Draft Environmental Permitting (Electricity Generating Stations) (Amendment) Regulations 2024
(1 month ago)
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The Minister of State, Department for Energy Security and Net Zero (Sarah Jones)
I beg to move,
That the Committee has considered the draft Environmental Permitting (Electricity Generating Stations) (Amendment) Regulations 2024.
As always, it is a pleasure to serve under your chairmanship, Mr Vickers.
The draft regulations were laid before the House on 30 October 2024. The Government believe that the answers to the challenges of energy security, affordability and sustainability point not in different directions but in the same direction: towards clean power. Investing in clean power at speed and scale can help to tackle the climate crisis and create good jobs. It is the only route to protect bill payers and ensure energy security. That is why making Britain a clean energy superpower by 2030 is one of this Government’s five central missions.
Although renewable energy is at the heart of our plan to deliver clean power, we also know that we must bring forward low-carbon generation sources, providing added security for when the sun does not shine and the wind does not blow. This includes flexible supply sources that can scale up or down instantaneously to meet peak demand. Some flexibility can be provided by short-duration technologies such as batteries, which can help to balance the system within each day, but we will also need long-duration technologies, which can run for extended periods of low renewable production.
To meet the challenge, the Government are investing in low-carbon flexible technologies such as carbon capture and storage at existing power stations, hydrogen, and long-duration electricity storage. This flexibility is critical to maintaining a constant supply of electricity in the UK, keeping the lights on for millions of homes and businesses. However, as new low-carbon technologies scale up, we will continue to need reliable, mature technologies, including gas, to provide energy security.
Gas is expected to be used less in our future energy system, taking a backseat, and only to maintain security of supply. Although gas will continue to play an important role in the system, it is only right that we should expect any new or substantially refurbished combustion plants to be built net zero-ready. This is why we are updating the existing regime and introducing the new decarbonisation readiness requirements.
Before I turn in detail to the decarbonisation requirements, let me set out the current regime. Since 2009, all new-build combustion power plants in Great Britain with capacity over 300 MW have been subject to the carbon capture readiness requirements. Those regulations require plant operators to demonstrate that it is technically and economically feasible to retrofit carbon capture and storage technology. Due to the 300 MW threshold, the policy has seen limited application since 2009. It has also contributed to a costly market distortion by incentivising the building of smaller, less efficient plants, and inadvertently creating an unacceptable loophole that has resulted in a significant number being built at 299 MW to avoid the carbon capture readiness requirements.
The policy landscape has changed significantly since the carbon capture readiness requirements were introduced. Plant operators now have an alternative pathway to decarbonise through hydrogen-fired generation, and there has been the introduction of the UK’s legal obligation to meet carbon budgets and to reach net zero by 2050.
In March 2023, the previous Government published a final consultation on the decarbonisation readiness proposals, alongside the publication of two technical studies for hydrogen and for carbon capture and storage. The consultation received positive feedback from industry and we published a response in mid-October, giving the go-ahead to proposals set out in the consultation.
Let me turn to the detail of the regulations. This statutory instrument will amend the Environmental Permitting (England and Wales) Regulations 2016 by inserting new schedule 25C. This will remove the 300 MW minimum capacity threshold, removing any existing market distortion and supporting rapid decarbonisation by setting out that nearly all new and substantially refurbished combustion power plants must have a credible plan to decarbonise.
The regulations will also move the requirements from the planning consent process, where they currently sit for carbon capture readiness, to environmental permitting. This will ensure that the responsibility for regulating the requirements falls to the Environment Agency rather than to local planning authorities and the Department for Energy Security and Net Zero. Unlike local planning authorities, the Environment Agency is already involved in the assessment of carbon capture readiness and has the technical expertise to assess the requirements. As I mentioned a moment ago, this will also include hydrogen readiness.
The new requirements will now enable combustion plants to demonstrate decarbonisation readiness through conversion to hydrogen firing as well as carbon capture. In doing so, the instrument introduces hydrogen conversion readiness and carbon capture readiness assessments, which are proportionate to the developing nature of hydrogen to power and of carbon capture and storage. It will also expand the generation technologies in scope of the requirements to include biomass, energy from waste, and combined heat and power plants, ensuring that a higher number of carbon-intensive plants are now captured.
The updated requirements are intended to strike a balance, ensuring that new-build plants are ready to take full advantage of future decarbonisation opportunities —and that the refurbishment of old sites is conducted to take advantage of those opportunities too—while acknowledging the emerging state of hydrogen and carbon capture technologies and their enabling infrastructure. We expect that the requirements will be strengthened over time as the generation technology improves and clarity on enabling infrastructure availability increases.
To ensure that we continually assess the impact of the policy and the case for strengthening the requirements, we have included a statutory requirement for the Government to carry out a review of the policy in periods of not exceeding five years.
In summary, the regulations will ensure that the gas capacity that we need for the security of supply is future-proofed and that there is a credible plan to transition to low-carbon operation. In doing so, they will help towards our aim to become a clean energy superpower and deliver net zero by 2050. I commend the draft regulations to the Committee.
Andrew Bowie (West Aberdeenshire and Kincardine) (Con)
It is a pleasure to be here and to serve under your chairmanship, Mr Vickers, for yet another Delegated Legislation Committee; it seems like we spend every Tuesday morning in these Committee Rooms, doing yet another DL. I am pleased to be here. Indeed, the regulations are the result of a consultation that launched by the Conservatives when we were in government back in March. It was encouraging to see the response published in October and to see the regulations brought forward today.
As the Minister has set out, the instrument introduces requirements for new combustion plants and for those being refurbished, including regulatory requirements for a new decarbonisation readiness report as a prerequisite for environmental permitting approval. It also requires new combustion plants be built with regard to how they could be decarbonised in the future—for example, by converting to hydrogen firing or retrofit carbon capture technology, under environmental permitting regulations.
As I said, we are very supportive of the regulations. In fact, I think we are all supportive of the growth of new technologies like carbon capture, usage and storage, and their potential to cut carbon emissions. For combustion plants, where it is economically and technically viable, the implementation of such technology should be considered. I note that no impact assessment has been produced as the regulations are not expected to impose significant costs to businesses. However, it is noted in the explanatory memorandum today that they are expected to have an economic impact on small and micro businesses affected by the change to the 300 MW threshold. We all want a future where small businesses can thrive—the Chancellor herself has said that growth is her No. 1 priority —so will the Minister provide more detail of what support might be made available to the small and micro businesses that feel this new burden on them as they seek to decarbonise along with the rest of the country?
This instrument is a sensible move, although we worry and have some reservations about its impact on small and micro businesses, and would be keen to see more detail about what engagement the Department has had with the Scottish and Welsh Governments. As it says in the explanatory memorandum, this is a devolved area—but decarbonisation is a UK-wide effort.
We have no objection to the regulations, so I will draw my remarks to a close.
Sarah Jones
I thank the Opposition spokesperson, the hon. Member for West Aberdeenshire and Kincardine, for his support. I think we are all on the same page on the regulations, but I will make a couple of comments in response to his questions.
The hon. Gentleman talked about the impact on businesses, particularly smaller ones; of course, we are all mindful of that. The regulations require four things, including that relevant businesses look at the kind of space they have and whether it is technically possible for the transition to be made. They also have to report whether they have considered hydrogen or carbon capture, and whether it is economically feasible. The latter two points are entirely self-reported, so the process should not be difficult.
The Environment Agency is looking at ways to roll up the different requirements and regulations to see whether businesses could fill in a single application rather than multiple ones. We can provide more information on that at a later point; I have had a meeting with officials to talk about the issue. The hon. Gentleman makes a good point and it is one of which we are certainly mindful.
The regulations only apply in England. The Scottish and Welsh authorities have different rules and policies, although of course we have been talking to the nations about the change.
I commend the regulations to the Committee.
Question put and agreed to.
Draft Proceeds of Crime Act 2002 (Search, Seizure and Detention of Property: Code of Practice) (Northern Ireland) Order 2024
(1 month ago)
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The Minister for Security (Dan Jarvis)
I beg to move,
That the Committee has considered the draft Proceeds of Crime Act 2002 (Search, Seizure and Detention of Property: Code of Practice) (Northern Ireland) Order 2024.
It is a pleasure to serve under your chairship, Sir Roger, and it is very good to see the shadow Minister in his place. I want to take this opportunity to thank him for the very constructive tone he adopted in the Martyn’s law debate last night. I am very pleased that we have been able to make progress with that important piece of legislation and I am very grateful to him and to the Opposition for the support they have offered throughout the passage of the Bill.
The debate this morning relates to the commencement of a statutory instrument similar to one debated in Committee on 13 November. I will therefore not go into great detail on the context but will briefly remind the Committee that the order relates to the Economic Crime and Corporate Transparency Act 2023. The Act contained a wide range of reforms to reduce economic crime and increase transparency over corporate entities conducting business in the UK, which included reforms to enable targeted information sharing to tackle money laundering and remove reporting burdens on business. Additionally, the Act introduced new intelligence-gathering powers for law enforcement and reformed outdated criminal corporate liability laws. It also introduced reforms to keep pace with the use of emerging technologies used to launder money and commit economic crime, including cryptoassets.
The Act introduced new search, seizure, and detention powers when cryptoassets are being used illegally or for terrorist purposes. The legislation aims to remove criminal gains and disrupt criminals who use cryptoassets for illicit purposes. On 26 April, the cryptoassets measures to which the debate relates came into force in Northern Ireland, as well as in England and Wales. As of the end of November, more than 100 cases in the UK have involved the exercise of the new powers, including cryptoassets seizures or confiscation cases involving cryptoassets. The cases account for £18 million.
The Committee will be relieved to hear that I do not intend to cover the content of the powers as they were debated extensively by both Houses during the passage of the Act. I will instead outline briefly the purpose of the order. The code of practice being brought into operation by the statutory instrument is the search, seizure and detention of property code for Northern Ireland. The code is made by the Home Secretary to guide the exercise of search and seizure powers operated by immigration enforcement and His Majesty’s Revenue and Customs in Northern Ireland.
It is the responsibility of the relevant Ministers in each jurisdiction in the UK to publish their own codes of practice. The Northern Ireland Assembly’s code of practice for officers’ operating powers in Northern Ireland came into force in July. This is the final code of practice to be debated under the cryptoassets measures in the Act.
The codes of practice clarify the circumstances in which the powers may be exercised to ensure that they are applied consistently and proportionately across law enforcement, in order to safeguard against improper use of the powers, which is vital given the broad range of law enforcement agencies that can exercise them. For instance, the code of practice in the order contains guidance on what constitutes reasonable grounds for suspicion when searching a premises and the prior authorisations required to exercise the powers. Those safeguards are necessary where more intrusive powers are used to investigate crime. To be clear, the code relates to guidance for officers using powers that are already introduced.
The draft order is required to complete commencement of the Economic Crime and Corporate Transparency Act 2023. That will ensure that all necessary legislation is in place and that law enforcement operates the powers proportionately and according to the aims of the legislation. I commend it to the Committee.
Matt Vickers (Stockton West) (Con)
It is a pleasure to serve under your chairmanship, Sir Roger. A version of these changes was discussed in Committee last month, and we rightly support the measures made as a consequence of the Economic Crime and Corporate Transparency Act. It is critical that we update our legal regime to ensure we can seize the proceeds from all those who commit crimes, whether they are in cash or cryptocurrency, and a code should apply consistently wherever a criminal operates in the United Kingdom, including Northern Ireland. As such, we support these changes to the proceeds of crime codes. Some things are beyond party politics, and it is heartening to see the new Government continue the legislative process stemming from the Economic Crime and Corporate Transparency Act, which was passed by the Conservatives.
Cryptocurrency has fundamentally and permanently changed the way criminals and terrorist groups launder, move and spend their money. It is right for the Government to move quickly to ensure that our police and enforcement agencies have the authority and means to respond to those changes. The ability to do so successfully will play a vital role in our national security.
Based on conversations in Grand Committee, I understand there is potential for the proceeds of crime to be recycled back into agencies under this system. The impact assessment for the Act estimated total benefits of £430.4 million over 10 years. Although I appreciate that it may be challenging to provide precise figures, has the Minister estimated what proportion might be allocated to Northern Ireland? Additionally, given the decentralised nature of cryptocurrencies, what discussions has the Minister had with counterparts in the Republic of Ireland and other partner countries to ensure cross-border co-operation in preventing the illicit use of such funds?
I want to take a moment to salute the work of the National Crime Agency on its recent investigation into a global cryptocurrency money laundering network based out of Moscow. Eighty-four people have been arrested—with the network stretching across 30 countries —including 71 here in the UK. That shows that our law enforcement agencies are getting ahead of crypto, despite its relative novelty. We in this place should continue to play our part to ensure that that remains the case.
Finally, given the recent discovery and exposure of and police action against Moscow-based crypto laundering, has the Minister considered and investigated the use of crypto in sanctions evasion by Russia? Although I understand that what he can share will be limited, I encourage him to prioritise tackling that.
As I said before, national security must always come above party politics. It is in that spirit that I reiterate our support for the changes today and assure the Minister of our continued collaboration on matters of national security.
Robin Swann (South Antrim) (UUP)
It is a pleasure to serve under your chairmanship, Sir Roger, and I thank you for inviting me to speak on this statutory instrument. We will support the proposals, because any measure that puts more pressure on organised crime, criminal organisations and, indeed, paramilitary and terrorist organisations is a welcome step forward.
I want to ask the Minister two questions about the order. Paragraph 6.3 of the explanatory memorandum says that the code will apply only to Northern Ireland, but I seek the Minister’s reassurance that although the code is specific to Northern Ireland it still comes under the Economic Crime and Corporate Transparency Act 2023 and that there will be similarities across all jurisdictions of the United Kingdom.
I join the shadow Minister in seeking reassurance that the Minister is working with his counterparts in the Republic of Ireland. What we have seen in Northern Ireland is how easy it is to move physical assets of crime across the border. I would not like to see cryptoassets being able to be easily transferred into the Republic of Ireland and hidden there in a safer form.
I also note that the explanatory memorandum states in paragraph 7.2 that
“one enforcement agency sought clarity on the definitions in a different code on property, cryptoassets and wallets and also suggested where additional guidance could be added on storage and searches.”
Can the Minister clarify whether that additional guidance has been provided to the agencies? It is vital that we get this right and tackle crime at its heart.
Dan Jarvis
I thank the shadow Minister and the hon. Member for South Antrim for their constructive and helpful comments. I will seek to address the points that they made and if I am not able to do so this morning, I will write to them both as I did previously. Let me see what I can do.
First, on the helpful remarks made by the hon. Member for South Antrim, I think he was seeking assurance that that the code is specific to crime in Northern Ireland. That is the case—I can give him that assurance—but he also, entirely reasonably, was seeking wider reassurances on the engagement that the UK has had with colleagues in the Northern Ireland Assembly and in the Republic of Ireland. I can give him those assurances.
I am grateful to the shadow Minister for the constructive tone he struck. He asked an entirely reasonable question about the recycling of funds. As he was kind enough to accept that I would not be able to give him the precise figures at this particular moment, rather than giving him an inaccurate figure I will write to him, as I did previously, to make sure that he has the most up-to-date figures that the Department holds. I can also give him the same assurance that I gave the hon. Member for South Antrim about the UK Government’s engagement with colleagues in the Northern Ireland Assembly and contact with the Republic of Ireland, too.
The shadow Minister also made a good point about the cryptocurrency and sanctions against Russia. I was at the National Crime Agency yesterday with the Foreign Secretary and our newly appointed anti-corruption champion, Baroness Hodge. These matters are a real priority for the Government and we are working at pace across the Government to look at the resources we have to tackle the issues the shadow Minister has raised. The appointment of Baroness Hodge, who brings long-standing experience in this area, will complement the work we are doing.
Having visited just yesterday, I want to take the opportunity to pay tribute to the extraordinary work being done by the National Crime Agency on behalf of the UK Government. It recently completed a very successful operation known as Destabilise, which involved targeted interventions against Russia, about which there has been quite significant media reporting. I can give the shadow Minister an absolute assurance that we are looking incredibly carefully at what more we can doto take action against the use of cryptocurrency and to ensure that our sanctions regime is as effective as it possibly can be.
I thank the Committee for considering the statutory instrument. As I have set out, it is necessary to complete the commencement of the Economic Crime and Corporate Transparency Act 2023 and I commend it to the Committee.
Question put and agreed to.