid before, and approved by a resolution of, Senedd Cymru.(8) DAERA must, before making regulations under section (Assessment of environmental effects etc), consult— (a) the Secretary of State,(b) the Marine Management Organisation, so far as the regulations relate to protected sites in England or the Northern Ireland offshore region,(c) Natural England, so far as the regulations relate to protected sites in England,(d) the Joint Nature Conservation Committee, so far as the regulations relate to protected sites in such part of the UK marine area as is beyond the seaward limits of the territorial sea,(e) the Scottish Ministers and Scottish Natural Heritage, so far as the regulations relate to protected sites in Scotland,(f) the Welsh Ministers and the Natural Resources Body for Wales, so far as the regulations relate to protected sites in Wales, and(g) such other persons as DAERA considers appropriate.(9) The power of DAERA to make regulations under section (Assessment of environmental effects etc) is exercisable by statutory rule for the purposes of the Statutory Rules (Northern Ireland) Order 1979 (S.I. 1979/1573 (N.I. 12)).(10) Regulations may not be made under section (Assessment of environmental effects etc) by DAERA unless a draft of the regulations has been laid before and approved by a resolution of the Northern Ireland Assembly.(11) In this section, “protected site” has the same meaning as in section (Assessment of environmental effects etc).”Member's explanatory statement
The new Clause inserted by this amendment sets out consultation and other procedural requirements relating to the making of regulations under the new Clause about assessment of environmental effects of relevant offshore wind projects.
“Interpretation of Chapter(1) In this Chapter—“adverse environmental effect” has the meaning given by section (Strategic compensation for adverse environmental effects)(4);“consent” means any consent, approval, permission, authorisation or confirmation (however described or given) that is required, or otherwise provided for, by or under primary legislation;“DAERA” means the Department of Agriculture, Environment and Rural Affairs in Northern Ireland;“England” includes the English inshore region and the English offshore region;“Minister of the Crown” has the same meaning as in the Ministers of the Crown Act 1975 (see section 8(1) of that Act);“Northern Ireland” includes the Northern Ireland inshore region;“primary legislation” means—(a) an Act of Parliament,(b) an Act or Measure of Senedd Cymru,(c) an Act of the Scottish Parliament, or(d) Northern Ireland legislation;“protected marine area” has the meaning given by section (Strategic compensation for adverse environmental effects)(6);“public authority” means—(a) a Minister of the Crown,(b) the Scottish Ministers,(c) the Welsh Ministers,(d) a Northern Ireland department, or (e) any other person with functions of a public nature;“relevant offshore wind project” has the meaning given by section (Meaning of “relevant offshore wind project”);“Scotland” includes the Scottish inshore region and the Scottish offshore region;“UK marine area” has the meaning given by section 42(1) of the Marine and Coastal Access Act 2009;“Wales” includes the Welsh inshore region and the Welsh offshore region.(2) References in this Chapter to the English, Scottish, Welsh or Northern Ireland inshore and offshore regions are to be construed in accordance with the Marine and Coastal Access Act 2009 (see section 322 of that Act).”Member's explanatory statement
The new Clause inserted by this amendment contains some further definitions of expressions used in the new Chapter consisting of the new Clauses inserted by the amendments in Lord Callanan’s name for insertion before Clause 225.
Baroness Sheehan
“Transparency of decommissioning costs(1) The Secretary of State must publish, within 6 months of this Act coming into force and not less than every 3 years thereafter, a statement on decommissioning offshore installations that includes—(a) a list of decommissioning relief agreements in force and the qualifying companies which are parties to each agreement,(b) the estimated likely range of the total future amount of tax relief to be granted in respect of any decommissioning expenditure under existing decommissioning relief agreements under—(i) current oil, gas and decommissioning prices, and(ii) expected future oil, gas and decommissioning prices,in current prices and as a proportion of tax revenue paid by qualifying companies which are parties to those agreements;(c) an assessment of how the estimates under paragraph (b) would be affected by world oil and gas prices equal to the lowest cost of global oil and gas production.(2) In this section—“decommissioning relief agreement” and “qualifying company” have the meanings given in section 80 of the Finance Act 2013;“offshore installation” has the meaning given in section 44 of the Petroleum Act 1998.”Member's explanatory statement
This amendment is intended to bring greater transparency to the future taxpayer liability in respect of decommissioning relief agreements.
Baroness Sheehan (LD)
My Lords, I rise to speak to Amendments 222A and 227AA in my name. I put on record my support for Amendment 223 in the name of my noble friend Lord Teverson; Amendment 227 in the name of the noble Baroness, Lady Bennett of Manor Castle; Amendment 227A in the names of the noble Lord, Lord Lennie, and the noble Baroness, Lady Blake of Leeds; and Amendment 232 in the names of my noble friend Lord Teverson and the noble Baroness, Lady Bennett of Manor Castle, to which I have added my name. I regret that I cannot offer support to the remaining amendments in this group, which I am sure will come as little surprise to those who tabled them.
I start with my Amendment 222A on decommissioning tax reliefs, and why I think it necessary. I hope that I can provide some useful background information, taken mostly from the National Audit Office report of January 2019 entitled Oil and Gas in the UK—Offshore Decommissioning. The report sets out the landscape of oil and gas decommissioning so that Parliament is in a position to consider whether the various government departments involved are protecting taxpayers’ interests effectively. The report states that:
“There are currently around 320 fixed installations, such as oil platforms, in production in the UK, primarily in the North Sea. … Oil and gas operators … are increasingly decommissioning their assets as they are reaching the end of their useful economic lives … Decommissioning affects the government’s finances because operators can recover some of their costs through tax reliefs. These enable operators to deduct decommissioning costs from their taxable profits and potentially claim back some taxes that they have previously paid.”
That is all well and good, and fairly normal practice. However, the report goes on to say:
“With decommissioning activity increasing, the government is paying out more in tax reliefs for decommissioning at the same time as tax revenues have fallen due to a combination of lower production rates, a reduction in oil and gas prices and operators incurring high tax-deductible expenditure.”
That represents a triple whammy for UK taxpayers such that, as the report says:
“In 2016-17, the government paid out more to oil and gas operators in tax reliefs than it received from them … for the first time”.
While oil and gas expansion looks artificially secure, with very generous tax reliefs, it is nevertheless clear that government is, on behalf of taxpayers, taking on a liability that is ultimately unknown. The lower and upper estimates of decommissioning costs from the Oil and Gas Authority, now known as the North Sea Transition Authority, are £38 billion and £61 billion respectively, but even that is only a guestimate. With another round of new licences being issued—potentially up to another 100—the risk is enormously compounded. Furthermore, it used to be that a ceiling was kept on the overall cost to the taxpayer by the fact that a firm cannot claim back more in decommissioning tax relief than it has previously paid in tax. However, since 2017, when firms default, government has explicitly said that partner firms that pick up the Bill can claim back more in tax relief than they have ever paid.
This amendment is designed to put more information into the public domain about who the taxpayer is on the hook to; what the liability amounts to, as a proportion of tax received; and by how much this amount will increase in a low-demand world, which is the way in which we are headed.
The amendment asks for three things. First, in proposed new subsection (1)(a), it asks for
“a list of decommissioning relief agreements”
and who has signed them—because at the moment we have no idea. We know how many there are—approximately 100—but not who those agreements are with. As the taxpayer faces a liability from each of these agreements, at an average of £200 million per agreement, some public transparency is desirable.
Lord Teverson (LD)
I shall speak to my Amendments 223 and 232, but I am in sympathy with my noble friend Lady Sheehan’s amendments. On flaring, we are undoubtedly the dirty man of the North Sea. Although the Minister may say that over the past year we have reduced our flaring by some 20%—we are starting to get there—as my noble friend said, really it should be zero, as many North Sea neighbours have been able to do.
Amendment 223 effectively bans fracking. It is straightforward, in black and white. I shall go through a bit of modern history—this Government’s view of fracking. In November 2019, there was a moratorium on fracking. In September 2022, fracking was allowed. In October 2022, fracking was banned. Let us be clear about this: we need a little certainty and the firm smack of decisive government here. Let us put this to bed by putting a ban on fracking in primary legislation.
With the cost of energy from gas at the moment, the problem is that in the UK we are still overdependent on gas, but our production, even with fracking, would be minuscule in terms of global production, so it would have little effect on the market price. Looking back to last February, Kwasi Kwarteng tweeted
“UK producers won’t sell shale gas to UK consumers below the market price. They are not charities.”
Indeed they are not. Fracking in this country will make no difference to gas prices at the moment. It will take some years to develop it, and the time is past. Let us be decisive about this and make clear where the UK stands.
Amendment 232 is very similar; it concerns England, because this is a devolved area. We should end the licensing of new coal mines. I was quite shocked at the end of last year that the Whitehaven mine in Cumbria was approved, and that it was approved by the Levelling-Up Secretary, Michael Gove, who should know better, having invented the 25-year environment plan, knowing all about these issues and being one of the best Environment Secretaries we have had for many years and a member of a Government who have sufficient respect and leverage to say no to something that should not happen. We have become an international laughing stock in many ways. Our reputation has been straightforwardly destroyed by hypocrisy.
I looked at a BEIS press release from just over a year ago, on 3 November 2021, regarding COP 26. It says:
“The end of coal—the single biggest contributor to climate change—is in sight thanks to the UK securing a 190-strong coalition of countries and organisations at COP26, with countries such as Indonesia, South Korea, Poland, Vietnam, and Chile announcing clear commitments to phase out coal power … Business & Energy Secretary Kwasi Kwarteng said: ‘Today marks a milestone moment in our global efforts to tackle climate change as nations from all corners of the world unite in Glasgow to declare that coal has no part to play in our future power generation. Spearheaded by the UK’s COP26 Presidency, today’s ambitious commitments made by our international partners demonstrate that the end of coal is in sight.’”
A year later, just after COP 27 has finished, we have the Government declaring that a coal mine should open in England.
Lord Lilley (Con)
Would the noble Lord remind the Committee that that coal mine will not produce power—all the pledges that he has just talked about concern the use of coal to produce power—but steel?
Lord Teverson (LD)
The noble Lord makes a very good point. One-fifth of that production is estimated to be going towards steel, an industry that needs to decarbonise and has said that it will do that itself. The other 80% is to be exported and will be used as energy. I cannot understand what else it would be used for.
Lord Teverson (LD)
But that industry should be decarbonised. Whatever the noble Lord says, it goes exactly against what we as a nation have said about the future of coal. That brings disrespect, I am sad to say, on not just this Government but this country. That is why I believe this amendment is an important one to go forward.
If the Government cannot agree to the amendment from the noble Lord, Lord Lennie, on the name of the Oil and Gas Authority then there is absolutely no hope for the Bill. I also very much support the amendment by the noble Baroness, Lady Bennett. I remind the Committee that the International Energy Agency’s executive director, Fatih Birol, said at the end of last year:
“If governments are serious about the climate crisis, there can be no new investments in oil, gas and coal, from now—from this year.”
Lord Moylan (Con)
My Lords, I shall speak to Amendments 224 and 230 standing in my name. Before I do so, I shall make a supportive remark about Amendment 226 in the name of my noble friend Lord Lilley.
I remind the Committee, since it is such a long time since Second Reading back in July, that the context in which it was introduced was one of a very serious energy crisis. Whether or not we have a climate crisis is highly debateable, and many of us do not accept that alarmist language. However, that we undoubtedly had an energy crisis in the course of last year is absolutely manifest in the lives of hundreds of thousands, if not millions, of ordinary people living in this country. Although we have been assisted by the weather in having a very moderate winter and therefore less demand for domestic energy, none the less that energy crisis has not abated; prices remain extremely high and energy is in short supply. We all know the reprehensible reasons lying behind that and we condemn Russia’s action in Ukraine, but none the less there is no likelihood of it ending very soon, as far as anyone can see, and we have a very serious crisis. That is the background to the amendments that I am speaking to. It is remarkable that in the same group there are a number of other amendments that seek to cut off—radically, permanently and, by statute, for ever—access to energy supplies that we have available to us.
The noble Baroness, Lady Sheehan, was somewhat surprised that I should talk in Amendment 224—which I will speak to in more detail in moment—about increasing gas supply to reduce foreign dependency. The noble Baroness seems to think that we have a target of zero carbon emissions set in law in this country. We do not; we have a net-zero target and there is nothing that I am aware of in government policy that says that the use of some amounts of carbon, including gas, in our energy mix over the long term is not both foreseeable and acceptable, provided that it meets a net-zero target.
Lord Teverson (LD)
I am not objecting to importing. I have supported fracking in the past. The point is that the time has gone; it has all changed. The United States has been fracking for some time; I have no problem if we import that. My whole concern is about new sources and new exploration.
Lord Moylan (Con)
I am grateful for that clarification. If the noble Lord is saying that the time has gone, that, it seems to me, is essentially a commercial and practical judgment. It may be right—I do not run a fracking company; I know very little in practice about fracking. It is possible that the time has gone in commercial terms, and that it might not be a sensible thing to do in current circumstances. None of that is grounds for ruling it out as a matter of statute and prohibiting it. It is complete nonsense to suggest doing that. We will leave fracking to one side for the moment.
I turn to Amendment 230, a much narrower and more technical probing amendment which relates to the composition of the domestic gas supply. It takes me back to my boyhood and the childhoods of a number of people in this Room, though not all, who might remember what life was like before we had North Sea gas pumped into our homes. We had town gas, which was produced from coal. Its content was a mixture of gases, including CH4, CO, CO2, H2, higher-order hydrocarbons and phenols. The composition was adjusted according to the calorific value.
When we switched over to North Sea gas, the composition of the gas that we used became over-whelmingly methane, with a small amount of higher-order hydrocarbons. The switchover to using methane allowed the calorific value to be higher. Those of us with very long memories will recall that it was marketed as “high-speed gas”, which meant “hot”—it had a high calorific value, so you could cook that much faster. Moreover, we then put that composition into legislation, which I am grateful to the Library for finding for me: the Gas Safety (Management) Regulations 1996, which are referred to in my Amendment 230.
The result is that, today, a significant amount of gas that we could extract from the North Sea is not being extracted because it cannot be used in our domestic supply by law. In effect, a lot is going to waste. The proposal in this probing amendment is to ask the Government to reflect on this and consider whether, given the energy crisis we have been facing, it might not be sensible and possible to amend those regulations so that we could make use of many of these gases that are currently going to waste but could, none the less, be fed into our domestic system. It could mean that the calorific value would be a little lower in our cookers, so it might take a little longer to bake a cake—a number of television programmes might be affected by this in detail; the outcomes might change—but in terms of efficiency, at a time when we desperately need energy, it is certainly worth looking at.
Baroness Hayman (CB)
I have listened to the noble Lord with some interest, but those of us with long memories remember the dangers inherent in the gas that was used before the date he was talking about and the number of suicides that took place. Does he think there is a health and safety issue to consider before going back to those days and that sort of gas?
Lord Moylan (Con)
The name of the regulations that I am suggesting we review is the Gas Safety (Management) Regulations, so I fully acknowledge that this is a question of safety, but it is not necessarily the case that these regulations, passed in 1996, that we are still adhering to could not be looked at to see whether, precisely as I say in my amendment, they could be
“safely amended to allow more efficient use of extracted … gas.”
It may be that they cannot but, nearly 30 years on, it would be helpful if the Government could look more closely at this.
My principal point in raising these amendments relates to Amendment 224. A bit like the noble Baroness, Lady Worthington, earlier, I want to know whether the Government have a strategy for resilience. Do they contemplate the dependence on foreign supplies going on endlessly in very large measure, and what would they like to do about it? I think that an awful lot of people in this country were shocked to discover our level of dependency on imports and would like to hear that we are becoming more self-sufficient.
Baroness Sheehan (LD)
My Lords, may I address some of the noble Lord’s responses to my comments earlier? It is clear to me that we have a fundamental difference of opinion on the science behind climate change. I believe that climate change is real, as is shown by the change we are experiencing. What evidence can the noble Lord point to that climate change is not real? There is substantial evidence of it, including the unprecedented levels of the concentration of carbon dioxide in the atmosphere, as verified by ice core samples from the Antarctic and tree rings over millennia. The changes in carbon dioxide correlate precisely to the changes in climate that we have seen in historic times. That is the basis on which my amendments have been tabled, and they are clearly designed to meet the Government’s legal duties under the Climate Change Act and their need to reduce oil and gas consumption to meet net zero by 2050. The noble Lord’s amendment talks about a strategy for increasing domestic gas production. That cannot be compatible with meeting climate change targets—the Government have a legal duty to do that. Will the noble Lord, Lord Moylan, please accept that?
Lord Moylan (Con)
I am grateful for those points, which I will try to answer briefly since they were put to me directly.
First, I hope that nothing in what I said suggested, implied or stated that I do not accept that climate change is happening. I am also perfectly happy to accept that there is a man-made contribution to that. What I reject is the language of climate alarmism and climate crisis. The questions around the consequence, in practice, of climate change and the best means for dealing with it remain absolutely open. Over the last 20 years, we have seen wild, extravagant and unjustified claims about how large parts of the world are going to sink under water and we are all going to scorch; in fact, we see very little of that, but we see a few weather events being played up as if they are great catastrophes. Even if that were happening, the question that arises is what you do about it.
Many of us would rather put the emphasis on mitigation and adaptation rather than what we are doing at the moment, which is absolutely damaging our economy, in order that we should try to avoid those emissions. The cost of that damage to our economy has been estimated by the Climate Change Committee as at least 1% of GDP per annum—most people recognise, I think fairly, that it is closer to 4% or 5%. There are those who would say that that that cost is both necessary and justified, but it is none the less a damage to our economy, and not all of us accept that it is necessary and justified—we think that there are other methods of dealing with it.
I have not rejected climate change. I accept that net zero is a statutory target—I said nothing contrary to that. If I may repeat myself—this is my fault entirely; it is the problem with having an amateur such as myself drafting amendments—I apologised when I spoke for using the word “increase”, which I can change if we come back to this on Report. That was not quite what I meant; I meant increase relative to imports, such that I explained that my amendment would be applicable even if our consumption of gas was falling.
There is not that much in the substance of the comments that the noble Baroness, Lady Sheehan, made about my remarks. None the less, we have a profound disagreement—less about the science and more about what to do about it.
Baroness Bennett of Manor Castle (GP)
My Lords, rising to speak after the contribution of the noble Lord, Lord Moylan, and his representation of an extremely minority view, I will restrain myself and simply say that there will be no jobs on a dead planet. I will leave it there.
Lord Lilley (Con)
I shall speak to Amendment 226 and say a few words about Amendment 223 in the name of the noble Lord, Lord Teverson, and, by implication, Amendment 227 to which the noble Baroness, Lady Bennett, has just referred.
The noble Lord, Lord Teverson, said he is against just new supply and not fracking as such, in which case, why has he singled out fracking and not sought to ban new North Sea fields? If he were logical, he would be signing the amendment tabled by the noble Baroness, Lady Bennett of Manor Castle, which seeks to ban all new fields.
Lord Teverson (LD)
That is a very good question. It is partly answered by the fact that I put my amendment down first before the other amendment went down. The other answer is that in all legislative processes—the noble Lord, Lord Lilley, will know far more about this than me—you try to go for what might be possible, and I suspect that the Government are less keen on the amendment tabled by the noble Baroness, Lady Bennett, whereas all my amendment does is confirm present government policy.
Lord Lilley (Con)
So, had the noble Baroness, Lady Bennett, got her amendment in first, the noble Lord would have signed it. It is interesting to know that the Liberal Democrats are against any new fields in the North Sea.
What I want to try to get home to those members of the Committee who have not yet taken it on board is that up to now we have pursued a path to net zero which involves reducing demand for fossil fuels by replacing fossil fuels with renewable energy. That is a logical path to pursue. We have not been seeking to achieve it by reducing supply of fossil fuels. As a result, if people choose to produce more fossil fuels than there is demand, as demand falls fossil fuel producers will be left with stranded assets and lose money. It could not happen to a nicer bunch of people, but why should we think that our judgments are better than theirs or worry about them erring and producing too much, investing too much and not getting their money back? That is up to them.
Lord Lilley (Con)
May I pursue the point? When I have made it and made my own case, I look forward to the noble Baroness demolishing it.
We will continue to use gas, albeit in reducing amounts, for decades, probably alongside carbon capture and storage. That is accepted by almost everybody I know. If the UK bans production, which would be an absurd thing to do, given that we do not ban imports of natural gas, we will simply leave others to supply our needs and needs elsewhere in the world. If lots of countries decide to ban new supply, if they succeed in reducing supply faster than we reduce demand, there will be shortages. Prices will shoot up. There will be the same sort of crisis—and huge profits for the oil industries—and we will have done to ourselves what Putin has done to us by reducing supply more rapidly than demand. I want to know why the noble Baroness, Lady Bennett, and the noble Lord, Lord Teverson, want to introduce that sort of risk into the system. Why not just pursue the steady path of reducing demand until it is net zero?
Baroness Bennett of Manor Castle (GP)
It is interesting that the noble Lord’s analysis bears a great deal of resemblance to that of the fossil fuel non-proliferation treaty proponents, who point out that we have been seeking to reduce demand and say that they explicitly want to reduce supply. I think the noble Lord was making the case that the price will go up if there is not enough supply. Of course, the reverse is true: if there is too much supply, the price will go down. Indeed, we saw this during Covid, with petrol in the United States—gas, as they call it—where people were actually being paid to store and hold it, because you cannot switch these supplies on and off like a tap. Once you build a field, you are going to keep producing that stuff: you cannot suddenly switch it on and off. So, if you have overproduction, you have extremely low prices and those prices, of course, do not reflect the actual cost and the damage being done, either in terms of the climate or all the other damages that the WHO, signing up to this treaty, points out, in terms of the damage done to human health by burning fossil fuels.
Lord Lilley (Con)
If that the best argument against the thesis I put forward, I know I am on strong ground. The noble Baroness says that we might end up with cheap fuel and the oil companies losing money: well, I can cope with both those things.
Baroness Sheehan (LD)
Will the noble Lord at least agree that, when we are looking at supply and demand and prices going up and down, that will work only where we have a level playing field? Where you have a market that is skewed, with perverse incentives, such as tax reliefs in the example I gave on my first amendment, that really negates his argument: you cannot say supply is going to be one factor and then have it overridden by incentives to investment that reduce the risks for the people taking them.
Lord Lilley (Con)
I think that is a rather different set of arguments. My point is that we can approach net zero by reducing demand and let supply find its own level, with or without incentives. Incidentally, the idea that there are incentives to oil production, when the taxes at our pumps are a massive proportion of the price we pay and when oil in the North Sea pays double the corporation tax rate that other companies do in any other industry, is simple nonsense.
However, now I will turn, if I may, to my own Amendment 226, which would ensure that the conditions relating to vibrations from drilling for shale should not exceed those applied to other industries, for example under British Standard 5228. There is no reason that shale drilling should face different conditions as to the tremors it may cause from, say, quarrying, mining, construction or pile driving. In particular, there is no reason, other than environmentalist virtue signalling, why standards for shale as far as tremors are concerned should be stricter than drilling for geothermal or carbon capture and storage—other than that they get positive ticks from the green lobby whereas shale does not, even though we are going to continue using gas for many decades to come.
Indeed, recently, there was a 1.6 magnitude tremor in Cornwall as a result of drilling for geothermal. People could feel it. It did not do any damage, of course, and it is an order of magnitude higher than the maximum tremor that we allow without stopping production in shale. The level set by Sir Ed Davey when he was Secretary of State for Energy was a magnitude of 0.5 and the one in Cornwall was 1.6. Sir Ed Davey has since admitted that he was proud that, by setting this limit, he effectively stopped the fracking industry in this country. Of course, that was not what he said at the time.
At the time, he said that he was accepting the report that came out at the time. It was an excellent report, produced by the Royal Society for Science and the Royal Academy of Engineering, called Shale Gas Extraction in the UK: a Review of Hydraulic Fracturing. The opening paragraph states:
“The health, safety and environmental risks associated with hydraulic fracturing (often termed ‘fracking’) as a means to extract shale gas can be managed effectively in the UK as long as operational best practices are implemented and enforced through regulation.”
So it gave a pretty clear vote of support. It said that the
“magnitude of seismicity induced by hydraulic fracturing would be no greater than”
magnitude 3, which would be
“felt by few people and result in negligible, if any, surface impacts.”
So we are left with this absurdly low criterion, which is an order of magnitude more severe than that applied to any other industry.
It is not only an order of magnitude; it is entirely unreasonable. Natural earthquakes in this country can be several orders of magnitude greater than is permitted as a result of fracturing for shale gas, and these natural earthquakes occur with little damage. I can remember being woken up at midnight on 23 September 2002 in London. My whole house shook and the windows rattled and I was woken. It was the only time—no, I will not say anything about that. The earthquake was actually centred in Dudley in the Midlands and was a force 4.7 and had that effect in London. There were no reports of damage anywhere in the United Kingdom as result of it—and that was 500 times greater than the highest seismicity induced so far by fracking in the UK, let alone the low 0.5 standard set. Over the last 50 years, according to the British Geological Survey, there have been 25 natural earthquakes of greater than or equal to magnitude 4 and in the last 60 days we have had 29 minor earthquakes in the United Kingdom about which no one has complained at all.
The University of Liverpool produced a study using seismicity measurements which showed the impact of a whole range of household events. I have a copy of it here. It showed that, for example, a door slamming uses more vibration at its surface than the maximum magnitude permitted from fracking in the United Kingdom. So does sitting down suddenly on an office chair, or a building site piledriver 15 metres away. They are all similar orders of magnitude—they are 0.6—but you can find things which are an order of magnitude higher, and we should remember that this is a logarithmic scale. Dropping a large bag of shopping has a magnitude of 1.5 and a toddler playing on a wooden floor, I am astonished to learn, can produce seismicity of 2.1. So we are talking about having such a degree of security against any seismic shock resulting from fracking as to be completely ridiculous.
Baroness Altmann (Con)
I thank my noble friend for giving way. I have listened carefully to his arguments and would like to ask him whether he is excluding the other risks associated with fracking. Whether or not there are earthquake risks, surely we have the pollution of the groundwater, the toxic chemicals being released, the ground level ozone, air pollution and the use of large volumes of water in a country which had water shortages not that long ago and indeed where the geography seems to be rather different from that in other countries where fracking has been so successful.
Lord Lilley (Con)
I have good news for the noble Baroness, because those issues were covered in Shale Gas Extraction in the UK: A Review of Hydraulic Fracturing, produced by the Royal Society and the Royal Academy of Engineering. We are all constantly urged to follow the science, so let us follow the science in that review. She discussed water, and according to the review:
“Overall water use is important. Estimates indicate that the amount needed to operate a hydraulically fractured shale gas well for a decade may be equivalent to the amount needed to water a golf course for a month”.
That seems something with which we can probably cope. She then discussed the possible results leading to the pollution of aquifers. The review says:
“Concerns have been raised about the risk of fractures propagating from shale formations to reach overlying aquifers. The available evidence indicates that this risk is very low provided that shale gas extraction takes place at depths of many hundreds of metres or several kilometres.”
In the UK’s Bowland shale, it would be kilometres deep. The review continues:
“Geological mechanisms constrain the distances that fractures may propagate vertically. Even if communication with overlying aquifers were possible, suitable pressure conditions would still be necessary for contaminants to flow through fractures.”
When you have a kilometre or more of stone—impermeable rock—bearing down, you could not get a better seal.
Nevertheless, we do not have to worry about scientific analysis and theory, because we have practical experience. Over a million wells have been fracked in North America; not a single one has resulted in a building falling down from tremors or in a single person being poisoned by contaminated aquifers. So we are bound to conclude that lots of people have been spreading the sort of scaremongering that would make anti-vaxxers blush—even Andrew Bridgen would probably blush if he heard some of the stuff that has been put out by the friends of the noble Baroness, Lady Bennett, at their various camps around every conceivable attempt to get fracking going. We should rely on the science and the scientific reports and regulate the industry well, as we have done in the past.
Baroness Bennett of Manor Castle (GP)
Since the noble Lord addressed me directly on fracking, I ask him if he is aware of the article published in 2020 in Environmental Health Perspectives in the United States which showed that babies with low birth weight are significantly more common in families living close to fracking wells in the US. That demonstrates the practical reality of the outcome of fracking on health.
Lord Lilley (Con)
What is the mechanism by which those babies are born with low health when they are near a well?
Baroness Bennett of Manor Castle (GP)
The scientists behind that study say that they cannot explain it, that it needs further examination and that there are a number of possible mechanisms.
Lord Lilley (Con)
I have not read the report, but I will read it. I have read similar reports, and almost all rely on the statistical phenomenon that random events are as likely to be bunched together as they are to be evenly spread; I say that as someone who studied statistics. This results in bunches of things; for example, you will get bunches certain cancers somewhere near Windscale, as it used to be called, yet there are bunches elsewhere not near Windscale but people do not worry about them. I very much doubt that there is any scientific basis—and indeed the authors of the article could not think of any scientific basis—as to why we should relate one thing to another in that case. It is the sort of thing that the anti-vaxxers say when they find a little concern. Obviously we should always be concerned about issues such as vaccination or drilling under pressure, but we should not exploit people’s fears to stop something we do not like for other reasons. I hope that my amendment will be adopted and that it will mean that we actually regulate the shale gas industry on exactly the same basis as we do all other industries which can produce similar environmental impacts.
Baroness Worthington (CB)
My Lords, I hesitate to speak on this fascinating group of amendments, because we have had a rather long debate already. However, as it is such an important aspect of energy policy, I hope that the Grand Committee will bear with me as I comment on the group of amendments. If I had more time and had not been overseas recently, I would have added my name to Amendment 222A tabled by the noble Baroness, Lady Sheehan, as it is absolutely critical that we have transparency.
Over a series of years, finance measures have allowed us to walk into quite a huge liability on the public purse in relation to decommissioning the oil and gas facilities that are already there. That should not be ignored; it could be huge and very significant, especially as the nature of the investment in the North Sea shifts away from the majors into much smaller, less stable and less financially competent entities. I fully support the amendment and look forward to hearing from the Minister in detail in his response, because it is very well drafted and concerns an absolutely critical issue.
Baroness Worthington (CB)
I will continue if I may, and perhaps the noble Lord will come back to me on all the reasons. Another reason is that there is a moral dimension to climate change. We should never forget that. It is not about number crunching and bean counting of carbon in one country or another. This is a common-action problem. The whole world needs to move. Arguably, we have had the greatest number of years of unfettered exploitation of fossil fuels of any country on the planet. Therefore, it is high time that we signalled an end to that, to allow those countries that have not had that possibility to potentially increase their revenues from their resources while we signal the direction for the whole planet. That moral leadership is what led to net zero and it is what will lead to us acting on the supply side, because we must do both. We cannot effectively do this by cutting with one side of a pair of scissors. We need to cut with both. It seems ludicrous that the only body in the world that discusses supply-side constraints is OPEC. We are a nation state and we should, as a group of countries, come together to negotiate a much more considered and appropriate mechanism for looking at the supply side.
Finally, there is an absolute imbalance of power in those incumbents currently involved in the extraction of fossil fuels. They do not sit by passively, waiting for demand to be destroyed. I can tell the Committee as a matter of fact that money is being put into disinformation and misinformation campaigns to slow down the demand reduction that we want sped up. I do not disagree that demand is a very good way of doing this, but it is not the only way. We must be clear-sighted and honest with ourselves when we look at this problem from the perspective of a single-member state. What influence can we have on the world? Standing up to these giant companies with huge budgets, massive legal teams and huge sophisticated communication exercises is not easy. If we in the UK took this on, we would have to do so in an international context.
Therefore, I am not putting my name to these amendments. They are not appropriate without that commitment to act on an international basis. Here I am echoing some of the comments made about the non-proliferation treaty. Something must happen on the supply side within the auspices of an international agreement. We can then have an orderly transition in which everyone understands what we are allowed to do and what we are not. The current situation, where coal mines can be approved in the UK in the 21st century—sending people underground to dig out coal that no one wants with high sulphur content—is ludicrous. We as a country should lead on this. We should introduce appropriate policy at this stage, not legislation, which leads us to an international agreement.
I am sorry that I have spoken at length, but I feel strongly that we should take this on as a nation, particularly for that moral reason.
Lord Lilley (Con)
I was touched by the concern expressed by the noble Baroness for giving people in the fossil fuel industry certainty about the future. I used to be an analyst in the City, analysing energy and trying to forecast. It was very uncertain. The oil, gas, coal and electricity companies all found it very difficult to forecast. It is now somewhat easier because we have spelled out a path to net zero. They know that there will be a decline. They may think that perhaps it will not as much as that, or a bit more, but they have a better trajectory than ever before. In any case, why is she so worried about people in the fossil fuel industry having certainty, which no one else has? Also, she said that it is a moral issue—that it is about signalling something. In other words, it is virtue signalling.
Baroness Worthington (CB)
I dispute that point completely. It is not about virtue-signalling; it is about moral leadership. There is a difference. When the UK stood up and passed legislation on climate change, and took those measures to pass net zero, the rest of the world took notice. We can do the same on this issue, and we will need to. It does not have certainty because it depends on who you talk to in the City. At the moment, many people in the City are saying, “Woohoo!” Everybody is piling on to fossil fuels, with record high profits and huge amounts of money to be made in the short term. That short-termism is going to send us as a society collectively off a cliff. We do not want to see that. What happens in that uncertainty is speculation. A huge amount of trading that goes on with these commodities creates a bubble that all of us then pay for. I do not want to see any more of that; I want it to become a regulated industry that is declining according to an agreed strategy. Otherwise, I have no doubt that they will push us off a cliff; arguably, they already have.
I turn to other amendments in this group. I do not want to get into a debate about fracking but, for the record, I remember being on the Front Bench when we debated fracking regulations in our debates on the energy Bill that introduced them. Why did the industry not spot this at the time? Perhaps it was a clever move by the Lib Dems that it did not spot, although I would find that surprising. There is a host of regulations that have been passed on this issue. I am not averse to us looking at these seismic limits again because nobody wants to hold the Bill back on that basis. However, my contention is that the time has passed and it will be too slow to make a significant contribution to our domestic gas supply. We would be far better off electrifying everything and reducing primary energy demand by at least a third in that process.
That brings me on to Amendment 224, tabled by the noble Lord, Lord Moylan. Surprisingly, I quite like this amendment because it would force us to think about how we could reduce our domestic reliance on gas. Within that timeframe, no fracking is coming online, I am afraid, so the only option left is massively reducing our dependence on gas. That means electrification, not just because it is abundant, clean and cheap but because it is much more efficient. It is an energy-efficiency measure to electrify, taking down primary consumption. I feel confident that, if we were to produce a strategy, we would see a huge amount of electrification being brought on. That may well be what we should be doing; in fact, Amendment 242, which we debated previously, would have asked the Government to do just that. Perhaps there is something here to come back to on Report.
I turn to Amendment 227A; it was not debated but I am sure that we will come on to it. I just want to say that I lend my support to that renaming.
On Amendment 227AA in the name of the noble Baroness, Lady Sheehan, flaring is absolutely ludicrous in the sense that we should not be allowing this resource to be burned without it being captured and brought to market. However, there is something worse than flaring: venting. I want to hear some reassurance on the banning of flaring—it has been banned at times, specifically for wildlife protection reasons as I remember it—because it can lead to venting. That means allowing methane to be released into the atmosphere, which would be far more damaging and much harder to track. I would not want to see this amendment agreed to unless that issue was addressed.
We have had a debate about coal. If we are looking at this Bill holistically—I offer the Minister this thought for free—there is a way through the apparent contradiction around allowing us to exploit in environmentally sensitive ways the continued use of our own fossil resources where that will avoid us bringing in more polluting sources from America, which I think is the case at the moment. What about a climate recovery fund? We have just created a marine recovery fund for the almost non-existent damage that the offshore wind industry creates. What about a climate recovery fund for the very real damage that the continued extraction and burning of fossil fuels causes? Why do we not innovate around that policy? It would be easy to implement it. It could become a condition of all future licensing of fossil fuels in this country. We could work out the price we think should be paid and give the industry an incentive to make CCS work. That is something the Government could look at; I would be happy to meet the Minister to discuss it but I have only just thought of it.
Baroness McIntosh of Pickering (Con)
My Lords, I was not going to speak, but I think I am the only person in the Committee who has had first-hand experience of a planning application for fracking, which was in my then constituency. This is a classic example of what a broad church the Conservative Party is, because I support Amendment 223 in the name of the noble Lord, Lord Teverson.
I think my noble friend the Minister is going to reply that the government position is that we will only proceed to frack—if I am completely up to date—if local communities are agreeable to it. My concern is how you determine whether the local community is agreeable to it. I am minded to be guided by the science, which is very clear. The British Geological Survey says that
“it is well known that hydrocarbon exploration and production can result in man-made or ‘induced’ earthquakes”.
It goes on to say that fracking is one of the usual causes of these manmade earthquakes.
I am more pro-European than pro-American. What works in America—in the wide open spaces of North America, which are very sparsely populated and have a very isolated population in most cases—does not work in counties like North Yorkshire.
One of the reasons I took the title of “Pickering” is because there was an application in Kirby Misperton. It was well funded by Third Energy and underscored by Barclays. I am delighted to say that the reason it failed—and why I think no future application will be made—is that there was nowhere to put the polluted water. That area is prone to water stress, not only because of its proximity to Scarborough, but because that north-eastern corner of North Yorkshire is prone to water stress. Sometimes we have flooding, as there is in York at the moment. That particular corner is very water stressed. The problem was that there was nowhere to put the polluted water. There was also the usual problem, which all MPs are familiar with, of very narrow rural roads and heavy lorries coming in at the construction phase. The locals did not like the congestion. It was also very close to Flamingo Land, which is probably the second most frequently visited attraction after the North Yorkshire Moors Railway. That is also in Pickering.
With those few remarks, I am minded to support the amendment in the name of the noble Lord, Lord Teverson, rather than my own Government’s position.
Baroness Blake of Leeds (Lab)
My Lords, I thank everyone for the discussion. I want to start with Amendment 223 in the name of the noble Lord, Lord Teverson, but I do not intend to open another strand of debate on this. Obviously, the Minister will come back to it.
Picking up on the point made by the noble Baroness, Lady McIntosh of Pickering, from all my experience in planning, I really struggle with leaving these decisions to the planning system. There has obviously been the intervention of the Planning Inspectorate in the decision on the coal mine in Cumbria. We must have much clearer policies to guide us as we go forward, rather than effectively setting people against each other. One year ago, would we have anticipated that this debate could have such a devastating impact on the Government of the day, with the Prime Minister effectively falling afterwards? The heightened emotion of this debate in the Commons is something to behold. I want to clarify that Labour Party policy is to move to a permanent ban on fracking. I think it is very clear where we stand in that regard.
I will also comment on the debate from the noble Lord, Lord Teverson, on coal mines and Amendment 232. I honestly do not think that we could sum it up any better than the president of COP 26, Alok Sharma. On hearing of the possibility, he said:
“A decision to open a new coal mine would send completely the wrong message and be an own goal. This proposed new mine will have no impact on reducing energy bills or ensuring our energy security.”
This was quoted in the Observer on 3 December. I do not know whether noble Lords looked at the press coverage around the world following the decision, but the reputational damage that was done to this country in this space through that one action is incalculable—it is, frankly, shocking.
Baroness Worthington (CB)
I wanted to say something in my speech, but it went on too long. There is this question of carbon neutrality of fossil fuel extraction, and two things are really important here. First, you have to take into account the embedded carbon within the product, which, it has to be assumed, will be released into the atmosphere, with an almost guaranteed impact now because the concentrations are so high that every additional tonne, which will be there for 1,000 years, will have a certain impact. Attribution science is getting ever better; you can now attach a cost to allowing that to happen, so we should do that.
Secondly, any neutrality that is sought on the back of something that is storing carbon in the biosphere is in no way equivalent to that extraction of something from the lithosphere and allowing it into the atmosphere. I feel very strongly that any claims around carbon neutrality of fossil fuel extraction need to be regulated: we need government standards that state what is and is not allowable. That is not to say that it cannot be done—it can be—but it is the equivalence of impact and the certainty of it that must be matched in any off-set, and it will not be achieved by planting trees or, even worse, saying that you will protect some trees that may or may not be cut down. That is the key to this. You could come up with a climate checkpoint that allows a limited amount of continued licensing, but it has to be done in mindfulness of the full effect of that on the climate.
Baroness Blake of Leeds (Lab)
I thank the noble Baroness. This brings to mind the debate we had in the Chamber last week about greenwashing and all the wider implications.
On the amendments in this group, I will talk about the demand and supply side, because it is important that we do not look at this in isolation; we have to think about the impact on people and how we can motivate our populations and communities to get behind the drive towards net zero. That is a very important consideration in these amendments.
The International Energy Agency clearly set out that there must be no new oil and gas fields and no new coal-fired power stations built if the world is to stay within safe limits of global heating and meet the goal of net-zero emissions by 2050. There is now, finally, acknowledgement and recognition that moving away from fossil fuels is the key to achieving greater energy security. This debate has been going on for decades; what a tragedy that it is the horrendous situation in Ukraine that has brought it to a head. Action much sooner would have helped prevent us being in the position we are in today.
The noble Lord, Lord Lilley, talked about a steady transition. The point we are trying to get across is that there is an urgency here. There needs to be a rapid transition if we are to have any chance of moving along in the way that has been outlined, as we need to.
The other issue is how we permanently help households move away from the volatility of fossil fuel prices and reduce the fiscal burden of financial support to households through this and any future energy crisis. We have talked a great deal on other occasions about energy efficiency. We hear about the amounts that the Government are putting into this space but, quite frankly, the demand in this area is much higher than the response that we have had so far. I will not go into all the cost of living implications, but we cannot forget the millions of households that are set to be in fuel poverty this winter. This has to be one of the main drivers in making sure that we get the amendments we need into the Bill so that we can move away from the volatility and expense of fossil fuels.
Amendment 227A in my name and that of my noble friend Lord Lennie seems to me an absolute no-brainer; it is already in train, and we need to move forward on it. I have one very simple question for the Minister: will he support our amendment today?
Baroness Bennett of Manor Castle (GP)
I am very interested and pleased that the noble Baroness referred to the International Energy Agency study that I mentioned. The inference could be drawn from her comments that the Labour Party supports a ban on new oil and gas. I know that many people out there listening to us today would be very interested to know whether that is the case. Can the noble Baroness confirm that the Labour Party supports a ban on new oil and gas?
Baroness Blake of Leeds (Lab)
It was a nice try, but I think that is without the scope of this debate.
Lord Callanan (Con)
Well done to the noble Baroness, Lady Blake, for avoiding the question.
I thank everyone who has contributed today; it has been a fascinating debate. In the context of the Energy Bill, I think it is the first we have had on the fundamentals of our energy policy, with both sides: those who, in the case of the noble Baroness, Lady Bennett, seem to want to ban everything, and those who take a more pragmatic view of the issues. I will attempt to set a centre course of a sensible, pragmatic energy policy, which is the one we will follow.
I will address the various amendments, starting with Amendments 224 and 227, tabled by that fascinating pairing: on the one hand my noble friend Lord Moylan and on the other the noble Baroness, Lady Bennett. I will also address the contribution from the noble Baroness, Lady Worthington.
I begin by stating our fundamental policy of driving down demand for fossil fuels as we transition to our legally binding net-zero economy. Of course, the noble Baroness’s Amendment 227 would have significant ramifications. At a time of global energy crisis, an orderly transition underpinned by oil and gas is the best approach and it is crucial to maintaining our energy security of supply.
Outside the rarefied world that the noble Baroness lives in, Greens in other parts of the world are having to live up to these difficult choices in the real world, in real policy. At the moment, the German Greens are quite hilariously justifying the expansion of a massive new coal mine—producing lignite coal, one of the dirtiest forms of coal—in northern Germany, because of the energy crisis. The noble Baroness, Lady Bennett, might think it is funny for us all to sit in the cold and dark, relying on unstable sources of power, but the rest of us think that we need to supply this country with the energy it needs. We need to set the country on a net-zero transition, but we need to do it gradually and responsibly. We set this out in the British Energy Security Strategy, where we set out our long-term plan for greater energy security, including references to domestic gas supply. In the Autumn Statement, the Chancellor built on that and set out that the Business and Energy Secretary will publish further details on our energy independence plans in due course, and we will do so.
The North Sea Transition Authority launched the 33rd licensing round on 7 October 2022. This is expected to deliver over 100 new licences, which will put more UK gas on the grid. I repeat: it will not put more gas on the grid—it will put more UK gas on the grid. I have had this debate many times in the Chamber with the noble Baroness, Lady Sheehan, and I still fail to see how she does not think that this is a good idea. In our transition, as we are reducing our demand, it makes sense to have that gas from relatively low carbon-producing sources rather than importing highly polluting, high-carbon fracked gas from other parts of the world.
Baroness Sheehan (LD)
So the gas produced from the licences that will be issued in the 33rd round will not be traded on the commodities market—is that what the Minister is saying?
Lord Callanan (Con)
Of course it will be traded on the commodities market, but the vast majority of it will be moved, produced and used in the UK. We have relatively limited ways of exporting gas. We have some interconnector pipelines, which, interestingly, over the summer were used extensively to build up continental supplies of stored gas ready for the winter. Most of our LNG terminals are used for importing; very few are used for exporting. The gas will be subject to the international price—I totally accept that; we cannot isolate ourselves from the international market—but the vast majority of the gas would be used and produced on the UK market. Unless the Lib Dems are telling us that we are going to tell everybody to switch off their gas boilers, turn off their heating and sit in the dark and cold—which I do not think is a practical policy, but I look forward to seeing that in focus leaflets, if that is what they really believe—this is a sensible way of proceeding, gradually reducing our demand over time. The Climate Change Committee accepts this as well.
I hope that the noble Baroness will find some reassurance in the landmark North Sea transition deal between the Government and industry. This deal will help to reduce emissions, ensuring a net-zero basin by 2050, and support our goal of decarbonising the wider economy. We have seen the sometimes wildly opposing views on this matter, but the Government believe that we can pursue a pragmatic, sensible, middle ground approach—our Lib Dem approach, if you like—to meet our climate ambitions while also ensuring British energy security.
I turn to Amendment 227A, tabled by the noble Lord, Lord Lennie, and the noble Baroness, Lady Blake. As drafted in the proposed amendment, the Oil and Gas Authority’s name change to the NSTA would occur only in the Energy Act 2016. However, the OGA is mentioned in a large amount of primary and secondary legislation which would also need to be changed. The Government recognise the importance of this change, and we are currently considering all the legislative options to amend the statutory name of the OGA to the NSTA in all places where it occurs. The amendment also seeks to remove the NSTA’s statutory principal objective to maximise the economic recovery of UK petroleum and add a new obligation regarding net zero. As I have just said on the previous amendments, in my view, maximising economic recovery of oil and gas need not be in conflict with the transition to net zero.
Lord Teverson (LD)
I will not detain the Minister for long, it was interesting that he referenced the Climate Change Committee in response to my noble friend’s amendment. That same letter said,
“the evidence against any new consents for coal exploration or production is overwhelming.”
I am sorry that the Minister accepts part of that letter, but maybe not the other part. The Minister has nobly and served well a number of Administrations, including the one during COP 26, and I would like to know how he reconciles the COP 26 statements by his own department with the opening of that new coal mine.
Lord Callanan (Con)
The decision was taken by a different department, by DLUHC, in a quasi-judicial manner. It is likely to be the subject of judicial proceedings, so I cannot comment in detail on that decision, as the noble Lord will understand. I am sure we will be having this debate lots of times in future.
I move on to the question from the noble Baroness, Lady Blake. The reasons for the Secretary of State’s decision are set out in full in his published letter on GOV.UK, which takes into account matters like the demand for coal, climate change and the impact on the local economy. To reiterate the point of my noble friend, coking coal is used in the production of steel—it is not used in power generation—which is, of course, crucial to building the infrastructure that we all wish to see more of, such as offshore wind turbines.
On fracking, I thank my noble friend Lady McIntosh for her contribution. The Government have been clear that in line with the commitment made in the 2019 Conservative manifesto, it is adopting a presumption against issuing any further hydraulic fracturing consents for the extraction of shale gas. That position is, in effect, a moratorium. This will be maintained until compelling new evidence is provided that addresses the concerns around prediction and management of induced seismicity.
I move on to my noble friend Lord Lilley’s amendment. I welcome his thoughtful contributions to today’s debate, as well of those of my noble friend Lady Altmann. British Standard 5228, which my noble friend quoted, recommends procedures for noise and vibration control in respect of construction and open-site operations. It is not a measure designed to reduce the risk of induced seismicity. The potential for induced seismicity from hydraulic fracturing is a result of the injection of fluid deep underground, at depths of one kilometre or more. Seismicity induced by hydraulic fracturing is therefore different in nature from vibration directly induced by a construction site, and the application of BS 5228 would therefore not be appropriate.
My noble friend Lord Moylan tabled an amendment about the composition of our domestic gas supply. A review of the Gas Safety (Management) Regulations 1996 is currently under way. The Health and Safety Executive has been reviewing these regulations, which govern gas quality, and is consulting on a set of proposed changes. The HSE’s consultation closed in March 2022, and it will be aiming to publish its response in due course. BEIS has worked closely with the HSE and has taken regular opportunities to input into the process in both an analytical and a policy capacity. A statement by the Secretary of State at this stage is therefore unnecessary as the publication of the Government’s formal response will be tantamount to just that. I hope my noble friend will understand that in advance of that document, I cannot comment as it would not be proper.
The noble Baroness, Lady Sheehan, tabled two amendments in this group. On Amendment 222A, I should say at the outset that tax matters are an area for the Treasury. Since the introduction of decommissioning relief deeds—DRDs—the Treasury issues a Written Ministerial Statement at the end of each financial year updating on DRDs, including the total number of DRDs in force during the past financial year, past payments under DRDs and the projected value of future payments under ongoing DRD claims. While a DRD claim may arise where a company has defaulted on its decommissioning obligations, the tax system also provides tax relief for decommissioning costs in recognition that decommissioning is a significantly expensive and statutory obligation. HMRC publishes information annually on the estimated sum of all forecast tax relief payments due to decommissioning as part of its annual report and accounts.
Baroness Sheehan (LD)
I thank the Minister for his comments on decommissioning. He is unwilling to move further on the amendment, but will he at least commit to writing with the current estimate of the Exchequer costs of decommissioning if prices were to fall to less than $5, in line with Clause 1(3)(c), and to explain how these risks are being managed? I think that would be within scope.
Lord Callanan (Con)
Decommissioning relief deeds are private contracts between the Treasury and the relevant company. That is a matter for the Treasury. I cannot give a commitment on behalf of the Treasury. I suspect that the best option would be for the noble Baroness to take it up with Treasury Ministers.
Baroness Sheehan (LD)
I hope the Minister will not mind me pressing on this issue. I am not asking for anything commercially secret but just for some assurance, which I think the PAC and the NAO have sought, that the Government have a handle on the liability and risks which they are potentially exposing taxpayers to in the future.
Lord Callanan (Con)
As I said, the noble Baroness should take this matter up with the Treasury. I cannot give commitments on its behalf. I do not know the details. I have set out the position on DRDs. As far as I am aware, this is not tax or revenue legislation. I suggest that the noble Baroness take this up with a Treasury Minister.
I move on to Amendment 227AA on the prohibition of flaring. The Government are already taking steps to drive down routine flaring and the similar practice of venting. The UK has committed to the World Bank’s Zero Routine Flaring by 2030 initiative, and we are working with regulators towards eliminating this practice as soon as possible. Through the North Sea transition deal, industry has committed to accelerating compliance with the World Bank initiative ahead of 2030. We are making good progress: in 2021, total flared gas and vented gas reduced by 20% and 22% respectively, relative to 2020. Furthermore, the North Sea Transition Authority, as the lead regulator on these matters, expects all new developments to be planned and developed on the basis of zero routine flaring and venting.
With the explanations on these various points, I hope that the noble Baroness will feel able to withdraw her amendment.
Baroness Sheehan (LD)
I thank the Minister, but I have to say that I am not hugely satisfied with the responses on decommissioning tax reliefs. I take up the point made by the noble Lord, Lord Lilley, about stranded assets and who will pick up the risk. In a scenario where, say, Shell decides that a particular field has become uneconomic for it to exploit commercially and decides to sell on that asset, which is then picked up by another entity which, in turn, goes bust, who will pick up the cost of that decommissioning? I hope that the Minister will be able to quickly address that.
In terms of flaring, I am really disappointed. It is such a no-brainer. Since 1991, Norway has been able to ban flaring—and, within that, I would include venting—yet our Government cannot give that commitment, when we have made commitments at COP 26 and COP 27 under the Global Methane Pledge, and we continue to do this. It really is on a par with asking countries to ban coal and then giving permission for our own coal mine in Cumbria to go ahead. It is just incomprehensible, and I hope that the Minister can quickly address that before I withdraw my amendment.
Baroness Sheehan
“Prohibition on flaring(1) The Secretary of State must by regulations prohibit the practice of flaring by oil and gas installations within the jurisdiction of the United Kingdom.(2) In this section “flaring” means the burning of gas, produced during oil extraction, in order to dispose of it.(3) Regulations under this section must be made so as to bring the prohibition into force by 31 December 2025.”Member’s explanatory statement
This amendment would prohibit ‘flaring’ which is the burning of gas, produced during oil extraction, to dispose of it. This is in line with recommendations made by the Commons Environmental Audit Committee and would help ensure the UK fulfils commitments it made at COP26 and COP27 under the Global Methane Pledge.
Baroness Sheehan (LD)
Despite the Minister’s lack of response to my comments, I will not move the amendment at this stage.
Baroness Bennett of Manor Castle (GP)
As I say in the Member’s explanatory statement, this debate is to raise issues that many people have raised with me about the purpose of Clause 230, which covers licensing nuclear sites that are on or under the territorial sea of the UK.
The noble Baroness, Lady McIntosh of Pickering, in talking about offshore wind farms, referred to the impact on marine mammals of seismic testing in particular. In the middle of last year we saw seismic surveys being carried out in the Irish Sea off Cumbria in order to assess the potential of undersea nuclear storage. At that time the Marine Management Organisation noted in a letter that those tests could cause disturbance to certain cetacean species. Those tests were carried out before this Bill became law. Those are interesting circumstances for them to be carried out in, which I will come back to.
In the Government’s own words, they need to keep the waste safe and secure for hundreds of thousands of years, give or take, for the radioactivity to decay. That is why they are seeking long-term storage for hundreds and thousands of years. The UK has the world’s largest stockpile of untreated nuclear waste, more than 100 tonnes of plutonium, and the total volume is 750,000 cubic metres. We are talking about a lot of nuclear waste. The chair of Nuclear Free Local Authorities, David Blackburn, who for full disclosure I will note is also the leader of the Green Party group on Leeds City Council, has said:
“The waste would be left in situ for millennia and, no matter how effective the barriers, some of the radioactivity will eventually reach the surface. The rate at which radioactivity would leak … can be poorly predicted and is likely to remain so for an indefinite period.”
I was in Cumbria a decade ago when there was talk of onshore storage of nuclear waste there and a great deal of local resistance. We are aware that there is no certainty. Putting it under the sea would seem to add to that uncertainty, to the risks and to the difficulties of dealing with anything should it go wrong. I put down this clause stand part debate because there is a great deal of uncertainty. People are unsure what the Government’s intentions are, which is why I hope the Minister may be able to provide more certainty.
I also refer to the fact that seismic testing was going on. The Explanatory Notes for the Bill appear to suggest that Clause 230 is actually to close a possible loophole that nuclear sites under the sea might not currently require a licence or be subject to the nuclear regulator. Page 71 of the Explanatory Notes states that:
“This clause amends section 1 and section 26 of the NIA 1965 and section 68 of the Energy Act 2013 … to make it expressly clear that certain nuclear sites located wholly or partly in or under the … sea … require a licence and are regulated by the Office for Nuclear Regulation”.
That raises a question that I will put explicitly to the Minister: are the Government aware OF or concerned about any unlicensed or unregulated nuclear sites on or partly on or underneath the sea in UK territorial waters?
Lord Teverson (LD)
My Lords, I shall be brief. When I first read this clause I assumed it was effectively to give permission to go out to sea from land, like some coal mines. I am interested to know whether that was the Government’s intention.
I was also quite interested that the site has to be partly in territorial waters. Territorial waters go out to 12 nautical miles, so that seems to suggests that it does not. I wonder why there is the stipulation that the site has to be partly in territorial waters. It seems to me that if this is done it really needs to be within territorial waters. I have no other questions.
Lord Lennie (Lab)
My Lords, I will also be brief. I do not want to provoke another debate—two hours on this would be unnecessary. We are all doing our bit by keeping this Room at low temperature in terms of this debate. I do not know whether they can turn the heat up a bit, as I think that would be helpful to all of us.
Lord Callanan (Con)
The noble Baronesses, Lady Sheehan and Lady Bennett, are in charge of heating.
Lord Lennie (Lab)
Perhaps it is something like that.
The Government state that the best means to manage hazardous nuclear waste in the long term is in GDF undersea burial sites. Can the Minister tell us how they have concluded that that is the best possible means? Clearly we have plenty of it and we will have plenty more. We support nuclear power and nuclear generation as part of the overall mix of energy fuels to supply the UK—there is no question about that. However, dealing with hazardous waste is an important matter that we would like some information about.
Baroness Bloomfield of Hinton Waldrist (Con)
I thank the noble Baroness, Lady Bennett of Manor Castle, for the opportunity to debate and discuss Clause 230.
This clause relates to geological disposal facilities. We have spoken about this often in the Chamber during Questions. GDFs are highly engineered facilities capable of isolating and containing radioactive waste within multiple protective barriers deep underground, so that no harmful quantities of radioactivity ever reach the surface environment.
The Government consider a GDF to be essential to the successful decommissioning of the UK’s civil nuclear legacy and our new-build nuclear power programme which will support the UK Government’s net-zero ambitions and their energy security strategy. The process to find a site for a GDF is under way, and it is therefore vital that we have a clear legal framework to ensure that such a site will be licensed and subject to oversight by the Office for Nuclear Regulation—the ONR.
On the noble Baroness’s point about disturbance, there is no evidence that any disturbances were caused by the specific seismic studies undertaken on behalf of Nuclear Waste Services. We have not seen any, and none has been drawn to our attention, but if the noble Baroness has other information, obviously we would be very grateful if we could see it.
Clause 230 makes clear that certain nuclear sites, including a GDF once prescribed in regulations, located wholly or partly in or under the territorial sea adjacent to the UK require a licence and are regulated by the ONR. In answer to the noble Lord, Lord Teverson, I have no idea why it says “wholly or partly”; I take his point that it is a long way off to get to “partly in our territorial waters”. However, presumably that is a drafting necessity.
The GDF siting process is a consent-based approach which requires a willing community to be a partner in the project’s development. Four areas have entered the siting process: three areas in West Cumbria—in Copeland and Allerdale—and one in Theddlethorpe in Lincolnshire. This clause is intended to provide clarity to parties with an interest in the GDF process that a GDF in their community, whether located deep below the land surface or deep below the seabed, will be safe, secure and appropriately regulated by the ONR. I would like to be clear: no part of a GDF will be in the sea itself, nor will radioactive waste be dumped in the sea. That is banned by international conventions, including the London convention and protocol. Whether a GDF is built in the geological formations deep below the land surface or deep below the seabed, it will be accessed from facilities on land, and the waste will be isolated deep underground within multiple barriers to ensure no harmful quantities of radioactivity reach the surface environment.
I thank noble Lords for their contributions, I hope this has assured the noble Baroness of the Government’s intentions for this clause, and I hope she will feel able not to oppose that this clause stand part of the Bill.
Baroness Bennett of Manor Castle (GP)
I raised the question of whether the Government are aware of or concerned about any unlicensed, unregulated nuclear sites, which the Explanatory Memorandum seems to suggest might be a reason for this.
Baroness Bloomfield of Hinton Waldrist (Con)
My officials say that that is not a concern to us. If we establish that it is otherwise, then of course we will let the Committee know.
“Chapter 3Relevant nuclear pension schemesCivil nuclear industry: amendment of relevant nuclear pension schemes(1) The Secretary of State may by regulations make provision requiring a designated person to amend the provisions of a relevant nuclear pension scheme in respect of which the person is designated—(a) for the purpose of making scheme-specific changes;(b) for the purpose of making changes that relate to any scheme-specific changes;(c) for the purpose of making contribution rate adjustments.(2) “Scheme-specific changes”, in relation to a relevant nuclear pension scheme, are changes that—(a) relate to defined benefits for members of the scheme, and(b) are in connection with one or more of the matters mentioned in subsection (3).(3) Those matters are—(a) securing that the structure under which the defined benefits in question accrue is a career average revalued earnings structure (in particular where it would otherwise be a final salary structure);(b) providing for other changes to the amounts of such of those defined benefits as are payable in respect of members of the scheme;(c) providing for revaluations of pensionable earnings, or of benefits in deferment or pensions in payment, to be by reference to the consumer prices index (and not the retail prices index) but not involving imposing a cap on any revaluation or revaluation rate;(d) setting percentage rates, for contributions to the scheme by members of the scheme, that are higher than they would otherwise be; (e) setting periods for which contributions to the scheme by members of the scheme are required to be made that are longer than they would otherwise be.(4) Amendments made by virtue of subsection (1)(b) may include amendments relating to benefits provided under the scheme other than defined benefits.(5) “Contribution rate adjustments” means such adjustments—(a) to the rates of contributions to the scheme by its members in respect of defined benefits, or(b) to the salary bands to which such contribution rates apply, as are considered appropriate by the designated person (acting on actuarial advice) to ensure that the average contribution rate for members of the scheme in respect of defined benefits is as close as reasonably practicable to 8.2%.(6) Where a person is required by regulations under this section to amend the provisions of a relevant nuclear pension scheme, the amendments may be made—(a) free from any consent requirements set out in the scheme, and(b) notwithstanding provision made by or under any other Act of Parliament, or any rule of law, that would otherwise prevent or limit, or impose conditions on, the making of the amendments.(7) Amendments made by virtue of subsection (1)(a)—(a) must not relate to service prior to the date on which the amendments are made;(b) may be made in the case of a particular scheme on one occasion only.(8) Nothing in this section limits any power that a designated person has to amend a relevant nuclear pension scheme.(9) A person may not be designated in relation to a relevant nuclear pension scheme unless it appears to the Secretary of State that the person has the power to amend the scheme.(10) In this section, “designated” means designated by regulations under this section.”Member's explanatory statement
This new Clause is the first Clause in a new Chapter of Part 12 of the Bill (also containing the other new Clauses inserted after Clause 237 by amendments in Lord Callanan’s name). This new Clause enables regulations to be made requiring persons with responsibility for pension schemes for public sector employees in the nuclear sector to amend those schemes in line with wider changes to public sector pensions.
Baroness Bloomfield of Hinton Waldrist (Con)
I turn now to the amendments in the name of my noble friend the Minister. The 2011 report by the noble Lord, Lord Hutton of Furness, started the Government on the road to the reform of public sector pensions. While the Public Service Pensions Act 2013 made a large number of reforms, it did not cover all public sector bodies, including those within the Nuclear Decommissioning Authority group. A proposed bespoke career average revalued earnings scheme was, following statutory consultation with affected NDA employees and a ballot of union members, formally accepted by the trade unions. The bespoke scheme is in line with the rest of the public sector. The reformed scheme still offers excellent benefits to its members. Notably, indeed unusually for other reformed schemes, it still includes provision for members to retire at their current retirement age. For nearly all, this will be 60.
The complicated nature of the pension schemes in the context of the statutory framework which applies to pension benefits across the NDA estate means, however, that specific legislation is needed to implement the new scheme. Amendment 227B provides the Secretary of State with the power to make secondary legislation designating a person who will be required to amend the provisions of a nuclear pension scheme.
The Deputy Chairman of Committees (Lord Lexden) (Con)
My Lords, the amendment is Amendment 227B.
Baroness Hayman (CB)
For the assistance of the Committee, I point out that the numbering of the groups that we were given last night and was up to date was changed when we came to the paper that we received today, but no indication was given of that. Therefore, I believe that this is now the correct order.
Baroness Bloomfield of Hinton Waldrist (Con)
We are on the fifth group, with government Amendment 227B on pensions. I turn to Amendment 227C. The amendment that I just spoke to uses the phrase “relevant nuclear pension scheme” to describe the types of schemes that a designated person could be required to amend by virtue of that amendment. This amendment explains what is meant by that phrase. New subsections (1) and (2) provide that a relevant pension scheme is one run by, or on behalf of, the NDA under Section 8 of the Energy Act 2004, or one which provides pensions or other benefits to persons who are, or were, performing similar public functions. The new clause also clarifies that the UK Atomic Energy Authority pension schemes and pension schemes that benefit persons specified in Public Service Pension Scheme Act 2013 are not relevant pension schemes.
I turn to Amendment 227D. In order to implement the proposed pension reforms, the NDA and, in the case of the MEG-ESPS, Magnox Limited, will need information from others. Amendment 227D gives a person who has been required to amend a relevant nuclear pension scheme the power to require persons holding any information they might reasonably require to provide such information. Examples of information that they may need but which they might not otherwise be able to obtain include the number of members in a pension scheme and the salaries and ages of those members. Data protection legislation may still prevent the information from being shared; however, this amendment specifies that in making that assessment the requirement to disclose imposed by this clause must be taken into account. This amendment also provides that disclosure does not constitute a breach of confidence or a breach of any other restriction on the disclosure of information.
Lord Teverson (LD)
One thing that the Minister did not mention, although I may have missed it, is the employees and staff of the NDA. What consultation has taken place as far as they are concerned?
Baroness Blake of Leeds (Lab)
I have a few questions and, if it is not possible to answer them all, I shall accept a written response. It would appear that the Government are bringing forward legislation that breaks promises of previous Governments, going way back, in relation to nuclear workers’ pensions. The statutory pensions protections that Parliament previously legislated for were vital to the success of privatisation. Is it right for the Government to promise those protections to ensure that success, and then to rip them up that many years after the event? We would like some clarification as to whether the Minister believes that that is the case—and, if not, why not?
Is it accurate to claim that these reforms would bring pension provision across the NDA group into line with wider public sector pensions? These pension schemes underwent much more radical reform long before my noble friend Lord Hutton’s review of public sector pensions. They have been closed to new entrants for many years. My noble friend recommended that public sector pension accrual should remain on a defined benefit basis, but pension provision across the NDA group is mostly on a defined contribution basis. I have it on good authority that there is an appetite from the trade unions to discuss these reforms with Ministers. Would the Minister be prepared to accept this course of action?
Several more questions are coming up, particularly on technical issues and questions about the proposed amendments. The amendments should allow for the implementation of the agreement between BEIS, the NDA and the recognised trade unions. There is a lot of detail about the proposed career average benefit structure in the heads of terms, but the proposed amendments are drafted in more general terms. Regulations are the proper place for the detail to be set out, but might the agreed accrual rate be an important enough term of the agreement to be in the Bill as well? The average member contribution rate of 8.2% is specified.
There are concerns about proposed new subsection 3(c) of the first proposed new clause that adds this chapter to Part 12, which provides for the increase of pensions in line with CPI, not RPI, for active and deferred pensioner members. However, it says that only increases for active and deferred members—that is, re-evaluation—cannot be capped. This opens the real possibility that the Government intend to bring forward regulations that provide for pension increases for at least some members, possibly members of the Magnox group, to be capped. This is contrary to the heads of terms, which explicitly states that pension increases will be in line with inflation as measured by CPI, with no reference to any cap. Would it be possible to propose an amendment so that we can look at ensuring that regulations cannot propose capped increases for any pensioners?
I will end by asking: how confident are the Government that they can identify people in and out of scope of future regulations, given that there is a fair degree of geographical mobility around the industry?
Baroness Bloomfield of Hinton Waldrist (Con)
I thank both noble Lords for their contributions to this important debate. I suspect that I might end up having to write to the noble Baroness, Lady Blake, with the answers to some of her questions.
I turn first to the question raised by the noble Lord, Lord Teverson, on what consultation there had been with NDA employees. As I mentioned in my opening remarks, a public consultation was undertaken and published in December 2018. It ran for a number of months before that. All these changes were agreed then with the trade unions, recognising the vital work that the NDA and its workforce delivers. BEIS and the NDA worked with national trade unions in 2017 to develop an agreed pension benefit structure tailored to the characteristics of the affected NDA employees. This resulted in a proposed bespoke CARE benefit structure, which is in line with the key principles of reforms already implemented in respect of other public sector pension schemes. The bespoke CARE scheme design was formally accepted by the national trade unions following statutory consultation with affected NDA employees and a ballot of union members. There are two final salary public sector schemes within the NDA, with a total of approximately 8,000 scheme members, that are therefore within scope for reform.
As I said in my opening remarks, this is still a very good pension. It allows full pension awards at 60 for the majority of members, whereas most public sector pensions are linked to state retirement age. I am afraid there has been a delay in implementing these reforms, purely because the Energy Bill has provided the first opportunity to make the change since the agreement with the unions; previous legislative vehicles were considered but were not deemed appropriate for these clauses. I will respond to any further questions that were raised in writing. I beg to move.
Lord Callanan
“Meaning of “relevant nuclear pension scheme”(1) In this Chapter, “relevant nuclear pension scheme” means—(a) a pension scheme maintained by or on behalf of the NDA under or by virtue of section 8(1)(a) or (b) of the Energy Act 2004, or(b) subject to subsections (2) and (3), a scheme that provides for the payment of pensions or other benefits to or in respect of persons who are, or have been, employed to perform duties relating to matters that correspond or are similar to matters in respect of which the NDA has functions.(2) A scheme of a kind mentioned in subsection (1)(b) is a relevant nuclear pension scheme only to the extent that the pensions or other benefits are provided in connection with employment by a person with public functions.(3) Subsection (1)(b) does not apply to—(a) a UKAEA pension scheme (within the meaning given by paragraph 1(1) of Schedule 8 to the Energy Act 2004);(b) a scheme that provides for the payment of pensions or other benefits to or in respect of persons specified in section 1(2) of the Public Service Pensions Act 2013 (schemes for persons in public service).(4) In this section, “the NDA” means the Nuclear Decommissioning Authority.”Member’s explanatory statement
This new Clause defines “relevant nuclear pension scheme” for the purposes of the Chapter consisting of the new Clauses in Lord Callanan’s name inserted after Clause 237.
“Information(1) This section applies where a person (“P”) is required by regulations under section (Civil nuclear industry: amendment of relevant nuclear pension schemes) to amend a relevant nuclear pension scheme.(2) P may require a person who holds relevant information to provide it to P.(3) “Relevant information” means any information or data that P reasonably requires in connection with deciding whether, or how, to amend the scheme. (4) Except as provided by subsection (5), the disclosure of information under this section does not breach—(a) any obligation of confidence owed by the person making the disclosure, or(b) any other restriction on the disclosure of information (however imposed).(5) This section does not require a disclosure of information if the disclosure would contravene the data protection legislation (but in determining whether a disclosure would do so, a requirement imposed under subsection (2) is to be taken into account).” Member’s explanatory statement
This new Clause gives a person who is required, by regulations under the first of the new Clauses in Lord Callanan’s name inserted after Clause 237, to amend a relevant nuclear pension scheme the power to require persons with relevant information to provide that information.
“Further definitions(1) This section applies for the purposes of this Chapter.(2) References to the amendment of a relevant nuclear pension scheme include references to the amendment of any one or more of the following—(a) the trust deed of the scheme, if there is one;(b) rules of the scheme;(c) any other instrument relating to the constitution, management or operation of the scheme.(3) References to a relevant nuclear pension scheme include references to any section into which the scheme is divided.(4) A “career average revalued earnings structure” is a structure where—(a) the pension payable to or in respect of a person, so far as it is based on the person’s pensionable service, is determined by reference to the person’s pensionable earnings in each year of pensionable service, and(b) those earnings, or a proportion of those earnings accrued as a pension, are under the structure revalued each year until the person leaves pensionable service.(5) “Consumer prices index” means—(a) the general index of consumer prices (for all items) published by the Statistics Board, or(b) where that index is not published for a month, any substituted index or figures published by the Board.(6) “Defined benefits” are benefits—(a) that are not money purchase benefits (within the meaning of the Pension Schemes Act 1993), and(b) that are not provided under an injury or compensation scheme (within the meaning of the Public Service Pensions Act 2013).(7) A “final salary structure” is a structure where entitlement to the pension payable to or in respect of a person which is based on the pensionable service of that person is or may be determined to any extent by reference to the person’s final salary; and “final salary” here means the person’s pensionable earnings, or highest, average or representative pensionable earnings, in a specified period ending at, or defined by reference to, the time when the person’s pensionable service in relation to the structure terminates.(8) “Retail prices index” means—(a) the general index of retail prices (for all items) published by the Statistics Board, or(b) where that index is not published for a month, any substituted index or figures published by the Board.” Member’s explanatory statement
This new Clause sets out definitions relevant to the provisions about amendment of relevant nuclear pension schemes.
“Application of relevant pensions legislation(1) The Secretary of State may by regulations make—(a) such provision about the application of relevant pensions legislation in relation to persons of a specified description, or (b) such amendments of relevant pensions legislation,as the Secretary of State considers appropriate for the purposes of or in connection with the amendment of a relevant nuclear pension scheme in pursuance of regulations under section (Civil nuclear industry: amendment of relevant nuclear pension schemes).(2) In this section—“relevant pensions legislation” means—(a) Schedule 8 to the Energy Act 2004 (pensions), or(b) regulations made under Schedule 14 or 15 to the Electricity Act 1989 (the Electricity Supply Pension Scheme etc);“specified” means specified in regulations under subsection (1).”Member’s explanatory statement
This new Clause enables the Secretary of State to make regulations about the application of relevant pensions legislation, or amending relevant pensions legislation, in connection with the amendment of a relevant nuclear pension scheme in pursuance of regulations under the first of the new Clauses inserted by the amendments in Lord Callanan’s name inserting new Clauses after Clause 237.
“Procedure for regulations(1) Regulations under this Chapter are subject to the affirmative procedure.(2) If, apart from this subsection, a draft of an instrument containing regulations under this Chapter would be treated for the purposes of the standing orders of either House of Parliament as a hybrid instrument, it is to proceed in that House as if it were not such an instrument.”Member’s explanatory statement
This new Clause provides that a statutory instrument containing regulations under any provision of the new Chapter of Part 12 (consisting of the new Clauses inserted after Clause 237 by the amendments in Lord Callanan’s name) is subject to the affirmative procedure. It also provides for the disapplication of the hybrid instrument procedure in the House of Lords.
Lord Teverson
“Net Zero duty(1) In section 4AA of the Gas Act 1986, after subsection (1) insert—“(1ZA) In exercising its functions in relation to the principal objective the Authority has a duty to assist the delivery of greenhouse gas emissions targets as set out in the Climate Change Act 2008.”(2) In section 3A of the Electricity Act 1989, after subsection (1) insert—“(1ZA) In exercising its functions in relation to the principal objective the Authority has a duty to assist the delivery of greenhouse gas emissions targets as set out in the Climate Change Act 2008.”” Member’s explanatory statement
This amendment would place on the Gas and Electricity Markets Authority a duty to assist in the delivery of Net Zero.
Lord Teverson (LD)
My Lords, I will speak also to Amendments 229 and 233 in my name. Amendment 228 is around Ofgem. We have debated this many times, in many contexts, within the House. It is about Ofgem having a direct net-zero responsibility and objective. That is what this amendment does, and I know another amendment is trying to do exactly the same thing. I am indifferent as to which one is accepted, as long as we achieve this.
The thing about Ofgem is that it is, rightly, customer focused in many ways, but it is focused very much on the short term and not so much on the long term—and that is why we are here. I believe that, in many ways, we have high energy prices because we have not transitioned enough towards net zero in the past. This is partly around the lack of infrastructure and the way that Ofgem assesses investment by the national grid and DNOs, in particular to upgrade the transmission system in the United Kingdom.
Ofgem’s objectives have not been updated since its establishment in 2000. Although Ministers have always said that there is, in effect, a net-zero obligation on Ofgem, I do not believe it is specific enough. There are a number of blockages in the system at the moment: solar farms are not all able to connect and we have talked before about slow offshore wind, which will be more likely in the future. I hope that new onshore wind is coming on, but I am sure the connections for that will be equally difficult. We even have housing developments in the south-east that are not able to connect to the grid through lack of capacity. This is all around Ofgem not being balanced in the way that it looks at investment programmes.
Page 10 of Chris Skidmore’s report says that one of the needs is
“to finally update the mandate of Ofgem”,
which must be to
“accelerate the connection of our cheap renewable generation”.
So let us bite the bullet with my Amendment 228 and finally put a net-zero objective into Ofgem.
As I said, I was impressed that the Government’s future systems operator—which, we understand, is, in effect, a subsidiary of Ofgem, although I am sceptical about that structure—does indeed have a net-zero objective. I welcomed that at the time and welcome it now. Let us reflect that up the management chain to Ofgem as well.
Baroness McIntosh of Pickering (Con)
My Lords, I shall speak to Amendment 229, which is tabled in my name.
Although I am against fracking, I am very much for energy from waste, and I am very proud of the facility close to the A1 at Allerton which is creating energy from waste material that is difficult to dispose of and used to go landfill. The benefits of energy from waste are twofold: we are creating an energy strand and we are disposing of waste. I think there is still an incinerator in Sheffield. I understand it was created by the Liberal Democrat administration at the time of the severe floods in the 2000s. One of the reasons for it was that there was a large quantity of furniture and other items damaged by the floods that needed to be disposed of very quickly. I hope that my noble friend will be minded to do more on energy from waste. Where it works, it works very effectively. We could learn from the experiences of other European countries, notably Denmark and other Scandinavian countries, Austria and Germany. In Allerton at the moment, the energy created is going into the national grid. I argue it should go to the local community. Allerton is one of the coldest parts of the country, and it would be in its interest to have a cheaper source of fuel.
The criticism that is made of energy from waste is around potential emissions. Looking at the BEIS figures which were brought to my attention thanks to the House of Lords Library, I see that the emissions figure for waste incineration was static between 2016 and 2020, at just 0.3 million tonnes of carbon dioxide equivalent, whereas the waste management total stayed at around 17 million tonnes of carbon dioxide equivalent and landfill was off the stratosphere, with extremely high methane emissions. That is another argument in favour of energy from waste.
I hope my noble friend will look favourably on rolling out more projects on energy from waste, such as those he knows about from exchanges we have had on the Floor of the House.
Baroness Hayman (CB)
My Lords, I declare my interests as set out in the register. I have Amendment 242A in this group, which is supported across all parties in the Committee—I am grateful to noble Lords who have signed it. It is similar to Amendment 228, which has just been moved by the noble Lord, Lord Teverson. There is a choice of amendments for the Minister, because we have the Labour amendment later on.
Like the noble Lord, Lord Teverson, I am in some ways indifferent to which of the three amendments the Minister supports or to whether he wants to put forward different drafting himself, but I hope that the number of ways the Committee has brought forward this issue will persuade the Government to move. It is worth saying that there is not just support from different parties and political support, and from the Skidmore report, as the noble Lord, Lord Teverson, said, but great support for replacing the existing language of Ofgem’s objectives and duties in the Electricity and Gas Acts with a new text which makes reference to enabling the Secretary of State to meet the targets set out under Part 1 of the Climate Change Act.
As has been said, the future systems operator—the new regulator created by the Bill—does have a specific statutory net-zero objective linked to our climate change targets. However, this is weakened by the fact that there is no equivalent provision in relation to Ofgem, which has only the much more limited duty given to it in the Energy Act 2010. In their consultation on the future systems operator, the Government noted that
“There were several strong calls for Ofgem’s remit to be reformed to focus on enabling net zero in the most economic and efficient way”.
This view is also shared by your Lordships’ Industry and Regulators Committee. I am sure that the noble Lord, Lord Hollick, who signed my amendment, will go into the committee’s rationale for this recommendation.
The case for updated net-zero duties goes far wider than this House or political circles. It has been argued for by environmental organisations such as Green Alliance but also by industry bodies such as Energy UK, the main trade body for energy, representing over 100 energy suppliers and generators. It has said that strengthening Ofgem’s statutory duties to explicitly support the delivery of the legally binding net-zero target would help ensure it balances the needs of both current and future consumers.
As has been said, the Skidmore review has been published in the last few days. It recommends that this change takes place to ensure that Ofgem gives sufficient weight to net zero and to incentivise network companies to plan ahead, emphasising the importance of future-proofing our energy infrastructure. It is essential that Ofgem is given, by government and Parliament, a very clear remit and role as to the importance of net zero and that it recognises the cost to consumers of delayed action. Regulators, given explicit responsibilities by government and Parliament, have a key role to play in demonstrating cross-government commitment to reducing carbon emissions. There is widespread support for this change and I hope the Minister will be able to respond positively to it.
I will turn briefly to two other issues. I record my support for the case made by the noble Baroness, Lady McIntosh of Pickering, and hope that she too will get a positive response.
Turning to Amendment 229 in the name of the noble Lord, Lord Teverson, to which I have added my name, the Minister and I have had many exchanges on the topic of onshore wind. I should start by saying that I welcome the movement the Government have made here and that they have opened a consultation on changing the National Planning Policy Framework guidance on onshore wind, to remove the effective moratorium to allow a new development where the proposal has community support and to encompass the repowering of existing sites.
I also welcome the commitment in the Written Ministerial Statement that the Government intend to make changes by the end of April this year. It is important that we move forward with some speed on this. It is now three years since I tabled a Private Member’s Bill to deal with this issue specifically. In that time, wind farms could have been built in the appropriate places, feasibly adding to the grid at this precise moment and reducing our reliance on expensive gas and foreign imports.
The amendment is not overly prescriptive, as the noble Lord, Lord Teverson, has laid out; it simply requires the Secretary of State to set out a plan as to how more onshore wind farms will be deployed. It does not force the installation of turbines anywhere and would complement the existing consultation, which is focused on allowing communities which can show demonstrable support for onshore wind the ability to install it.
It would indicate the need, and the recognition of the need, for an overarching plan. RenewableUK has long called for the Government to set targets for new onshore wind and solar capacity:
“While onshore wind and solar are now eligible for CfDs, there is no clear medium- to long-term ambition.”
I hope the Minister will recognise that setting a target of 300 gigawatts by 2030 would create 27,000 high-quality jobs and add £45 billion to the UK economy. It is time to set a target now and to be ambitious. I hope the Minister will respond positively.
Lord Ravensdale (CB)
My Lords, I shall speak to Amendments 241, 242B and 242H in my name. In so doing, I declare my interests, first as an engineer and project director working for Atkins within the nuclear industry and as a director of Peers for the Planet.
Amendments 241 and 242H both relate to the renewable transport fuel obligation, the RTFO. I shall concentrate my remarks on Amendment 242H, as I believe it is the right amendment of the two to take forward. It aims to widen the scope of the RTFO from renewables to cover all low-carbon sources. I know the Minister will agree that we should, as far as possible, be technology-independent in how we set up subsidy schemes; as long as the source from which the fuel is derived is low-carbon, we should not care about its wider classification. The amendment seeks only to reflect existing government policy.
I note the July 2022 consultation on the related topic of recycled carbon fuels, which was titled Supporting Recycled Carbon Fuels through the Renewable Transport Fuel Obligation. Recycled carbon fuels are not classified as renewable fuels, as they are made from fossil-derived waste: for example, non-recyclable plastic waste or industrial waste gases that would otherwise be landfilled or incinerated. However, RCFs can provide significant carbon savings compared to traditional fossil fuels such as petrol, diesel and kerosene. The consultation says:
“To introduce support for RCFs into the RTFO we will need to amend the Energy Act 2004 and lay secondary legislation to amend the RTFO Order 2007. The measure is expected to be part of the forthcoming Transport Bill.”
The Government have already agreed with the principle of taking this important measure forward and there is a great opportunity for them to get it done now, within the Energy Bill, so that primary legislation is in place to begin allowing the significant carbon savings that can be generated from recycled carbon fuels, the constituents of which would otherwise end up in landfill. Otherwise, if we wait for the transport Bill, we are looking at a significant delay, as I understand that it will not be progressed in this Session—perhaps the Minister will correct me. I am sure he will see the sense in this argument, given the benefits of progressing with these measures now. It would not commit the Government to anything. Obviously, secondary legislation would be needed to enact any of this, but it would remove the blocker that currently exists in primary legislation and allow the Government to progress with these measures when they so choose.
The amendment would also have wider benefits beyond recycled carbon fuels. It would also allow, for example, hydrogen produced from nuclear power to be eligible for RTFO support. There are plans being developed to use nuclear-derived hydrogen to power construction vehicles for Sizewell C build. It could be a key use case for hydrogen in transport and in construction vehicles which need to operate for long periods—24 hours a day—on sites with limited electrical or charging infrastructure.
As with the RCF, much further work would be required to implement this in secondary legislation if the Government chose to, not least on additionality rules. However, it would remove the blocker that exists in primary legislation and open an opportunity for the nuclear industry to begin generating hydrogen. It would also demonstrate the Government’s commitment to technological independence.
The question may arise of how exactly we define low carbon. In the RTFO context, the Government have published detailed sustainability criteria which any eligible fuel must meet. These include requirements to deliver at least a 60% greenhouse gas emissions saving versus fossil fuels. Compliance with the sustainability and carbon reduction criteria would be a straightforward way to define this term in secondary legislation.
To summarise, this is a straightforward amendment that reflects existing government policy. It does not commit the Government to do anything but does remove a blocker that currently exists in the Energy Act 2004 in extending RTFO support to other low carbon sources. It would also allow the Government to progress with their plans for recycled carbon fuels, given the delays with the Transport Bill. Therefore, I hope the Minister will agree that it would be sensible to proceed with Amendment 242H and allow the carbon reductions that will be possible through the use of recycled carbon fuels.
Amendment 242B was originally put forward by the noble Baroness, Lady Neville-Rolfe, and was transferred to me following her move to the Front Bench, so I thank her for originally tabling it. It is also related to an amendment I put forward regarding the Nuclear Energy (Financing) Act. It is a probing amendment designed to highlight a key issue with the financing of nuclear projects going forward, both through the RAB and other investment mechanisms. There are two aspects relating to financing of new nuclear that need to be highlighted here.
First, investors are constrained by ESG criteria that apply to their funds. My concern is that nuclear will not be considered sustainable, or taxonomy aligned, under the green taxonomy, which the Minister assured us last week is progressing at the Treasury. This concern comes from previous positions on nuclear in similar EU schemes, and from the Treasury’s not including nuclear in its green financing framework.
As with the previous group of amendments, this all comes back to technology independence. Nuclear is a low carbon technology, along with many others, and the Government should not be picking winners in the race to net zero but enabling a level playing field. If nuclear is not considered as taxonomy-aligned under the UK green taxonomy, there is a real risk that nuclear projects will not be able to attract capital in sufficient quantity to realise the Government’s ambitions for the sector. ESG alignment is now a key factor in capital raises for pension funds and institutional investors. I would be most grateful if the Minister could again provide some assurance that nuclear will be considered as taxonomy-aligned under the forthcoming green taxonomy.
Secondly, I referred earlier to the UK Government Green Financing Framework, which describes how the UK Government plan to finance expenditures through the issuance of green gilts and the retail green savings bond. Currently, this excludes investment in nuclear, but again I urge the Government to reconsider. The Government need to take the lead here in defining what counts as sustainable within their frameworks. This is so important in leading the markets in the right direction and in allowing these schemes to finance future government investment in nuclear.
Lord Hollick (Lab)
I rise to speak to Amendment 242A, which my noble friend has just introduced. In the course of our inquiry into the net zero transformation, the Industry and Regulators Committee, which I chair, took extensive evidence about Ofgem’s remit and whether it should be amended to include a specific requirement to have regard to meeting the UK’s net zero emissions target.
Ofgem’s primary statutory duty is to protect the interests of existing and future consumers in relation to gas and electricity. This objective is to protect those interests taken as a whole, including their interest in the reduction of greenhouse gases and in the security of the supply of gas and electricity. This duty guides Ofgem when it is making decisions and trade-offs in the regulatory framework between the three objectives of decarbonisation, affordability and security of supply.
Many of our witnesses told us that the net zero target should be included explicitly within Ofgem’s strategic duties, not least because Ofgem’s responsibility for setting the price and affordability of energy must take into account the substantial level of costs of the transition to net zero which will have to be borne by consumers.
If there is no explicit reference to net zero, there is a danger that the decisions will be very short-term in nature, focusing on short-term costs for consumers and not the long-term costs of failing to achieve net zero and invest in the infrastructure necessary to achieve that. The Climate Change Committee agreed. It argued:
“Giving Ofgem a net zero responsibility”
will help it to
“think … strategically about the changes that lie ahead so that we can minimise the cost to the consumer in the long run.”
Jonathan Brearley, the CEO of Ofgem,
“said that Ofgem is open-minded about whether it should be given a primary duty to achieve net zero, arguing that ‘I and the board have been very clear that we see net zero as fundamental to our existing duty’ … noting that there may be a benefit to clarifying that.”
The impact of net-zero costs on consumer bills is, ultimately, a decision for the Government, not for regulators. The Government promised a strategy and policy statement setting out priorities for delivering a net-zero energy system to ensure that the supplies are available at the lowest possible cost—that was promised in 2022. They also promised to publish a fairness and affordability proposal by the end of 2022. Neither of those documents has yet been cited, and it is indeed unclear whether the consultations are actually taking place. There will be an opportunity in our debate on Friday on the report from the Industry and Regulators Committee for the Minister to enlighten us on the progress of those two very important pieces of work on strategy and affordability.
Without those two statements from the Government, Ofgem will struggle to reflect net-zero costs in its energy pricing; but there is no doubt that those costs will have to be reflected, and Ofgem should have a clear and explicit duty to do that. That is why the Government should accept the amendment, to make it plain to all parties that Ofgem has a strategic duty to take into account the very considerable short and long-term costs of the transformation of our energy system and challenge the Government should their guidance impose unaffordable or unfair costs on consumers. Perhaps the Government might find such an independent intervention from the statutory regulator a little inconvenient. It would be ironic if the regulator most responsible for regulating the journey to net zero is one of the only regulators which does have a specific responsibility in its remit.
Lord Lennie (Lab)
My Lords, I thank all noble Lords who have spoken, particularly the noble Lord, Lord Teverson, my noble friend Lord Hollick and the noble Baroness, Lady Hayman. I also support what the noble Baroness, Lady McIntosh, said and what the noble Lord, Lord Ravensdale, asked.
I will comment on how reforming the remit of Ofgem using the Energy Bill would achieve what we are trying to achieve in the amendments in my name and those of the noble Baroness, Lady Hayman, and the noble Lord, Lord Teverson. Ofgem’s remit has not changed substantially since 2000. It does not prioritise electricity decarbonisation in line with the Government’s recent legislation or stated ambitions; it has only a consideration of greenhouse gas reduction. As a result, Ofgem has been unable to reform substantially its working practices and regulatory frameworks in response to the Climate Change Act 2008 and the UK’s subsequent net zero ambition.
The Government have an opportunity to address that with the Energy Bill, and, while they have recognised the need to reform substantially the working practices of Ofgem in the past, they have done so through the creation of a strategy and policy statement—an SPS—for Ofgem. That urgent statement will be welcome; we note that, largely due to its complexity, it has not been published since 2020, when it was first proposed. It was consulted about in 2021, but we are still waiting for the statement to see the light of day. It seems to us that, to help with the Government’s net zero ambition, giving Ofgem the mandate to advance policies in support of net zero would be extremely welcome.
Lord Callanan (Con)
I will start my remarks by talking about the amendments on a new net-zero duty on Ofgem. While the Government agree with their intent, we do not believe that they are necessary, because Ofgem already has a decarbonisation objective in law. The Energy Act 2010 amended the Gas Act 1986 and the Electricity Act 1989 to modify Ofgem’s principal objective—that is, protecting the interests of existing and future consumers, including their interests in the reduction of targeted greenhouse emissions. Ofgem agrees that its principal objective includes an obligation to support delivery of our net-zero targets, and it would be keen to avoid any confusion over the need to balance decarbonisation, affordability and security of supply. This will be supported by the upcoming strategy and policy statement setting out the Government’s priorities, including those that will help to deliver net zero as a guide for the regulator. As the noble Lord noted, the Government published the results of Chris Skidmore’s net zero review on 13 January, and we will carefully consider the recommendations proposed and respond to the review in the spring.
On the amendment to designate a strategy and policy statement for the purposes of the Bill, this replicates the provisions set out in the Energy Act 2013 so, again, we think that this is unnecessary.
Amendment 229, tabled by the noble Lord, Lord Teverson, and the noble Baroness, Lady Hayman, is on onshore wind. As the noble Baroness said, on 22 December the Government launched a consultation on making changes to the National Policy Planning Framework so that local authorities can have more flexibility to respond to their communities when they wish to host onshore wind infrastructure. On improving infrastructure to ensure access-to-grid connections for onshore wind, the Government are already making strides, publishing a comprehensive strategic framework for the electricity networks. As has been said, the Government included onshore wind in the latest contracts for difference round, where it played a key part in securing almost 1.5 gigawatts of power, including 900 megawatts of mainland projects.
On the annual reporting of onshore wind deployment, BEIS in fact already publishes quarterly and annual statistics for all renewable sources of electricity, including generation and capacity of onshore wind.
On Amendment 233, on decarbonising the capacity market, the most recent capacity market four-year-ahead auction was held in February 2022. There was a record investment in low-carbon flexible capacity; for example, it included more than 1 gigawatt of new-build battery storage. I can reassure the noble Lord, Lord Teverson, that the Government recognise the need to ensure that the design of the capacity market is aligned with the wider decarbonisation of the power sector. As he noted, the Government published a consultation on this on 9 January, aiming to consult on design changes to the capacity market. I assure him that the consultation proposes measures that support greater investment in low-carbon capacity, including demand-side management.
I turn to Amendment 239 from the noble Baroness, Lady McIntosh, on energy from waste. The Government are committed to minimising waste; making better use of existing energy sources will play an important role in our journey to net zero. It is estimated that the total power exported by energy-from-waste plants in the UK in 2021 was approximately 2.9% of total net UK electricity generation. The Government have already made good progress in diverting waste away from landfill and maximising the energy that can be recovered from non-recyclable waste. Waste holders already have a legal duty to act in accordance with the waste hierarchy, which prioritises the prevention of waste arising in the first place, followed by preparing items for reuse and then recycling them. Only then should waste be sent for energy recovery, with only that which cannot otherwise be managed sent for disposal, including to landfill.
All energy-from-waste plants are largescale and, therefore, electricity. While some have private wire connections, most of the power is exported to the grid rather than locally. Therefore, it is not practical to ensure that all electricity produced from waste is used locally. However, of course, it is possible to ensure that heat produced from those waste plants is used locally, and there are some excellent examples of that, including a large plant in east London. The Government believe that our existing provisions in this Bill are sufficient to promote that heat and power source. We discussed that a couple of weeks ago, when we discussed heat network zoning, which will accelerate the deployment of heat networks provisions and ensure that waste heat sources connect to local heat networks and ensure greater use of waste heat sources, such as residual household waste.
Finally, on Amendments 241, 242B and 242H in the name of the noble Lord, Lord Ravensdale, we recently published our intent to allow the use of nuclear-derived fuels to receive support from government fuel support programmes—particularly a form of sustainable aviation fuel—but we do not support the wording of these amendments. We look forward to working together through the passage of this Bill to permit the support of nuclear-derived fuels while not categorising nuclear-derived fuels as “renewable”.
On Amendment 242B, the Government agree that nuclear should play a critical role in decarbonising the UK’s energy sector. However, accepting this amendment would pre-empt the outcome of the further work that is required in this area, which was announced in the WMS by the noble Baroness, Lady Penn, on 14 December. I therefore hope that noble Lords will not press their amendments.
Baroness Bennett of Manor Castle (GP)
Before the Minister sits down, will he acknowledge that this debate has been extraordinarily truncated and that this wide range of issues will need to be fully examined on Report?
Lord Callanan (Con)
I am sure that we will have lots to discuss about lots of issues on Report.
Lord Teverson (LD)
My Lords, there have been some excellent responses. We are getting somewhere on the capacity market and onshore wind. I thank the noble Baroness, Lady Hayman, for her support on onshore wind and my amendment. I had not realised there would be the contract for difference, and I take that as very positive. As the Minister knows, I like to be positive about these things.
However, I find it very difficult that the Government and the Minister will still not bite the simple bullet around Ofgem and the decarbonisation of the grid. It is having a practical effect as regards moving the whole transmission system forward—it really is. Those dilemmas about objectives that he talks about are the same for the future system operator, yet it has that objective.
I am sure that we will come back to this on Report. It is certainly my intention to work with others of a similar mind to find the right amendment and back whoever wishes to bring it forward. However, at this stage, I beg leave to withdraw the amendment.
“Energy Efficiency Commission(1) Within six months of the date on which this Act is passed the Secretary of State must establish an Energy Efficiency Commission.(2) The role of the Energy Efficiency Commission is to advise on targets and timetables for effective ways of using energy more efficiently and conserving energy across—(a) generators,(b) industry,(c) commercial developers and real estate managers,(d) households,(e) transport agencies, and(f) any other relevant sectors,to ensure minimal wastage of energy, improved conservation and best practice towards achieving net zero.(3) The Energy Efficiency Commission must also advise the Secretary of State on targets set in relation to energy storage.”Member's explanatory statement
This amendment would seek to establish an Energy Efficiency Commission to advise on targets and timetables for effective ways of using energy more efficiently.
Lord Bruce of Bennachie (LD)
My Lords, I rise to move Amendment 234 in my name. We are at the end of this Committee stage, but this could in a way have been taken at the beginning. We have had an interesting debate over the last few hours with contradictory views about different forms of generation. However, we should all agree that the best possible outcome is to use whatever energy we generate much more efficiently than we do.
My amendment basically suggests that we need a dedicated commission to test all the possible ways of using energy more efficiently, to ensure that—although we have achieved quite a lot—we achieve a great deal more. That will help us to get to net zero an awful lot quicker. That is the essence of this amendment.
There is quite a lot of evidence that investing in energy efficiency delivers returns three or four times greater than investing in energy generation. Of course, in the present climate, when energy costs are very high, people will themselves be taking steps to use energy more efficiently because they have to—although, for some people, the only way they can use it more efficiently is by not using it at all, which leads to considerable hardship.
It is possible to accelerate energy efficiency in a whole variety of ways, and I accept that the Government have promoted quite a lot of them. I also accept that the Secretary of State is perfectly capable of interesting new policies, but unless we have a dedicated commission, I do not think that all the possible permutations will be explored quickly or thoroughly enough to deliver the results.
It has been estimated that simply raising the quality of home insulation in the UK could deliver £10 billion to £20 billion of benefit a year. Energy conservation has been called the fifth fuel—after coal, hydrocarbons, nuclear and renewables. It is interesting that the Energy Saving Trust has identified that:
“Retrofitting homes to an Energy Performance Certificate standard of ‘C’ would save as much energy as six times the forecast output for the Hinkley Point C power station.”
That raises the whole question of why we are building the power station rather than investing in energy conservation. I really believe we can do a lot more, and remarkably quickly. It also creates a whole economic activity: it creates employment.
We have discussed these issues in the past, and policies have been introduced. I seem to remember that, when he was Environment Secretary, the noble Lord, Lord Prescott, as he now is—then John Prescott—suggested that every new house should have solar generation capacity installed on its roof. That did not seem to happen. We have seen examples of passive planning to ensure that houses are built and designed to get the maximum benefit from the environment. Again, it happens here and there but it is not a policy overall. We have discussed district heating systems and domestic combined heat and power, which has always been around the corner but never actually delivered.
As an aside, there is clearly potential for heat pumps, but they do not suit every situation. In Scotland, the Green Party has persuaded the Scottish Government to basically ban the installation of any new oil-fired boilers after 2025. I think they will find that very difficult to enforce. For many people in my part of Scotland, Aberdeenshire—the highlands—who are off the gas grid, the alternatives just do not exist yet, and they are not likely to exist in 2025. Most of those houses are reliant on oil and many are old and hard to heat. I had a conversation with my local plumber who said that he had installed a number of heat pumps in and around the village, but in the last 12 months he had been asked to take quite a few of them out because they did not deliver the ambient heat that was required, and people found that they were having to pay for additional heating to supplement the heat pumps.
Clearly, we have to identify the properties that can benefit from insulation and heat pumps and assist them to get there as fast as they possibly can. At the moment—I guess in the short run the Government have no option—billions of pounds are being spent simply enabling people to get a contribution from the Government towards paying their bills, but over any length of time that money would surely be much better invested in increasing the efficiency of those homes so that they are more affordable.
I suggest that a commission makes sure it looks at the best practice nationally and internationally and tests all the options; is able to make very clear recommendations about priorities and what could be achieved, how quickly and at what cost; and suggests what mechanisms might be better—whether grants or loans. In some cases, just having access to advice and information would enable people to make their own decisions.
I must be honest: I have a concern about those who think that we can just turn off oil and gas now when we clearly have not developed the alternatives. People say that in transport, for example, we need to move to hydrogen, but the technology is not yet there. Even with electric cars, there are still enough problems with charging units, batteries and so forth that there is a question of whether we can get there as fast as we want. We have to find ways of doing it—I am not suggesting that we should not—but we cannot switch off what we have until we have developed the alternatives.
Lord Teverson (LD)
My Lords, I have a question for the Minister that follows on from that. I very much support the idea of an energy commission, although Chris Skidmore says very strongly in his report, on decarbonisation, that:
“None of this will happen without a step change in the government’s approach to delivering net zero.”
He says that an office for net-zero delivery within government is needed but, if we cannot get that, energy efficiency must be part of it.
When we were in the European Union and single market, part of energy efficiency was around appliances and all sorts of things that we use or do, and we have had an increase in energy efficiency—not fast enough, but a sectoral trend—largely because of the sorts of implements we use; cars, vacuum cleaners or whatever. I therefore ask the Minister: in terms of energy efficiency and standards for equipment and pieces of machinery, what is happening now? Is BEIS doing this itself? Does it have a programme? How does that relate to our export markets and manufacturing sector? I would be interested to understand.
Baroness Bennett of Manor Castle (GP)
The noble Lord, Lord Bruce of Bennachie, has presented very interesting proposals. Like the noble Lord, Lord Teverson, I think this offers us one way forward on the crucial issue of energy efficiency, but I have a question for the noble Lord, Lord Bruce. Would he agree that a useful role for the energy efficiency commission would be ensuring systems to educate people to install this new technology properly, so that people such as the plumber whom he cited had the information available to ensure that they knew that what they were installing would work for their customers?
Lord Callanan (Con)
I thank the noble Lord, Lord Bruce, for his amendments. I will take up the question from the noble Lord, Lord Teverson, first. The answer is absolutely; we have an extensive programme called the Energy Efficiency (Energy Using Products) Regulations. They are largely similar to those we had in the European Union, but we have extended them and taken them further. We have recent regulations on more efficient lighting and there are others coming, as well as some on the more popular white goods that people use. I would be happy to send him more details of that.
I move on to Amendment 234 from the noble Lord, Lord Bruce. The Government agree of course with the principle of having an independent body to advise on targets and timetables for energy efficiency policy and net-zero policy more broadly. But we already have that body: the Climate Change Committee fulfils that role. He will also be aware that the Government will announce further details about the energy efficiency task force that was announced by the Chancellor and the Business Secretary late last year. There is a lot of detailed work happening on that at the moment. We hope to have more to say very shortly.
On Amendment 235, the Government fully recognise the importance of energy storage and its ability to help us to use energy more flexibly and decarbonise our electricity system more cost-effectively. Our measure to define electricity storage provides long-term clarity and certainty over its treatment in regulatory frameworks. That will facilitate storage deployment going forward. At this stage, however, it is premature to set a target for the sector. We do not yet know the full extent of the system requirements for storage. Especially in the context of high energy bills and having to pay for increased storage, it would not be responsible to set storage target at this time, as we could set a target that is too high or too low and favour a more expensive technology over a relatively cheaper one. Instead, our approach is to remove barriers and spur innovation for all low-carbon flexibility technologies. We published the 2021 Smart Systems and Flexibility Plan with actions to facilitate the deployment of these technologies, including storage at all scales.
The Government are not in disagreement with the noble Lord, except on the narrow issue of targets. I hope he recognises our commitment to enabling the deployment of flexibility, including energy storage, across our energy system to even out fluctuations in generation and demand and therefore deliver the best outcomes, which we all want, for our consumers. Therefore, I hope that he will see fit to withdraw his amendment.
Lord Bruce of Bennachie (LD)
My Lords, I am grateful to the Minister for that response. As I said, I accept that the Government have been doing quite a lot, but I still believe they can do an awful lot more. I hope that those initiatives yield results.
On the noble Baroness’s intervention, I do not think it is a question of people not knowing how to install heat pumps; it is about people having expectations of heat pumps that do not suit every property. I speak from my own personal concerns. I have a house built in 1910; it is not the most efficient house. I inquired about a heat pump, and was told that if I was lucky I would get an ambient temperature of about 14 degrees, which would cost me about £10,000. I could get the ambient temperature up to 18 or 19 degrees as long as I spent £120,000 on increasing the insulation in the house. But other houses could be upgraded much more cheaply, so I suggest that they should be prioritised.
I am sorry, but I do not think the Scottish Greens are realistic about what they think can be achieved between now and 2025. In places such as Aberdeenshire and the Highlands, they will find a kickback when people are told that they cannot have an oil-fired boiler, there is no gas and we do not have a viable alternative for their property—yet.
Baroness Worthington (CB)
I am sorry; I was saying to myself that I would not do this, but I point out that when it comes to energy efficiency, electrification, which is a tried-and-tested way of providing heating to homes, is a fundamentally more efficient way of getting energy. The total primary energy demand of the UK could go down by one-third if we were to electrify our heating and transport, because of the lack of efficiency of anything that is combusted. The combustion inefficiency of engines and boilers cannot be fixed. Electricity is the best vector.
Lord Bruce of Bennachie (LD)
The noble Baroness took the next sentence out of my mouth because the advice I was given for my house was to electrify it, but I cannot be guaranteed green, renewable electricity at the moment. For hard-to-heat houses, that is the way forward, but we have to ensure that we generate efficiently and economically, and deliver. I completely agree that that is exactly the result. We have got to get there as fast as possible, so I am on the same page. I just think that some people are being unrealistic in thinking we can choke off options before we have developed the alternatives. It is a question of how quickly we can get there. That was the purpose of my amendment.
I heard what the Minister said, and I urge him to keep moving and to do this as fast as he can. I beg leave to withdraw the amendment.
Lord Callanan
“(6) Subsection (3) does not apply to regulations made by the Scottish Ministers under section (Assessment of environmental effects etc).”Member's explanatory statement
This amendment ensures that the provision about affirmative procedure in the UK Parliament does not apply to regulations made by the Scottish Ministers under the new Clause relating to assessment of environmental effects of offshore wind projects (which will instead be subject to affirmative procedure in the Scottish Parliament).
Lord Callanan
Member's explanatory statement
This amendment provides that the new Clauses in the name of Lord Callanan, to be inserted as a new Part after Clause 201, extend to England, and Wales, Scotland and Northern Ireland.
“(ha) Chapter 3 of Part 12;”Member's explanatory statement
This amendment provides for the new Clauses in Lord Callanan’s name to be inserted after Clause 237 to extend to England and Wales, Scotland and Northern Ireland.
Lord Callanan
“(ba) Part 9A, except sections (Directions to scheme administrators) and (Financial assistance to scheme administrators and participants);”Member's explanatory statement
This amendment provides that the new Clauses in the name of Lord Callanan which contain provision about ESOS regulations (but not those making provision about directions or financial assistance) come into force on the day on which this Bill is passed.
“(ca) Chapter 3 of Part 12;”Member's explanatory statement
This amendment provides for the new Clauses in Lord Callanan’s name to be inserted after Clause 237 to come into force on the day on which the Bill receives Royal Assent.
Lord Callanan
Member's explanatory statement
In consequence of the notice given by Lord Callanan of his intention to oppose the Question that Clause 161 stand part of the Bill, this amendment removes the reference to that Clause from the list of provisions that are to come into force two months after Royal Assent.
“(ga) sections (Directions to scheme administrators) and (Financial assistance to scheme administrators and participants);”Member's explanatory statement
This amendment provides that the new Clauses in the name of Lord Callanan which make provision about giving directions and financial assistance in relation to Energy Savings Opportunity Schemes come into force at the end of the period of 2 months beginning with the day on which this Bill is passed.
“(ga) Chapter 1 of Part 11;”Member's explanatory statement
This amendment provides for the new Chapter for Part 11, comprising the new Clauses inserted before Clause 225 by the amendments in Lord Callanan’s name, to come into force 2 months after Royal Assent.
Lord Callanan
Member's explanatory statement
This amendment amends the long title to insert reference to the new Clauses in the name of Lord Callanan to be inserted as a new Part 9A after Clause 201.
Member's explanatory statement
This amendment amends the long title.