Nuclear Energy (Financing) Bill (Third sitting)

Alan Whitehead Excerpts

Committee stage
Thursday 18th November 2021 Public Bill Committees

[The Chair]

I have a few preliminary reminders for the Committee. Please will you switch all your electronic devices to silent? No food or drink is permitted during sittings of the Committee, except for the water provided. I encourage Members to wear masks when they are not speaking. That is in line with Government guidance and that of the House of Commons Commission. Please give each other and members of staff space when seated, and when entering and leaving the room. Hansard colleagues will be grateful if Members could email their speaking notes to [e-mail].

We now begin line-by-line consideration of the Bill. The selection list for today’s sitting is available in the room and it shows how selected amendments have been grouped together for the debate—there is one change. Amendments grouped together are generally on the same or a similar issue. Please note that decisions on amendments do not take place in the order in which they are debated, but in the order they appear on the amendment paper. The selection and grouping list shows the order of debates. Decisions on each amendment are taken when we come to the clause to which the amendment relates. Decisions on new clauses will be taken once we have completed consideration of the existing clauses of the Bill. Members wishing to press a grouped amendment or new clause to a Division should indicate when speaking to it that they wish to do so.

We will start with amendment 1 to clause 1, but first, Dr Whitehead, did you wish to talk about the change to the selection list?

[Dr Alan Whitehead (Southampton, Test) (Lab)]

Thank you, Ms Fovargue. It is a pleasure to serve under your chairmanship. I want to say two things before we go into detailed line-by-line discussion: one is on the order in which we are debating the Bill—clause 1, clause 2 and so on. The other is to say to the Committee before we start that Her Majesty’s Opposition voted in favour of the Bill on Second Reading and, therefore, we hope that the amendments before us will be seen and discussed in that light, which is that they seek to strengthen the Bill and to address specific concerns that we have about elements, in particular the RAB—regulated asset base—process.

[The Chair]

Order. This should just be about the amendments and groupings; there can be no general statements about the Bill. Is everyone content to group amendments 1 and 2 together?

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[Alan Brown]

It is a pleasure to serve under your chairwomanship, Ms Fovargue. In my intervention, I wondered if the amendments would technically preclude EDF under the RAB scheme. I hoped that the amendments were a stalking horse for Labour to come round to our way of thinking regarding a new nuclear power station, but unfortunately, that does not seem to be the case.

That said, I support the amendments. It is crazy that decisions have not been made before now about excluding China General Nuclear from critical infrastructure. The UK Government probably acted on the back of the United States’s actions to remove Huawei from critical telecoms infrastructure, so it makes no sense that a Chinese state-operated nuclear company is allowed to participate and invest in and possibly, if it gets its way, construct a new power station at Bradwell. That makes no sense. I would like to hear what the Minister has say about that. In principle, I support the amendments, although, ideally, I would rather we were not doing new nuclear.

[Dr Whitehead]

Continuing briefly from my initial remarks, I want to make it clear that the amendments—and all our other amendments—are based on the idea that the Bill should be strengthened, not subverted in any way. I can assure the Committee that the hon. Member for Kilmarnock and Loudoun’s hope that these two amendments are a stalking horse to remove EDF from the project is certainly not the intention. The intention is precisely to ensure that the nuclear programme in this country is sound, robust and integral to our security in all senses of the word.

We do not think the amendments will do anything other than put us in a much better position to ensure that the financing of nuclear is done on a clearer footing and on the basis that we know who is putting money into the project, in this instance Sizewell C. I concur with my hon. Friend the Member for Greenwich and Woolwich that effectively the Bill is pretty much about how Sizewell C gets going, comes to financial closure and gets into its construction period so that it produces electricity in good time for the grid.

It is important that the Committee thinks carefully right at the beginning of its proceedings about how we want to framework that nuclear financing; how we want to framework the arrangements which, after all, will be the umbrella under which we have all our other discussions in Committee. The framework that we have at the moment, particularly for Sizewell C, as my hon. Friend has set out, is a sequence of memorandums and a number of things further to memorandums, which appear to lock our nuclear development into an arrangement with the Chinese General Nuclear Power Corporation, which is very much an instrument of the Chinese state. Although companies have been set up—set up for the purpose of engaging in Hinkley—with one nominated director, given who those nominated directors are and how they go back to China it is very clear that those companies are centrally state-controlled, and are state-controlled vehicles for investment—just as we have stated in our amendment—for the promotion of that particular foreign power’s interests, in this instance in nuclear power.

Given those interests in nuclear power, it is important that we do not lose sight of the overall scheme of things in considering investment or otherwise in Sizewell C. It is important to understand that the deals, as it were, that were made between 2013 and 2016 were very much about that sequence of events leading from investment in a power station with a minority stake, with a reactor that would be built in France, within a framework of a company controlling that, that is a private company but has substantial state connections, but nevertheless is a very different model from what we are faced with regarding the CGN investment.

So there has been a sequence of events that starts with Hinkley C, with a minority stake, a French reactor and a French company with its own investment in the majority of the plant, and then a contract for difference at the end of it for production, moving to the second event in the sequence, which was envisaged at that time to be Sizewell C, with an undefined arrangement at the time for investment elsewhere in the plant, but a clear stake in that plant, beyond financial closure, of the Chinese General Nuclear Power Corporation, coming to 20%. And then would come the prize at the end of the sequence—certainly the prize for the Chinese Government—of the entry into European nuclear development for the first time of a Chinese reactor, the Hualong One. That would be the basis of a Bradwell nuclear plant. That reactor would separately go through a generic commissioning process; the initial moves towards that are being made. That reactor would then be at the core of the Bradwell plant, and Bradwell would be majority-owned, run, controlled and operated by the Chinese state nuclear corporation.

So, leading down the path of that sequence, Sizewell C being a stopping-post in that sequence and the end of it being Bradwell, is obviously the nuclear project that we are discussing at the moment. Therefore, the part-ownership of the nuclear company must be seen as integral to that overall process and that overall agreement; and if we do nothing and say nothing about that involvement, we are effectively condoning that whole sequence of agreements.

Those agreements were initially made in the form of a memorandum of understanding on civil nuclear collaboration in 2013, and effectively those stakes that I mentioned were set out then. George Osborne, the then Chancellor, stated that Chinese companies were taking a stake, including potential future majority stakes, in the development of the next generation of British nuclear power. So, it was pretty explicit, certainly from the UK Government side, what they thought that sequence was going to be about, and it was actually pretty similar to the idea that the Chinese had, as far as their involvement in nuclear was concerned.

That was followed, during Chinese President Xi Jinping’s state visit to the UK in 2015, by a “Statement of Cooperation in the Field of Civil Nuclear Energy”, which welcomed the minority investment and the proposal for a Chinese-led project at Bradwell B in Essex. What is less well known is that that was followed by a very lengthy document, “Secretary of State Investor Agreement”, which was primarily about investment by a number of parties, including CGN, in Hinkley but which also related to the whole sequence. It is arguable, therefore, that there is a substantial lock-on of Chinese involvement not just in 20% of Sizewell but in the whole sequence, as laid out in the various memorandums of understanding and the investment agreements undertaken between 2013 and 2016.

The question is: what are we going to do about it? The proposal is for a RAB scheme to cover the project’s investment costs. A decision will have to be made about how the RAB scheme will work and we will discuss the detail later, including how Ofgem will set out the allowable costs that form the backbone of a RAB agreement. Ofgem will have to assess the overall allowable ceiling for the project costs, particularly in its construction phase but also during its production phase. That will form the basis on which the money to meet those costs will be taken in from the general bill-paying public. The ceiling for those allowable costs will be determined to a considerable extent by how much investment is likely to be required and, therefore, how much of it will have to be underpinned by the RAB arrangement at the Sizewell plant. If a substantial part of the plant is to be financed by the China General Nuclear Power Corporation, then logically the allowable costs would relate to the rest of the required investment, rather than all of it. Crucially, the decisions and discussions that this Committee is going to enter into will be determined by what that 20% consists of.

The Red Book offers a tantalising clue as to what that might be. As my hon. Friend the Member for Greenwich and Woolwich said, a total of three lines focus on the £1.7 billion of new direct Government funding being made available, essentially for the Sizewell C project. He said that the Red Book is possibly wilfully obscure; it is certainly obscure, and for a number of reasons. All the Budget and spending review document has to say about the £1.7 billion Government funding is that it is being provided

“to take a final investment decision this Parliament, subject to value for money and approvals.”

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[Greg Hands]

To be fair, I also listened carefully to Sizewell C’s evidence, and the company will be as aware as we are that this is an active negotiation. I was not in any way surprised that Sizewell C’s representative did not wish to be drawn on the question of exactly where the £1.7 billion would be deployed. We have outlined in the Budget document the sorts of areas that would be in scope. None the less, this is an active financial negotiation.

[Dr Whitehead]

Does that mean that the evidence that was given to us in our session with Sizewell C was not correct, or was ill-informed? Or was it informed, but matters have moved on since then? Or was it—

[Mark Fletcher (Bolsover) (Con)]

Diplomatic.

[Dr Whitehead]

Was it, indeed, as the hon. Member for Bolsover suggests from a sedentary position, diplomatic? If so, was that diplomatic answer given after any sort of instigation from the Government, or was it just diplomatic on the basis that Sizewell C did not want to tell us?

[Greg Hands]

I do not think the hon. Gentleman is correct. It is not fair to conclude that the evidence from Sizewell C was incorrect, or that it was ill-informed in any other way. This is an active commercial negotiation. We have laid out the parameters of the £1.7 billion, and is in no way surprising that our negotiation partners may not wish to comment on what they think it is likely to be spent on. After all, it is taxpayers’ money, which will be deployed by this Government to move forward a nuclear project.

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[Greg Hands]

As I have made clear, we think that the Bill adequately addresses these issues, particularly in combination with the National Security and Investment Act, so I do not see it as necessary for us to make any further clarification. Ultimately, the Bill is about bringing in more financial options for future nuclear power, not cutting them.

The hon. Member asked about Bradwell. To reiterate, that is not a decision for now. CGN does not have regulatory approval for its reactor, nor has it submitted any applications to build a nuclear plant in Essex. We are in negotiations for Sizewell C, as the most advanced nuclear project in the UK.

[Dr Whitehead]

I am afraid the Minister cannot have it both ways. Either the Bill is about financing Sizewell C or it is about financing nuclear power more generally, in which case Bradwell surely has to come into the equation. We could be committing today to a RAB model that could, in principle, help to fund Bradwell, if it goes ahead. It is part of the linked sequence that has already been agreed in heads of terms by the UK Government and the Chinese Government, effectively. He says that it is not a discussion for today, but that is true only if the Bill is just about Sizewell C, in which case his statement that the Bill is potentially about other things is not correct. Which is it?

Although the Bill is effectively about financing Sizewell C, it has implications elsewhere. The Minister says that it is not relevant because the Hualong reactor does not yet have generic approval. That is not a question of making a decision about the involvement of foreign powers or anything like that; whether the reactor gets generic approval for use in UK nuclear markets is just a technical issue. I presume that he would want the nuclear authority to take that line and to give approval, or not, on the technical merits of the Hualong reactor, not on who is running it. That is the issue, however, concerning Bradwell. It has nothing to do with generic commissioning or otherwise; it is a much bigger issue, and he needs to recognise that.

[Greg Hands]

The hon. Member is correct that this is about future nuclear projects, but I stress two things. The original question from the hon. Member for Greenwich and Woolwich was about the future of Bradwell. I am reflecting on the specifics in relation to Bradwell. Of course, nuclear projects going forward are what the Bill is all about, but I will not comment on specific projects potentially going into a RAB process, because that, as we will discover later, is a properly defined process, set out with approvals from the Secretary of State after consultations. The Secretary of State will make essentially two determinations: will the project provide value for money, and is it sufficiently advanced? It would not be proper to comment on whether a specific project that we discuss today will have the ability in future to meet the two most important criteria laid out in the Bill.

Let me say a few extra things about amendment 2. The legislation gives the Secretary of State the power to designate a nuclear company and to modify the company’s licence subsequently to include RAB conditions. The Bill requires the Secretary of State to consider the two criteria that I just mentioned when deciding whether to designate a nuclear project. The two criteria are that the development of a project is sufficiently advanced to justify the designation and that the project is likely to result in value for money.

The amendments seek to include additional criteria for the Secretary of State to consider before designating a project. As I said, amendment 2 requires that a nuclear company may not be owned by a foreign power. I have already raised concerns about the unintended consequences of that for our ability to pursue new nuclear projects in this country.

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Division 1

Ayes: 5

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Labour: 4
Scottish National Party: 1

Noes: 8

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Conservative: 8

[Dr Whitehead]

I beg to move amendment 3, in clause 2, page 2, line 14, at end insert—

“(c) the Secretary of State is of the opinion that the nuclear company is able to complete the nuclear project.”

This amendment requires the Secretary of State to give a view that a designated nuclear company is able to complete the project for which it is designated.

I am grateful to you, Ms Fovargue, for grouping amendment 3 on its own so that we can talk about it in its own right. Like the previous amendment, it seeks to add into the clause the designation of a nuclear company. We have not talked about the designation process, although I am sure we will.

The designation process is where a nuclear company that appears to have an interest in a plant, and has at least taken some steps to develop it beyond the conceptual state, is then given a preferential initial contract and a window—again, we will discuss the timescale of the window later—where it goes through the various processes of modifications of its licence to set itself up to take part in a RAB. It agrees to various things relating to the counterparty in the RAB process and agrees the initial ceiling for allowable costs for the project, which it has at the time of designation brought to a position where work can start to proceed. It is therefore on a track, but not in the RAB process at that point.

We attempted to put a third designation criterion in the clause a moment ago, which states that the designation criteria are that

“the development of the nuclear project is sufficiently advanced to justify the designation of the nuclear company”.

In other words, the project is more than just a drawing board idea. As I am sure the Minister will be painfully aware, we have had a plethora of nuclear projects in this country at various stages of advancement that have fallen by the wayside for various reasons. Some of them were relatively advanced and some were just concepts, but they were all reflected in the original planning documentation in, I think, 2011 in terms of consortia and sites and various other things that were given an overall green light in the planning process. The sites were not designated in the sense we are considering here, for nuclear development, but it is certainly true that a number of the projects suggested for those sites would not have passed the designation test before us today on the work having been done to advance the project.

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[Alan Brown]

I understand where the hon. Gentleman is going, but where is the fall-back?. The Secretary of State is desperate to get a nuclear deal signed off, so he just signs it off: “Yes, I am of the opinion that this project will be completed.” Ten years down the line, it all falls apart and the project cannot be completed, a bit like the Californian example. What protection would the amendment introduce? It seems that the Secretary of State can just sign this off based on his opinion. If there are repercussions down the line, they do not come back on that Secretary of State.

[Dr Whitehead]

The hon. Member makes an important point, at least part of which we will discuss when we come to the procedures under which a potentially failed project might be rescued or transferred to other undertakings so that it can be delivered and completed, or if already operating, can continue to operate.

[Dr Jamie Wallis (Bridgend) (Con)]

In what circumstances is it conceivable that a nuclear project would be deemed not to have a realistic prospect of completion but at the same time to be value for money?

[Dr Whitehead]

It is quite possible that the Secretary of State could deem the first two criteria on the basis of work that the company had done to approach designation. However, unless the Secretary of State has in mind the whole picture at the point of designation—in the previous group of amendments, we touched on some of the things concerning the whole picture—it would be possible for him to conclude that, yes, on the basis of the work done so far, the particular mechanisms looked like they might produce, say, value-for-money electricity at a rate per kilowatt-hour that was compatible with market levels of electricity at that point or in the future or with value for money as far as other electricity production is concerned, but he might still not have a handle on whether the undertaking that the nuclear company was about to engage in was sound in the overall, as far as completion was concerned.

The hon. Member for Kilmarnock and Loudoun touched on an important lesson in that respect, which ought to be put before the Committee. He mentioned a case in California—it was not quite in California; it was a little way a way, although it began with the same letter. I am talking about the experience of a nuclear power plant in South Carolina in the United States. When I say the experience of a nuclear power plant in South Carolina, I do not mean that—because there is no nuclear plant in South Carolina; there are a bunch of a concrete foundings, walls and various other things that look like a nuclear power station, but it does not operate, it has never produced a single kilowatt of electricity and it remains abandoned.

More significantly, that project not only was abandoned but was commissioned precisely on the sort of criteria that are contained in the Bill. All those things were gone through by the South Carolina legislature, which put in place something remarkably similar to a RAB. Indeed, the bill payers of South Carolina were required to stump up money for the project as it progressed, and I am sure hon. Members will be interested to know just how much money went from the bill payers of South Carolina to that project and how much they got out of it as a result of introducing a RAB model in South Carolina. The answer is nothing. Some £9 billion of customers’ money went into the project, and they will continue to pay for that lump of concrete for the next 20 years in their bills because of the way in which the thing was constructed, all on the basis of agreements that looked pretty similar to what is in the Bill.

What South Carolina did not do was ask serious questions about the resilience of the various partners and companies involved in the project in the light of changing circumstances in terms of the construction of the project and the health of the companies involved. Among other things, costs went through the roof, the timescale increased substantially and one of the companies that was in charge of the project effectively went bust—it called for chapter 11 protection and was therefore unable to continue with the project. All those things could have been foreseen by the South Carolina legislature, but were not. The project went ahead, with the customers footing the bill, as various reviews subsequent to the collapse of the nuclear programme said, on the basis of something that was extremely unlikely to ever come to fruition as a nuclear power plant, not only because of the dodgy nature of the financing of the project but because it had completely unrealistic timescales—those involved expected to produce electricity within six years from the start of production and so on, none of which was properly overseen.

[Alan Brown]

I appreciate the hon. Gentleman giving way once more; I am starting to feel like I am on a mission to annoy each contributor—apologies. He makes valid points, and I understand his concerns and what he is trying to do, but I still do not understand how the amendment would preclude such a scenario. Surely, as well as the amendment, the Secretary of State would need to look at a list of criteria, with their sign-off verifying what factors have been considered to reach the opinion that the project is viable. Otherwise, the Secretary of State could just say, “I think this project will be completed—let’s move on.”

[Dr Whitehead]

Yes, indeed. The hon. Gentleman is right, to the extent that the amendment does not actually guarantee the success of a project as a result of its placement in the designation clauses. Of course, it is not possible to do that, because changing circumstances can mean that projects cannot come to fruition. The difference the amendment would make is that the Secretary of State would be required to look at all those sorts of things in the overall scheme of things as far as the company and the prospects for success of a particular project are concerned, in such a way that he could form an opinion, which he would undoubtedly have to publish, that he was as satisfied as he could be, having done all that work, that the project had a very high prospect of being completed, and he would have to underwrite that.

One thing I did not say about the South Carolina project is that a lot of it is now the subject of legal action, and various state officials are being hauled up before the courts for their lack of diligence in actually looking at the overall circumstances of the project when they gave the go-ahead on a similar basis to that which we are discussing. If the Secretary of State had to sign off, on the basis of the amendment being in the Bill, that it was all okay and could go ahead, and it turned out that it was not okay and could not go ahead, under circumstances that could have been foreseen, he would then be liable. That is potentially quite an important concentration of the mind, ensuring that the work had been done, as much as it could be done—I accept that it would not be a perfect operation—to ensure that there was a reasonable or good prospect that the company involved could complete the project. That is all the amendment says. It would be an important addition to the designation process.

We need to be clear that, as much as we can do the work, we have done the work in getting the designation clearly marked on the basis that the company really can deliver a nuclear plant and produce electricity for customers. As I have said, we are engaged in a RAB process, which ultimately lands on the customers. We absolutely do not want to ever land the customers of the United Kingdom in the same position that the customers of South Carolina are in today, so far as a nuclear power plant is concerned.

Ordered, That the debate be now adjourned.—(Mark Fletcher.)

Oral Answers to Questions

Alan Whitehead Excerpts

Tuesday 16th November 2021 Commons Chamber

[Greg Hands]

My hon. Friend is absolutely right that we will always prefer British gas production to foreign imports. Some 50% of the gas we currently consume comes from the UK continental shelf, with an additional 30% from Norway. My hon. Friend is right to mention the transition; I know how much he fights for his constituency’s huge extent and variety of energy producers. Earlier this year, we were delighted to agree the North sea sector transition deal, which will offer a fantastic future for my hon. Friend’s constituents and those right across north-east Scotland.

[Dr Alan Whitehead (Southampton, Test) (Lab)]

I think the technically correct answer to the question posed by my hon. Friend the Member for Birmingham, Ladywood (Shabana Mahmood) is (a) none and (b) none.

The Secretary of State claimed that he was in talks with the Treasury about assistance for energy-intensive industries a month ago; it turns out that he was not, and nothing has happened since. Meanwhile, wholesale gas prices remain at around 200p per therm, compared with 39p per therm a year ago. Industry is suffering grievously and 40% of energy companies have now gone bust, leaving more than 2 million customers without a supplier and forced to take on new suppliers, often at great cost to their bills. Even with the price cap, bills are likely to rise by a further £200 in the spring. This is a train wreck, so what is the Minister doing now to rescue passengers from the carriages and put the rolling stock back on the lines? Or will he just continue to act the part of a disinterested bystander?

[Greg Hands]

That allegation is rather unfair. We are engaging continuously with the Treasury on these matters. We have already put in place £2 billion of funds to help with the cost of electricity and to protect jobs. We have the £350 million Industrial Energy Transformation Fund, and the Under-Secretary of State for Business, Energy and Industrial Strategy, my hon. Friend the Member for North East Derbyshire (Lee Rowley), meets regularly—and has done so very recently—with the Energy Intensive Users Group.

Nuclear Power Funding

Alan Whitehead Excerpts

Tuesday 9th November 2021 Westminster Hall

[Dr Alan Whitehead (Southampton, Test) (Lab)]

I have been confused in the past with Phillip Whitehead, the MP from some while ago, and also I have been called Alan Whitehouse on a number of occasions, which is a slightly less felicitous comparison.

I am delighted to say a few words on behalf of the Opposition. First, I congratulate the hon. Member for Ynys Môn (Virginia Crosbie) on securing this debate, and on putting her case so well and succinctly. She is a powerful advocate, from the point of view of her constituency, for the future of Wylfa nuclear power station. I share her great concern that what looked like a future for the new Wylfa power station a little while ago was dashed in the way that it was. I had conversations about that with her predecessor, Albert Owen, who was also a strong advocate for Wylfa and the area.

The case the hon. Member makes is essentially about how Government can secure the future of power stations by ensuring that they are financed and organised in the best possible way so that they actually do go ahead. The UK has had a serious problem over the past 10 years or so. Originally a number of consortia were interested in bringing forward a nuclear power station. There was the Horizon consortium, associated with Hitachi, which brought forward the Wylfa proposals. There was NuGen, associated with Toshiba, which brought forward proposals for a power station at Moorside. There was also, of course, the EDF consortium, which at the beginning of the decade brought forward proposals for Hinkley C, which is now being built, for Sizewell C and for Bradwell in Essex.

All of those consortia have, in one way or another, bit the dust. They have suspended their operations. In the case of Wylfa, the Horizon consortium first suspended operations and has now this year finally declared that it no longer has an interest in Wylfa as part of its future nuclear programme. All of that came about essentially because of the Government’s insistence on trying to secure new power stations by means of private sector investment. Wylfa and Moorside were closed down even after discussions with Government about assistance; the consortia did not like the way in which the arrangements would have been structured. There were some quite high-level discussions with the Japanese corporations involved in both of the consortia that I mentioned. A combination of their own balance sheets, their ability to fund those projects themselves and what they thought was on offer from the UK Government led them to decide that the projects should not go ahead.

As the hon. Member for Ynys Môn mentioned, building and financing a nuclear power station is a really hefty commitment. One has to put the money forward and not get any return on it for about 14 years, while the processes of generic agreement for the reactor, planning, construction and so on all proceed. One does not make a penny from the production of electricity from the power station before that. We know that funding new nuclear by private sector means is not a viable way of financing new nuclear. We must put that behind us.

EDF is building Hinkley C power station partly with its own finances, and that has caused a lot of problems for the viability of the company as a whole. However, it is aided in this build by a second form of nuclear financing, which is, effectively, a foreign Government part-financing the operation. In this instance, that is the 35% interest in Hinkley of the China General Nuclear Power Group, which was the result of a deal brokered by the then Chancellor, George Osborne, in 2015. The Chinese state nuclear corporation would have a 35% stake in Hinkley C, a 20% stake in Sizewell C and complete control of the third programme in that consortium’s plans, the Bradwell power station, whereby the China General Nuclear Power Corporation would install its own reactor—known as the Hualong One, I think—and have complete control of the financing, the planning and the operation.

As we have seen, that way of doing things appears to no longer be regarded as tenable. The Government have not said this explicitly—it would be interesting to hear whether the Minister is able to do so this afternoon—but the Bradwell proposal under Chinese control is no longer a reality because of the Government’s desire to remove Chinese influence from the future of the UK nuclear programme. I am sure we will discuss that further when we debate the Nuclear Energy (Financing) Bill over the next few weeks, as mentioned by the hon. Member for Ynys Môn. That second financing option—namely, getting a foreign Government involved—is probably not a good idea. As the hon. Member for Paisley and Renfrewshire North (Gavin Newlands) said, the latest Budget costings include a sum of £1.7 billion, which I understand is to be put towards not only the development of and early works on Sizewell C, but buying the Chinese out of their Sizewell stake. I do not expect the Minister to confirm whether that is the case, but I think it is fairly probable that at least part of that sum will be directed towards removing that 20% stake from Sizewell C.

Further on financing, there is the possibility, as was tried with Hinkley, of funding the end product of the power station—that is, the energy that comes out when the permissions, the planning and the construction are finally complete. In the case of Hinkley, that will happen a long time after the original date of 2026 or 2027. I distinctly remember the then chief executive officer of EDF saying we would be roasting our Christmas turkeys on new nuclear power from Hinkley C in the winter of 2017. That is how far they are behind the original plans. I have on my wall the chart of the original EDF plans for the development process for Hinkley.

As the hon. Member for Paisley and Renfrewshire North said, the contract for difference arrangement for Hinkley was probably one of the worst deals that could be entered into for nuclear funding. Although it was supposed to introduce a back-loaded arrangement to secure the price for production and therefore increase investor confidence that the project would generate income when construction was concluded, the deal struck was disadvantageous for the customer and for this country’s electricity production. The CfD deal is at twice the likely market price for electricity over the period, and we are stuck with that for 35 years down the line. It is very unlikely that such a deal would be repeated, especially since it does not overcome the problem of how investors get any money back from their investment before the plant has started production. Hence the RAB—regulated asset base—arrangement that the Minister and I will discuss over the next few weeks as the Nuclear Energy (Financing) Bill makes its passage through the House.

The RAB arrangement has advantages and risks. An advantage is that it enables investors who might not have put their money into Wylfa or Moorside to invest in a project because they know they will begin to get a return on their capital before production starts. The RAB model, among other things, allows that to happen by setting, as the hon. Member for Ynys Môn mentioned, an allowable cost ceiling, which enables that cost to be distributed throughout the life of the project rather than only at a certain point. It has a substantial advantage from that point of view, but at the same time it has risks. It is a deal that lands on the public consumer’s purse. It effectively puts a levy on energy bills for the whole life of the project––40 years from now for Sizewell C––on consumers’ backs at various levels at various points of the process. There is a high levy during construction and a tail-off as the project proceeds.

Should the project not go well––go over cost or, as at Hinkley, go well over time—there is an increased risk to the consumer. There is an even worse risk if the project does not go ahead, as was the case with a couple of projects in the United States that were built on the RAB model. Consumers then have nothing to show for a large amount of money they have spent in their bills in the expectation that there might be a plant that would give them cheaper electricity in the end. I know that the Government have taken some steps in the Nuclear Energy (Financing) Bill to mitigate that risk and ensure that there are ways out of a company being unable to deliver. Nevertheless, the risk remains. Using RAB repeatedly for new projects simply adds to the cost of consumer bills by aggregating the total levies, making it potentially even worse for the consumer, if that is the model that is proposed.

That leaves one method of financing, which is simply that the Government pay for the construction of a new nuclear power station and then lease it out to the operator at the end of the construction period. I am not suggesting that the Government get together their own workforce to build it. They would put the contract out for bids to build the power station, which would be owned by the public and leased out for operation. That will have to be considered for any further nuclear power stations, rather than these various devices that, to a greater or lesser extent, have either failed or have some risk attached to them.

From our side, as the Minister knows, we gave the Second Reading of the Nuclear Energy (Financing) Bill a clear run and we look forward to Committee discussion when we deal with some of the finer points of RAB. Nevertheless, we will go forward on the basis of a supportive environment for the construction of Sizewell C, since it is the only nuclear power station that could conceivably get under way before 2030, because of all the other withdrawals.

We look forward to our debates in the House and to discussing some of the issues I have raised this afternoon about how best to finance nuclear power for the future. The hon. Member for Ynys Môn made a powerful case for ensuring that Wylfa at least gets noticed in the next phase of discussions, but I suspect that if that happens, it may be under yet another model of financing and different from Sizewell C’s.

[Mr Virendra Sharma (in the Chair)]

Before I ask the Minister to respond, I would appreciate him leaving a few minutes for the hon. Member for Ynys Môn (Virginia Crosbie) to wind up.

Fireworks: Sale and Use

Alan Whitehead Excerpts

Monday 8th November 2021 Westminster Hall

[Dr Alan Whitehead (Southampton, Test) (Lab)]

The debate has been characterised by passion and unanimity. Across the House, hon. Members have joined together to say two things. No. 1 is that none of us is in the business of saying that fireworks should be banned completely. The way in which the debate has been characterised in some areas is a severe misrepresentation of what people are saying across the piece. The second issue on which there is pretty much unanimity in the Chamber is that the status quo cannot prevail in the end. It really is not acceptable to carry on in this way regarding firework displays.

I think today’s debate is the sixth on this subject. I cannot claim that I have been present for all of them, but the cast assembled for last year’s debate was pretty identical to today’s. Certainly I, as the Opposition spokesperson, and the Minister were in identical places. I hope we were not saying identical things, but I fear that we are looking at yet another identical response this evening to what hon. Members are saying. What I said last year pretty much coincides with what hon. Members have been saying across the Chamber. As the petition says, there is a strong case for looking at restricting firework sales to organised displays where we can be confident about the quality and safety of the display, and the extent to which proper arrangements, such as notice in advance, will be made that will allow fireworks to be enjoyed, as they should be, in both safety and reasonable peace.

[Jim Shannon]

The hon. Member for North Ayrshire and Arran (Patricia Gibson) referred to legislation in Northern Ireland. I just want to say that there is a reason for that: the terrorist campaign. The legislation in Northern Ireland works. It does not stop people getting fireworks, but they have to buy them under licence and it is controlled. Does the hon. Gentleman feel that that should be the example for the whole of the UK, England in particular?

[Dr Whitehead]

There is a strong case for looking seriously at what other legislatures have considered on fireworks and taking from them the sense that is embodied in their legislation. We should make evidence-based inquiries into what other legislatures, such as Northern Ireland, which the hon. Gentleman mentioned, and Australia have done and the effect of their legislation on the enjoyment of fireworks in those countries. As far as I know, that has not been done in the UK. It continues to be an area of silence, shall we say.

I am afraid that there are other areas of silence in terms of getting an evidence base together, as I have mentioned previously, particularly last year. The first is that we have heard, and continue to hear, about the effect of fireworks on domestic animals. We heard powerful testimony not just on domestic animals, but on the effect on children and people with mental health issues such as post-traumatic stress disorder. We have not heard about––there is little research on it––what the random use of fireworks does to wildlife. We know virtually nothing about that, yet we continue to allow random instances of letting off very noisy fireworks in both urban and rural areas, which I imagine has a substantial and continuing effect on wildlife.

We also have little information about the climate effects of fireworks, in terms of their constituents and their residues. We know that they put a great deal of CO₂ into the atmosphere on fireworks night and that the atmosphere changes quite considerably the morning after. We must think of the effect of the chemicals in fireworks on the environment, on which several environmental organisations have commented.

Above all, we know from our direct experience––I can comment from my own constituency experience––just how inappropriate it is that we are subjected to the unconscionable noise of fireworks every year. As hon. Members have said, it is not just on 5 November, the lunar new year or Diwali but throughout the year. It is acts of extreme noise spaced regularly across the year.

On Friday—I cannot blame my constituents for this, because I was just over the border in the neighbouring constituency, so the 550 people from Southampton, Test who signed the petition were not responsible—there was a private display 100 yards away from my constituency. I do not know whether it was a legal or illegal firework, but an airborne firework made repeated noises six or seven times that echoed across the entire neighbourhood. It was the equivalent of a pretty loud military explosion taking place just down the road from where I live. I cannot believe that we find it acceptable these days for those kinds of fireworks to be readily sold and readily set off in private displays, and something has to happen about it fairly urgently.

In his response to a Westminster Hall debate on fireworks last year, the Minister claimed that some progress had been made in this area. He said:

“Fireworks clearly require some explosive content to be set off. However, as part of the evidence-based work, we have commissioned a test of fireworks to determine the range of decibel levels, and that will help to identify a lower acceptable decibel level. It will also look at the potential impact of such a classification. We will publish the report based on that work in due course.”—[Official Report, 2 November 2020; Vol. 683, c. 19WH.]

I am not aware that the report based on that work has been published. If it has been published, I am not aware that anybody has drawn any conclusions yet about what an acceptable decibel level might be and what the potential impact of such a classification might be. Will the Minister tell us where the report is? If it has been published, what conclusions is he drawing from it? If it has not been published, will he hurry up and ensure that it is published? When it is published, will he also publish what the Government think are acceptable decibel levels for fireworks? That is the nub of the issue.

[Alison Thewliss]

The hon. Gentleman is making a very good point about decibel levels. I am aware of somebody who bought some fireworks on the basis that they were being marketed as reduced-noise fireworks. When they were set off, the person was mortified to find out that they were actually louder than the ones that would have been bought originally. Perhaps there needs to be more regulation, even on that matter.

[Dr Whitehead]

We clearly need legislation from the top that, first, enforces who lets off fireworks and where and that, secondly, enforces how noisy and disruptive those fireworks might be. We certainly have what I would call firework washing going on at the moment, whereby some fireworks are claimed to be less noisy but are not. There is no objective measure or enforcement that we can take to ensure that the claimed levels of noise are accurate, and we still have the problem that enforcement is down to local authorities, the enforcement bodies of which have been starved of money for many years and are really hard pressed to take meaningful action on firework displays, particularly in private areas. We clearly need something from the top in order for us to get going on the road to safer, more acceptable and enjoyable firework displays across the country. That has to come from the Government, and it has to come shortly.

I do not want to be here yet again next year saying the same things, and I am sure that hon. Members do not want that either. We want to be here when the tests on decibel levels have been completed, when there is a conclusion about decibel levels, and when there is perhaps legislation on the statute books, or on the way to the statute books, that starts getting the guidance that can shape our firework displays properly for the future. I commend my hon. Friend the Member for Luton North (Sarah Owen) for her private Member’s Bill, which I hope will go a long way, if successful, towards getting some of these things under way. But as she said, however valiant the intentions with which private Member’s Bills are put forward, rather like fireworks they land with a thump on the ground after initially going off quite brightly.

We need Government assistance in this area now, and I hope that the Minister will be able to say today just what is in train and what will be coming forward, both in terms of evidence and action, over the next year.

--- Later in debate ---

[Paul Scully]

We are never going to get a perfect situation. It was terrible to hear what the hon. Lady faced. One Member talked about the Republic of Ireland having tougher restrictions than we do, and it was terrible that only last month a lady in Galway had a firework fired into her face. Even with those tougher restrictions, there is no perfect situation, but we need to take an evidence-based, careful, proportionate approach. As I say, there is always more we can reflect on, but local police are best placed to understand what is driving the behaviour in question and the impact it is having, and to determine the most appropriate response.

[Dr Whitehead]

I hope that the Minister will not conclude his remarks on the question of evidence-based activities without saying where the report he mentioned last year actually is, and what he intends to do about it.

[Paul Scully]

I was not going to. Let me tackle that issue now: I talked about the fact that legislation already exists to limit the noise levels of fireworks available to consumers to 120 dB, and we said that we were going to work on a report on that topic. I freely admit that that report has not been published: the testing work on the noise was delayed due to covid and adverse weather conditions impacting the laboratory’s ability to carry out the necessary testing. However, the result of that testing will be available in due course, and we will reflect on what is in that report as we proceed.

Draft Green Gas Support Scheme Regulations 2021

Alan Whitehead Excerpts

Wednesday 3rd November 2021 General Committees

[Dr Alan Whitehead (Southampton, Test) (Lab)]

The subject that we are

talking about this morning is, as the Minister mentioned, green gas and how we can best incentivise the processes by which it is produced, which is primarily anaerobic digestion. He mentioned that biogas plants and biomethane plants are predominantly situated in rural areas. Indeed, a fair amount of the biogas produced in this country essentially comes from farm AD plants. Those who follow “The Archers” will remember the considerable controversy about a biogas plant around the village. Essentially, it is an arrangement whereby waste—farm waste, food waste and a number of other processes—can contribute through a biodigestion process, which does not involve burning or emissions in the sense that incineration has previously, and can be converted into biogas, which can, under many circumstances, be injected into the system.

As part of my exciting life as shadow energy Minister, I visited a large anaerobic digestion plant near Poundbury that has for a number of years very successfully processed food waste particularly and crop waste, which I will come on to in a moment, into biogas, which is then injected into the system, initially around Poundbury but covering quite a lot of the grid on a good day. The system works really well and, as the Minister said, produces substantial carbon savings by the process of injecting biogas into the system, thereby replacing the gas that is going into it at the moment. I therefore thoroughly endorse the intention behind the green gas support scheme, designed to bring on further those anaerobic digestion plants, which can substantially replace elements of our gas distribution system by the process that I described.

I do not have many criticisms of how the scheme has been set up, save for two potentially important ones. The scheme is set to last, as the Minister said, until March 2041, and the individual support that it will produce will be for 15 years, so the producers will have a good line of support in green gas plants as they build them and production gets under way. However, as he also mentioned, that is being underpinned by what we might say is yet another levy. The Minister mentions that the cost of the levy will be perhaps £2.50 a year on gas bills. This is a gas bill levy for green gas production, which sounds a fairly neat connection, but in practice the vast majority of bill payers pay a dual fuel tariff for energy, so in that instance, a levy is a levy is a levy; it will go on that dual fuel bill in exactly the same way as the substantial levies that are already on electricity bills.

I understand that the Government are considering a migration of levies from electricity bills to gas, but this is not a migratory levy; it is a new levy. Some while ago, the Government told me that that would not happen—there would be no new levies. Indeed, I have had some fairly arcane discussions in Committees and elsewhere about what is a new levy and what is not. The principle that we should not continue to put levies on customer bills as a way of funding new schemes was reasonably well established in those discussions. However, here we have a new levy. By the way, this afternoon, as I am sure the Minister is absolutely aware, we will discuss a possible further substantial levy for new nuclear build. We have a situation in which levies on customer bills are pretty substantial. I appreciate the Minister stating that this is not what he might call a serious and heavy levy, but it nevertheless represents a not insubstantial increase on customer bills over the period.

The previous support scheme—the non-domestic renewable heat incentive—which at least to some extent supported anaerobic digestion production was not a levy; it was funded from general taxation. I would be grateful if the Minister briefly expanded on the decision to make this transfer from general taxation, as was the case for the renewable heat incentive, to the levy that we are discussing. On reflection, the Minister might consider that, certainly in the long term, this scheme might be best funded through general taxation, rather than continuing with the levy.

My second question for the Minister is rather more detailed and relates to the purpose of the levy, which is to produce biomethane for injection into the grid. The explanatory notes for the draft regulations state that support payments will only be made for biomethane injected into the grid. That sounds fairly straightforward, but we need to reflect on two things. First, biomethane does not necessarily go exclusively into the grid. That is a substantial part of its purpose, but it has a number of other destinations as well. Biomethane can and is being used to fuel gas engines for district heating schemes as a replacement for the gas going into the engine, so the replacement arrangement is exactly the same as if that green gas went into the grid, but it is going into a mini-grid, as far as district heating is concerned.

There are a number of instances whereby methane is being used on-plant for purposes related to industrial commercial activity. Near my constituency, there is a biomethane plant that is associated with a water company’s sewage treatment arrangements, which produce biomethane that is used in the plant to continue the water company’s activities. As the Minister will know, the gas grid by no means covers the whole country. There are a substantial number of properties that are off grid and there is certainly the beginning of an industry where biomethane can be supplied as a replacement for tanked or bottled gas going into those properties for heating purposes.

Important as those categories are for reducing carbon emissions, driving out traditional gas and replacing it with low-carbon gas in exactly the way the scheme intends, none of them would, in my understanding, qualify for support because of the suggestion in the guidance that only direct injection to the grid would qualify for support. Can the Minister reflect on that and let me know whether he is prepared to consider—not necessarily today but for the future—a review of those arrangements so that where biogas is being produced and is not necessarily going into the gas grid, it can nevertheless remain supported or be supported? I think we can all agree that the direction of the biomethane is essentially the same. It is a scheme that undertakes reduction of emissions through biogas production in substitution of gas.

[Jerome Mayhew (Broadland) (Con)]

In support of that latter argument, I draw attention to British Sugar’s Cantley factory for sugar-beet processing in my constituency, which wants to put in an anaerobic digester. It is on the gas grid but it is a mile away from the main pipe. It is currently faced with the prospect of building a new pipe for a mile to connect the anaerobic digester to the grid, then take it back off the grid a hundred yards further down the pipe and bring it a mile back to the factory.

[Dr Whitehead]

The hon. Member emphasises the point that I was making, which is that quite a lot of biomethane production cannot easily be categorised as simply going into the grid. He has given a good example near his constituency, which substantially underlines my point.

The other matter that I want to raise briefly is the definition of feedstock for anaerobic digestion plants. According to the guidance notes, biomethane producers will be required to produce

“at least 50% of their biomethane from waste or residue feedstock.”

I assume that that means primarily food waste, but also farm waste and other residues. However, as I am sure the Minister understands, it is a little difficult accurately to determine what is and is not waste in relation to those categories. For example, I assume that forest trimmings, which can be used in certain circumstances for biomethane production, would be regarded as waste, but chopped-up wood would not be regarded as waste. Food waste, as the Minister will know, can be categorised both as proper food waste and as food waste that actually has not been used for food production but could quite well be used for food production in different circumstances. Therefore I wonder whether the Minister is satisfied that the definitions that there are in the scheme adequately determine what is and is not waste in relation to the 50% requirement.

I support the 50% requirement, because we do not want to see crops that could go into other activities being used to feed biodigestion either because the supply of waste is not good enough or just because people want to put the crops into the biodigester as an easy way of producing bioenergy, at the expense of feedstock that could be used for other purposes. It is a question of ensuring that the scheme is as well defined as it can be. I wonder whether the Minister has any comments to make on that in order to ensure that we get off to the best start possible with the scheme.

Other than having those hopefully brief and not very taxing questions, the Opposition support the green gas support scheme and we support that scheme starting as soon as possible in order to ensure that biodigestion takes its proper place in the panoply of measures that can lead us towards net zero in a coherent way.

Nuclear Energy (Financing) Bill

Alan Whitehead Excerpts

2nd reading
Wednesday 3rd November 2021 Commons Chamber

[Dr Alan Whitehead (Southampton, Test) (Lab)]

Labour believes that new nuclear has an important supporting role to play in the energy mix, alongside the decisive shift to renewables that we need to deliver the climate transition and secure our energy security. As set out by the Climate Change Committee, we need all the low-carbon power sources at our disposal to deliver the rapid and fair transition that is required.

I am sorry that the Minister, in presenting the Bill, has chosen the partisan knockabout route, rather than giving it the serious consideration that it deserves. If we want to go down that path, we can reflect on the decade of dither and delay on the Government’s part, with mixed messages from the Conservative Government on new nuclear. The result is that, after 10 years, we have one half-finished nuclear plant, which is funded by a mechanism that, as the Minister himself accepts, is quite disastrous in terms of future prices. The record of this Conservative Government on new nuclear is frankly very poor. At last we have a Bill that might rectify some of that poor performance over the last 10 years. We need to support the need to finance new nuclear. We will scrutinise this Bill to guarantee fairness for bill payers, including protecting consumers against any potential cost overruns, protecting the poorest households, and scrutinising the balance between public spending and bill payers.

It is welcome that at long last we are coming to the key issue in nuclear power, which is how we build the power stations that we seek to place in the mix of low-carbon energy for the future. We know how not to do it, as I mentioned. We have already seen from the passage of building Hinkley C, and the disappearance of many nuclear projects and programmes, that the model that the Government have long stood for—that power stations should be built entirely by the private sector, and that private-sector security can be bought by price mechanisms that grossly inflate the cost of energy to the customer in the end—is highly flawed.

We are facing a last-chance saloon for new nuclear build that requires us to throw away those principles and start again, because most of the programme of new nuclear power stations that the Government have been envisaging over the past 10 years has been washed away. As late as 2018, there were possibly three consortia actively pursuing an interest in building five new nuclear power stations. These have progressively fallen by the wayside. Consortia have fallen apart, companies with an interest in financing projects have pulled out, and we are now left with one proto-consortium—effectively just EDF—building Hinkley C and with active plans to build a new power station at Sizewell. It is not only an active interest. Sizewell is designed to be effectively a clone of the plant that is currently being built so that it can start to build as Hinkley completes its construction phase and the workforce currently undertaking construction at Hinkley can transfer to the building of its clone at Sizewell.

We ought to add two other factors that will have a substantial bearing on how we proceed with building plants—or in this instance, a plant, because that is all we have under consideration right now. First, the consortium proposing to build Sizewell is not exactly champing at the bit to finance it. EDF has effectively mortgaged itself to the hilt in financing 65% of Hinkley C and has stated unequivocally that it is not about to do the same with Sizewell C. Secondly, we still have the arrangement in place concluded by the then Chancellor George Osborne to arrange a fast track into the heart of our nuclear programme for the China National Nuclear Corporation via a Secretary of State’s investment agreement to help fund Hinkley C power station to the tune of 35% of the upfront capital; 20% of the second in the EDF consortium’s programme, Sizewell C; and the big prize for the Chinese—control of the financing, build and running of a third nuclear power station at Bradwell in Essex, which is now unlikely, to the point of impossible, to happen.

It is likely that the Chinese will not be able to get their hands on a real nuclear power station all of their own and they will not be investing into 20% of Sizewell—indeed, the Government seem to have set aside £1.7 billion in the Budget to buy out their interest in Sizewell C. Labour has long warned that the Government are playing a dangerous game when they outsource the funding of critical national infrastructure to foreign Governments. We are now seeing the results of a decade of Conservative Governments doing exactly that, and mostly failing to get anywhere. There we have it in terms of the UK’s nuclear programme for the foreseeable future—only one plant in prospect for a start before the late 2020s.

[John Redwood]

The shadow Minister is very thoughtful on these matters. How much standby capacity does he think we need to back up the wind and solar that will be the majority of our generation in due course?

[Dr Whitehead]

Interestingly, the Climate Change Committee, which has looked into this matter in great depth, considers that in the overall long-term future make-up of our energy mix, about 8 to 10 gigawatts of standby power—therm power—is likely to be required in the shape of new or existing nuclear power stations. That is about the size of the difference with an overwhelmingly renewable but variable economy, with elements of firm power backing it up.

I have mentioned that one plant only that would be included in the suggested 8 GW to 10 GW is in prospect for a start before the late 2020s, because every other proposal has fallen away. However, it is not financed and is probably not financeable by private capital. It is only part financeable by a state financer, with which we do not now want to do business. Let us be clear before we go any further: this Bill is about finding a formula to fund and build Sizewell C power station. Whatever its generic pretensions, that is the issue we should be concentrating on. Even so, getting that plant going would cover most of what the Climate Change Committee considers is the presence in the mix needed.

[Dr Dan Poulter (Central Suffolk and North Ipswich) (Con)]

Before the hon. Gentleman moves on from discussing the financing for Sizewell C, does he agree that it is important, when we are talking about financing, that the financing is not just in place for the build of the power station itself, but for the necessary infrastructure and mitigation measures for the local communities in the area, who will be suffering from construction traffic and the like for potentially a 12-year period?

--- Later in debate ---

[Dr Whitehead]

The hon. Gentleman is right to say that the build cost and financing of a nuclear power station has to include not just the obvious things that we think are associated with a nuclear power station, but all the other infrastructure around that nuclear power station and contributions to decommissioning costs. That is what we are talking about in terms of an overall financing package, and that is why a financing package has to last over the whole life, effectively, of that nuclear power station. I do not intend to move on from the financing of Sizewell C, because that is essentially what this Bill is all about. It is about all those things that the hon. Gentleman mentions, so far as that particular project is concerned.

This plant, if it goes forward—we hope it will go forward with something like this kind of financing—would cover a substantial part of what the Climate Change Committee considers necessary in the mix of low-carbon energy to drive power towards net zero by 2050. I have mentioned that it thinks about 8 GW to 10 GW of new nuclear power would be needed to complement a predominantly renewable power line-up so that firm power considerations are met, without being in such numbers that it puts the development of renewables into jeopardy. That 8 GW to 10 GW includes new nuclear power, but also the one existing power station that will probably last beyond the 2030s in Sizewell B.

Hinkley and Sizewell C together therefore would go a long way towards meeting that assessment by the end of the decade, with two 3.2 GW power stations with reactors in each, and the remaining Sizewell B power station continuing in action. It is not surprising then that we are talking about nuclear financing, which is pretty much all the Bill covers. Exam question: how do we finance an unfinanceable nuclear plant when we know we have got to do it because there is no other option? Even if we did decide to repeat the frankly disastrous device of providing a CfD for the plant at Hinkley, which is likely to produce power at twice market cost, it still would not work, because that does not solve the problem of getting investors into the plant for the lengthy period before production starts. There are ways in which nuclear finance can be sorted out.

[Jonathan Edwards]

I thank the hon. Gentleman for the very considered manner in which he is presenting his case. Is there anything in his mind that would stop the UK Government using this new financing model for other technologies, such as the tidal lagoon in Swansea, or is it blatantly unfair that one technology has a very favourable financing scheme, while another technology that could provide many of the solutions that he seeks is stuck on contracts for difference?

[Dr Whitehead]

The hon. Member mentions tidal power. Of course, a regulated asset base system can be used for any sort of major infrastructure project—and indeed has been already, as I will come to. I do not see the discussion on that system as being about just nuclear power, but a method of funding a large infrastructure project that has certain requirements that must be met by continuous funding throughout its operation. He is right that infrastructure projects other than nuclear in the energy sector could and should be funded by that system.

The National Audit Office discussed those options when it reviewed the decision making and value for money that the CfD process for Hinkley entailed. The route adopted by the Government, after much internal wrangling and delay, is a regulated asset-based model that is essentially constructed along the lines that it has been used for already in capital projects such as Heathrow terminal 5 and the Thames Tideway project. That is, the whole project is part-funded by the proceeds of a levy on bills. The levy varies in size during different phases of the project and, in the latter phases of production, lowers or even goes negative if the project’s income exceeds the ceiling of allowable costs under RAB.

There are substantial advantages to the RAB model for making the project investable. It provides returns for investors as the project proceeds rather than at the end of it, as does the CfD model, which allows investment to be brought into the frame for the project from sources that might otherwise baulk at the timetable between investment and return. It also reduces the hurdle rate for investment in the project, thereby in theory substantially reducing the overall cost of financing the project and likely resulting in cheaper prices for the energy produced by the plant.

There are also substantial risks with RAB that need to be managed. It places the cost and risk of financing the project on the shoulders of customers, in this instance electricity bill payers, which adds to bill costs through a levy on their bills before anything has materialised. In the event of the plant not being completed, it lumbers them with bill costs without the benefit of the plant for which they have paid producing relatively cheaper electricity.

RAB also adds to the burden of bills unpredictably if the project overruns on cost or time—both of which, as we know, nuclear plant development is rather prone to. The extension of the construction period for a project, when the highest effect is felt on bills, lengthens that higher take period. An increase in cost may also cause revisions to be made to allowable costs ceilings, and hence cause heavier costs on bills.

We are in somewhat uncharted waters with a project such as Sizewell C because of its size, complexity, timescale and investment costs compared with the more modest sums and shorter timescales involved in existing RAB projects. Nuclear power stations elsewhere in the world have been funded along RAB lines, but have simply not been completed, which has left consumers with a huge bill and no benefit.

In short, we need to go into this kind of arrangement with a clear eye about the advantages and risks of a RAB model for nuclear. As far as we can, we should attempt to mitigate the risks and play up the advantages. It is workable, but only if the Government have a serious plan.

The Government have sought to alleviate at least some of the disadvantages by introducing to the Bill a special administrative regime for the project in the event of a failure of the company involved during construction. We will look carefully at those provisions, but they seem to be a useful commitment to ensure the robustness of the overall project, even if its prime developer fails to deliver. We also accept that provisions in the Bill on who may be involved in legacy and decommissioning costs will help to clarify the risks for security trustees and secured creditors.

There is much to agree with in the Bill, given the evident need to secure a mechanism that enables Sizewell C to be developed and come into production at a reasonably early date. There are measures to lower the overall cost of the project so it is investable and less price inefficient than its immediate predecessor, and to ensure that the project stays on track and delivers at the end of it. However, there are still many questions to be answered, particularly on the robustness of the RAB model under circumstances where the inevitable “optimism bias” of project costings—that candid acknowledgement comes from the Bill’s impact assessment—proves to be disadvantageous and costly to consumers who, after all, are supposed to be paying up for a benefit later on. It is important that we look at such matters carefully, with a clear eye on consumer protection, and do not just assume that the mechanism will milk customers for whatever it takes to produce an outcome in the end.

We need much greater clarity about the Government’s intentions on the difficult situation concerning Chinese investment in Sizewell. That may not be central to the Bill and the RAB model, but it is indirectly affected. The project’s overall shape will be affected by whether the Government take over the Chinese share, offer it to other investors or even calculate that RAB is a sufficiently powerful tool to enable investors easily to come in and scoop it up once the Secretary of State’s investment agreement provisions are untangled. We need to know in the Bill’s early stages what the Government will do about that and through what mechanisms.

As the Bill progresses, the Government can expect Labour’s overall support but also a proper, critical eye on aspects of the mechanisms they are adopting and a particular emphasis on protecting the people, who will either stand to benefit from a reliable power station producing needed energy at reasonable cost if it goes right or suffer grievously if it goes wrong. In other words, the customer must be first in our minds in taking such decisions, and we will stand up for them as the Bill progresses.

--- Later in debate ---

[Mr Deputy Speaker (Mr Nigel Evans)]

We now come to the wind-ups, but the shadow Minister is slightly detained.

[Dr Whitehead]

He’s gone to the loo, Mr Deputy Speaker.

[Mr Deputy Speaker]

He has, yes.

Climate Change Committee Progress Report 2021

Alan Whitehead Excerpts

Thursday 21st October 2021 Westminster Hall

[Dr Alan Whitehead (Southampton, Test) (Lab)]

Thank you, Sir Christopher. I am always guided by your wisdom. I will attempt to restrain my remarks as much as possible, although, I am not sure whether I can get them done in 45 minutes. I hope I will be much briefer than that, because quite a lot of what I wanted to say this afternoon has already been said. That is a reflection of the very high quality debate that we have had.

I do not want to go overboard about this and start saying things such as, “Better fewer, but better”—better being the watchword for these sorts of occasions—which is actually a quote from Lenin, but it reflects very well on the Members present. I could not have asked for a better group of parliamentarians to debate this issue. Between us, we have addressed in a sober manner both the pluses and the minuses of where we stand on emissions. For the second day running, I congratulate the hon. Member for South Cambridgeshire (Anthony Browne) not only on securing the debate, but on the quality and content of what he had to say. I know that is probably a career-limiting move on the part of an Opposition Front-Bench spokesperson, but I really think that the hon. Gentleman did ample justice to his brief, albeit perhaps he pulled some punches a little because of his party political position. Overall, his speech was a sound and good exposition of both the pluses and minuses of our progress on climate change.

[Mrs Sheryll Murray in the Chair]

I will come back to one or two things that the hon. Gentleman said, but I also want to say that valuable additional points were made by Members from my party and the Scottish National party. My hon. Friend the Member for Rochdale (Tony Lloyd) emphasised the importance of buildings, heat pumps and the seismic change in delivery that we have to get into over the next period. Those were well made points, which reflected how we talk about what we have achieved so far and what we have to do in the future. That is a central point in our discussions.

My hon. Friend the Member for Bristol East (Kerry McCarthy) made some important points about transport and the difference between what we think we have achieved by putting something down on a piece of paper, and, when we follow it through, where we think that has got to. That was exemplified in her comments on the 900 buses that have allegedly been procured. Indeed, I was present at the visit to the buses yesterday, along with her and other hon. Members. That exemplified that we have some things that are an obvious next step in the decarbonisation of the transport sector. If it is possible to embrace an entire bus, we should be running off with those examples and planting them everywhere in the country as quickly as possible, yet we appear to be falling down badly in terms of how we roll out that fine ambition over a period of time.

My hon. Friend the Member for Leeds North West (Alex Sobel) emphasised the role that local government and a cross-departmental approach can play in the fight to reduce emissions across the board. He made a number of very telling points about what local government can and cannot do, and how much needs to be entrusted to local government in order to bring about emissions reductions.

I return to one or two of the comments made by the hon. Member for South Cambridgeshire. He made the important point that if we are to have a balanced assessment of where we have come from and what we are trying to get to, we should neither condemn a Government—or, in this case, the two Governments we have had from the turn of the century to today, or three if we count the coalition—for doing nothing, nor praise them for doing everything. We have to have a clear line between those two positions to make a sober assessment of just how much we have to do, and to place our successes and failures so far in context.

As the hon. Member also said, it is only possible to decarbonise our power sector once, which is an important observation for our record so far. Some people, talking about where we have got to, might say that we have done better than a number of other countries in the world, that we have reduced emissions substantially while expanding our economy, and then stand back with folded arms and say, “There we are—it is pretty much done, isn’t it?” The Climate Change Committee’s report gives a telling antidote to that stance. It draws our attention to not just changes in UK emissions over the period 2000 to 2020, but changes by sector.

A useful chart appears on page 20 of the report—I see hon. Members flicking through their copies to find it—which shows that there has been a stupendous change in emissions from electricity supply. We have done a fantastic job of decarbonising our emissions from electricity supply, which have plummeted from annual emissions of about 160 megatonnes of CO₂ in 2000 to less than 45 megatonnes of CO₂. We see the wisdom of the point made by the hon. Member for South Cambridgeshire—we can only decarbonise these things once. Although we should go much further, and it is good that we have seen a proposal for the complete decarbonisation of the power sector by 2035, we will not be able to repeat that reduction in emissions in that sector, so we cannot set that achievement against what we need to do next in the areas we need to concentrate on for the future.

That same chart is alarming in a number of areas. We must enter a caveat about the deep reduction in emissions from aviation and surface transport during the pandemic, because all the evidence already suggests that they will pretty quickly return to their previous levels. In general, despite some reduction in emissions from manufacturing and construction over the period and a smaller reduction in buildings—albeit a flat line in recent years—emissions in most other sectors are flat or increasing. That means that, in effect, measures in those sectors either have not started or have been completely ineffective in reducing emissions. As we look at the overall picture, it is important to be able to say, “We have done well here and we have done badly there,” and, when we are judging the totals, we must carefully take that into account.

We must also carefully consider the proportion of emissions in those sectors. For example, electricity supply—power stations—currently accounts for 15% of emissions. Yes, we can achieve a reduction in emissions there, but those emissions as a percentage of total emissions are now about the same as those from agriculture and land use, yet emissions from that area have stayed static in the period. Therefore, among other things, if we continue to make progress in particular areas, as has been described, but others stay static, they will represent an increasing, and increasingly intractable, part of our emissions over the next period. To do nothing about aviation, shipping, surface transport and, certainly, agriculture and land use, or to ignore them or put them in the background, is nearing criminal. If we leave them out, they will be impossible to pull back later.

We need to look at the progress made under the plans in those areas and how well they are getting us towards the same emissions curve as we see in the power sector, and as soon as possible. In that context, the Climate Change Committee’s report to Parliament is telling. The committee is the most polite organisation that one could come across. Not only is it unfailingly courteous in personal dealings with Members but all its reports have “courteous” written through them, like a stick of rock. It does not jump up and down and scream, and it does not over-hype its statements; quite the opposite. Where necessary, it is careful to caveat them as far as possible. In those circumstances, it is sometimes accused of being a bit soft. I do not think it is, but it is rigorously careful and accurate in what it tries to do.

However, in reading between the lines, the progress report is a pretty coruscating condemnation of progress, particularly in the areas that I have represented to hon. Members. As hon. Members have mentioned, page 24 of the summary report shows the areas where progress falls far short of the Government’s stated ambition and commitments. In some areas the Government’s commitment meets what the Climate Change Committee said should be the pathway. However, in a number of other areas their commitment is failing very badly, and those areas represent a large chunk of the overall emissions coming down the road, while those where they are succeeding often account for relatively small amounts of emissions. We need to try to get that into proportion as well.

Looking at what the Climate Change Committee said, something that we ought to think carefully about, which we have not done particularly this afternoon, is that the progress report is about not only mitigation but adaptation. Although there is a separate adaptation report, it comes under the overall ambit of the general report to Parliament. On adaptation, the committee says:

“A robust plan is needed for adaptation. The UK does not yet have a vision for successful adaptation to climate change, nor measurable targets to assess progress. Not one of the 34 priority areas assessed in this year’s progress report on adaptation is yet demonstrating strong progress in adapting to climate risk. Policies are being developed without sufficient recognition of the need to adapt to the changing climate. This undermines their goals, locks in climate risks, and stores up costs for the future.”

That almost sounds not terribly polite. It is waving a red flag about the disgraceful complete lack of any plan for serious Government action in this country on adaptation, which will really turn around to bite us in the near future if we do not get our act together. If the hon. Member for South Cambridgeshire is minded to apply for a further debate in this Chamber, I would suggest a specific debate on adaptation. It is a very important area, which we have largely missed out on, and we do so at our peril.

The committee’s report also reflected on the fact that, at the time it was written, the Government were in the process of producing a number of reports that had been promised for quite a while but had not arisen, such as the net zero plan, the transport plan, the hydrogen plan, and the heat and buildings strategy, which the Climate Change Committee was unable to incorporate into its report to Parliament because they were still anticipated. Just this week, no fewer than 1,800 pages of material finally came tumbling out of the Department for Business, Energy and Industrial Strategy, the Treasury and so on, with 10 days to go to COP26, rectifying a number of those emissions. I am afraid that, try as I might, I have not been able to get through all 1,800 pages by any means. It is apparent from reading those just how far off we are from getting to grips with things that the Climate Change Committee mentioned in its report.

Let me take the “Heat and Buildings Strategy”, which has just come out, as an example. I do not particularly blame the Department for Business, Energy and Industrial Strategy for this, and hon. Members will have to take it from me, but the “Heat and Buildings Strategy”, which is an interesting report, has been written, in what we might call Shakespearean authorship analysis, by several different hands—I do not include the Minister in that. Broadly, I can say that the right questions have been written by one series of hands, and the wrong answers have been written by another series of hands, so the report does not cohere.

The answers to the ambition that the Climate Change Committee was concerned to underpin in its report to Parliament are not very ambitious at all. There is a really lame response to the question of how we go about the insulation and energy efficiency uprating of our homes, which, as everybody knows by now, is a sine qua non of a load of actions in other areas, as we have mentioned already.

The hon. Member for Kilmarnock and Loudoun (Alan Brown) unpacked some of the issues on heat pumps. We know that they will not work in badly insulated homes. We have an ambition for heat pumps, but there are all sorts of issues even within the report about the difference between the ambition of 600,000 heat pumps a year by 2030 and the practical issue of who will be trained up to install them, whether they will be manufactured in this country, and which sectors will have heat pumps in them. I note, for example, on the Government’s ambition for 300,000 homes a year, that it is suggested that heat pumps will go into only about 60% of them, so we have the prospect of new homes being built with gas boilers in them, which will have to be retrofitted pretty shortly afterwards, but we will perhaps let that pass us by.

On how the paper addresses our overall ambitions, the sector, as the strategy sets out, occupies 23% of emissions just on heat. So when we talk about the energy sector, we are talking about heat being much more important in terms of emissions than power, and it is heat that we have made virtually no progress on at all. The overwhelming majority of our homes are still heated by gas, and that figure has remained fairly static for a fairly long time. A strategy that proposes more heat pumps only works if we deal with other heat factors, particularly how much heat we lose from our buildings, how meaner we could be in our use of heat in buildings in future, and what sort of win-wins we might have in insulating our homes, and we must deal with fuel poverty and various other such things.

One would think that a strategy of energy efficiency should run alongside everything else that we do on heat generation. That one thing, with the exception of some short-term, fairly small amounts of funding for particular projects in the strategy, is sorely missing. I do not know, but I would speculate, bearing in mind the different authors of the report, that perhaps a much more ambitious strategy was in the minds of BEIS, and certain other people came along and crossed a nought off the end of each of the amounts of money in the strategy. It woefully misses the opportunity to really go forward on getting heat firmly in our sights as far as decarbonisation is concerned.

The hydrogen strategy that has come out is interesting, premised on the progress report to Parliament. It does not have any path by which we can develop green hydrogen, which of course is the element of hydrogen that will do the work of decarbonisation. Unless we have a decent path for developing green hydrogen over the period, we will not make the progress that we should on climate change and emission reductions.

As I said, I have yet to go through all of this, but I think we are simply not articulating our own ambition on carbon reduction and getting the details of how we do it right. Indeed, not only are we a long way from that in some instances, but in others we are not even addressing it. I am interested to reflect on the points made by my hon. Friend the Member for Leeds North West about the nudge unit report that came out recently. It was nudged into public view and pretty immediately nudged out again, within I think a day of being published. One of the reasons for that is because the nudge unit drew our attention to some very difficult areas that we have to get to grips with, but we have hitherto walked on by on the other side of the street.

I know that to my cost. Recently, I think at a fringe meeting at the Labour party conference, I ventured the opinion that we will have far fewer livestock farmers in our country in 20 years’ time. That is a straightforward statement of understanding of what we have to do in the agricultural and land use sector, what we have to do about our diets and how we deal with emissions in our food chain, and many such things. I got absolute grief. Indeed, I got a number of angry invitations in my in-tray to visit some farms and see what is really happening, and so on. I know it is a really difficult issue, and that we will have to do a lot of just transition-type work in getting it right, but it is an issue that we have to face. I am afraid that the Government are not doing that in a number of areas as far as emission reductions are concerned.

My conclusion, which I hope will be pretty widely shared across the Chamber, is that although we have done well so far in our emission reductions process, we need to unpack that to understand where we have done quite well and where we have done badly, so that we have better pointers for the future. As things stand, we appear to be nowhere near meeting the challenges ahead of us on climate change reduction. A lot more new policies and new thinking will be needed to get us anywhere near those targets. Regrettably, as the strategies come out they do not appear to rise to that challenge. I hope that this afternoon the Minister will be able to respond to the debate in that vein, because I hope that I have given a reasonably accurate picture of what the Climate Change Committee says and what hon. Members have said in this Chamber today.

I have not quite taken my 45 minutes, Sir Christopher—[Interruption.] Sorry, Mrs Murray; while I was talking, you snuck into the Chair.

[Mrs Sheryll Murray (in the Chair)]

I snuck in.

[Dr Whitehead]

Obviously, the previous Chair just could not stand the idea of being there for the entirety of my speech and has left.

I hope that this debate will serve as almost a watchword for how we approach our task over the next period. We need to work soberly, carefully and, as far as possible, on a consensual basis, for the future of our climate goals, but also with a clear-eyed recognition of just how far we have to go and how difficult many of the choices will be. We need to face them together, creating solutions that can actually work in our national and, indeed, international interests.

By the way, even though it was very late in the day, I understand just how much work has gone into these documents and how hard people have worked at getting them out, and indeed how they have attempted to address the choices in front of us in a real way. I do not underestimate any of that. My criticisms are based on what we have to do politically to address these issues for the future. I am not in any way attempting to denigrate the people who have put these documents together.

That is the offer from the Opposition, and that is what we want to do—to move us forward in the face of this tremendous challenge and the really daunting task ahead of us. And if we can manage to conduct our future debates as well as we have managed to conduct today’s debate, that will be a great help in this process.

[The Minister of State, Department for Business, Energy and Industrial Strategy (Greg Hands)]

Let me begin by thanking the Backbench Business Committee for nominating this important debate today, and I also thank my hon. Friend the Member for South Cambridgeshire (Anthony Browne) for his very able introduction to it. We were sitting in exactly these seats yesterday during his last Westminster Hall debate, which was on the interesting subject of carbon capture and storage, a subject that has also cropped up in today’s debate.

Of course it is vital that we focus on clean growth and the Government’s vision for transitioning to a net zero economy. This has been a very useful debate, with a very high degree of consensus, which of course the Government welcome.

First, the Government welcome the Climate Change Committee’s 2021 “Progress in reducing emissions” report, which highlights our successes in setting an ambitious climate mitigation agenda while also providing healthy challenge to our progress to net zero by 2050. The point of having this kind of Committee is for it to keep challenging the Government and to ensure that the Government are straining every possible muscle to get to that target and get there in good time.

The report correctly emphasises that the journey to net zero is not yet half-completed and that this decade is the decisive one for tackling climate change, which Britain must take a leading role in. Of course, that is why on Tuesday we published our net zero strategy, which has been referred to many times; I welcome the Opposition’s praise for my officials and my ministerial team for the work that they have put into it. I know that a lot of my team have been working very long hours to get the strategy out there and to do so on time.

The strategy delivers a comprehensive set of measures to support and capitalise on the UK’s transition to net zero by 2050. It outlines measures to transition to a green and sustainable future, and to help businesses and consumers to move to clean power, supporting hundreds of thousands of well-paid jobs and leveraging up to £90 billion worth of private investment by 2030.

We have already set out a lot about our journey to net zero. Over the past year alone, we have published the Prime Minister’s 10-point plan for a green industrial revolution, the energy White Paper, the North sea transition deal, the industrial decarbonisation strategy, the transport decarbonisation plan, the hydrogen strategy and, most recently, our heat and buildings strategy.

[Dr Whitehead]

Would the Minister be able to provide us with some helpful guidance on the production of those documents, and set it against what the Climate Change Committee has been doing with its carbon budgets and so on? Does he consider that as a result of those documents being published and their contents, we are now on course to meet the terms of the sixth carbon budget?

--- Later in debate ---

[Greg Hands]

Again, that is a temptation down a particular road, but let me say this. The Government are absolutely clear that all further airport expansions must be consistent with our climate change obligations. Government policy is absolutely clear on that.

[Dr Whitehead]

Will the Minister give way?

[Greg Hands]

I will make a bit more progress.

Nothing in a trade agreement prevents our ability to regulate environmentally or prevents the UK fulfilling its climate change obligations. The hon. Lady asked about COP26 leaders, and I can give her an update. We have a stellar array of world leaders coming for COP26, including President Biden and the four Ms—Prime Minister Modi, Prime Minister Scott Morrison of Australia, President Macron and Chancellor Merkel. We have leaders of medium-sized economies who will be really important. I spoke earlier today with the Vietnamese Energy Minister Dien and the Vietnamese Prime Minister Chinh is coming. Vietnam is an important player, as well as an important ally and friend to the UK. Its current plans are to double coal usage over the next decade, which will not set the right tone at COP26. We are looking forward to welcoming a wide variety of leaders, some of which are close friends and allies of the UK, and developing economies, of which Vietnam is just one, are also coming.

In terms of the carbon border adjustment mechanism, we watch all the proposals very closely. We need to make sure they are World Trade Organisation compatible, that they are not a disguised form of protectionism and that they do not discriminate unnecessarily against developing countries. Departmental policy decisions are consistent with net zero. We have established two Cabinet Committees dedicated to climate change. The Environment Bill requires the Government to reflect environmental issues in national policy making through consideration of the five environmental principles.

Where are the two EV buses? We have delivered the national bus strategy, investing £12 billion in local transport systems over the current Parliament and delivering 4,000 new zero-emission buses.

The hon. Member for Leeds North West (Alex Sobel) spoke of a scenario where one person on a street puts in solar panels and everybody else says, “I want a piece of the action.” That is a great example of the Government simulating demand. It does not mean that the Government should come down the road and install everybody’s solar panels, though. It shows the effectiveness of Government policy in getting people to sit up, take notice and want to take advantage of something. That is what the role of the Government can be. Heat pumps will be exactly the same.

[Greg Hands]

I have already outlined the support we are giving to the housing sector overall. If the hon. Gentleman or any other hon. Member wants to write to me with a specific proposal, I am happy to look at it. I have to say, I was not entirely sure about his recent history—he mentioned COP21 in relation to the election of Donald Trump, which of course came after that, but I may be misremembering his speech, so I will not go down that road.

How many people have been trained in heat pumps so far? We want more to be trained. The figure is around 3,000 and we require 35,000, so that is definitely a challenging position. We have set out Government policy and the direction of travel on heat pumps very clearly and we are waiting for the market to respond.

[Dr Whitehead]

Will the Minister give way?

[Greg Hands]

I am going to make progress. On Germany’s net-zero strategy, I shared a platform with the German ambassador last night, and both of our countries are very supportive of each other’s policies on net zero and the environment. We consider ourselves to be world leaders in this space. On retrofitting, we are committed to supporting businesses and households to upgrade energy efficiency in buildings.

--- Later in debate ---

[Dr Whitehead]

Will the Minister give way?

[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.

--- Later in debate ---

[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.

[Dr Whitehead]

Now that he has almost finished, will the right hon. Gentleman give way?

[Greg Hands]

I will finish, as I have been speaking for almost half an hour. The net zero strategy sets out clear principles on how we will engage the public and support them to make green choices. We will explore how to enhance public-facing climate content and advice on gov.uk and our Simple Energy Advice service to provide homeowners with advice for decarbonising their homes, including tailored retrofit advice in local areas.

I thank the CCC once again for its expertise and advice in producing its annual report. The Government are committed to delivering a net zero economy, and we welcome the committee’s contribution to this obligation. The net zero strategy sets out a roadmap to cut emissions and create new jobs across the whole country. It comes as the UK prepares to host the UN COP26 summit next week, where the Prime Minister will lead by example and call on other world economies to set out their own domestic plans for cutting emissions. Through the strategy, we are accelerating towards more resilient futures, towards our green recovery and towards protecting our planet for this generation and those to come.

Carbon Capture and Storage

Alan Whitehead Excerpts

Wednesday 20th October 2021 Westminster Hall

[Dr Alan Whitehead (Southampton, Test) (Lab)]

I congratulate the hon. Member for South Cambridgeshire (Anthony Browne) on securing this debate and the exemplary way he put forward the case for carbon capture and storage—a case that has many other articulate exponents on both sides of the Chamber as well as him. My hon. Friend the Member for Stockton North (Alex Cunningham) particularly comes to mind. He has championed the cluster, CCS and all that goes with it over many years, and he is, I think, substantially responsible for the moves forward in CCS.

We do not need to spend much time clarifying among ourselves that the case for CCS is overwhelming. We are, after all, moving to a net-zero target. In this context “net” is a very important word. To achieve the net-zero target, we have to concentrate on not only keeping minerals and energy and such in the ground, but putting stuff back into the ground, and we have to think of methods of doing that, because there will be a carbon overhang in 2040, 2050 or whenever. The methods of doing that include growing trees and direct air capture, which has been mentioned, though that has to go in the ground as well. Other methods are CCS and bioenergy with carbon capture and storage, which involves attaching CCS to an already relatively low-carbon method of producing power, thereby making it net carbon-negative.

CCS is important across all these fields and the industry as a whole. It is not just a question of the power sector. Most heavy and energy-intensive industries will need CCS if they are to have lower-carbon processes; they have processes besides power production that produce a lot of carbon. It is important across the board. I was indeed pleased to hear in the statement yesterday that the north-east cluster and HyNet had secured strong backing for going ahead with precisely that combination of activity—with providing CCS for industry, or with providing the proper transport for CCS and then sequestration. It is important to recognise that there are a number of different components to CCS.

As the hon. Member for South Cambridgeshire said, this is not an experimental technique that we need to do a lot more work on. We know how it works. We know what we have to do and where we have to put CO₂. The North sea, for example, has capacity to take 78 billion tonnes of CO₂—200 years’ worth of the country’s CO₂ emissions. We know where it is going. As I have said, I have seen a full-chain CCS plant in operation at Boundary Dam in Saskatchewan, Canada. It captures the emissions it transports and sequesters them. What it does with the sequestered CO₂ is a matter for another debate. The system works really well and is complete. We should be aiming to get whole systems working together in those industrial clusters in the north-east and the north-west, so that everything works well for the benefit of industry, hydrogen production and low-carbon heavy industrial activities.

It is perverse that the Acorn Project has been designated as first reserve—whatever that means—in this process. I do not understand how a first reserve is meant to come in if the first two clusters do not work very well, or change their minds and decide that they do not want to do it. It is clear to me that we need to go with three, and that the Acorn Project should be one of them.

I want to emphasise that we are no longer in the chamber of discussion on CCS. We are in the chamber of action, and we need to apply that to as many things as possible, as soon as possible, in this country. In that context, I want to ask the Minister very briefly—

[Mrs Maria Miller (in the Chair)]

Very briefly, please.

[Dr Whitehead]

Very briefly indeed, Mrs Miller. What is the status of the various support measures that will be introduced for CCS? I have perused carefully the various updates on the design of the CCS infrastructure fund and the business models, but it seems to me that there is no clear line on the exact support to be offered to the different CCS sectors that I have talked about. There may be a contract for difference, for example, for heavy industry. That will need to be led by a 10-year plan, with a levy control framework or similar, but that is not in place.

[Mrs Maria Miller (in the Chair)]

We need to move on to the Minister’s comments now.

[Dr Whitehead]

There is no CfD in place, either. How is that coming on, and will the Minister guarantee that the arrangements will be in place as soon as possible so that we can roll out CCS as quickly as possible?

Oral Answers to Questions

Alan Whitehead Excerpts

Tuesday 21st September 2021 Commons Chamber

[Greg Hands]

Yes, of course we take community renewable initiatives very seriously indeed. We also take the Environmental Audit Committee very seriously indeed and I look forward to appearing before its Chair, my right hon. Friend the Member for Ludlow (Philip Dunne), in due course.

The hon. Gentleman is wrong to say that the CCC progress report was damning. For example, the report says:

“The UK has a leading record in reducing its own emissions”,

and:

“The UK has been a strong contributor to international climate finance”.

Recently, John Kerry himself, the President’s special envoy on climate, praised the UK approach.

[Dr Alan Whitehead (Southampton, Test) (Lab)]

I too welcome the Minister to his new post, my opposite number in the Department, and hope that he will last a little longer in the post than his immediate predecessor.

The Climate Change Committee’s report to Parliament highlights how little progress has been made with the upgrading of insulation in buildings and points out that

“insulation rates remain well below the delivery achieved in 2012 before key policies were scrapped.”

Does the Minister accept that, had those insulation policies been pursued, energy customers would have been in a much better position to cope with the energy prices rises and the cost of living crisis that we have currently. Does the Minister now take responsibility for the abject failure of the Government’s home insulation policies, and, most importantly, what will he now do about it?

[Greg Hands]

The hon. Gentleman has managed to pack a lot into that question. Let me try to answer it in three ways. First, when it comes to the heat and buildings strategy, he will just have to wait until we publish it. We are doing the right thing. Secondly, when it comes to energy price rises, my right hon. Friend the Secretary of State pointed out at great length the action we are taking to protect customers, including vulnerable customers, with the rest of the support that the Government provide. Thirdly, when it comes to the Climate Change Committee, we have done very well on achieving, for example, last year’s recommendations. Actually we have achieved in full or in part 40 of the Committee’s 92 recommendations last year; 32 are already on their way. We are looking forward to responding as well to this year’s recommendations.

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 Whitehead Excerpts

Wednesday 8th September 2021 General Committees

[Dr Alan Whitehead (Southampton, Test) (Lab)]

It is a pleasure to serve under the chairmanship of my near neighbour. You will be pleased to know, Mrs Miller, that the Opposition do not intend to pit our mighty forces against the Government in a vote this morning, because we consider the two SIs to be very uncontroversial.

These measures are an obvious thing to do to ensure that the labelling processes for ecodesign and energy efficiency, which I have long supported, remain an excellent way of ensuring that people know what they are getting in terms of the energy efficiency of the products they are purchasing. Indeed, over time that drives changes in consumer choices and hence manufacturing arrangements for the energy efficiency of products. We have seen that in operation already with the emergence on the market of products that seek to get the highest energy rating on the scale in their marketing.

We are all together on the desirability of ensuring that, post the UK’s exit from the EU, those labelling arrangements are maintained in the best possible order for the future, and that is essentially what these SIs are about as far as lighting is concerned.

The Minister said that, for ease of both transition and continuing reputational arrangements as far as labelling is concerned, the closest alignment with EU regulations and arrangements would be achieved. I think that is right, in terms of the interaction of products between EU countries and the UK. I assume that by that, the Minister means that should there be future changes in the labelling arrangements within the EU, the UK will seek to ensure that those are mirrored, if not now, then for the future.

However, I am not sure whether one of the changes that has been made to the regulations applies to the UK alone or is mirrored by changes in EU regulations. That is the change—on lighting—from the A to E scale that we are familiar with to a simpler A to G scale. Common sense suggests that that is necessary given that, as a result of the substantial improvements in energy efficiency in lighting and other electrical products, the scaling as it stands has tended to bunch towards the A++, A+ end of the scale, so there is a danger of the scales becoming incoherent for the public. Moving to a simpler A to G scale is therefore the right thing to do. However, I do not know whether that has happened in the EU as well, and whether, in Northern Ireland, scales might differ on products that are EU-certified, as opposed to those with a UK label.

In most of the UK that is not an issue, inasmuch as such products will all be labelled appropriately for the UK market, but it may not be the case in the interaction between Northern Ireland the rest of the UK. Can the Minister tell us whether those changes in scaling mirror the EU arrangements, or whether they apply to the UK only?

The change in scale, while logical, common-sensical and important, is almost totally unknown to the public. Such changes have been made in other product areas. I have personal experience of turning up to, as it were, rate a dishwasher, only to find that the products had the new A to G scale labelling on them, which made what had previously looked very energy efficient look very energy inefficient—until one understood that products labelled D or E, which looked at first sight energy inefficient, were the equivalent of, say, A+ under the previous arrangements. Will the Minister reflect on the possible need for publicity and some public-facing general explanation, so that we all know why these changes in lettering have been made and how important they are to get the system working properly for the future?

I have no further comments to make about the detail of the statutory instrument, which, I have to say to hon. Members, is some of the most tedious stuff I have ever read—[Laughter.]—from which they may deduce that I did actually read it. I look forward to further enlightenment from the Minister.