Climate Change Committee Progress Report 2021

Alan Brown Excerpts

Thursday 21st October 2021 Westminster Hall

[Anthony Browne]

That is a very good point and I will come to it briefly. We need absolutely to try and get to net zero, but also to promote measures such as insulation and energy efficiency in housing and industry to reduce consumption.

We need other measures, rather than just decarbonising power. These other measures are where the potential political pain comes. Decarbonising electricity production did not really require consumers to change anything. The electricity supply to their homes and their sockets was the same as before, but produced in a climate-friendly way. They had the same cars and same central heating systems. However, with other sectors needing to decarbonise, future policies will inevitably have a more direct impact on consumers. That is why we need more political will in the coming decades, not less. This should be doable. The public are very supportive; a large majority say they want stronger action on climate change.

The CCC did welcome the advances in policy that have already been made. In last year’s report they made 92 different recommendations; this year’s report says that 72—over 75% of them—have either been achieved, partly achieved or are underway. That is a good record. However, it thought that things were going too slowly. It concluded that clearly policy progress is being made, but it is not yet happening at the necessary pace. Only 11 of the 72 recommendations have been achieved in full.

The report states that in 21 areas of abatement—places where we can make real changes—sufficient ambition is being maintained in only four. The report welcomes the Government’s ambitions until 2025 on electric cars and vans, off-shore wind and tree planting. I very much welcome that here the Government are in line with the committee’s recommendations. In last year’s 10-point plan for climate change, the Government committed to 40 GW of offshore wind power by 2030, which is what the CCC is calling for—tick! They also committed to 30,000 hectares of tree planting a year by 2025, which again is what the CCC is calling for—tick!

In some ways, the Government have arguably gone further than the CCC wanted. It wanted to ban the sale of new petrol and diesel cars by 2032, but the Government are bringing in the ban from 2030—two years earlier. That really is a world-leading ambition. Sales of electric vehicles are already escalating rapidly, and although the charging point infrastructure is not being rolled out quite fast enough for some electric car drivers, it is going at pace. Industry is taking the lead from the Government, with Jaguar having committed to selling only electric vehicles from 2025, and Ford has just announced that it will make parts for electric cars at its Halewood plant in Liverpool, giving it a new lease of life.

I am delighted to say that there has been significant progress since the CCC published its report in June and since this debate was applied for. In particular, the CCC was critical of the Government for not having published their transport decarbonisation plan, their hydrogen strategy, their heat and building strategy and their overall net zero strategy—it criticised them for the uncertainty and delay. To their credit, the Government published the first two, on transport and hydrogen, in the summer, and the heat and building strategy and the net zero strategy were published just a couple of days ago. Those included measures such as: a £5,000 grant to make clean-heat heat pumps affordable for homeowners; working with industry to ensure that clean heat is as cheap as gas-fired central heating by 2030; and a target to stop any new gas boilers from being installed by 2035—another world-first commitment.

The CCC has also chastised the Government for a lack of ambition on carbon capture and storage, which was the subject of a debate in this Chamber yesterday. It has said that we need to capture 22 million tonnes of CO₂ a year by 2030 while the Government were targeting only 10 million tonnes a year by then. It noted that that was the biggest single gap between what it had called for and what the Government were planning. When I drafted my speech at the beginning of the week, I was going to call on the Government to be more ambitious on CCS. Then, on Tuesday, they were: they announced two new clusters and a target of between 20 million and 30 million tonnes a year by 2030, which is potentially more than the CCC asked for. Hurrah! Those targets must be turned into reality, but the announcement is a big step forward.

[Alan Brown (Kilmarnock and Loudoun) (SNP)]

Does the hon. Gentleman not agree that the Government could be even more ambitious on carbon capture and storage by progressing the Scottish cluster on track 1 as well, instead of having it stuck as a reserve?

[Anthony Browne]

The more ambitious the Government are, the happier I will be, but I totally bow to the Government’s metrics. The first two projects are right for the first phase, and the Acorn project is in reserve. I think the Minister said yesterday that being the reserve puts the project in a more advanced position for the second phase of the next two that will come—I am not sure whether anyone picked that up.

[Alan Brown]

It is still in reserve.

[Anthony Browne]

Hopefully it will get there in the second phase.

In my draft speech, I was also going to echo the Climate Change Committee’s call on the Government to commit to greenhouse gas removal targets, for which they had no target at all. The CCC said that the UK Government need to target 5 million tonnes of removal by 2030. In the net zero strategy this week, I discovered as I read through it that the Government committed to do exactly that—I did not see that reported anywhere, however. They also committed to a robust monitoring, reporting and verification process for greenhouse gas removal, which the CCC called for and which I was going to call for. In short, many of the policy gaps between the CCC’s report and Government policy have been closed since the report was published. Four months is an extremely long time in politics.

I strongly welcome this week’s announcements, even though it meant I had to rewrite my speech. Yes, the strategies have been delayed, but I am sympathetic to how the Government’s machinery has been distracted by the worst pandemic for 100 years. It is much better to have a good strategy late than a bad strategy early. However, there are still a few areas where more progress would be good. One of our biggest carbon sinks is peatland, and the Government are aiming for 32,000 hectares of peatland to be restored each year by the middle of the decade, but the CCC would like to see 67,000 hectares restored. That is quite a big difference. The CCC also says that the Government need to do more on consumer choice and behaviour: in particular, diet change—eating less meat, presumably—and reducing demand for flights. Those are indeed sensitive areas. I am hopeful that new technologies such as cultured meat and synthetic aviation fuels will help bridge that gap.

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[Tony Lloyd]

The hon. Gentleman has the good grace to admit that, like me, he has not got a clue. However, we need to have an educated consumer and we need to change the way people see this matter. These issues are not trivial if we are to make a real difference.

Similarly, in the industrial sectors, some of the same kinds of issues arise. Asking huge organisations around the world, such as Amazon or Manchester United football club, that have the intellectual and surplus capacity to decarbonise is one thing, but for a small firm, which focuses just on its core business, being informed about how they can and ought to make a difference is much more difficult unless we begin to look seriously at the issue of consumer education.

The hon. Member for South Cambridgeshire mentioned the need to change our diets, and possibly our attitudes to air travel. We have to take the country with us, and frankly we are not yet in a position to do so. This week there was a statement about the Government’s net zero ambitions, but the media did not seem to pick up that issue and say, “This is the one we have got to go with.” Education and taking the public with us was mentioned in the report, but we are still in the foothills of such a debate.

[Alan Brown]

I agree with the points that the hon. Gentleman is making about consumer education and the fact that more information should be available. In Scotland, the Scottish Government fund Home Energy Scotland, which is an independent, impartial body to give advice to people. Does he agree that the UK Government should consider that as a recommendation, so that consumers in England and Wales can access that impartial, independent advice?

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[Alan Brown (Kilmarnock and Loudoun) (SNP)]

It is a pleasure to serve under your chairmanship, Sir Christopher. I congratulate the hon. Member for South Cambridgeshire (Anthony Browne) on bringing forward the debate. I was trying to make the point earlier that when he secured a debate on carbon capture and storage the Government, in a remarkable coincidence, decided what carbon clusters were going to go forward. He has secured this debate and the Government have printed their response to the Climate Change Committee’s progress report and produced strategies. He must be feeling very productive. I wonder what is on the go for next week.

As others have said, the hon. Member for South Cambridgeshire made a thoughtful and balanced speech. There was a lot to be agreed on. He could have been a bit harder on the Government, but he did acknowledge that there is more work to be done from the Government and, critically, that we are not on track to meet the fifth carbon budget, let alone the final net zero target of 2050.

I disagree profoundly with a small part of the hon. Gentleman’s speech, about nuclear energy. He said that nuclear energy is safe and clean. The existing nuclear waste legacy is going to cost £132 billion to clean up and dispose of. We still do not have a means of disposing of nuclear waste other than burying it for a thousand years. I take umbrage at that. The Government need to think again about nuclear energy.

The hon. Member for Rochdale (Tony Lloyd) made a thoughtful contribution. He made an important point about housing and private landlords. He spoke about the need to involve local government, which is obviously a big theme for the hon. Member for Leeds North West (Alex Sobel), who I congratulate on rising to the challenge of making this debate last longer. He did really well.

There was a thoughtful contribution from the hon. Member for Bristol East (Kerry McCarthy), who mentioned the key Climate Change Committee recommendation that all decisions have to be looked at through the net zero prism and to be compliant with net zero. She correctly highlighted the £27 billion roads programme and the decision on Cambo, which needs to be looked at, and other matters. I would be interested to hear the Minister’s response to that.

The hon. Member for South Cambridgeshire was more optimistic than the speakers on this side of the Chamber, which is understandable. He is certainly more optimistic than I am. That said, we must acknowledge the progress that has been made, which he rightly pointed out, such as the 40% decrease in emissions by 2019 from the 1990 baseline—the biggest emission reductions in the G20. We welcome that; it is a fantastic start.

The reality is that, despite the publication of the heat and buildings strategy this week and the net zero strategy, there are still huge policy gaps that mean that we will not achieve the intended target of 68% reduction in emissions by 2030. The Government need to address this quickly, but we are still waiting for the Treasury’s net zero spending review. We know that the Treasury is, unfortunately, where the power lies, and it is the Treasury that will dictate how quickly the policies can be implemented. There is no clear plan on how to pay for the decarbonisation of our heating system. The UK Government have acknowledged that continually adding levies to our electricity bill is unsustainable, given that nearly a quarter of our bill is already made up of levies; and they still do not have a plan in place on how to fund the decarbonisation of our 24 million or so homes that are connected to the gas grid. There is no coherent plan for increasing the number of heat pump installations from 30,000 per year now to the stated target of 600,000 per year by 2028. The Climate Change Committee is clear about the extent of electric heating that is required, but at the moment the Government do not have the plans to match that ambition, and if they fall short there they will fall short of the 2030 nationally determined target.

The UK Government and the Minister seem to be putting all their faith in an announcement by Octopus Energy that it can make air-source heat pumps for the equivalent of the price of a gas boiler by April 2022. I really hope that Octopus Energy is successful, as it would be fantastic for industry and for enabling us to move forward much more quickly in decarbonising our homes, but a quick look on the internet today shows that a decent gas boiler can be purchased for £1,000, while air-source heat pumps are still in the order of £6,000 to £10,000. It is clear that the prices are not going to come down that quickly by next year. Air-source heat pumps are not a new technology. Other countries install many more heat pumps than we do in the UK, so there is no way that we could get such an exponential price drop, unfortunately.

The Government have tried to tackle the price differential with the announcement of a £5,000 grant. I suppose that is a start for the market and helps to close the gap slightly, but I am not sure that the Government or Ministers actually understand the amount of work required to install an air-source heat pump and the total cost. For a start, the home needs to be made energy efficient. That is good, but it adds cost and disruption. Generally, a new hot water tank will need to be installed in the property, which also adds further cost and disruption by requiring additional plumbing and possibly joinery work—adapting a cupboard or creating a space for the hot water tank. Radiators and pipework might need upgrading, the existing boiler will need to be decommissioned—needing further gas engineer and plumbing work—and redecorating might be needed after the boiler is taken out. Considering all that work, that £5,000 grant does not get anywhere close to closing the gap between replacing a gas boiler and the total amount of work needed to install an air-source heat pump. The Minister will need to review that and his Department’s strategy, or there is no way that they will meet that target of 600,000 installs per year by 2028.

The Government also need to understand, in general, how people replace their gas boilers. It is called a distress purchase because usually it is made when the boiler reaches the end of its life. If my gas boiler breaks down this winter, I might make inquiries about replacing it with an air-source heat pump, but if I find out that the pump and all the install has a two to three month lead-in time, I am not waiting the rest of the winter to get an air-source heat pump. I am going to buy a new gas boiler and pledge to myself that, some time in the future, I will get that energy-efficient air-source heat pump. That is the reality. As the hon. Member for Leeds North West said, we have a skills gap and a shortage of people with the knowledge and availability to do these types of installs. If that is not tackled by Government and planned for in policy, everything will fall short.

On heating in general, and decarbonisation, the UK Government remain open to the use of hydrogen. That is fine if they think it is a large-scale option that could progress, but if we are keeping hydrogen as an option and still want to progress ventilation air-source heat pumps, I suggest that the right place for them to start is with off-gas-grid homes. They should have a coherent programme that matches energy-efficient installation and air-source heat pumps in off-gas-grid homes, where people are more likely to be fuel-poor. That would scale up industry, reduce emissions, and help to tackle fuel poverty. That is where I would ask the Government to start.

The new heating grant announced by the Minister yesterday replaces the UK-wide renewable heat incentive scheme, but he has confirmed that the £5,000 grant is only for people in England and Wales, so Scotland has been completely excluded. Could the Minister explain why Scotland is excluded, and whether the Scottish Government will get Barnett consequentials so they can implement their own scheme? It seems ironic that page 27 of the heating building strategy states that

“Decarbonising our heat and buildings is a joint endeavour across the United Kingdom”,

because that is clearly not the case. What discussions did the Minister have with the Scottish Government before announcing the £5,000 grant scheme to replace the RHI?

On one last aspect of heating, the UK Government have clearly failed to meet the recommendation of providing a

“long-term policy framework to support sustained energy efficiency and heat pump growth at…scale.”

They have ignored the recommendation about bringing forward the target date for all homes to be EPC band C-compliant by 2028, and are instead sticking with the 2035 date. They have not set a date for mandatory hydrogen-ready boilers, and they need to make energy efficiency a national infrastructure programme, in the way that the Scottish Government have. As another hon. Member said, 2035 is far too late for the phase-out of new gas boilers. That date needs to really to be brought forward.

Excluding Scotland seems to be the theme of the week for the UK Government. I need to say again that the decision to not include the Scottish cluster as a track 1 CCS project is disgraceful. It has been classed as a snub in the north-east of Scotland, and has in turn been widely reported in the press. It is not just Scottish National party politicians saying that; that is the feeling. It is a real snub to Scotland, and I urge the Minister to think again about that decision. He has still not been able to explain why the Scottish cluster has been tagged as a reserve, or even why he thinks he needs a reserve. Is it because he is not sure about the deliverability of the two clusters that the Government propose to take forward? It seems illogical, but hopefully we will get a bit more information about that.

On carbon capture and storage, although the Government have announced that they hope to progress to clusters, they have yet to agree a pricing model for the storage of carbon dioxide. We need to get that in place if we are going to progress carbon capture and storage, which the Committee on Climate Change has said is really important.

[Tony Lloyd]

An important point in the debate about carbon capture is a recognition that yes, planting trees is excellent, and the Government’s ambitions will be really important if they are delivered, but we in England are destroying our peat bogs, which are a bigger carbon sink than the trees we will plant, and as we destroy those bogs, they become a source of carbon emissions. I congratulate the hon. Member, because Scotland is way ahead of England in restoring its peat bogs. It is a really important issue, and I congratulate Scotland on the approach it has taken. I hope the Minister will take it up with his colleagues in other Departments.

[Alan Brown]

I thank the hon. Gentleman for that intervention, and clearly I agree with him. It is great that he has recognised the work that is going on to restore peat bogs in Scotland. As he said, the UK Government’s tree-planting target is welcome, but I am sceptical that they have a plan in place to meet that target. They have never met any target for tree planting to date, so the idea that they can scale up massively in a couple of years is beyond belief. I was going to mention tree planting in Scotland later on, but in 2019, 85% of trees planted in the UK were planted in Scotland via the Scottish Government’s scheme. The Scottish Government have aggressively pursued tree planting—they have led the way on it—while the UK Government have not yet put plans in place to meet their ambitions.

There are too many policy gaps to mention, even though we have a lot more time today than we expected. We need to see an impact from the net zero aviation strategy, for example. I am not convinced by the plans that are in place. As the hon. Member for Leeds North West said, there is a transport decarbonisation plan in place, but when it comes to hydrogen and conversion of HGVs, we have heard the hon. Member for Bristol East say that not enough zero-emission buses are being produced. We really need to move quickly on these matters.

The hon. Member for South Cambridgeshire complimented the work that is being done on decarbonising the electricity system. That work is truly welcome, but there is still not a proper plan for ending unabated gas-fired electricity generation by 2035, nor a proper structured plan for the decarbonisation of the electricity grid to meet the 2035 target set by the Government. If they are going to meet the target of a net zero electricity grid by 2030, there are some things that I suggest the Minister needs to be cognisant of. The Government need to review the grid charging system, which will end the farce of Scotland having the highest grid charges in Europe. That system disincentivises the construction of renewable energy production in Scotland—puts it at a disadvantage compared with projects in England—but it does not help the UK to meet its net zero target, either. We need to make net zero a statutory consideration for Ofgem, and the Government need to review the capacity market to address its reliance on fossil fuels, and allow storage that is co-located with renewable energy to be able to bid into the capacity market. Bizarrely, that is blocked at the moment.

As I touched on earlier, the Government need to end their nuclear obsession. Instead of spending another £20 billion on a new station at Sizewell, not to mention the billions they want to invest in small modular reactors and the mythical advanced nuclear reactors, they should be investing that money in renewable energy—in green hydrogen production and storage. The UK has now fallen behind France, the Netherlands and Germany in terms of hydrogen production proposals, so an urgent rethink of policy development is required. The 5 GW hydrogen target is not ambitious enough. The Scottish Government have a 5 GW hydrogen production target, so surely the UK Government need to up their game.

The UK Government should be investing in pumped storage hydropower—a proven technology that allows dispatchable energy to be added to the grid when the wind is not blowing and the sun is not shining. This is something that can progress quickly. SSE is ready to progress with the Coire Glas scheme, and Drax is advancing plans to double output from the existing Cruachan dam pumped storage hydro plant. What is needed is a pricing mechanism to be agreed with the Government, like a carbon floor mechanism. I raised this with the previous Minister. Will the current Minister look at a pricing mechanism to allow pumped storage hydro to progress? It is a good use of renewable energy.

Wave and tidal turbine power—technology Scotland literally leads the world in— needs help to get to the next phase of scaling up. The industry requested a ringfenced sum of money in part 2 of the contracts for difference—round 4 is coming up shortly. Ringfencing money in part 2 has been done for floating offshore wind; all that the wave and tidal industry are asking for is the same ringfencing to allow them to compete and get a slice of the pie. It is believed that the Treasury blocked this ringfencing, which is ridiculous, considering that it would not have cost the Government any money. There is a risk that this technology will lose out and move abroad, and as happened with onshore wind, we will lose the opportunity to have the manufacturing set up in the UK and lose the export opportunities and growth that comes with that. Hopefully the Minister will listen the arguments. I would be more than happy to meet and discuss it, and he would be very welcome to meet industry representatives. Small changes could be made that will not cost the Government money, but could generate fantastic growth opportunities.

In Scotland’s commitments to the Paris climate change targets and net zero, we are genuinely leading the way. We were the first Government to set a net zero target with a date of 2045, the first to declare a climate emergency, and we have set up the Just Transition commission. Admittedly, we also did not meet our emissions target of a 55% reduction by 2020, a 51.5% reduction is still fantastic progress. In Europe, Scotland is second only to Sweden in terms of the scale of reduction achieved. Interestingly, one of the reasons Scotland missed its latest target is that the process under way of rewetting peatlands necessitates the removal of some trees. As the hon. Member for Rochdale (Tony Lloyd) pointed out, Scotland is doing fantastically with peat bog and wetland restoration, as well as having a fantastic tree-planting operation.

When it comes to energy production, Scotland has led the way in decarbonisation; last year, 97% of equivalent electricity demand was produced by renewable energy—this is absolutely tremendous. We have ambitious plans and we are making them happen; they cannot nor should not be blocked by decisions made in Westminster. I appreciate the UK Government does have ambitious targets, but as the report from the CCC shows, more policy and further intervention from Government are required—and they are required sooner rather than later.

[Sir Christopher Chope (in the Chair)]

Dr Alan Whitehead, I think you need to limit your remarks to 45 minutes.

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[Greg Hands]

Our position on the sixth carbon budget is unchanged, as the hon. Gentleman knows. However, I am a believer in an active Government, and publishing a set of strategies does not necessarily mean that we have reached the point that we want to reach: it merely lays out the map and sets out the process, which I think is very helpful. In terms of delivery, obviously the onus to fulfil these objectives is on not only the Government, but every citizen of this country and, indeed, the whole world.

We have just unveiled a landmark commitment to decarbonise the UK’s electricity system by 2035, to help us build a secure home-grown energy sector that is not reliant on fossil fuels and exposure to volatile wholesale energy prices, which as we know are very much in the news at the moment. However, the science could not be clearer: by the middle of this century, the world needs to reduce emissions to as close to zero as possible, with the small amount remaining sucked up through natural carbon sinks such as forests and relatively new technologies such as carbon capture. We are proud to lead the world in ending our contribution to climate change, not just because it is the right thing to do, but because we are determined to seize the unprecedented economic opportunity it brings. We want to build back better from the pandemic by building back greener and levelling up our country with new high-skilled, high-wage, sustainable jobs in every part of the United Kingdom. Those jobs will be spread across the UK, with specialists in low-carbon fuels in Northern Ireland, low-carbon hydrogen in Sheffield, electric vehicle battery production in the north-east of England, green finance in London, more engineers in Wales, and offshore wind technicians in Scotland.

The strategy builds on all the progress that the UK has already made. In June 2021, the UK Government set the sixth carbon budget at 965 megatonnes of CO₂ equivalent, a world-leading target that will mean a 78% reduction in greenhouse gas emissions by 2035 compared with 1990 levels. This is in line with the latest science, as the level recommended by our expert advisers at the Climate Change Committee, and is consistent with the Paris agreement’s goal of limiting global warming to well below 2 °C and pursuing efforts to limit it to 1.5°. The target would achieve well over half of the required emissions reductions from now to 2050 in the next 15 years.

Turning to the points raised during the debate, my hon. Friend the Member for South Cambridgeshire has pointed out that a parallel debate on COP26 is taking place in the main Chamber, so anybody watching the debate might wonder why there are not more Members here. The overlap has been considerable. He also rightly pointed out the UK’s huge success—in 2015, we emitted the lowest amount of CO₂ per annum since 1859—and then he got Opposition Members a little bit excited with his reference to the 1926 general strike. I do not think my hon. Friend thought of the 1926 general strike as something we would wish to emulate, but I noted from interventions and comments made by Opposition Members that they perhaps thought it was. It was very important that my hon. Friend quoted the 2019 figure, because emissions obviously went down quite a bit during the pandemic, so it is important that we look at a more robust figure, such as that from 2019. As he said, it was the biggest decline in the whole of the G20 since 1990: we emit less per person than the EU average, and less than Denmark or Norway. All of those were incredibly strong points.

I was thinking back to the 1990 benchmark for all those emissions. The nearest election to that time was the 1989 European elections, which were not memorable for anything other than the fact that they were the high point in the performance of the UK Green party. It was the year when the Green party got more than 10% of the vote overall. It ran on a manifesto that it was impossible to do anything to reduce emissions while still growing the economy. We had to reduce growth in the economy and reduce its size to do something about emissions.

As my hon. Friend the Member for South Cambridgeshire has pointed out, the incredible success in the 30 years since, during which the UK has grown the economy by 78% while reducing emissions by 44%, demolishes the case that was made at that time by the UK Green party and others. He also makes the good point that the hard work is yet to come. It gets more difficult and the low-hanging fruit has already been picked. Now we have the harder job ahead of us. He talked about carbon capture utilisation and storage and I refer, as in yesterday’s debate, to the fact that the Carbon Capture and Storage Association described Tuesday’s news as “amazing”. I will come back to the Scotland issue in just a moment.

On peatland, my hon. Friend rightly pointed out the Climate Change Committee’s recommendation to restore 67,000 hectares. Currently, only 32,000 hectares have been restored. We are committed to restoring 35,000 hectares by 2025 and 280,000 hectares by 2050. Other points included consumer choice and diet style and those also cropped up later in the debate, as well as the importance of nuclear power. I noticed that two Opposition MPs here today, the hon. Member for Southampton, Test (Dr Whitehead) and the hon. Member for Rochdale (Tony Lloyd), were first elected in 1997, running on a manifesto of ending new nuclear power plants in this country. It was part of the new Labour manifesto of 1997, which I think did so much damage to the nuclear industry in this country and effectively cost us a lost generation in nuclear capability.

I agree with my hon. Friend the Member for South Cambridgeshire that the decade of delivery has come.

[Alan Brown]

What is the Minister’s estimate of the capital cost of new nuclear that the Government are willing to commit the UK to?

[Greg Hands]

That is a slightly open-ended question, as the hon. Gentleman knows our commitment is to the existing Hinkley Point C facility. We are committed to bringing forward one further station for its investment case in this Parliament and on Tuesday we also allocated £120 million for a new nuclear innovation fund, which increases the optionality. What are the options for the UK in nuclear capability and capacity going forward? I just wish we had a more positive attitude on nuclear from the SNP. Scotland is part of this country’s nuclear heritage and it disappoints me continuously to see the SNP not seeing the opportunities available for Scotland in so many of our energy and climate change programmes.

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[Alan Brown]

Will the Minister give way?

[Greg Hands]

I will make some progress.

On transport, the hon. Member for Rochdale makes some good points. Let me tell him what we are doing on transport: the zero-emission vehicle mandate, improving consumer choice; further funding of £620 million for zero-emission vehicle grants; allocating a further £350 million of our up to £1 billion automotive transformation fund to support the electrification of UK vehicles; £3 billion on integrated bus networks; and a £2 billion investment to enable half of journeys in towns and cities to be cycled or walked by 2030. Those are big commitments.

The hon. Gentleman talked about homes and the boiler upgrade scheme. It is exciting, but slightly buried in all the news about net zero overnight, that one of the energy companies—it is Octopus Energy, but I expect others are either there or will follow—said that it is confident that by April next year, the installation price of a new heat pump will be equivalent to the price of a natural gas boiler. This is one of the important points about what the Government can do. The Government will not come round to everybody’s home, across the whole UK, and install a heat pump. That would be impractical and it would potentially be beyond the means of the Government and the taxpayer to do that. What we are doing is kick-starting a market and kick-starting private sector innovation to come along and do it, and we are already having an impact in what we are doing on heat pumps.

[Alan Brown]

The Minister is citing Octopus again, but can he tell me, then, what he thinks the installation price of an air source heat pump will be in a year’s time? Did he listen to the points that I made about all the other installation costs that need to accompany an air source pump? Can he give an estimate of what the total cost of that installation would be?

[Greg Hands]

I will not go further down the road of making price or market predictions. What the Government need to be in the business of doing is kick-starting the market, stimulating the market, and getting it going. I do not think it is in my interest to set out predictions of what I think supply, demand or pricing might be in a year’s time.

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[Greg Hands]

I am going to make a bit more progress. We intend to upgrade as many homes as possible to energy performance certificate band C by 2035.

The hon. Member for Kilmarnock and Loudoun (Alan Brown) talked about the heat pump grant scheme. I am amazed by that. It is a devolved matter, but there have been discussions with the Scottish Government about the Scottish Government joining up with us and participating in this scheme; but if I understand the situation correctly, they have refused. The irony is that the Ofgem team that will be administering the England and Wales scheme will be based in Glasgow, with more than 100 new members of staff. Unless they have a very long commute, they will not be able to benefit from the scheme that they are helping to administer, due to the fact that the Scottish Government have said that they will not be joining the UK Government in the scheme. That is a great pity.

[Alan Brown]

Will the Minister give way?

[Greg Hands]

If the hon. Gentleman has some hot news from the Scottish Government, over to him.

[Alan Brown]

I have not had time to get on the hotline to them. On the point about the additional members of Ofgem working in Glasgow, that is very welcome and I hope they will not have a long commute—that would not be good for climate change overall. The more serious point is about what funding is coming to the Scottish Government to run their own scheme.

[Greg Hands]

The Barnett consequentials will of course be enacted in the usual way as we would expect, but why not join with a scheme that has been very well received, that I think will be a market leader and that will, ironically, be administered out of Glasgow? It makes perfect sense for the Scottish Government to come on board with us.

We have made huge investments in offshore wind and other renewables in Scotland. The hon. Member for Kilmarnock and Loudoun mentioned the 5 GW target for hydrogen being less than in Germany. It is the same as Germany’s target—they have exactly the same target. On wave and tidal, we have already put down more than £175 million in innovation funding across this country, with 10 MW already deployed. In many senses, they are still pre-commercial technologies, but we are making the investment to increase the optionality that will be available in wave and tidal.

I welcome the hon. Gentleman’s overall support for the UK’s targets and ambitions. He mentioned reforms to the electricity market. We recently published a call for evidence on actions to align capacity markets with net zero and actions to encourage the participation of more low-carbon capacity. We are committed to accelerating the deployment of low-cost renewable generation through the contracts for difference regime and by undertaking the review of the frequency of CfD options.

The hon. Member for Southampton, Test, in a comprehensive speech, congratulated us on our success in decarbonising electricity generation. I go back to the commitment given to complete that process by 2035. He said that we are ignoring other areas. I do not think that is fair and I do not think that is the case. He talked about adaptation. We are currently developing a national adaptation programme, which is due in 2023. DEFRA published the response to the Climate Change Committee’s adaptation report, which goes into more detail on our progress on adapting to climate change.

On fossil fuels and net zero, of course net zero does not necessarily mean zero residual emissions in all sectors of the economy. It is, after all, a net zero figure. In aviation, agriculture and industry it may not be feasible, practical or cost-effective to eliminate all emissions.

I thank the hon. Member for Southampton, Test for his praise for the hard work put in by my officials on producing the reports.

The hon. Member for Kilmarnock and Loudoun asked, “Where is the Treasury review of the cost of net zero?” I have news for him—I emailed it to him about 15 minutes ago. It was published on Monday night. It is entitled, “Net Zero Review: Analysis exploring the key issues”. There are 135 pages for him to digest before I see him next, when he can ask me questions about it. It was published at the same time as, or just before, the net zero strategy.

In the past few years, the Government have gone further than ever before to ensure that the climate is at the heart of our decision making. We have taken new approaches to embed net zero in spending decisions, including requiring Departments to include greenhouse gas emissions in their spending review bids and their impact on meeting carbon budgets and net zero. As I already said, we have established two Cabinet Committees. The integrated review reflects that and ensures that it is the Government’s No. 1 international priority. We are also using the Environment Bill to require the Government to reflect all these issues in national policy.

We are committed to taking a whole-system approach to the net zero challenge, ensuring that we understand and can navigate the complex ways that our climate goals will interact with other priorities for the country. As I mentioned, we published the heat and buildings strategy, which sets out the required actions to decarbonise buildings over the next decade, helping meet near-term carbon budgets and getting us on track for net zero by 2050.

Carbon Capture and Storage

Alan Brown Excerpts

Wednesday 20th October 2021 Westminster Hall

[Alan Brown (Kilmarnock and Loudoun) (SNP)]

It is a pleasure to serve under your chairmanship, Mrs Miller. I, too, congratulate the hon. Member for South Cambridgeshire (Anthony Browne) on securing the debate, which is timely in the light of yesterday’s announcement about which CCS clusters the UK Government will progress.

The anger and disappointment about the snubbing of the Scottish cluster will not go away any time soon. Although the Government previously stated that they would give the go-ahead only to two clusters, it should be noted that Teesside and Humber were originally two separate clusters that have now combined on the east coast. Yesterday’s decisions effectively progress three clusters, then, so why not do the same for the Scottish one as well?

The Minister tried to portray our analysis as Scotland versus the north of England, but let me be clear: we want the other clusters to progress. We just think the Scottish cluster is ideally placed to be progressed at the same time. We know, given that the Scottish cluster met the technical aspects, yesterday’s decision was a nakedly political one, targeted at the red wall constituencies in England. Given that HyNet also covers north Wales, we have a so-called UK Government who advance projects in England and Wales but who snub Scotland.

[David Duguid (Banff and Buchan) (Con)]

rose—

[Alan Brown]

It is illogical not to progress the Scottish cluster at this stage. The shipping and infrastructure proposals for Peterhead port, for example, were intended to facilitate the importing of carbon dioxide from outside Scotland, so the Scottish cluster can actually help other areas of the UK to decarbonise. Will the Minister advise why that aspect alone did not ensure that the Scottish cluster was given priority status?

Is the Minister aware that the Scottish cluster also includes Project Cavendish, which allows for hydrogen production in the south-east of England, not far from London? That London connection should be enough to make this UK Government think again on that decision. It is obvious, looking at what the Scottish cluster will achieve, that it should be given support now. Scotland has a world-leading target of net zero by 2020 and of cutting cut emissions by 75% by 2030. That interim target is now at risk because of the UK Government’s decision.

For the avoidance of doubt, the Scottish cluster will, if progressed, do the following. It will capture 25 megatonnes of carbon dioxide by 2030. It will tackle Scotland’s biggest two carbon dioxide emitters—Ineos at Grangemouth and the Peterhead gas station. And it will facilitate the production of blue hydrogen, as part of the clear pathway to green hydrogen. The UK Government talk glibly of leading the world on hydrogen, but they are quickly falling behind. If given the go-ahead, the Scottish cluster could deliver 1.3GW of hydrogen by 2030, which is more than a quarter of the UK and Scottish Governments’ 5GW production target.

The Scottish cluster also incorporates Storegga’s direct air capture proposals—technology that the UK could lead the world on and use as an effective offsetting methodology. The Scottish cluster also unlocks—again, on its own—30% of the UK’s carbon dioxide storage resource. That statistic should be sufficient for the cluster to be a No. 1 priority. Of course, it also best placed because it utilises existing oil and gas infrastructure. It could create more than 20,000 jobs by 2030—jobs that will facilitate a just transition and utilise the expertise built up in the north-east of Scotland.

When those factors are considered, it is obvious that the UK Government should be prioritising and backing the Scottish cluster now. Can the Minister explain if the decision was made solely by the Department for Business, Energy and Industrial Strategy, and if so, why is it not proceeding as a track 1 project? Or is this like the 2015 decision, when the Treasury intervened and pulled the plug in Peterhead? Bizarrely, yesterday, the Minister kept bragging about having visited Aberdeen last week and being well received. Has he spoken to industry following yesterday’s decision, and if so, what was their feedback, and did he apologise to them for not progressing Acorn?

As we have heard, the Committee on Climate Change and the International Energy Agency both state that carbon capture, utilisation and storage is practical for achieving net zero. The Committee on Climate Change says that progress in the UK will help lead the way elsewhere. That is why multiple projects need to be progressed in the here and now. It is the only way the Government can get on track for net zero and decarbonisation in the electricity system by 2035.

On net zero, the Minister needs to listen to the calls for a ring-fenced pot of money for the contracts for difference auction round 4 for wave and tidal to allow this industry to scale up and continue leading the world. I conclude by saying that the Scottish north-east Tories should hang their heads in shame at the Scottish cluster being overlooked. The Minister should apologise. I look forward to him hopefully admitting that he will reverse the decision and progress the Scottish cluster as a priority.

Net Zero Strategy and Heat and Buildings Strategy

Alan Brown Excerpts

Tuesday 19th October 2021 Commons Chamber

[Greg Hands]

I thank my right hon. Friend for, as always, putting his question very directly, which I have appreciated over many years in the House. I have mentioned our commitment to nuclear and our commitment to the gas sector as a transition fuel. Fortunately, at the moment, we are dependent largely on domestic gas production, in that 50% of our gas usage comes from the UK continental shelf while 30% comes from Norway. The point here is to ramp up our commitment to low and zero carbon fuels. That makes sense for the environment, for our economic security and for our diversification.

[Alan Brown (Kilmarnock and Loudoun) (SNP)]

The key point in the announcement today is the fact that Peterhead has once again been betrayed. All along, warm words have been paid to the Scottish cluster, but we have been stabbed in the back again. Classing the Scottish cluster as a reserve is an even bigger insult. What representations has the Minister had from the Scottish Secretary of State about what is happening to Peterhead? Can he also confirm that this is a political decision rather than a technical one, given that the Scottish cluster ticks all the boxes and would have contributed to the hydrogen production target?

The Minister keeps going on about nuclear, but the reality is that, at £23 billion, Hinkley is the most expensive power station in the world. Its strike rate is £92.50 per megawatt-hour, compared with offshore wind at less than £40 per megawatt-hour. What is the capital cost in billions of pounds that the Government are willing to commit to, given that it could be better spent elsewhere? What funding is coming to Scotland on the back of the announcement of the social housing decarbonisation fund and the home upgrade grant schemes?

If we look at Scotland in the round, we see that it has contributed £350 billion in oil and gas revenues over the years. Where is the UK Government’s match funding for the £500 million just transition fund that the Scottish Government have committed to the north-east of Scotland? The Minister talks about levelling up, but his levelling up does not include Scotland. We have the highest electricity grid charges in Europe, which puts renewable energy in Scotland at risk, as it is 20% more expensive than in the south-east of England. That also affects the UK’s net zero trajectory. Scottish energy consumers are now made to pay for their nuclear, which we do not want, and Peterhead has been sacrificed for the red wall constituencies. When it comes to Scotland, the UK Government are not helping us tackle climate change but are instead adopting a scorched earth policy as we head towards independence.

[Greg Hands]

I spent significant time in Aberdeen last week, and I did not meet a lot of people who share the hon. Gentleman’s doom and gloom approach to all things when it comes to energy. I had meetings with Oil & Gas UK, Robert Gordon University, Harbour Energy, CHC Helicopter and Jim Milne of Balmoral Group, and I found a region and a city that are enthusiastic about the energy transition and our North sea transition deal.

I have already mentioned nuclear and the new funding that is available, and I am disappointed that the SNP remains resolutely anti-nuclear, which I think it will regret. I think the Scottish people do not agree with the SNP.

Today’s announcement on carbon clusters is for track 1, and it is not the end of the story—far from it. We have always been clear that we will have two industrial clusters by the mid-2020s, and four by 2030 at the latest. We have announced the Acorn cluster as a reserve. It met the eligibility criteria and performed to a good standard against the evaluation criteria, and we will continue to engage with it throughout phase 2 of the sequencing process to ensure it can continue its development and planning. We remain committed to track 2. This morning the Carbon Capture and Storage Association welcomed today’s announcement as “amazing news” for carbon capture and storage.

The hon. Gentleman asked about home grants. Of course, a lot of these policy areas are devolved. He might have a word with his SNP colleagues in Edinburgh and perhaps get them to participate, as they will get Barnett consequentials. Ironically, the heat pumps scheme for England and Wales will be administered by Ofgem out of its office in Glasgow. Those administering the scheme will not be eligible for it themselves unless the Scottish Government take action to match what the UK Government have said.

Finally, on the North sea transition, energy in Scotland and the move to net zero, I urge the hon. Gentleman for once to take a more positive approach and get with us, particularly as we prepare to host the world in Glasgow in just two weeks’ time.

Gas Prices and Energy Suppliers

Alan Brown Excerpts

Thursday 23rd September 2021 Commons Chamber

[Alan Brown (Kilmarnock and Loudoun) (SNP)]

This is not market failure; it is Government and regulator failure. Ofgem all along had the financial and hedging information to know which companies were at risk, so why are we now in crisis management phase?

The Tories promised us cheaper energy bills post Brexit, but right now electricity wholesale prices in the UK are the highest in the whole of Europe. Meanwhile, as gas prices increase, the Treasury gets extra VAT receipts and increased oil and gas revenues. Surely, there must be a redistribution of that increased Treasury income to help hard-pressed bill payers. At the moment, it is those bill payers who cover the additional cost of transferring customers to other energy suppliers. They cover the credit of customers with failed companies and then have to pay increased tariffs when transferred. The cap might stay but the cap does not stop energy bills going up, so why should bill payers pay even more money when the Treasury is getting increased revenue out of this? What is the additional estimated cost for bill payers?

A quarter of our electricity bills consist of levies, so as we move away from our reliance on fossil fuels, we need a fundamental shift in how that concession is paid for. That is something that the Treasury needs to address. It means ending the grid charging regime so that Scotland does not have the highest charges in Europe, and it means giving the go-ahead to pumped hydro storage in wave and tidal.

Finally, is the Secretary of State happy to sit by while the cost of living crisis is ongoing? Is he happy to plunge 500,000 extra people into fuel poverty, or will he fight the Treasury to end the universal credit cut and release extra money to help hard-pressed bill payers?

[Kwasi Kwarteng]

Clearly there was a lot in that question and statement. I will deal with a couple of issues, if I may.

With respect to universal credit and wider budgetary considerations, I have repeatedly said that they are matters for my right hon. Friend the Chancellor. We will have ample opportunity to discuss these things in the House. With respect to the move away from fossil fuels, the hon. Gentleman and I are in agreement: I think that we need a diverse supply of decarbonised sources of energy.

Finally, I dispute the idea that we are ill-prepared. We have the SOLR and SAR processes in place and we stress-tested them throughout the whole covid period, when I was in constant contact with the industry. I feel that so far we have managed to accommodate such supplier failure as we have seen with existing structures.

Draft Ecodesign for Energy-Related Products and Energy Information (Lighting Products) Regulations 2021 Draft Ecodesign for Energy-Related Products and Energy Information (Amendment) Regulations 2021

Alan Brown Excerpts

Wednesday 8th September 2021 General Committees

[Alan Brown (Kilmarnock and Loudoun) (SNP)]

It is a pleasure to serve under your chairmanship, Mrs Miller. It seemed appropriate that the shadow Minister mentioned “tedious” as I stood up to speak.

In the Minister’s opening remarks, she spoke about products being reusable and recyclable, and I wonder how much that is applicable to these regulations. They copy EU regulations, and the explanatory notes make it clear that because of the Northern Ireland protocol, we do not want any differentiation between Great Britain and Northern Ireland as that would mean differentiation within the UK. Does that mean that, in this magnificent, post-Brexit world, the UK Government will always mirror EU regulations to avoid that differentiation?

How confident is the Minister about the carbon savings and the savings for consumers and businesses that are detailed in the explanatory memorandum? Is there anything that can be done to go further, because carbon savings are not saving money although they are clearly a good thing as we project through to net zero? Was a consultant employed to design the new labels that will effectively replace the EU flag with the Union flag? Was a consultant needed to do that and how much did that cost?

Nuclear Fuel Manufacturing

Alan Brown Excerpts

Tuesday 7th September 2021 Westminster Hall

[Alan Brown (Kilmarnock and Loudoun) (SNP)]

Thank you, Mr Betts. Thank you for your guidance. It is a pleasure to serve under your chairmanship. I have a funny feeling that it might not be a pleasure for other hon. Members to listen to my contribution, because, not for the first time, I might be presenting a minority and contrary view in the room. That said, I congratulate the hon. Member for Fylde (Mark Menzies) on initiating the debate. It is only right that an MP fights to retain and create jobs within his or her constituency. He has been ably supported in that by the hon. Members for Preston (Sir Mark Hendrick), for Bolton West (Chris Green), for Blackpool North and Cleveleys (Paul Maynard) and by—from the adjacent constituency—the hon. Member for Strangford (Jim Shannon), as well as the hon. Member for Gloucester (Richard Graham).

It is clear that Springfields has been an important employer through the years, with highly skilled jobs that are well paid. It is clearly very important to the north-west region of England, which I appreciate. However, if we are looking forward, when we consider the need for the production of nuclear fuel within the UK, we need to look at the strategic picture. In that strategic picture, we have to ask whether nuclear energy is required at all.

Even more important, we need to understand the cost and risks of nuclear energy and the state of the nuclear energy generation market. There are too many false narratives from the nuclear industry, though it is very successful at lobbying. Briefings from EDF argue that it is the only proven reliable low-carbon technology—many hon. Members have said that today—but, by way of an example, last year, Scotland generated 97% of the equivalent of its electricity demand from renewable energy.

Looking ahead to Sizewell, EDF argues that, with Sizewell being a copy of Hinkley Point C, there will be cost savings in that building. That might be the case design-wise, but there are different access and construction logistics to consider at Sizewell and the fact that it is still mired in the planning and environmental impact assessments, before it can proceed on to detailed design, means that nothing is certain in terms of cost at Sizewell.

It is also nonsense to say that these projects are cost-comparable with other technologies. The reality is that Hinkley Point C has a strike rate of £92.50 per megawatt-hour, for a 35-year concession contract, compared with offshore wind, which now comes in at £40 per megawatt-hour for just a 15-year concession contract. At the moment, nuclear is roughly four or five times more expensive than onshore and offshore wind. Even if the Government agree a regulated asset base funding model for Sizewell, that will not account for such a cost differential.

[Chris Green]

I do not want to debate whether the hon. Gentleman ought to approve of nuclear, but there is a question about the reliance on wind or solar panels. Perhaps there is a surge or abundance of energy at one point, but if at night we have high pressure and no wind, how do we power things at that point? At the moment we would typically be reliant on gas or coal. What will the source of power be in those times?

[Alan Brown]

I will come on to that. The hon. Gentleman himself touched on carbon capture and storage. It has not been proven at scale yet, but it is nearly there. We are looking at hydrogen. The Government have their own hydrogen production targets, as have the Scottish Government. Hydrogen can clearly be used from storage. The regulatory regime should be changed for the capacity market so that storage can be collocated with renewables and used to access the capacity market. The Electricity Act 1989 should be changed so that electricity released from storage is not double charged as a generator, which happens at the moment. There are other things in terms of Government strategy and regulation that would help advance the situation.

[Chris Green]

It is not quite the same as nuclear fusion, which is always 50 years away—or that is what is always said. On the other technologies, be it battery storage or carbon capture and storage, is there any certainty about the dates when these will become viable technologies?

[Alan Brown]

I have to admit that there is not absolute certainty, but it is predicted that the first key carbon capture and storage plant could be up and running before another nuclear power station will be constructed. We are getting very close to the final investment decisions on these carbon capture and storage plants. That in itself will give the market an indication of where that is going. We will be looking at the next year or two for the final investment decisions.

Turning to the recent history of the nuclear sector in the UK, it is obvious there has been a market failure as well as a failure of Government strategy. Clearly, that has impacted Springfields in the demand for nuclear fuel. Hinkley point C is the most expensive nuclear project in the world. When the right hon. Member for Maidenhead (Mrs May) became Prime Minister, she threatened a U-turn on this project, but then caved in and signed the deal anyway. The cost for Hinkley is now estimated at £22.5 billion, which is an increase of 25% on the estimated cost when the deal was signed. The Government tell us that cost increases are tied up in the risk and that EDF carries that burden. The reality is that no company can afford losses of £4.5 billion or 25% of the original cost estimates, so electricity bill payers must be paying for it somewhere along the line.

The sign-off for Hinkley was supposed to send signals to the market to allow other sites to be developed to generate competition and bring down prices. Since then, we know that Toshiba has walked away from developing Moorside and Hitachi pulled out of Wylfa and Oldbury. The good news for us electricity bill payers is that £50 billion to £60 billion of expenditure has not been committed. From a UK Government perspective, that should have been the realisation that their nuclear aspirations were in tatters. Unfortunately for Springfields, that is three pipeline projects that they could have accessed now lost. Worse, Hinkley point C is now predicted to come online in June 2026 instead of 2025, but it is a possible 15 months away on top of that, so it could be September 2027 before unit 1 of Hinkley comes online. We will have to bear in the mind that the European Pressurised Water Reactors system has still not been shown to be successful. Flamanville in France is expected to generate in 2024—12 years late. Finland’s project is due to come on to the grid next year, but that is 13 years late.

[Sir Mark Hendrick]

Will the hon. Gentleman give way?

[Alan Brown]

I have to watch my time, I apologise. I can come back maybe. Taishan in China was held up as an exemplar when it went online, but it has now been taken offline because of safety concerns. If China General Nuclear Power Corporation is involved at Hinkley and the consortium for Sizewell, the fact that Taishan has got safety concerns should be ringing alarm bells for the Government. We talk about energy security, but the reality is that we have a reliance on France’s state-owned company EDF and on China’s state-owned company China General Nuclear Power Corporation. That kind of blows our energy security argument. I have not heard any answers alternative to that in here.

[Sir Mark Hendrick]

Will the hon. Gentleman give way?

[Alan Brown]

Very briefly.

[Sir Mark Hendrick]

I thank the hon. Gentleman for giving way. He consistently mentions France. President Macron recently said that by generating more than 41% of the energy in France, “nuclear makes us autonomous”. Macron also said,

“It preserves French purchasing power, with a kilowatt-hour 40% cheaper than our European neighbours.”

--- Later in debate ---

[Alan Brown]

That is what Macron said worked for France. In actual fact we are helping France by paying EDF, effectively helping to subsidise the French nuclear market, so that does not make sense to me. It is by the by. We will also have interconnectors coming from the EU, including France, that do not pay grid charges. In the north of Scotland Scottish renewable energies pay the grid charges, so French nuclear energy comes here at no charge, whereas Scottish renewables have to pay charges to connect the grid. The actual system is not thought through properly and that is why we need a much better strategic look at things.

Going back to the timeframe before Hinkley is operational, it is certain that seven of the existing eight nuclear power stations will be offline, because we know that the advanced gas reactor stations are all closing earlier than planned. We heard that Dungeness went offline seven years early. Four more stations will go offline in the next three years. Nobody is going to bet on Torness and Heysham making it to 2030. The existing market demand for nuclear fuel production in the UK all but ends before Hinkley comes on stream. That is why it is so critical to think about and debate the future of Springfields.

That is why, for me, the UK Government should have a nuclear diversification or transition policy to help to save jobs or create new jobs as alternatives. We have the North sea transition deal; why not something similar for nuclear? Communities all over the UK have financially benefited from the jobs created by nuclear, but they need replacement jobs. These communities need to be supported, not left behind. That is what I suggest the Government need to look at.

We hear that Hinckley has created a lot of jobs, but a £22 billion project should create thousands of jobs. It is not difficult with that level of expenditure. If we look at the £20 billion that the Government may commit to Sizewell, I would argue that this money could be better spent in creating other jobs UK-wide. We are truly world leading in wave and tidal energy development, and floating offshore is getting there. Why not invest in the future? As I said earlier, hydrogen development is getting close to a commercial reality. These considerations need to be part of that transition.

The nuclear baseload argument is an outdated concept. That was confirmed by the former chief executive of the National Grid in 2015. Can the Minister confirm that taking these existing nuclear stations offline will not increase the risk of the lights going out? Moreover, going forward, a report by Good Energy and the Energy System Catapult has demonstrated that net zero can be achieved without the need for new nuclear. I suggest that the Minister needs to look at that.

Although we hear about renewables and fluctuations, large-scale nuclear is inflexible. Indeed, having more large-scale nuclear in tandem with renewables is a problem. That is why we have the constraint payments for renewables as well. I refute the arguments about baseload and energy security. I am not sure that the future is therefore nuclear, in the way that we keep hearing, because that argument has not held up to date. I ask the Government to revisit their strategy, please support these communities around the UK, and look at diversification and a fair transition.

--- Later in debate ---

[Dr Whitehead]

I congratulate the hon. Member on securing what is an important debate, not just for the future of the plant in his constituency, which we are talking about this afternoon, but for the wider question of our strategic future, when we look at the future of nuclear at all.

I do not want to be a party pooper, but this debate is about Springfields nuclear fuels. There is a lot I could say about all sorts of things, such as the role of hydrogen in the economy and whether, when the wind does not blow very well, other forms of thermal power may be needed. However, we need to concentrate our minds not on the future of our entire nuclear programme, but on Springfields nuclear fuels. What is unique about Springfields nuclear fuels is that it has single-handedly held up the entire UK nuclear programme for four or five decades now. It has provided pretty much all the fuel for the Magnox systems. It now provides the fuel for advanced gas-cooled reactors, and it should hopefully be able to provide the fuel for the new nuclear power stations coming on stream.

The role of fuel is usually unsung, but it is crucial to the whole process of nuclear power. There is a popular perception, which I am sure is not shared among hon. Members here, that using nuclear fuels means finding some uranium, enriching it a bit and sticking it in a pot to make the energy. That is very far from the truth. It is a highly skilled operation, requiring intensely developed engineering skills, which are involved in making the rods and the pellets, which must have the right specification and order for the particular form of nuclear reactor for which they are being made.

There is also a whole load of ancillary activities, some of which have been mentioned, such as the reprocessing of uranium to go back into the rods. That is another very highly skilled enterprise, far from the perception of this being a pretty simple journeyman activity that anyone can do. No, not anyone can do it. In the case of the UK, there is only one company that can do it—Springfields nuclear fuels. We need to see Springfields nuclear fuels not just as part of the nuclear landscape generally, but as a vital national strategically important component of whatever our nuclear programme was and whatever it will be.

It should be a cause of enormous alarm for hon. Members if there are suggestions that somehow this strategically important national asset will either be downgraded or lost in the not too distant future. There is a very real prospect of that because, as hon. Members have said, despite its crucial and honourable history backing up the nuclear industry in the way that it has, it is finding it difficult to get contracts for the continuation of its excellent production activities. I think there was some work recently for the Norwegian nuclear corporations, but there is a real gap in what is coming up—what we know will be an important requirement, particularly of Hinkley C and certainly of Sizewell C when they eventually come on stream. There is a substantial gap between that time and now. There is a real prospect, therefore, of that company—which is owned by Westinghouse, a private US company with no great feeling for UK national strategic interests—dying, not for lack of praise but for lack of an immediate future between new nuclear and modular nuclear reactors coming on and where we stand now.

[Alan Brown]

What kind of timescale does the hon. Gentleman envisage for small modular reactors or even Sizewell C coming on stream?

[Dr Whitehead]

The hon. Gentleman himself mentioned that Hinkley C is coming on stream in 2026—maybe even later than that. I will come to the arrival of Sizewell C in a moment, which is probably at the heart of his questions, should we develop modular nuclear reactors that are even further off.

--- Later in debate ---

[The Parliamentary Under-Secretary of State for Business, Energy and Industrial Strategy (Amanda Solloway)]

It is a great pleasure to serve under your chairmanship, Mr Betts. I thank my hon. Friend the Member for Fylde (Mark Menzies) for securing today’s really important debate and my parliamentary colleagues for expressing their support for the UK’s nuclear sector and future.

I will start by reaffirming the strategic importance of maintaining our sovereign fuel manufacturing capability, as set out in the 2018 nuclear sector deal. As many hon. Members have said, the UK is a world leader in the nuclear fuel cycle, which is a testament to the highly skilled workforce currently employed at the Springfields and Capenhurst sites and in the wider UK supply chain. Maintaining and developing that skilled workforce will be critical to delivering our net zero ambitions. I welcome the Westinghouse launch of the clean energy technology park last year. Such commercial ventures support collaboration and low-carbon research. Development and business are central to the UK’s transition to net zero. I am aware of the short-term challenges facing the Springfields site as the UK’s advanced gas-cooled reactor fleet retires. However, as we look forward to the 2030s, I agree with my hon. Friend that the site could and should have a bright future. That leads me to the Government’s commitment to nuclear power.

The 2020 energy White Paper sets out our vision for the transformation of our energy system, continuing to break the dependency on fossil fuels and moving homes and businesses to clean energy solutions. We have not yet made the full transition away from coal, let alone decarbonised our energy system, but “The Ten Point Plan for a Green Industrial Revolution” highlighted the key role of nuclear power in delivering the deep decarbonisation of our electricity system alongside renewables and other technologies.

This is an exciting time for the nuclear industry. This Government are clear that nuclear has an important role to play in decarbonising the electricity system, and in meeting carbon budget 6 and net zero targets. In the energy White Paper and “The Ten Point Plan for a Green Industrial Revolution”, this Government committed to advancing large, small and advanced nuclear projects as part of our future low-carbon energy mix, heralding what my hon. Friend the Member for Fylde called a golden age of new nuclear across the regions and nations of the UK, thereby contributing to the levelling-up agenda.

That includes at least one large-scale nuclear project, and in December 2020 we announced that negotiations with EDF on Sizewell C had begun. Those negotiations are already well under way. Moreover, as the Secretary of State has said in the House, we will bring forward legislation in this Parliament that will further commit us to creating more nuclear power in this country.

[Alan Brown]

What does the Minister think is a realistic timescale for our Government agreeing a deal with EDF on Sizewell C?

[Amanda Solloway]

I thank the hon. Gentleman for his question, and I will come on to that issue later.

As my hon. Friend the Member for Gloucester (Richard Graham) noted, nuclear could have a role in beyond grid applications such as low-carbon hydrogen production. Last month, we published the UK’s first ever hydrogen strategy, confirming our support for low-carbon hydrogen production across the United Kingdom. In addition, we have announced up to £385 million in the advanced nuclear fund to invest in the next generation of nuclear technologies, with an ambition to employ small modular reactors and to develop an advanced modular reactor demonstrator as early as the 2030s.

I also recognise the importance of developing our fuel-manufacturing capabilities to support these ambitions. My Department, in co-operation with the National Nuclear Laboratory, has delivered a £46 million advanced fuel cycle programme, aiming to develop world-leading skills and capabilities in advanced fuels and recycling. Recently, we announced a short extension to the programme, which will focus on advanced nuclear fuels for use in small and advanced modular reactors. The programme has been delivered at the National Nuclear Laboratory facility located on the Springfields site in the constituency of my hon. Friend the Member for Fylde.

I will also touch on the Government’s levelling-up agenda. We remain committed to addressing the economic disparities across the whole of the United Kingdom. The civil nuclear supply chain is playing an important role, currently supporting over 59,000 jobs across the United Kingdom in the areas where high-skilled, high-value jobs are needed most, including, for example, in the north of England and north Wales. As we develop the next generation of nuclear technologies, with the emphasis on high-quality manufacturing, I agree with the hon. Member for Strangford (Jim Shannon) that it would be excellent if the skilled workforce in Northern Ireland could play a part in that process.

I was delighted to hear that nearly 2,000 apprenticeships have been delivered on the Springfields site over the last 70 years. These kinds of training opportunities benefit not just the site and its workforce but the surrounding communities. Westinghouse and Springfields Fuels Ltd should be proud of their impressive achievement.

We keenly anticipate the outputs of the trial of the advanced nuclear skills and innovation campus at the Springfields site, which the hon. Member for Preston (Sir Mark Hendrick) drew attention to. We hope to see the successful collaboration between industry, academia and the National Nuclear Laboratory to support skills development. As my hon. Friend the Member for Bolton West (Chris Green) rightly pointed out, the objective should be to create careers, not just jobs.

As previously mentioned, the Government recognise the importance of maintaining and developing a strong nuclear skills base in the United Kingdom. I am aware of the plans for redundancies on the Springfields site this year. My Department has been working with Westinghouse, the National Nuclear Laboratory and the Nuclear Decommissioning Authority to explore opportunities to support the workforce on the Springfields site. We will also continue to encourage vendors and developers to maximise their UK supply chain content, including fuel, wherever that is possible, in order to support the economic growth of the UK nuclear sector’s supply chain.

Finally, I will reflect once more on the strategic importance of our sovereign fuel manufacturing capability and on the ability of the United Kingdom, as my hon. Friend the Member for Bolton West reminded us, to provide cost-effective support to reduce our reliance on imports, which may have a bigger carbon footprint. This Government would like to see the UK continuing to pioneer nuclear technologies in the lead-up to net zero. Our success will be underpinned by the capacity of our civil nuclear supply chain, including fuel manufacture. We are already considering, along with operators, fuel producers and the research and development community, how best to meet the needs of future nuclear power stations, including the opportunities provided by small and advanced modular reactors.

We also continue to work closely with our nuclear fuel industry and trade unions via the nuclear fuel working group, as noted by my hon. Friend the Member for Blackpool North and Cleveleys (Paul Maynard), to explore ways to secure the industry’s future. Those discussions are wide ranging, and I understand that EDF and Framatome are actively involved. Further Government support is under review as a part of the spending review. Further communications on the subject can be expected following the settlement.

In the meantime, the nuclear fuel working group that we have set up will meet again this month and, as my hon. Friend the Member for Blackpool North and Cleveleys said, it is important that we continue the dialogue and make sure that opportunities and ideas are given proper consideration. My right hon. Friend the Minister for Business, Energy and Clean Growth is taking a very active interest in this important issue.

The Government have made a clear commitment to nuclear as part of our future low-carbon energy mix. The UK’s success in achieving our net zero ambitions will be underpinned by the critical work carried out in the civil nuclear supply chain. We will continue to work with the nuclear industry to maintain our sovereign capability and the benefits that it brings for the local workforce and surrounding communities.

Electricity Network Grid Charges

Alan Brown Excerpts

Thursday 8th July 2021 Commons Chamber

6.2 pm

[Alan Brown (Kilmarnock and Loudoun) (SNP)]

It is a privilege to introduce my first Chamber Adjournment debate. Ideally, it would not have been at this time on a Thursday, but beggars can’t be choosers.

This is a long overdue debate on the need to reform the grid charging regime. It is an issue that has been simmering for a long time, and it is now reaching a critical period where, if change does not happen, renewable energy investment and job creation in Scotland will be put at risk, needless sums will be added to consumers’ electricity bills, and the UK Government’s pathway to net zero will also be put at risk. I will go into further detail on that, but a key issue is that the UK Government do not seem to understand the problems or have the desire and willingness to change. As a result, the remit of the regulator Ofgem is not fit for purpose either. It is not just me saying that change is required; the wider industry is saying it too. Scottish Power, SSE, Vattenfall, RWE and Red Rock Power, among others, have all called for changes to the grid charging regime, so I hope the Minister will take these matters seriously and engage with the industry to find a solution.

The national grid system was founded in 1935. There were massive and significant upgrades in the 1960s, effectively giving us the footprint that we still have, although of course there have been ongoing upgrades. With the privatisation following the Electricity Act 1989, systems had to be developed to create a framework for the private market to operate in, so in 1992 a charging system was developed that is still with us to this day. This means we have a system and a charging regime that are still aligned with the concept that electricity is generated from coal, gas, oil and large nuclear stations. That means that the charging system is still geared to incentivise power generation sites close to centres of population or, to be more accurate, the closer to London, the better.

It beggars belief that three decades on from when the system was devised based on the factors pertaining then, we are still having to highlight the absurdity of the system to the UK Government. What it means in reality is that instead of having a long-term plan for where the best locations are for the generation of renewable energy and the system required to facilitate that, we have one that does the polar opposite.

The Minister will be aware that Scotland has 25% of Europe’s offshore wind potential, but at the moment offshore developers connecting to the north of Scotland will pay the highest connection charges in the whole of Europe. Meanwhile, connections to the south of England result in generators actually getting paid to connect to the grid. That in itself shows how wrong the system is. I understand that it can be argued that there are transmission losses when moving electricity long distances, but that aspect is dealt with separately via the transmission loss multiplier, which is applied to Scottish generators.

I know it can be argued that the further away a generation site is, the more extensive the national grid network needs to be, and there are associated maintenance costs with that, but I would argue that geographical charges are not the best way to deal with that. Why penalise developers for constructing in the areas best placed to give maximum power output? Also, the charges cannot be reflective of the true cost, either, because clearly it is impossible to have a negative cost of operation, which is effectively what the payments to southern connections indicate.

What that means in numbers is that a 1 GW offshore wind farm off the north Scottish coast will pay £38 million a year to connect to the grid, yet a similarly sized offshore wind farm connecting to southern England will get paid £7 million a year. That is a £45 million a year differential between the same size Scottish and English offshore wind farms. Over 20 years, that would equate to nearly a billion pounds of difference between the two.

The reality is that Scottish offshore wind farms are now 20% more expensive than those in English waters. When lowest price is the winner takes all in the contracts for difference auctions, that is clearly a major issue. It means that investment in offshore renewable energy in Scotland is at risk, which means fewer direct jobs and less supply chain work in Scotland, but it also potentially hampers the just transition for the oil and gas industry.

The effects of the charging burden on Scottish projects can already be seen. In the 2015 auction round, Scottish projects accounted for about 40% of offshore wind contract awards made. In the 2019 round, it was less than 10%. Surely that is not an intended consequence of the charging regime. Worse, if nothing else is done, in the next few years, grid charges will be charged at a rate equivalent to 50% of the current offshore wind strike rate, and that would make it utterly impossible for Scottish projects to compete with those bidding in English waters.

The charging burden also means that the most appropriate efficient locations for renewable energy will not be utilised and maximised, which risks the net zero targets for the entire UK. Achieving net zero is now legally binding, and it is accepted that net zero is required by 2050—or 2045 in Scotland—to mitigate the effects of climate change and abide by the Paris agreement, yet there is no net zero plan in place, and we have a regulatory regime that is not fit for purpose. It makes no sense that the Government have set a legally binding net zero target, but as yet have not made net zero a statutory consideration for the regulator, and that clearly affects long-term planning for the grid transmission network. It could lead to short-term investment that needs further future upgrades, costing bill payers even more money. Both the National Infrastructure Commission and the Business, Energy and Industrial Strategy Committee recommend that Ofgem is mandated for net zero, so could the Minister advise when she thinks Ofgem will be legally bound to consider net zero?

The UK Government initially set an ambitious target of 30 GW of offshore wind deployment by 2030, then last year they increased the target by 33%, so the new target is now 40 GW of offshore wind by the end of the decade. So far, so good—it is a welcome target, except that then we realise that the policies do not match the target. To achieve the 40 GW target, the UK Government need to mandate changes to the grid charging regime as soon as possible. They also need to rapidly increase the current auction caps or, quite simply, not enough offshore wind contracts will be awarded to meet their own targets.

How difficult is it to look ahead and work out how much future capacity needs to be allocated in the next few years? It is not difficult. Here is a hint: it requires 4 GW a year from 2025 onwards. It means doubling the existing 20 GW of offshore wind that has been consented, in a five-year period. If there are no changes to the current policies and systems, that will not happen.

We come to the next contradiction or policy failure in the mix, and that is energy interconnectors. They do not pay connection charges—the Minister confirmed to me in a parliamentary question that that was part of the EU trade deal. That is clearly a disadvantage for companies looking to construct in the UK. It means that a multi-national company is now effectively incentivised to build in another country with zero connection charges, and then surplus energy can be exported to the UK, undercutting renewable projects here.

I appreciate the advantages of a wider interconnected grid and, given that Scotland is a net exporter of electricity, Scotland might benefit, but it still does not seem right to have an uneven playing field that could impact on projects here. What is worse, for me, is that there is no control over the source of any imported energy from interconnectors. The Minister knows that. It means that, while the UK is supposed to be going green, we might end up having imported electricity generated from gas on the continent undermining the cost of renewable energy here. That is another paradox that the Minister needs to consider.

These examples illustrate how dysfunctional the current system is. The UK Government need to do something about it. The one focus they have is nuclear energy, but that is another policy that actually adds to our electricity bills. They have committed to Hinkley Point C and this week reinforced their commitment to signing a deal for another £20 billion nuclear plant at Sizewell. It is so obvious that the £20 billion would be better invested in grid upgrades, long duration storage such as pumped hydro, or even battery storage and hydrogen. Why the nuclear obsession?

The Government cannot stick to the baseload argument, given that 75% of the existing nuclear fleet will be offline before Hinkley even starts generating. To me, that proves beyond doubt that large-scale nuclear is not required. A report recently published by Good Energy in conjunction with Energy Systems Catapult demonstrates that the UK could be operating a net zero electricity network in 2050, based on 98% renewables, with the other 2% being provided by Hinkley, not because it is required but because it is assumed it will be there.

I hope the Minister can consider that report, as well as one published by Imperial College that demonstrates that the use of new pumped storage hydro could save nearly £700 million a year in system costs by 2050.

There is one more point on nuclear, in terms of grid charging. It is frustrating that EDF is going to be paid money to connect Hinkley Point C to the grid. Will the Minister acknowledge that that is effectively another hidden subsidy over and above the 35-year deal to pay £92.50 per megawatt-hour, when the strike rate for offshore wind now sits at £40 per megawatt-hour? Where does the risk for changes in the grid charging system sit? Is it with EDF or the Government? Has the grid charging system been discussed with EDF as part of the current negotiations for Sizewell?

Returning to renewable energy, Scotland leads the world in the development of wave and tidal energy generation, but the UK Government have refused to consider a proper route to market, meaning that the technology development and investment could be lost to countries such as Canada. Will the Minister therefore confirm tonight that the Government will ring-fence a proportion of capacity—the request is 100 MW—in round 4 of the auction process? Will she properly discuss with the Treasury the development of an innovation power purchase agreement to allow companies to enter into agreements to purchase electricity from emerging wave and tidal companies? Does she understand that, if this technology does scale up in the way we want and its generation costs come down, those companies will also be at the mercy of the grid-charging system, unless changes are made? Will she please open discussions with the European Marine Energy Centre on the funding needed to replace EU funding streams?

I wish to make a final point about the current charging system and price volatility. Although the actual cost of maintaining and operating the grid remains stable year on year, the charging prices vary every year. This is another example of how the system is not fit for purpose. Prices can vary by an astonishing 500% in one year. As companies cannot predict such fluctuations, they are a risk that they need to factor into the capital cost of projects. It is estimated that, by the end of this decade, the cost of that risk will be £400 million a year. That is £400 million a year going to companies so that they can hedge against the risk of price fluctuation. That is money added to our energy bills for no reason at all—money that would be better off either in our pockets or, at worst, if the £400 million is realised, at least used for investment purposes. Will the Minister address that as well, please?

One small positive in the mix is that Ofgem has now recognised that there is an issue and proposed changes with the targeted charging review and the ongoing access and forward-looking charging review consultation. The downside is that the changes Ofgem currently proposes do not resolve the problem. Indeed, Ofgem’s new proposals could prejudice existing embedded renewable energy sites in Scotland. What assessment have the Government made of Ofgem’s “minded to implement” proposals? Will the Minister finally admit that it is for the UK Government to take charge of the process and make the necessary changes for Ofgem to follow, rather than continuing to say that it is “for the regulator”, which is actually just passing the buck?

To sum up, I have a list of questions for the Minister to consider and I am sure she would love to answer them. Will she consider the impact of the current locational grid charges that make Scottish offshore wind farms 20% more expensive than southern English ones? Does she recognise that the charges applied to Scotland are the highest in Europe? Does she accept that the projections are that the charging burden could go as high as half the current strike rate that is received and paid to companies? Does she understand that the impact of price volatility could cost £400 million a year by 2030? What will be done to assess and mitigate that? Does she understand that the current Ofgem proposals could adversely affect 6 GW of embedded energy projects? Will she consider the cost savings and system benefits that would arise from adding more pumped hydro storage to the grid?

The Minister must realise that it is for the Government to set the policy and regime for Ofgem to implement and that a new policy statement is long overdue. I really hope that she can address those points, and that she will work with the industry and the regulator to shape an electricity system that is designed for the 21st century—one that will lead us on the pathway to net zero.

Fuel Poverty

Alan Brown Excerpts

Thursday 8th July 2021 Commons Chamber

[The Minister for Business, Energy and Clean Growth (Anne-Marie Trevelyan)]

I beg to move,

That this House has considered fuel poverty.

I am pleased to be able to open this debate, which is an annual opportunity for Members to raise their constituents’ views on the important question of fuel poverty. The past year has been a challenge for everyone, yet the impacts of the pandemic have not been felt equally. In particular, it has had a devastating impact on those already on a low income. The issues being faced by those in fuel poverty are not unique to the pandemic. The health implications of living in a cold home remain as serious as ever. Work is ongoing to address the issue and support those who are most vulnerable.

[Alan Brown (Kilmarnock and Loudoun) (SNP)]

I appreciate the Minister giving way so early. She is illustrating the impact of covid and people in fuel poverty. Does that not underline the need to retain the £20-a-week universal credit uplift?

[Anne-Marie Trevelyan]

I will continue, if I may, and I hope I will answer the hon. Gentleman’s points.

Government-led energy-efficiency upgrades over the last decade have reduced the cost of heating homes, building resilience for all households, especially those on low incomes. I will come on to the energy-efficiency schemes that have kept households warm over the past year and the further action we are planning to take to accelerate progress towards tackling fuel poverty.

I would just like to acknowledge the importance of the strong relationships built with energy suppliers, which have been crucial during the pandemic. I thank them and their staff for their total commitment to looking after customers, despite risks to themselves. These relationships enabled us to quickly secure a voluntary agreement to support customers impacted by covid-19, which has been hugely successful in protecting those most vulnerable or at risk of debt, and came top of the Citizens Advice ranking of protection measures by industry. There is no doubt that more immediate support for those struggling to pay their energy bills and ensuring fairness within the energy market is important and I will come back to that later.

It is important to note that fuel poverty is devolved and that the Department for Business, Energy and Industrial Strategy has a responsibility for England. Each nation remains committed to tackling the issue and I welcome contributions from all hon. Members today as they raise their own nation’s issues.

In February this year, we published an updated fuel poverty strategy, “Sustainable Warmth: Protecting Vulnerable Households in England.” The strategy details our focus on energy efficiency, which enables warmer homes at lower cost, while also reducing carbon emissions in line with net zero. Our strategy reiterates the 2030 fuel poverty target in England, which is to ensure that as many fuel-poor homes—indeed, all homes—as is reasonably practical achieve a minimum energy-efficiency rating of band C by 2030.

A great deal has been achieved in the last decade, but there remain a significant number of households in need of support on our journey to the 2030 target. As of 2019, there are 3.18 million households in fuel poverty in England. That is a reduction of 1.6 million households since 2010. The main reason for the reduction in fuel-poor households over the last 10 years has been energy-efficiency improvements—improvements that are of benefit for many years to come.

Cold homes will often have issues with mould and damp. By installing energy-efficient measures, we are improving the comfort of our constituents’ daily lives. They are crucial in protecting and improving people’s health and helping to reduce the burden on the NHS, as well as reducing energy use and thereby reducing bills. We are focusing on improving the least energy-efficient homes first, to ensure some of those in the homes that are the most difficult and expensive to heat are prioritised. There has been significant progress.

Compared with 2010, there are now 1.3 million fewer low-income households living in the least energy-efficient homes—that is bands E, F or G. Our sustainable warmth strategy details the energy-efficiency schemes currently in place.

The green home grant local authority delivery scheme will deliver £500 million of energy-efficiency and low-carbon heating measures across the owner-occupied, private and social rented sectors. The home upgrade grant will support low-income households, with upgrades to the worst performing off-gas grid homes in England, providing energy-efficiency improvements and low-carbon heating alternatives.

In the 2019 Conservative manifesto, we committed to a £3.8 billion social housing decarbonisation fund over a 10-year period to improve the energy performance of socially rented homes. We have committed to a four-year, £4 billion successor scheme to the energy company obligation—the ECO, as it is known—across Great Britain. That will accelerate our efforts to improve homes to meet fuel poverty targets.

While these energy-efficiency schemes are crucial in reducing fuel poverty in the long term, we also recognise the need for short-term help, so our support for households in the winter months continues with the warm home discount, providing 2.2 million households with £140 off their energy bill this year. We are continuing to improve the scheme by expanding it and consulting on new ways to improve targeting to reach those most in need. Since 2011, it has provided more than £3 billion of rebates to households, helping keep homes warmer over the colder months.

Winter fuel payments provide pension age households with financial support worth up to £300 each year and cold weather payments support vulnerable households through particularly cold spells. They provided more than 3.6 million households in Great Britain with support last winter.

Alongside all the direct support, the voluntary agreement with energy suppliers has been crucial over the past year in protecting vulnerable customers. Our work with energy suppliers to ensure the best protection for low-income and vulnerable consumers and promote best customer service in a thriving energy market is vital, so we are working to reduce the impact of debt on fuel-poor households and identify those at risk of self-disconnection or self-rationing. Ofgem rules require suppliers to offer emergency and “friendly hours” credit to all prepayment customers at risk of self-disconnection. We are also working to improve the communications and advice available to everyone, to ensure that better engagement and information are readily accessible to consumers.

I assure hon. Members that we remain fully committed to addressing and reducing fuel poverty for our most vulnerable constituents so that all households can be assured of a warm and affordable home. We will continue to drive forward on delivering energy efficiency measures to reduce energy bills and create warmer, safer living environments, while providing direct support with energy bills and working alongside the energy market to ensure a better consumer experience and protect customers. I am grateful for the opportunity to discuss this important issue and look forward to hearing from colleagues.

--- Later in debate ---

[Alan Brown (Kilmarnock and Loudoun) (SNP)]

Like you, Mr Deputy Speaker, I was shouting at the television last night.

The subject of today’s debate is very important. Everybody agrees that fuel poverty is a bad thing. It is debilitating. It causes mental and physical health problems. It is estimated that it can cost the NHS in England up to £2 billion a year in related health conditions. It causes people to die earlier, and it further shortens the remaining lifespan of those who have been diagnosed with a terminal illness. It can force the terminally ill out of their homes as they face a death that they would rather manage in their own homes with their families. So I ask the Minister to consider the recommendations of the report by the all-party parliamentary group for terminal illness, entitled “No place like home”. I pay tribute to the work it has done in conjunction with Marie Curie.

National Energy Action estimates that, shamefully, there are approximately 10,000 premature deaths a year related to fuel poverty, so we really need to do what we can to eliminate this scourge. In Scotland, we have greater pressures because we have a colder and wetter climate and a high proportion of homes are off the gas grid. Within the off-gas-grid cohort in the highlands, many customers pay up to £400 more per annum to heat their homes because they have restricted meters and pay up to 4p more per unit of electricity. I ask the Minister why she thinks it is fair that that surcharge is added in an area that is actually now a net exporter of electricity to the rest of the UK. When will that injustice be resolved?

As the Minister said, fuel poverty is a devolved matter, but energy policy overall is reserved to Westminster, and 85% of welfare spending in Scotland is reserved to the UK Government. Although the Scottish Government are trying to address the devolved aspects, they are constrained by UK Government policy. One simple example of that is that the UK Government have confirmed that the universal credit uplift of £20 per week will be removed. If that uplift was required for people to live through covid, it is obvious that it will be required going forward. Otherwise, more people will end up in fuel poverty.

In contrast, last year, the Scottish Government introduced child winter heating assistance, which will support the families of about 14,000 of the most seriously disabled children and young people with automatic payments of £200 a year. As always, the Scottish Government are having to work wonders within a fixed budget.

Energy efficiency is devolved, but the UK Government refuse to cut VAT on insulation measures, despite a request from the Scottish Government. I support the call from the right hon. Member for Wokingham (John Redwood) for that to be removed.

The UK Government designed the warm home discount and, although it provides welcome relief, it is actually paid for by other energy users, which puts others under pressure in terms of energy bills. It is the UK Government who are responsible for the energy company obligation scheme. The Committee on Fuel Poverty stated in 2018 that it has not been targeted at the correct audience. In March, the Environmental Audit Committee concluded that ECO will not achieve the fuel poverty targets required, and that the reality is that

“the poorest pay proportionally the most…this makes it a regressive policy.”

Energy UK, whose members are responsible for delivering the ECO scheme, has expressed concerns about the impact on the bills of the poorest. When will the UK Government and the Minister listen to those concerns and make relevant changes?

As we know, it is the UK Government who were responsible for the failed green deal scheme, which came about because they were determined not to have direct Government investment or on-book borrowing. I again ask the Minister: when will the HELMS victims be compensated for the mis-selling of green deals to them?

How renewable energy is paid for is under the remit of the UK Government. As a consequence, nearly a quarter of our electricity bills are now accounted for by energy policy decisions. That again puts more pressure on bill payers and could tip the scales for some, pushing them into fuel poverty, especially those in off-grid homes. The current imbalance in policy costs between electricity and gas bills really needs to be addressed as soon as possible.

Overall, we need more direct UK Government investment and the UK Government need to follow the lead of the Scottish Government. It is not just the likes of myself as an Opposition Member saying that. Energy companies say it; many third sector organisations say it; the Committee on Climate Change, in its 2019 progress report, said it; and so did the Business, Energy and Industrial Strategy Committee in its 2019 report, “Energy efficiency: building towards net zero”.

There are some key points in that BEIS Committee report, which stated:

“We note that Scotland’s investment of four times more than England cannot be explained by a less efficient dwelling stock…For example, in 2017, 49 per cent of homes in England had insulated walls, compared to 60 per cent of homes in Scotland…Scotland has made much faster progress in improving the energy efficiency of its fuel poor homes than England, where in some bands, progress has stalled.”

The statistics actually show that: 44% of Scottish homes were rated EPC band C or better in 2018, compared with just 34% in England and 28% in Wales.

The UK Government have given us a failed green homes grant scheme, whereby last year the Treasury clawed back £1.5 billion of the original allocation. What is actually needed from the UK Government is a long-term energy efficiency investment programme that will create jobs and deliver at best value, avoiding spikes in cost. It could be part of a green industrial revolution. It is no wonder that the BEIS Committee concluded its report by stating:

“The Government appears indifferent towards how public per capita spend in household energy efficiency in England compares to other parts of the UK…the governments of the devolved nations treat energy efficiency as a much higher priority than the UK Government.”

That comment on indifference is particularly damning. I would like to hear how the Minister responds to that.

By contrast, let us look to Scotland. The Scottish Government have an award-winning fuel poverty scheme, Warmer Homes Scotland, which is designed to help those who are living in or are at risk of fuel poverty through installing energy insulation and heating measures into individual properties. More than £124 million has been invested through the scheme since its launch in 2015, helping over 20,000 households. By the end of 2021, the Scottish Government will have allocated more than £1 billion since 2009 to tackling fuel poverty and improving energy efficiency, including nearly £200 million this year alone.

Another important measure in Scotland is Home Energy Scotland, which is also award-winning. It provides impartial free advice for anybody concerned about paying their energy bills. Yet again, UK and English-based consumer groups think it is a model that the UK Government need to adopt. As we look to decarbonise our heating systems, having an impartial advice service, as we do in Scotland, will be critical when people have to consider key choices such as whether to purchase a new boiler, or when they are considering low carbon energy such as heat pumps.

That brings me to the target of 600,000 heat pump installations per year by 2028. When will the Government bring forward a policy road map for the funding, and why are they not starting with a rolling programme aimed at off-gas-grid properties? That, combined with energy efficiency measures, would be an ideal way to tackle one category of fuel poverty. It is no wonder that the Committee on Climate Change, in its latest progress report, is scathing about the lack of UK Government policies. We really need to see the heat and buildings strategy, although it was disappointing that no energy Bill was listed in the Queen’s Speech.

The Scottish Government remain committed to implementing the Fuel Poverty (Targets, Definition and Strategy) (Scotland) Act 2019 in full. It is the most ambitious and comprehensive fuel poverty legislation in the UK, setting challenging but achievable targets, including that by 2040 no more than 5% of households are fuel poor and no more than 1% in extreme fuel poverty. That is compared with the UK Government’s targets, which are based solely on energy certification, which in itself is not sufficient to eliminate fuel poverty.

In conclusion, it is quite clear that fuel poverty is another matter where the UK Government hold Scotland back. Plenty of other bodies can see that change is needed in UK-wide policy, which the UK Government are responsible for. We really need to see policy in action—sooner rather than later.

Oral Answers to Questions

Alan Brown Excerpts

Tuesday 6th July 2021 Commons Chamber

[Anne-Marie Trevelyan]

As I said earlier, we already have a number of funds working in community energy. I am happy to meet the hon. Lady at any point to discuss her perspective.

[Alan Brown (Kilmarnock and Loudoun) (SNP)]

Yet again, we have heard about the need for a nuclear baseload. The reality is that Dungeness nuclear power station shut down seven years early and 75% of the existing nuclear fleet will be offline before Hinkley Point C can be up and running. Will the Minister tell me whether the nuclear baseload is a myth or when the lights will be getting turned out?

[Anne-Marie Trevelyan]

We continue to invest in new nuclear, as I set out earlier, and we are working to grow our renewable energies at an extraordinary pace. We are world leading, with our offshore wind capacity already at 29% of the total, and we will continue to grow that from 10 GW to 40 GW by 2030.

District Heat Networks

Alan Brown Excerpts

Wednesday 28th April 2021 Westminster Hall

[Alan Brown (Kilmarnock and Loudoun) (SNP)]

It is a pleasure to serve under your chairmanship for the first time, Ms Ghani. You will be pleased to know that the word “resignation” does not appear once in my prepared notes.

I congratulate the hon. Member for Carshalton and Wallington (Elliot Colburn) on securing the debate; I should have realised that potentially it would relate to a constituency issue, rather than being a plug for district heating. He made his case well about the issues that his constituents are suffering, and there is no doubt that the Minister has to provide a robust response. We also heard from the hon. Members for Greenwich and Woolwich (Matthew Pennycook) and for Lewisham East (Janet Daby) about the need for a regulator and for consumer protections—that was certainly a theme common to all three speeches.

The hon. Member for Carshalton and Wallington highlighted the fact that energy from waste is causing a traffic movement issue. There is a proposed site next to my constituency where residents are concerned about movement and emissions. The point about there being no future-proofing is interesting, and it certainly seems that the local council has a lot of questions to answer. I must say that I was really shocked and surprised that it was not a Conservative council that the hon. Gentleman was laying into; he let slip at the end that it was a Lib Dem council.

Looking at the big picture for heating overall, we face conflicting problems when it comes to heating our homes. For too many people, fuel poverty is an issue, yet 85% of our homes rely on methane gas heating—a system that is cheaper than electricity and, for the most part, clearly very convenient, given that a boiler can be activated at leisure. That is illustrated by the fact that until it was recently overtaken by China, the UK was the biggest market for gas boilers in the world, but we know that cannot continue. We need to decarbonise, and we need plans, strategies and funding to get there.

The UK Government are good at soundbites and targets, but targets are meaningless without policies—for example, the target of 600,000 heat pump installations by the year 2028, from circa 20,000 a year right now. That means almost doubling the number every year from next year onwards. Without coherent policies and funding strategies to put that in place, it does not seem realistic, especially when we factor in that the installation cost for a full system is circa £15,000. Without grants or some sort of long-term route to market strategy, strong action is required for the Government to get heat pump installations in place.

The 10-point plan also has targets for carbon capture and storage from hydrogen production. We are still awaiting strategies for them, but district heating is not even mentioned in the document. In fact, district heating has not featured significantly enough in debates to date, which means today’s debate is very welcome. Looking forward, the reality is that if we are to decarbonise, we will have a rise in some form of district heating in some cases.

As far back as 2017, the then director of the Department for Business, Energy and Industrial Strategy stated that

“whatever you do you end up with 17-24 per cent district heating”,

so why does district heating lag behind in discussions and planning? It is quite clear that we need more of that. We need the heat and buildings decarbonisation strategy, as well as the Government’s net zero strategy. The Scottish Government published theirs in February 2021. If re-elected, the SNP pledged to decarbonise the heating of 1 million homes by 2030—over a third of the housing stock in Scotland—and all new homes and buildings from 2024 will use renewable or zero-emission heating. That is backed by a £1.6 billion investment plan.

Scotland is trying to reduce emissions and heating costs, and to fight fuel poverty. Compared with Westminster, we spend four times more per capita on energy efficiency, which is vital in reducing emissions. By contrast, the UK Government’s future homes standard involves eliminating the connection of new homes to the gas grid by 2025. That means that by 2024, something like 200,000 new homes will be connected to the gas grid and will then need retrofit measures in order to decarbonise at a later date.

That is not to say the UK Government have not made attempts to introduce a greater range of district heating. Some £320 million was allocated through the existing heat networks investment project, but that comes to an end in 2022, and two pilots—in Sheffield and Manchester—were pulled. What has been the extent of spend on district network creation to date? What lessons, if any, have been learned, including what we have heard today? What would the success of the green heat network fund look like, and how much of the green heat network’s £270 million is new money?

As we have heard clearly, the big issue for district heating is the fact that there is no regulator. This means that consumers in district heat networks have less security than traditional gas and electric consumers, and there is no ombudsman to receive complaints. That discourages consumers from connecting to the heat network. As we have heard, the ones who are connected have real issues trying to resolve matters.

Looking to Scotland again, the Scottish Government passed the Heat Networks (Scotland) Act in February 2021, which provides a regulatory framework to cover heat networks. What is the UK Government’s position on introducing a regulator or a regulatory framework for district heating? I hope the Minister can answer that. As the hon. Member for Greenwich and Woolwich said, the industry and the Heat Trust are trying to fill the gap with a voluntary standard, but at the end of the day it is voluntary. That belies the issue, so we need statutory protections.

We need to see greater investment in energy efficiency. What of the Tory manifesto’s £9.2 billion commitment? We need to see a coherent heat and building strategy that will deliver a suite of options. They will still need to include district heating, which the Committee on Climate Change reckons will account for 18% of heat in our homes going forward. That means ensuring a route to market for the capital cost and/or a Government funding plan.

It is interesting that the Association of Decentralised Heating estimates that energy bills for those in district heating is £100 cheaper compared with gas, so this could be a good tool for fighting fuel poverty. Again, clearly we need protections. As the hon. Member for Carshalton and Wallington said, we cannot have a closed shop where consumers start paying higher charges than they otherwise would need to.

As we look forward, there is plenty to be done. I look forward to the Minister’s response. With COP26 on the horizon, this should be our ideal platform to demonstrate a coherent, complementary heat decarbonisation strategy.

--- Later in debate ---

[The Minister for Business, Energy and Clean Growth (Anne-Marie Trevelyan)]

It is a pleasure to serve under your chairmanship, Ms Ghani. Let me begin by congratulating my hon. Friend the Member for Carshalton and Wallington (Elliot Colburn) on securing this really important debate. I also thank the hon. Members for Greenwich and Woolwich (Matthew Pennycook), for Lewisham East (Janet Daby) and for Kilmarnock and Loudoun (Alan Brown) for raising issues of concern in their own constituencies. As ever, I thank my friend the hon. Member for Southampton, Test (Dr Whitehead), who turns out to be an expert and an advocate on the subject of domestic heat networks—who knew? He was able to take us from Denmark to Southampton in demonstrating why they can and should be an important part of the mix. I thank to all colleagues for their contributions to the debate.

I was very sorry to hear of the troubles experienced by the constituents of my hon. Friend the Member for Carshalton and Wallington in the New Mill Quarter of his constituency. They have had really awful challenges with their district heat network. I sympathise with the difficulties that has clearly caused them all and it is profoundly disappointing to hear that their Lib Dem-run council has failed them all so very badly. I absolutely agree with the need for protections for heat network consumers. The experience of my hon. Friend’s constituents highlights the importance of the Government’s commitment to regulate the heat networks market within this Parliament.

Heat networks play and will continue to play an important part in assisting us to meet our net zero challenge. They will unlock larger-scale renewable and recovered heat sources, both energy from waste heat and heat from rivers and mines. It was interesting to hear about the geothermal heat source being used in Southampton. When deployed effectively, they can bring greater heat efficiency than individual gas boilers, lower costs for consumers and support local regeneration. However, we recognise that we need to regulate the market to ensure that those outcomes are real, for which protections for heat network consumers are needed.

As colleagues have highlighted, in 2017 the Government commissioned a survey to quantify consumer experiences with heat networks in England and Wales. The results showed that consumers connected to a heat network have generally received good service and were as satisfied as non-heat network customers, which makes the terrible experiences of those in New Mill Quarter all the more upsetting. The results of the survey also showed that, on average, a heat network consumer was likely to pay £100 less per year for heating and hot water compared with consumers on other utilities. Again, this makes it all the more shocking that my hon. Friend’s constituents have got such a raw deal from their Lib Dem council’s activities.

The Government also noted, however, a report by the Competition and Markets Authority in 2018, which showed that a significant minority of heat network consumers experienced high prices, frequent outages and a lack of transparency. Therefore, we committed to the Competition and Markets Authority’s recommendation of regulating the market and, last year, consulted on establishing a heat networks market framework.

The framework will include introducing consumer protection rules to combat cases of detriment, such as the outages being experienced by the residents of New Mill Quarter. We want heat network consumers to have comparable levels of service and protection to those using electricity and gas on individual contracts for their homes. As part of the market framework, we will introduce quality of service standards requiring notification periods for planned outages and compensation for all outages.

Consumers will have access to an independent redress scheme and a consumer advocacy body, which will provide a consumer helpline and priority services for consumers in vulnerable circumstances. The regulator will have powers to enforce price transparency, introduce guidance on fair pricing, set requirements on cost allocation and conduct investigations into heat networks where prices are disproportionately high. Finally, consumers will be provided with a minimum level of easily accessible information and guidance on heat networks at the pre-contractual stages of property transactions and during residency. There will be requirements on the provision of heat supply agreements and billing information.

We are preparing to introduce legislation to regulate the market, but, as colleagues have mentioned, there are some measures already in place to improve standards for heat network consumers. The Heat Trust provides an independent market-led voluntary standards scheme and consumers on heat networks registered to the Heat Trust benefit from terms of service similar to those in the gas and electricity markets. They can also access the energy ombudsman if they have a complaint against their heat supplier. In 2019, BEIS wrote an open letter to all heat network operators encouraging them to register their schemes with the Heat Trust and we continue to encourage schemes to sign up to raise standards now and to prepare for regulation.

[Alan Brown]

The work on the regulation framework the Minister is talking about seems well advanced, so can she give us a timescale for when legislation will come forward?

[Anne-Marie Trevelyan]

If only I could do it tomorrow, but I think Prorogation would stop me. We have also supported the Heat Networks Industry Council in its work to establish the consumer protection agreement and the heat network emergency responders group in response to the covid-19 pandemic. We encourage heat suppliers to sign up to that agreement and we have written to signatories urging them to do more to tackle outages and improve compensation standards for those outages. Although these schemes have benefited many consumers, we recognise that regulation is needed to drive up consumer standards across the heat networks market. I therefore reiterate our commitment to that regulation today, but I am afraid that I cannot give a precise date.

The Government have introduced several schemes to support heat network deployment. Our heat networks investment project has made £320 million of capital funding available for investment in heat network projects through grants and loans in England and Wales. That will be succeeded by the green heat network fund in 2022, which will support and incentivise the use of low-carbon heat sources in heat networks. Both investment projects will ensure adequate consumer protection measures are in place by requiring projects to demonstrate Heat Trust or equivalent standards, which will ensure that taxpayers’ money supports only heat networks that deliver fair pricing and which are well designed, efficient systems.

Furthermore, we have been carrying out work on improving performance across a number of existing heat networks. That provides an evidence base for the development of the heat networks efficiency scheme, which will part-fund operational performance improvements and carbon emission reductions in existing systems. Further details will be announced later this year.

It is essential that heat network consumers are provided with clean and reliable heat at an affordable price. As such, we are developing the heat networks market framework that will place consumers at its heart, deliver sustained investment in the sector and maximise heat networks’ potential economic and environmental benefits. We committed in the energy White Paper to legislate for the market framework by the end of the Parliament.

We are working closely with the industry and consumer groups to ensure that regulation delivers positive outcomes for consumers, and we will shortly publish the Government’s response to last year’s consultation. I look forward to working with all colleagues on the proposals that we will bring forward. In the meantime, I wish my hon. Friend the Member for Carshalton and Wallington and his constituents well as they seek redress from their council, whose failure to meet the standards that residents could have reasonably expected is motivation indeed for the Government to get protections in place.