The Earl of Effingham
To ask His Majesty’s Government, following the recent military strikes in Iran and Qatar, what steps they are taking to secure UK energy sources and reduce the cost of energy for UK citizens.
The Minister of State, Department for Energy Security and Net Zero (Lord Whitehead) (Lab)
I thank the noble Earl for his Question. The UK benefits from a strong and diverse range of energy supplies. The physical supply of fuel to the UK is stable. The only way to protect ourselves from these and future potential price spikes in the longer term is to get off international fossil fuel markets controlled by the actions of petrostates and dictators. That is what our clean energy mission for homegrown power that we control is all about.
The Earl of Effingham
My Lords, I thank the Minister for his response. Last night’s escalation proved that we should not be dependent on imported oil and gas and that the UK must make use of its domestic energy supplies. Given this and the fact that, by autumn, we could be producing enough gas to heat 1.6 million homes by simply approving production at the Jackdaw gas field, will the Minister today commit to approving Jackdaw for gas production?
Lord Whitehead (Lab)
The noble Earl will be aware that the present crisis is essentially a price crisis rather than a supply crisis. I emphasise again that the UK has a strong and diverse range of energy supplies and that the physical supply of fuel to the UK is stable. However, the Government have not been idle in this respect. Among other things, the Government have introduced transitional energy certificates for North Sea and associated producing fields that allow producers to engage in tie-backs, which is the development of fields additional to fields that are already in production. That is completely in line with IEA recommendations on how production can be increased in the not too distant future.
Earl Russell (LD)
My Lords, I welcome the measures that the Government have already taken, particularly around reducing the cost of heating oil. Does the Minister agree that it is important that we work with allies and partners to encourage all involved to stop targeting energy infrastructure?
Lord Whitehead (Lab)
The noble Earl is absolutely right that one of the key issues in the recent escalation has been the targeting by both sides of oil and gas installations. Clearly, this brings into a further spotlight the need to seek an urgent de-escalation of hostilities and the resolution of this crisis by negotiation rather than continued bombing of everyone’s oil and gas facilities.
Lord Alton of Liverpool (CB)
My Lords, in the light of the Times report earlier this week on energy links between the United Kingdom and Xinjiang, has the Minister read the Joint Committee on Human Rights report on supply chain transparency and modern-day slavery? Will he say when he last discussed with Great British Energy its compliance with Section 3(2)(e) of the Great British Energy Act, which was added following an all-party amendment in your Lordships’ House and prohibits the use of products, such as solar panels, made by slave labour?
Lord Whitehead (Lab)
I will have to write to the noble Lord on the specifics he mentioned. He should know that the UK Government are pursuing very robust measures to ensure that the supply of products such as solar panels is not the product of modern slavery. Efforts are under way on the diversification of supply and on the certification of panels to ensure they are not subject to modern slavery. The noble Lord will of course appreciate the difficulty of getting exact information on the sourcing of particular products, but the British Government are doing everything they can to ensure that they are not from the sources that the noble Lord is so concerned about.
Lord Anderson of Swansea (Lab)
My Lords, does the current crisis and the vulnerabilities that have been exposed lead the Government to re-examine the case for tidal power in the UK?
Lord Whitehead (Lab)
The noble Lord mentions what is potentially a very effective, long-term and secure method of homegrown energy. As I mentioned in my initial Answer, the long-term way to protect ourselves from these price spikes is to develop homegrown energy. Clearly, tidal range, which has a very stable supply of energy and a not particularly long period of development, could play a role in that process. However, I emphasise that we are very far at the moment from developing tidal range in the way that the noble Lord seeks to promote.
Lord Moynihan (Con)
My Lords, two days ago, the Chancellor of the Exchequer said that all countries must play their part in boosting oil and gas production. The Energy Secretary demonises and bans drilling for oil and gas in the North Sea. Who is right?
Lord Whitehead (Lab)
No, the Energy Secretary does not wish to see drilling for North Sea oil banned. What he is doing, as the noble Lord will know, is developing transitional energy certificates, which will enable tie-backs to take place in existing fields. The noble Lord will know that the existing structure of the North Sea fields largely consists of fields that have not been tapped—small fields that are adjacent to additional fields—and so the tie-back arrangement will ensure both production and drilling for those tie-back fields in association with the existing fields.
Baroness Hayman (CB)
My Lords, I declare my interest as a director of Peers for the Planet. Given what the Minister said about this being, in essence, a price security issue, what progress have the Government made on the issue of decoupling the price of other forms of generation from the price of gas? As we know, that is hugely volatile and has an enormous impact on both domestic and industrial consumers.
Lord Whitehead (Lab)
The noble Baroness is exactly right. As she will know, part of the price increases that are being suffered at the moment go into the market-making price of gas that secures the general price of electricity, for example, in our markets by marginal cost pricing. Certainly, the renewed and continuing volatility in international markets is likely to be a substantial driver of high price levels and price increases in the future. Therefore, the Government are actively looking at measures that could decouple the UK energy market, where it is green and low carbon, from that marginal cost pricing arrangement, which is still driven by gas in about 65% of settlements at the moment. That will be part of the UK’s drive for clean energy sources for the future.
Lord Robathan (Con)
My Lords, surely the issue is one of supply, and it is not the Government’s fault. However, there is one thing that is the Government’s fault: we do not have a single ship in the Persian Gulf that can assist with guarding the Strait of Hormuz. Does the Minister share my disappointment that we do not have anything in the Gulf that can assist?
Lord Whitehead (Lab)
The noble Lord will know that we do have quite a presence in the Gulf, not of ships but of other defence capacity which can play some part as far as the Strait of Hormuz is concerned. He will also know that the US has already indicated that it does not wish to have the UK and other NATO countries’ assistance in undertaking the clearance of the Strait of Hormuz. Nevertheless, we regard the opening of that strait as imperative as far as fuel supplies are concerned. As far as UK fuel supplies are concerned, only about 1% currently comes from sources relevant to passage through the Strait of Hormuz—for example, Qatar. We are not as internationally exposed to those supplies as a number of other countries.
Lord Mohammed of Tinsley (LD)
My Lords, following up on the question from my noble friend Lord Russell, who mentioned support for domestic users in particular of heating oil, my question is on highly energy-intensive industries, particularly steel. What support, if any, are the Government thinking of providing, particularly if this war continues for weeks and months rather than just ending in days, as we hope, for the steel industries in south Wales, Scunthorpe and South Yorkshire?
Lord Whitehead (Lab)
The Government are open to all eventualities as far as this crisis is concerned and are keeping the position under review on a very regular basis. The noble Lord will know that immediate support has been for heating oil, particularly for those customers who are off grid in the UK. The Government recently announced over for supplies of heating oil, with particular reference to Northern Ireland, where a substantial proportion of the population are dependent on oil for heating. Of that £50 million-odd, £17 million has gone to Northern Ireland for that purpose.
Baroness Bennett of Manor Castle (GP)
My Lords, I am sure that the Minister will agree that the cleanest, greenest, cheapest and most secure energy is the energy that you do not need to use. France, for example, is far ahead of us in avoiding wasteful use of energy, with measures such as switching off the lighting for shops, ensuring that offices switch off lights during the night and taking measures to stop wasting energy, such as with video screens with advertising. What steps are the Government taking to reduce the wastage of energy, which will make us all more secure?
Lord Whitehead (Lab)
The first issue is, as the noble Baroness suggests, the efficient use of energy by more intelligent means and planning how that energy is deployed on a highly intelligent basis. That is activity that the Government are advanced on as far as the management of our energy system is concerned. The second point is, as the noble Baroness mentions, the energy security from energy that is not used. The Warm Homes Plan that the Government have recently introduced—a multi-billion programme over a number of years to increase the energy efficiency and resilience of people’s homes, particularly those in fuel poverty—will produce not only a win for fuel poverty but a substantial win for the efficiency with which energy is used and the amount of energy that is used in the domestic sphere.
Lord Fuller (Con)
My Lords, the crisis is immediate. What assessment have the Government made about the essential products that rely on gas—ammonia, CO2, aniline, soda ash, ethylene and sulphuric acid—without which a modern economy cannot exist and without which factories will close?
Lord Whitehead (Lab)
The noble Lord will know that we have recently engaged in an extensive conversation in corridors about the question of ammonia in the UK economy. This is related to the energy crisis, in as much as we do not have ammonia manufacturing sites in the UK and the manufacture of ammonia is highly energy dependent. One of the ways forward on that is to produce green ammonia, which he will know was a subject of our discussion just recently. That is one way to secure the future of ammonia supplies in the UK without resorting to high levels of fossil fuel in the process.