Oral Answers to Questions

Debate between Andrew Bowie and Alan Brown

Tuesday 27th February 2024 Commons Chamber

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

T7. The last published Government estimate for Sizewell C is £20 billion, but Hinkley Point C, the supposed prototype for Sizewell C, is now estimated to cost £48 billion. When will the Government admit that the actual cost of Sizewell C will be a colossal £50 billion noose around bill payers’ necks?

[The Parliamentary Under-Secretary of State for Energy Security and Net Zero (Andrew Bowie)]

The SNP, blinded by a misplaced belief in its own exceptionalism, seems almost alone in the world in not recognising the benefits of new nuclear when it comes to meeting our net zero objectives, delivering our energy security and improving our baseload. At last year’s COP, 30 countries around the world came together to commit to increasing nuclear-generated capacity by 30%. It would be brilliant if Scotland could be part of that change, but the SNP and its luddite partners in the Green party are holding Scotland back. We are determined not to do that for the rest of the UK.

Oral Answers to Questions

Debate between Andrew Bowie and Alan Brown

Tuesday 28th November 2023 Commons Chamber

[The Parliamentary Under-Secretary of State for Energy Security and Net Zero (Andrew Bowie)]

It would not be Energy questions without a question on Wylfa from my hon. Friend, who is such a champion for that technology and for her constituency. We all agree that Wylfa is a great candidate for new nuclear and one of several potential sites that could host new projects—[Interruption.] Ignore the luddites on the SNP Benches. As a first step towards a new national policy statement, the Government will consult later this year on a way forward to determine how new nuclear developments might be located.

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

T6. In energy-rich Scotland, roughly one in three households in my constituency is living in fuel poverty. A properly designed social tariff would at least alleviate some of that poverty. Why have the Government broken their promise of a year ago to consult on a social tariff?

Energy Infrastructure

Debate between Andrew Bowie and Alan Brown

Wednesday 5th July 2023 Commons Chamber

[Andrew Bowie]

Given the limits on time, I will not. However, I commit to meeting the hon. Lady and other Members from the Humber region—or one of my ministerial colleagues will do so—to discuss how we can move those projects forward at a pace that she would find acceptable and that would be beneficial to the Humber region.

My hon. Friend the Member for Ynys Môn (Virginia Crosbie), who is such a champion not just her constituency but for the nuclear industry in general, raised the prospect of the innovations and investment that we are taking forward and making in nuclear. I look forward to having many more conversations with her in the months and years ahead, as we get Great British Nuclear off the ground, begin our down-selection process and then move forward to further gigawatt projects later on.

The only problem with the comments made by the hon. Member for Bath (Wera Hobhouse), which were well informed, was that they were so negative. As my hon. Friend the Member for Stroud (Siobhan Baillie) pointed out, we cannot meet doom with doom—we have to be positive about the benefits to our economy, this country and the environment that will be brought by this energy revolution. I am very positive, as are this Government. For those who think that this Government are complacent, let me say that this Prime Minister and this Government created the Department for Energy Security and Net Zero, we are leading the G7 on cutting carbon emissions and we are launching new nuclear programmes, as well as investing in new technologies across the piece. This Government are not complacent: we are tackling the challenges head-on and we are growing the economy in the process of doing so.

[Alan Brown]

Will the Minister give way?

[Andrew Bowie]

I will not, sorry.

My hon. Friend the Member for Mole Valley (Sir Paul Beresford) was right to raise the prospect of fusion and the transformative impact it will have. As has been said today, and as everybody says, fusion is always seen as being 20 years away. I can inform the House that we are looking to have the first commercial fusion reactor on the grid in this country by 2040. We are absolutely leading the world in this regard. It is fascinating to go up to the Culham centre to see the developments that are taking place and the science that is happening on that site. I cannot wait to see the developments at the West Burton site in Nottinghamshire as we move towards commercialisation at scale.

We heard contributions from the hon. Member for Stockton North (Alex Cunningham), my hon. Friend the Member for Peterborough (Paul Bristow), the hon. Member for Ceredigion (Ben Lake), my hon. Friend the Member for North Devon (Selaine Saxby), the hon. Member for North West Leicestershire (Andrew Bridgen), my hon. Friends the Members for Stroud and for Great Grimsby, and the hon. Members for Kilmarnock and Loudoun (Alan Brown) and for Southampton, Test (Dr Whitehead). It has been a very positive debate overall. I am pleased to have been able to respond on behalf of the Government. I am very committed to leading the change that is required to our networks, infrastructure and national grid, and in bringing forward the new technologies. We are proud to lead the world in ending contributions to climate change, as is demonstrated through our commitments to building a new energy infrastructure on a scale never seen before in Great Britain. Our strategy supports our ambitions for green growth and jobs, and will ensure that our energy infrastructure is secure and resilient, and delivers value for money to consumers, while delivering on our net zero target.

Energy Bill [ Lords ] (Eighteenth sitting)

Debate between Andrew Bowie and Alan Brown

Committee stage
Thursday 29th June 2023 Public Bill Committees

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

It is a pleasure to serve under your chairmanship, Mr Sharma. I want to say a few words in support of new clause 87. As the hon. Member for Sheffield, Hallam outlined, it is not even that onerous, as it is about reporting going forward, although I always find that clauses that require reporting still have the Government running a mile, because they do not like to commit to it.

Government Members voted to remove from the Bill clauses 272 and 273, which were in favour of community energy schemes and putting in place arrangements to procure them. The argument from the Minister was:

“Introducing a fixed price would be a step backwards, as it requires all energy consumers to pay more than the market price for electricity to subsidise local communities that benefit from community energy projects.”––[Official Report, Energy Public Bill Committee, 20 June 2023; c. 357.]

I do not think it is too onerous to ask all billpayers to help to subsidise a few community schemes. Will the Minister write to the Committee to outline what additional costs the Government think would go on to all billpayers’ bills if there was a fixed price guarantee for local energy schemes? It is really important that we understand what the Government think the extra costs would be for billpayers.

The Government happily tell us that the regulated asset base model in the Nuclear Energy (Financing) Act 2022 will add £10 to every single bill in the UK. If that is the case and it is okay for nuclear, why do they not look at what the costs and benefits overall for local community energy schemes would be? That is my main point.

Will the Minister also write to the Committee to outline the amount of community energy that has been deployed each year in the last decade? That will allow us to understand the trends and how easy it is for community energy schemes to access the grid and the system and whether there are any blockers.

Finally, perhaps the Minister does not need to write to us on this, but will he spell out what he thinks the flaws are now in the original Local Electricity Bill that he did not see at the time, when he signed up as a supporter and sponsor of the Bill? What are the defects, since he is now against such a concept?

[Andrew Bowie]

I thank hon. Members for their contributions, and especially the hon. Member for Sheffield, Hallam for tabling new clause 87, which seeks to create a new community energy strategy, to be followed up with annual reports to Parliament on progress for the sector. The Committee discussed community energy in great detail last week—and a very enjoyable debate it was too. I reassure the Committee that the Government are, as we speak, looking closely at this matter. I urge all Members to watch this space.

Nevertheless, I remind Members that the Government’s general approach to community energy is already laid out in the net zero strategy and the net zero growth plan. As such, we do not see any added value in mandating a dedicated community energy strategy or annual report in the manner set out in the new clause. Instead, we believe it is more beneficial to the community energy sector for the Government to continue our approach to help local authorities and community energy groups to work together to develop funding for projects across the net zero agenda, with funding from existing sources such as UK growth funding schemes.

For example, the UK shared prosperity fund provides £2.6 billion in funding for investment in places, including for community infrastructure projects. Ofgem supports community energy projects and welcomes applications to the industry voluntary redress scheme. Through our local net zero hubs, we are supporting local authorities and community energy groups to work together, including by funding a pilot programme that supports local authorities to develop community-led energy groups and projects.

The Government have also reintroduced the community energy contact group to strengthen our engagement with the sector. I have already outlined our arguments as to why the new clause would not be fair, so I am afraid that I cannot commit to writing to the Committee, as the hon. Member for Kilmarnock and Loudoun asks me to. In relation to why my own personal position may be now what it is, I have always been, and remain, committed to supporting community-led energy groups across the country. That is why we are working to implement schemes to support those projects across the entire UK. We will continue to do so, and I will be their biggest champion.

[Alan Brown]

It was positive to hear the Minister say, “Watch this space” because the Government are reviewing things. However, I reiterate my request that he writes to the Committee to outline what he thinks the costs will be. That must be a Government concern if they are considering how to provide further support to community energy schemes. That is a serious request—I am not trying to be awkward. Also, how much community energy is being deployed each year?

[Andrew Bowie]

I would be delighted to engage in further discussion with the hon. Gentleman and other interested hon. Members. I will commit to ongoing engagement, but we do not believe that the new clause provides any added value.

--- Later in debate ---

[Andrew Bowie]

I thank the hon. Gentleman for his contributions on the new clauses. I have said in Committee, on the Floor of the House and elsewhere that this is the biggest challenge we face—connectivity and improving capacity in the grid—if we are to reach our targets, not just on our net zero commitments but in becoming more energy secure and delivering cheaper bills for the British people.

I recognise that the speed of electricity consenting in Scotland is critical to those aims and to the whole UK economy, as I have just suggested. It is important to enable rapid deployment of renewable energy generation and of the transmission lines needed to transport it to consumers across the country. With that goal in mind, we are aware that areas of the Scottish planning system need to be reviewed—specifically the ones that the hon. Member for Kilmarnock and Loudoun just mentioned—and we are committed to speeding up planning decisions across the UK wherever possible.

I am sure, however, that we are all in agreement—I know the hon. Gentleman is—that the issues are incredibly complex and multifaceted, and that any potential changes need to be carefully considered to ensure they are the right ones for consumers and the network. For example, as the Electricity Act 1989 applies to projects in England and Wales less than 132 kV and 2 km, and to all transmission projects in Scotland, we need to be certain that any amendments to the Bill would not have unintended consequences elsewhere. Moreover, we would not want to remove an automatic inquiry trigger without understanding what could replace that process.

The Government share the concerns of the hon. Member for Kilmarnock and Loudoun and we want to find a solution. I have had constructive discussion with the Energy Minister in the Scottish Government and within my Department on how to resolve this issue moving forward, but I am interested to meet the hon. Gentleman and anyone else he might suggest so that we can work together on a solution to this complicated issue. I therefore do not feel that we can accept his new clauses, and I would be grateful if he did not press them to a vote.

[Alan Brown]

I was shocked when the Minister said that he could not accept the new clauses—I did not see that coming! I am having to think on my feet, because I am completely thrown.

To make a serious point, I appreciate the Minister’s offer of a meeting, and I would like to take that up. I suggest that we have someone from the industry there as well. I am happy to work with the Minister to see how we can resolve the matter. I beg to ask leave to withdraw the motion.

Clause, by leave, withdrawn.

New Schedule 1

Permitted disclosures of material obtained by OGA

“Disclosure by OGA to specified persons

1 (1) Section (Prohibition on disclosure) does not prohibit a disclosure of protected material by the OGA which—

(a) is made to a person mentioned in column 1 of the table below,

(b) is made for the purpose of facilitating the carrying out of that person’s functions, and

(c) is a disclosure of protected material obtained by the OGA under a provision mentioned in the corresponding entry of column 2 of the table.

[The Chair]

With this it will be convenient to discuss the following:

Amendment 114, in clause 275, page 242, line 31, at end insert—

“(10A) The Secretary of State may not make regulations under this Act which would affect any matter within the competence of the Scottish Parliament unless the Secretary of State has first—

(a) consulted the Scottish Ministers on a draft of the regulations; and

(b) obtained the consent of the Scottish Parliament to the regulations.”

Clauses 275 to 277 stand part.

Government amendments 171, 172, 123, 133, 131 and 175.

Clause 278 stand part.

Government amendment 17.

Clause 279 stand part.

--- Later in debate ---

[Alan Brown]

I do not think it would be an unnecessary legislative burden, to be honest. If it is some simple process, consent will be equally simple to achieve, so I do not think it would unduly delay things or overcomplicate them. I will not press amendment 114, but I reserve the right to table it on Report, because I really want to ensure that things are resolved to the satisfaction of each side.

Question put and agreed to.

Clause 274 accordingly ordered to stand part of the Bill.

Clause 275

Regulations

Amendment made: 19, in clause 275, page 241, line 35, after “State” insert “, the Treasury”.—(Andrew Bowie.)

This amendment provides for regulations made by the Treasury to be made by statutory instrument. This will affect regulations under paragraph 9 of Schedule 7.

Clause 275, as amended, ordered to stand part of the Bill.

Clauses 276 ordered to stand part of the Bill.

Clause 277

Extent

Amendments made: 168, in clause 277, page 243, line 6, at end insert

“, except section (Power to modify Gas Act 1986 in relation to hydrogen)”.

This amendment is consequential on Amendment 170.

Amendment 169, in clause 277, page 243, line 16, at end insert—

“(aa) sections (Key definitions for Part), (Designation), (Designation: procedure), (Revocation of designation), (Grant, extension or restriction of gas transporter licence by Secretary of State), (Applications for grant etc of gas transporter licence), (Modification of gas transporter licence by Secretary of State), (Scope of modification powers under section (Modification of gas transporter licence by Secretary of State)), (Procedure etc relating to modifications under section (Modification of gas transporter licence by Secretary of State)), (Information and advice), (Conditions of gas transporter licences for conveyance of hydrogen), (Secretary of State directions to the GEMA) and (Repeal of Part);”.

This amendment provides for the new clauses that are intended to form a new Part inserted after Part 2 to extend to England and Wales and Scotland.

Amendment 170, in clause 277, page 243, line 17, at end insert—

“(ba) section (Power to modify Gas Act 1986 in relation to hydrogen);”.

This amendment provides for NC72 to extend to England and Wales and Scotland.

Amendment 174, in clause 277, page 243, line 22, at end insert—

“(h) sections (Great British Nuclear), (Crown status), (Great British Nuclear’s objects), (Financial assistance), (Secretary of State directions and guidance), (Annual report), (Annual accounts), (Transfer schemes), (Transfer schemes: compensation), (Transfer schemes: taxation), (Transfer schemes: provision of information or assistance), (Reimbursement and compensation in connection with designation) and (Pension arrangements in connection with Great British Nuclear);”.—(Andrew Bowie.)

This amendment means that the new clauses relating to Great British Nuclear extend to England and Wales and Scotland.

Clause 277, as amended, ordered to stand part of the Bill.

Clause 278

Commencement

Amendments made: 171, in clause 278, page 244, line 7, at end insert—

“(ba) sections (Key definitions for Part), (Designation), (Designation: procedure), (Revocation of designation), (Grant, extension or restriction of gas transporter licence by Secretary of State), (Applications for grant etc of gas transporter licence), (Modification of gas transporter licence by Secretary of State), (Scope of modification powers under section (Modification of gas transporter licence by Secretary of State)), (Procedure etc relating to modifications under section (Modification of gas transporter licence by Secretary of State)), (Information and advice), (Conditions of gas transporter licences for conveyance of hydrogen), (Secretary of State directions to the GEMA) and (Repeal of Part);”.

This amendment provides for the new clauses that are intended to form a new Part, to be inserted after Part 2, to come into force two months after Royal Assent.

Amendment 172, in clause 278, page 244, line 9, at end insert—

“(ea) section (Power to modify Gas Act 1986 in relation to hydrogen);”.

This amendment provides for NC72 to come into force two months after Royal Assent.

Amendment 123, in clause 278, page 244, line 10, at end insert—

“(ea) section (Principal objectives of Secretary of State and GEMA);”.

This amendment provides for NC52 to come into force two months after Royal Assent.

Amendment 133, in clause 278, page 244, line 12, at end insert—

“(ga) sections (Electricity support payments for energy-intensive industries) and (Levy to fund electricity support payments);”.

This amendment provides for NC53 and NC54 to come into force two months after Royal Assent.

Amendment 131, in clause 278, page 244, line 16, at end insert—

“(l) section (Convention on Supplementary Compensation for Nuclear Damage: implementation power).”.

This amendment provides for NC55 to come into force 2 months after Royal Assent.

Amendment 175, in clause 278, page 244, line 16, at end insert—

“(l) sections (Great British Nuclear), (Crown status), (Great British Nuclear’s objects), (Financial assistance), (Secretary of State directions and guidance), (Annual report), (Annual accounts), (Transfer schemes), (Transfer schemes: compensation), (Transfer schemes: taxation), (Transfer schemes: provision of information or assistance), (Reimbursement and compensation in connection with designation) and (Pension arrangements in connection with Great British Nuclear);”.—(Andrew Bowie.)

This amendment means that the new clauses relating to Great British Nuclear come into force 2 months after Royal Assent.

Clause 278, as amended, ordered to stand part of the Bill.

Clause 279

Short title

Amendment made: 17, in clause 279, page 244, line 29, leave out subsection (2).—(Andrew Bowie.)

This amendment removes the privilege amendment inserted by the Lords.

Clause 279, as amended, ordered to stand part of the Bill.

Title

[Andrew Bowie]

I beg to move amendment 11, in title, line 3, leave out “industrial”.

This amendment is consequential on Amendment 10.

Energy Bill [ Lords ] (Sixteenth sitting)

Debate between Andrew Bowie and Alan Brown

Committee stage
Tuesday 27th June 2023 Public Bill Committees

[Alan Brown]

It is a pleasure to serve under your chairmanship, Ms Nokes.

We are now in the final week of this Bill Committee, and Members will have spotted that a lot of Government new clauses and amendments have been tabled and accepted. In the spirt of fairness, the Government should also accept some of our new clauses and amendments; hopefully that is what is going to happen. Rather than getting into a debate, if the Minister wants to intervene and tell me which new clauses the Government will accept in the spirit of fairness, I would be happy to give way.

[The Parliamentary Under-Secretary of State for Energy Security and Net Zero (Andrew Bowie)]

I would not like to put you off.

[Alan Brown]

Okay, so we go back to my monologue justifying why the Government should accept some of our new clauses, including new clauses 1 and 2.

Clearly, we should be grateful that energy prices are starting to fall, but the reality is that the cap on energy bills for an average household was set at £1,138 in April 2021. This month, Ofgem has set the cap at more than £2,000, so energy bills are still nearly double what they were two years ago. The reality is that many people are struggling badly with their energy bills, even though prices are falling, and those struggling the most are those with prepayment meters. People with prepayment meters can access credit of only £5 or £10. If they reach that credit limit, the lights go out—it is as simple as that. They cannot turn on the gas or electricity, and it is a real difficulty for people. It also means that if people cannot get out of the house for whatever reason—if they are ill or have just had a newborn kid—and have reached the threshold, they lose access to their energy by virtue of not being able to top up their meters.

It is unfair that people with prepayment meters pay higher standing charges. Frankly, it is an outrage that people who pay in advance for their energy are paying a premium to access it, whereas people like us in this room, who pay by direct debit, have access to credit and cheaper tariffs. As I say, the reality is that if someone is on a prepayment meter, they are going to struggle to pay their bills, they will pay more and they will face the difficulties associated with a lack of credit.

As End Fuel Poverty states:

“Imposition of a pre-payment meter is disconnection by the back door. When you can’t top up the meter everything clicks off”.

Forcing people to have prepayment meters means that those who are already struggling are put on to a system whereby they will be forced to ration, automatically disconnected when the credit limit is reached and more likely—this is the rub—to have a cold, damp home, with the long-term health implications that that brings, as well as the short-term heating and eating dilemmas.

It is estimated that 19% of housing stock across the UK is damp. The proportion rises to nearly a third, or 31%, for those on prepayment meters. In other words, if someone is on a prepayment meter, they are 65% more likely than the average person to live in a damp house. Some 51% of prepayment customers have health conditions or disabilities, so in many ways the existing system is punishing those who are more likely to require more energy in the first place. That, in a nutshell, is why a social tariff is needed for those with prepayment meters.

Research by Utilita indicated previously that as many as 14% of the 4.5 million households with prepayment meters did not choose to be on such tariffs, and what has been happening during the cost of living crisis is outrageous. For example, an investigation for the i paper revealed that since the end of lockdown energy firms have secured almost 500,000 court warrants to forcibly install meters in the homes of customers who are in debt. Freedom of information requests showed that in the first six months of last year there were 180,000 applications for such warrants.

We then had the bombshell coverage of an undercover reporter working for bailiffs, which exposed the cruelty of some bailiffs for what it was: revelling in the forced installation of prepayment meters, no matter the vulnerabilities of the customers. The officers of that debt company were working on behalf of British Gas, which of course said that it was shocked and that it did not advocate such a policy.

The rub is that some utility companies are using debt collection agencies routinely as part of their process to collect money that they believe they are owed. That set-up relieves utility companies of the burden of debt collection. More importantly, it stops them providing debt advocacy and interacting with customers, which is what is required. Meanwhile, the debt collection companies add their own fees just for reissuing bills to customers.

All that is why we tabled new clauses 1 and 2. Voluntary codes for prepayment meters will never be enough. It is quite clear that we will never know how many people were forced on to prepayment meters against their will, especially when smart meters can be switched remotely to prepayment mode without people even realising initially.

New clause 1 sets out the need for legacy prepayment meters to be switched to smart meters as long as consent is given. This is an enabling aspect, as smart meters will make it easier to implement the provisions of new clause 1(3), which will end the practice of so-called self-disconnection. The provisions include the consideration of a social tariff, and, most importantly, mechanisms to allow customers to access credit and not be cut off immediately as they would be with a £5 or £10 credit limit.

New clause 2 restricts the forcible use of prepayment meters. It does not prevent informed consent and agreement for people to move to prepayment mode, because some customers like it as a way of managing their debt, but what is important is consent and an understanding of what prepayment means. The provisions also give access to impartial debt counselling services before the switch to prepayment mode is needed. Subsection (2)(c) places a duty on the Secretary of State to assess and define customer vulnerabilities, because the current definition is too narrow and does not cover some people who should be classed as vulnerable. Lastly, subsection (3) confirms that switching smart meters to prepayment mode is considered the same as a legacy prepayment meter.

Too many people have been forced on to prepayment meters. We cannot allow that to continue and we cannot allow the door to reopen for energy companies. No matter what they say here and now when there is an immediate storm and a backlash, we need to protect people for good going forward, which is what new clauses 1 and 2 will do.

According to recent Government figures, £120 million-worth of the vouchers issued for customers in prepayment mode were still unclaimed at the start of June. There are only four days left until the deadline on 30 June, so I hope the Minister will update us on the outstanding balance of unclaimed prepayment meter credit vouchers. Having nearly 20% of vouchers unclaimed at the start of the month is indicative of a failed policy that does not support the most vulnerable in our society. Again, that is why we need new clauses 1 and 2 to protect those who sometimes cannot protect themselves.

[Kerry McCarthy (Bristol East) (Lab)]

As always, it is a pleasure to see you in the Chair, Ms Nokes.

I rise primarily to speak in support of new clause 38, but it has quite a lot of overlap with new clause 2. Our new clause 38, on the restriction of the use of prepayment meters, says:

“The Secretary of State may by regulations restrict the installation of new prepayment meters for domestic energy use.”

It makes provision to ensure that consumers have full and informed consent on the installation of a prepayment meter, and that vulnerable customers are not put on to prepayment meters. We heard from the hon. Member for Kilmarnock and Loudoun some of the reasons why we have shared concerns about that. Some of my points will be very familiar to the Minister if he followed the debate earlier this year, when it reached crisis point.

Citizens Advice estimates that the number of people moved on to prepayment meters reached 600,000 in 2022, up from 380,000 in 2021. We know that that comes at a cost to them. There is a poverty premium on some of the most vulnerable, and on people on the lowest incomes, because of the shift to prepayment meters, and their use should be restricted as a result. Those with prepayment meters are more likely to be in fuel poverty and facing significant debts already. We find ourselves in a situation in which those requiring the most support are being forced to pay the most and are given the least help.

Citizens Advice revealed at the start of the year, at the height of the energy crisis, that someone was being cut off from their energy supply every 10 seconds, with millions unable to afford to top up their prepayment meters. We also know that so-called voluntary self-disconnection was a thing. People simply could not afford it, so they would not necessarily feature in the numbers. Labour’s call for a moratorium on the forced installation of prepayment meters was dismissed until the March Budget. The Secretary of State told the House on a number of occasions that he was talking to Ofgem and that plans were in motion, but during that period we were still hearing horrific stories about forced entry to people’s houses, warrants being issued and energy companies continuing to go down that path.

Our view was very much that it was the Government and the energy regulator’s responsibility to ensure that people were not left at home in the cold and the dark, yet we had to press incredibly hard before anything was achieved. Over the winter, more than 130,000 households that included a disabled person or someone with a long-term health condition were being disconnected from their energy supply at least once a week because they could not afford to top up. The same report also said that

“63% of PPM users who had disconnected in the last year said it had a negative impact on their mental health. This rises to 79% of disabled and people with long-term health conditions.”

Really good work was done by organisations such as Citizens Advice, but it also took tireless investigations from UK newspapers to expose the scale of the crisis. An investigation by the i in December showed that magistrates were batch processing hundreds of warrants in the space of a few minutes to allow the forced installation of prepayment meters, with one court in the north of England approving 496 warrants in just three minutes. At some point, we were given reassurances that people’s circumstances and vulnerabilities were being taken into account before the warrants were issued, but if nearly 500 are issued in three minutes, clearly they are not taking any information into account; it is very much a rubber-stamping exercise.

An undercover report by The Times in February highlighted how British Gas was employing debt collectors to break into people’s homes. Among them were customers described in the staff notes as a woman in her 50s with “severe mental health bipolar”, a woman who

“suffers with mobility problems and is partially sighted”,

and a mother whose

“daughter is disabled and has a hoist and electric wheelchair”.

We heard in debates at the time that many MPs had their own stories of constituents who were affected by the forced installation of prepayment meters; hopefully we will hear from some today to back up what we are calling for.

It was therefore a relief when action was taken in April, and a code of practice was introduced by Ofgem, but we have to wonder why the scheme is voluntary rather than compulsory. Just yesterday, the Committee on Fuel Poverty, in its annual report, expressed disappointment with Ofgem’s code of practice, stating that it is

“disappointingly limited in ambition”.

We have to wonder what the Government’s role is in that. I argue that Ofgem has proven incapable of dealing with the situation and it is up to the Government to step up and take control. That is what we seek to achieve with the new clauses.

The code’s voluntary nature still leaves too much power and judgment in the hands of energy suppliers, and the vulnerable and the voiceless should not be exposed to the dangers that prepayment meters pose, so I call on the Minister to give us some assurance that he accepts that it is the Government’s responsibility to act in this case—we cannot continue to leave it to voluntary codes of practice—and to support new clause 38.

--- Later in debate ---

[Andrew Bowie]

The pause will be until Ofgem has finalised the review of supplier practice in relation to prepayment meter customers. That is what we expect, anyway, because in addition to what I have said this morning, the Secretary of State has told Ofgem to toughen up on energy suppliers and to investigate customers’ experiences of how their supplier is performing. Following that, Ofgem established a new customer reporting system for households to pass on their experiences of how they are being treated. We are approaching this across the board. We believe, however, that any ban on the forced installation of prepayment meters would risk a build-up of customer debt. Unpaid debts increase costs for all energy consumers and could pose a risk to supplier stability.

To address issues around the forced installation of prepayment meters, Ofgem has recently published a new code of practice, as I mentioned. The code has been agreed with energy suppliers to improve protections for customers being moved involuntarily to a prepayment meter. It ensures better protections for vulnerable households, increased scrutiny of supplier practices, and redress measures where prepayment meters were wrongly installed. It includes provisions to prevent involuntary installations for all high-risk customers, including those dependent on powered medical equipment, people over 85, and households with residents with severe health issues. It also includes a requirement for suppliers to reassess whether prepayment remains the most suitable and preferred payment method for a customer once they have repaid debts. Suppliers must agree to any request from a prepayment customer who is clear of debt to move off a prepayment meter.

The rules to which suppliers must adhere regarding the installation of prepayment meters are set out in the licence conditions set by Ofgem as the independent regulator. Ofgem will undertake a formal statutory consultation process to modify suppliers’ licence conditions in line with the code ahead of this winter. This will allow Ofgem to use its full enforcement powers to enforce compliance with the code, ensuring that consumers are protected and that the poor practices that we have seen will not happen again.

It is vital that, as the independent regulator, Ofgem continues to set the rules to which energy suppliers must adhere in licence conditions. New clauses 2 and 38 would risk taking that power away from Ofgem. Allowing the Government to set rules outside the licence conditions would threaten Ofgem’s independence and its ability to regulate suppliers effectively.

The Government have always been clear that action is needed to crack down on the practice of forcing people, especially the most vulnerable, on to prepayment meters. We will continue to work closely with Ofgem and industry to see that the code leads to positive changes for vulnerable consumers. I hope that hon. Members are reassured by my explanation and that they might feel able to withdraw their new clauses.

[Alan Brown]

Despite what the Minister says, I am not fully convinced by those arguments. With the leave of the Committee, I will not press new clause 1 to a vote, but it is important to understand that new clause 2 would not even mean an outright ban on the installation of prepayment meters; it would just put protections in place so that people are not forced on to prepayment meters. It would also address debt build-up by ensuring that people are given access to debt counselling, for example. New clause 2 is about working with customers and providing additional protections, so I would certainly like to press it to a vote.

On new clause 1, I beg to ask leave to withdraw the motion.

Clause, by leave, withdrawn.

New Clause 2

Restriction of the use of prepayment meters

“(1) The Secretary of State may by regulations restrict the installation of new prepayment meters for domestic energy use.

(2) Regulations under subsection (1) may set conditions for energy suppliers in relation to the installation of new prepayment meters, including—

(a) ensuring consumers have given full and informed consent to the installation of a prepayment meter after having been offered access to a recognised debt counselling agency;

(b) ensuring vulnerable consumers are not required to use prepayment meters;

(c) publishing a non-exhaustive list of circumstances in which a consumer is considered vulnerable, including financially vulnerable; and

(d) ensuring consumers have a clear, timetabled route back to standard meters once specified conditions are met.

(3) In this section ‘installation of new prepayment meters’ includes switching existing energy meters to a prepayment mode.”—(Alan Brown.)

This new clause would allow the Secretary of State to restrict the use of prepayment meters, especially in relation to vulnerable consumers or where consumers are not aware they are being moved over to a prepayment mode.

Brought up, and read the First time.

Question put, That the clause be read a Second time.

--- Later in debate ---

[Alan Brown]

I beg to move, That the clause be read a Second time.

This fairly simple clause seeks for the Government to include in all future legislative impact assessments a net zero compatibility test. Achieving net zero is vital to save to planet. The Government have legally binding targets to hit net zero by 2050, and this Committee has agreed to Government amendments that give Ofgem a statutory duty to consider net zero. If the regulator is obliged to consider net zero, and if the Government have legal targets to achieve net zero, surely it makes sense to legislate for the Government to undertake a net zero compatibility assessment, so as to ensure that policies will not have an adverse impact on the legally binding target to achieve net zero. That would result in transparency on whether policies are adversely or positively impacting on the route to net zero. Such transparency would also be of assistance with costs, especially given the net zero cynics among Government Members. Importantly, Energy UK, the trade body that represents energy companies, also says that it supports a net zero compatibility test.

Given what I have outlined, I do not see why the Government would not accept the new clause. If the Government can carry out impact assessments of the effect of legislation on small businesses, why not carry one out on the wider, legally binding target to hit net zero? I hope that the Minister will accept the new clause.

[Andrew Bowie]

I thank the hon. Members for Kilmarnock and Loudoun and for Argyll and Bute (Brendan O’Hara) for tabling their new clause. The Government agree with the intention behind it, but we believe that it is unnecessary. We are already taking a cross-Government and systematic approach to embedding net zero and climate into Government policies and decision-making processes.

The creation by the Prime Minister of the new Department for Energy Security and Net Zero, which I am proud to serve, means that there is an entire Department dedicated to delivering on our climate ambitions. The Department’s focus, alongside energy security, is driving overall delivery of net zero and maximising the economic opportunity that the transition presents. The new Department’s officials work with counterparts across Government to co-ordinate action, working particularly closely with the Cabinet Office and the Treasury to ensure that net zero is prioritised in Government policy and decision making, and that it aligns with our wider priorities.

We are also working with industry and stakeholders, which has led to the creation of the net zero council, the green jobs delivery group, the jet zero council and the local net zero forum. We also work closely with our devolved Administration colleagues. We have also gone further by creating the Domestic and Economic Affairs (Energy, Climate and Net Zero) Committee, which brings together senior Ministers from across Government to ensure a co-ordinated approach to delivering net zero across government. Additionally, we have provided Green Book supplementary guidance on the valuation of energy use and greenhouse gas emissions for appraisal. That guidance helps officials when undertaking options appraisal for policies, programmes and projects; building business cases; and when conducting impact assessments. I hope that provides the hon. Member with the reassurance that he needs to withdraw his new clause.

[Alan Brown]

The Minister smiled when he said he hoped that that would satisfy me. There is no surprise that it does not. He outlined the creation of the new Department for Energy Security and Net Zero, and the important thing is that the net zero compatibility test would apply to all legislation that the Government introduce from every Department, so it would make every Department start to consider the net zero implications of its policies. That is what is critical about this new clause. I do not wish to withdraw the motion.

Question put and negatived.

New Clause 6

Just Transition Commission

“(1) Within six months of the date on which this Act is passed the Secretary of State must by regulations establish a body to be known as the ‘Just Transition Commission’.

(2) Regulations under subsection (1) must provide for the purposes of the Just Transition Commission to include—

(a) the provision of scrutiny and advice on the ongoing development of just transition plans;

(b) the provision of advice on appropriate approaches to monitoring and evaluation; and

(c) consultation with such persons as the Secretary of State shall consider appropriate in relation to the delivery and likely impact of just transition planning.

(3) The Just Transition Commission must produce and lay before Parliament an annual report of its work.”—(Alan Brown.)

Brought up, and read the First time.

--- Later in debate ---

[Andrew Bowie]

I thank the hon. Members for Kilmarnock and Loudoun and for Bristol East for their contributions. The Government agree with the intention behind the new clause; however, we already view transition as a consideration embedded across all Government policy actions. We are committed to managing the transition to net zero in such a manner that the positive opportunities are maximised for the economy and the population, while protecting individuals, communities and the economy.

Given that the majority of the low carbon economy lies outside London and the south-east of England, Government action to deliver our net zero commitment and build a low carbon economy will help to level up the UK and spur on the transition. That is demonstrated through the North sea transition deal agreement in March 2021, through which the UK became the first G7 country to agree a landmark deal to support the oil and gas industry’s transition to clean, green energy, while supporting 40,000 jobs in industrial heartlands across the UK.

Since delivering a net zero workforce transition needs joint action by Government, industry, and the education sector, the Government have established the green jobs delivery group. The group is headed up by Ministers and business leaders to act as the central forum for driving forward action on green jobs and skills, and has committed to publishing a net zero and nature workforce action plan in 2024, which will consider the workforce transition. We will continue to join up across the devolved Governments, who have already made excellent progress, with the Welsh Government having launched their net zero skills plan in March 2023, and the Scottish Government and Skills Development Scotland having launched their climate emergency skills action plan 2020-2025 in 2020.

[Alan Brown]

On working with the devolved Governments, does the Minister recognise that it is time for the UK Government to match fund the £500 million just transition fund that the Scottish Government have put in place?

[Andrew Bowie]

I thank the hon. Member for his intervention, and point him to the remarks that I just made regarding the huge investment that we are already making in the transition, the fact that we were the first G7 nation to sign a transition deal, and the £100 billion of private sector investment by 2030 that we hope to see, and that we are driving into British industries, supporting 480,000 green jobs by the end of the decade. We are looking to meet that target, unlike the Scottish Government’s green jobs target, which of course they have not met—alongside failing in four years out of five to meet their climate change targets, as was announced just last week. Since delivering a net zero workforce transition needs joint action by Government and industry, as I have said, we are continuing in that regard.

With respect to the scrutiny advised in the new clause, the Government already report progress on delivering our net zero ambitions through multiple channels—through parliamentary Select Committees, the Public Accounts Committee, independent bodies such as the National Audit Office, and—under the Climate Change Act 2008—the Climate Change Committee. I should point out that the hon. Member’s colleague and friend, the hon. Member for Na h-Eileanan an Iar (Angus Brendan MacNeil), has recently taken up the chairmanship of the Energy Security and Net Zero Committee, and will, I am sure, ably hold my Department to account. I hope that that provides the hon. Member for Kilmarnock and Loudoun with the reassurances that he needs to withdraw the motion.

[Andrew Bowie]

I thank the hon. Member for Sheffield, Hallam for the tone of her words. The Government believe that the best way to secure jobs for oil and gas workers is to continue to give them support and, indeed, to support investment into the North sea, which not only provides secure employment for them now and into the future but provides for our energy security needs, which is something the Labour party might take note of moving forward.

As a representative of a constituency in the north-east of Scotland, I am fully aware of the pressures that workers in the North sea oil and gas industry face and the desires of many of them to transition to new green jobs. We see that in the city of Aberdeen, which is transitioning from being the oil and gas capital of Europe to the energy capital of Europe. That is why we have set up our green jobs delivery group and why we are identifying recommendations and actions for central and local government, industry and business, and the devolved Administrations.

We are also exploring how we can support local areas to deliver a successful transition, and the Department for Work and Pensions is expanding sector-based work academy programmes to help those who are out of work develop the skills they need to re-enter the job market. The programme runs in England and Scotland and is developed by jobcentres in partnership with employers and training providers. The Government take that incredibly seriously and I have a particular interest in the matter.

I thank the hon. Lady for her comments, but we are clear that it is very important to support people who are reskilling and upskilling from traditional oil and gas jobs into new green jobs, while also investing in our oil and gas industry to ensure that investment continues to support the traditional jobs that will be needed for some time yet.

[Alan Brown]

The Minister puts forward arguments that suggest the Government are doing a lot in terms of green jobs. The Government are doing some things, but not enough. That is the reality.

To go back to my intervention on the hon. Member for Bristol East, the CfD rules should have been changed years ago to incentivise supply chain development and create those homegrown jobs. Perhaps a just transition commission would have provided advice on how that procurement could have been taken forward. I want to revisit that. The Government should think and should speak to people engaged in the just transition commission. In the meantime, I beg to ask leave to withdraw the motion.

Clause, by leave, withdrawn.

New Clause 33

Purposes

“(1) The principal purpose of this Act is to increase the resilience and reliability of energy systems across the UK, support the delivery of the UK’s climate change commitments and reform the UK’s energy system while minimising costs to consumers and protecting them from unfair pricing.

(2) In performing functions under this Act, the relevant persons and bodies shall have regard to—

(a) the principal purpose set out in subsection (1);

(b) the Secretary of State’s duties under sections 1 and 4(1)(b) of the Climate Change Act 2008 (carbon targets and budgets) and international obligations contained within Article 2 of the Paris Agreement under the United Nations Framework Convention on Climate Change;

(c) the desirability of reducing costs to consumers and alleviating fuel poverty; and

(d) the desirability of securing a diverse and viable long- term energy supply.

(3) In this section ‘the relevant persons and bodies’ means—

(a) the Secretary of State;

(b) any public authority.”—(Dr Whitehead.)

This new clause and NC34, NC35 and NC36 are intended as a suite of purpose and strategy clauses for this Bill.

Brought up, and read the First time.

Energy Bill [ Lords ] (Fourteenth sitting)

Debate between Andrew Bowie and Alan Brown

Committee stage
Thursday 22nd June 2023 Public Bill Committees

[Alan Brown]

I thank the right hon. Gentleman for that clarification. I was not casting any aspersions about the hon. Member not being here; I was just saying that it was unfortunate when I am addressing her comments. I note how important that issue in her constituency is and hope it gets resolved.

On coalmining heritage—I do not think I need to point this out, but I will anyway, as an obvious history lesson—the coalmines were shut down as a result of Maggie Thatcher putting her anti-union ideology ahead of the coalmining industry. At that time she was more than happy to import coal from the likes of Poland and bring it in from overseas while shutting the coalmines here. That is a fact.

[The Parliamentary Under-Secretary of State for Energy Security and Net Zero (Andrew Bowie)]

indicated dissent.

[Alan Brown]

The Minister can shake his head but that is a fact.

--- Later in debate ---

[Alan Brown]

I understand the point that Government Members are trying to make but, at the end of the day, if we are shipping coal to Germany, we are still increasing UK shipping emissions. We are increasing emissions from the UK to about 400,000 tonnes of CO₂. In the global context, there is no saying whether those coal emissions are getting displaced if the coal is going to Germany, so we cannot guarantee a reduction in global emissions. We would be putting more coal on the market, which is coal somebody else will snap up elsewhere. The likelihood is that we would actually increase emissions.

I should have said in my opening remarks that I represent a former coalmining area, so I recognise the devastation caused by pit closures. My area recovered some jobs through open-cast coalmining, but even that industry collapsed a few years ago, leaving us with devastating blights on the landscape and huge craters that needed filling. Unfortunately, again, there was no help from the UK Government when we needed it. I understand the legacy of coalmining and I want support for these areas, but opening new coalmines is not the way to do it.

We cannot turn back the clock. What we need to do is create jobs for the future. We need green-based jobs in coalmining areas such as mine, using geothermal energy and making use of the closed mines. Let us make them an asset for the future, providing clean energy and reducing energy bills at a local level.

The Committee will be pleased that I am bringing my monologue to an end. I hope that my comments are going to convince the Government and Conservative Committee members that there is no need for new coalmines going forward. I would be delighted to hear the Minister, in his summing up, say that he is not going to move against clause 270, but is going to retain it and listen to those of us who want it.

Clause 271 is to be replaced by new clause 52. I welcome the Government’s change on that and their making reaching net zero a statutory duty of Ofgem. Will the Minister tell us whether new clause 52 and Ofgem’s new statutory duties will make it much easier for Ofgem to allow anticipatory investment? That has been one of the issues, so we want to make sure that it can do that and do that forward plan-ahead, rather than building more constraints into the grid while upgrading it at the same time.

Turning to clauses 272 and 273, it seems like for ages Energy Ministers have stated their support for the principle of the Local Electricity Bill—community electricity generation and the sale of electricity locally—but they have always said that the Bill was not the right solution to facilitate that. The original drafters and MPs who have tried to bring forward private Members’ Bills have changed the Bill to try to address the concerns of Ministers, but that still was not enough.

The cross-party group of peers who drafted clauses 272 and 273 to mimic the effect of the Local Electricity Bill again tried to address the Government’s concerns. I fail to understand why the Government are still against the two clauses. It is worth pointing out that 323 MPs overall, including 128 Tory MPs—let alone myriad local authorities, environmental groups and individuals—have supported the Bill. The feet-dragging makes no sense. I commend the hon. Member for Bristol East for pointing out that the Minister himself was a signatory to the Local Electricity Bill. I wonder what about a ministerial car made him change his mind about supporting it.

[Andrew Bowie]

Jealous!

[Alan Brown]

Not of one down here!

Community energy schemes have seen almost no growth for six years, despite renewables clearly being cheaper than ever. Of course, that is tied in with the removal of feed-in tariffs, which were very successful in delivering the likes of small-scale hydro across the highlands, for example.

The Government are pressing ahead with voting to remove clauses 272 and 273. What are their proposals for facilitating community energy generation and providing the certainty of price that groups and companies need to be able to move forward? The Minister must be aware that the smart energy guarantee does not deliver at present and, as I say, there has been no growth in community energy schemes in six years.

At the moment, community energy schemes account for just 0.5% of the UK’s electricity. According to the Environmental Audit Committee, that could increase twentyfold in 10 years, so something like 10% of energy by community generation could be achieved in 10 years if the right conditions are put in place. Even if that is overstated and the reality is only 5%, that would still represent a huge shift in generation and would provide local grids with stability and resilience. That would be much better value than the new £35 billion Sizewell C nuclear station.

If we consider nuclear, price certainty is not a new concept. It underpins the contract for difference auction rates, and it is what is provided for Hinkley Point C. A great example of the potential scope for community energy generation is a study being undertaken in my constituency by the Newmilns Regeneration Association, which is investigating the installation of solar panels on the brownfield site of the former Vesuvius factory. The aim is to sell electricity to local industry, reducing its bills and helping it to be sustainable, and for Newmilns to be a net zero town going forward. The national regulatory authorities believe that the Local Electricity Bill, or the alternative in the form of clauses 272 and 273, needs to be in place to facilitate trading of the electricity that would be generated. That is why I fully support the clauses’ retention in the Bill.

Clause 272 would provide guaranteed income for electricity for small-scale renewable energy generators, and clause 273 would enable community schemes registered under the clause 272 guarantee to sell the electricity they generate locally. The Committee Clerks circulated additional written evidence today, in which professors from the University of Manchester say there should be no fear about clauses 272 and 273, because they will not unduly affect the prices that suppliers have to pay for electricity; at worst, the effect will be marginal. They also recommend that the Government retain the clauses. I really hope that they do.

--- Later in debate ---

[Andrew Bowie]

As the hon. Lady knows, we are listening and acting on the concerns raised by many in this place and the other place, including on Second Reading in the Commons, when issues regarding the hydrogen levy were raised. I am sure that we will have much more to say on that when the Bill comes back to the Floor of the House.

I am also not convinced that the Lords amendments tackle the real issues faced by community energy groups: high start-up costs and lack of expertise. I have had positive engagement with Members on that. The Government are therefore considering other options that could tackle such issues in a fairer and more proportionate way ahead of Report stage. I hope that members of the Committee and those who are following our proceedings with interest are reassured by those comments.

The hon. Member for Kilmarnock and Loudoun spoke at length, as did other Members—I hope to cover most contributions in my response—about coal. The hon. Gentleman specifically mentioned exporting coal to Germany. It is rather ironic that the only reason that Germany is importing coal is its nonsensical position on nuclear and new nuclear power—a position that is shared by the Scottish Government in Edinburgh. The hon. Gentleman might want to take that away and consider it.

The hon. Gentleman also mentioned that he disagreed with the comment by my hon. Friend the Member for South Ribble that the debate in Committee the other day was one of the “most jaw-dropping” moments of her political career, given the events of the week. I concur with the hon. Gentleman that that was a bit surprising, given that this was the week that a former leader of Aberdeen Labour claimed that Labour’s energy policies were the “final straw”—this is a Labour councillor saying this—and that

“Margaret Thatcher never delivered a more brutal put down of an industry than that delivered by Keir Starmer in Edinburgh.”

In the same week, a Green Minister in the Scottish Parliament faced a vote of no confidence, the Whip was withdrawn from a former SNP Minister, and a person of interest in an ongoing police investigation professed their innocence but could not do the same for another person of interest, to whom she is married. The last week was quite an exciting week for politics—I agree.

Our reliance on coal is rapidly diminishing, but there is still a need for it in industries such as steel and cement, so now is not the right time to make these licensing changes. I thank colleagues, including my hon. Friend the Member for South Ribble, for highlighting the role that these industries play in our constituencies, where they provide jobs and contribute to the economy.

[Alan Brown]

On coalmines, what does the Minister think about the suggestion from the hon. Member for Hitchin and Harpenden that any new licences could be supplied on the condition that the coal be sold only on the domestic market?

[Andrew Bowie]

I would not like to shut down any of the ideas put forward by my hon. Friend the Member for Hitchin and Harpenden; the Government will consider all suggestions for the future licensing of coalmines. I do not want to go down a rabbit hole and make commitments on matters for which I may not be responsible in future.

I found the comments by my right hon. Friend the Member for Elmet and Rothwell fascinating, as I do all his comments. I was particularly interested in his intervention on the hon. Member for Southampton, Test regarding the situation in Germany, which I also referenced.

A number of Opposition Members mentioned the coalmine in Cumbria. The decision by the Secretary of State for Levelling Up, Housing and Communities followed a comprehensive planning inquiry, which heard from 40 witnesses, and considered matters including the demand for coking coal and its suitability, climate change, and impact on the local economy. The full reasons for the Secretary of State’s decision are set out in a published letter, which should be read in its entirety, but he concluded that

“there is currently a UK and European market for the coal,”

and that

“it is highly likely that a global demand would remain”.

Alongside that, the UK is working to support the decarbonisation of steel and other industries that still rely on coke and coal through our £315 million industrial energy transformation fund, which helps businesses with high energy use to cut their energy bills and carbon emissions by investing in energy efficiency and low-carbon technologies.

For those reasons, I do not agree with the hon. Members for Bristol East, for Southampton, Test, and for Sheffield, Hallam. A complete ban is not appropriate, and risks our having to meet future demand for the industries that I mentioned from our own resources. The hon. Member for Sheffield, Hallam—I am sorry that she is not here today—mentioned the Government’s commitment to COP26. As I said in my opening remarks, coal’s share of our electricity supply has already declined significantly in recent years; it has gone from providing almost 40% of our electricity in 2012 to less than 2% in 2021. I do not agree with professions from Opposition Members that we are surrendering our lead on climate issues to the Biden Administration in the USA. It is not for me to question the decisions of that Administration, or to say whether they are for good or ill, but they have just approved a drilling licence in the Arctic circle, so I suggest that our lead on these issues remains extant.

[Alan Brown]

Remember, we are talking about comments from not just Opposition Members; comments about us losing our international lead were made by the right hon. Member for Kingswood, who did a net zero review; the COP26 President, the right hon. Member for Reading West; and the chair of the Climate Change Committee. That is three senior Tories who are saying that the UK is losing its international lead.

[Andrew Bowie]

I recognise that. I speak with my right hon. and hon. Friends on thisissue and others, and I understand the concerns, including those of Committee members. However,I reassure all right hon. and hon. Members that phasing out unabated coal power generation within timeframes that keep 1.5°C within reach remains a key UK Government priority, and the Government are leading on that. That builds on our COP26 energy transition legacy, which included securing agreement to accelerate efforts

“towards the phasedown of unabated coal power”

in the Glasgow climate pact, our co-leadership of the Powering Past Coal Alliance, and launching an international just transition declaration at the Glasgow summit. I would be very surprised if we did not return to some of these issues on Report, but I hope that the Committee will carefully consider my remarks.

Energy Bill [ Lords ] (Twelfth sitting)

Debate between Andrew Bowie and Alan Brown

Committee stage
Tuesday 20th June 2023 Public Bill Committees

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

Given the Government’s plan for a quarter of electricity to be generated by nuclear by 2045, how much additional nuclear waste does the Minister predict? How much additional nuclear waste will be stored at the new geological disposal site, and what is the estimated cost of the new facility?

[Andrew Bowie]

The costings of any geological disposal facility will be presented to Parliament for scrutiny, but the process is under way to find a site that will be large enough to cope with any increase in waste from our civil nuclear fleet. The hon. Gentleman might be interested to learn that Finland has just opened, and is beginning to utilise, a new GDF. That is the model that we in the UK would like to follow.

[Andrew Bowie]

Absolutely—I could not agree more with my hon. Friend. I would be delighted to propose a trip to Finland for all Committee members, but it is not within my gift to organise such a trip. If anybody who is able to host us is listening, I would be keen to engage on that.

I agree with my hon. Friend’s comments regarding new nuclear waste. The excellent work being done in Sellafield—I know that is not in his constituency, but it is certainly in his part of the country—is an example to the world of how we regulate and dispose safely of nuclear waste that has been created. When we talk about a GDF, we are talking about new nuclear waste, which will come about as part of the exciting, new, world-leading and revolutionary investment in a civil nuclear fleet that the United Kingdom is engaged in right now. The north-west of England will be at the very heart of that.

[Alan Brown]

Will the Minister explain the process for looking for a new geological disposal site? Will consultants do it? Will it be desktop-based to start with, and then involve intrusive site investigations? Will people bid to have a site? How will the process work?

[Andrew Bowie]

That is a good question. In fact, I was just coming to the process. The GDF siting process is a consent-based approach that requires a willing community to be a partner in the project’s development. The siting process is already under way. Four areas have entered the process: three areas in Cumberland—in Copeland and Allerdale—and one in East Lindsey in Lincolnshire.

Government amendment 120 removes superfluous wording in new section 3A of the Nuclear Installations Act 1965. A licensed disposal site, as defined for the purposes of the new section, is not a nuclear installation within the meaning given by section 26(1) of the Act, so does not need to be mentioned explicitly in subsection (3). The amendment therefore removes it from the clause to correct this error. Amendment 121 is consequential on amendment 120 and removes the unnecessary definition of a licensed disposal site from new section 3A of the Nuclear Installations Act 1965.

The UK’s nuclear decommissioning programme is accelerating as older nuclear sites approach the end of their life cycle. As the first major nuclear sites will reach their final stages of decommissioning in the 2030s, it is essential that our nuclear legal framework is fit for purpose, while continuing to ensure an absolute focus on safety and security as the key priority. The Nuclear Installations Act 1965, which provides such a framework for nuclear safety and nuclear third-party liability, was written before serious consideration was given to decommissioning.

Clause 257 will amend the procedures for exiting nuclear third-party liability. Currently, the 1965 Act has the effect of requiring nuclear sites to remain subject to nuclear third-party liability for longer than is required by internationally agreed standards. The clause implements an alternative route based on internationally agreed recommendations and will apply to nuclear installations in the process of being decommissioned. It adopts a simpler and equally safe route out of the NTPL regime for non-nuclear parts of the nuclear site, such as laboratories, workshops, offices, car parks and land.

Clause 257 changes procedures for ending nuclear licences and regulation by the Office for Nuclear Regulation. It will require the licensee to apply to the ONR to end the licence and will require the ONR to consult the Health and Safety Executive before accepting an application. The ONR will accept an application when it considers that all nuclear safety matters have been resolved. Once the licence has ended, the ONR’s regulation of the site will cease. HSE will pick up responsibility for regulating the health and safety of work activities, while the relevant environmental agency will continue to regulate environmental matters for years or even decades after the end of the nuclear licence.

The clause has the effect of removing a barrier to the on-site disposal of suitable low or very low-level radioactive waste and avoiding the unnecessary excavation and transport of this material. Demolition work results in the creation of large amounts of rubble and waste, a small percentage of which may be lightly contaminated with radioactivity. Excavating that material can create radioactive dust, which is a hazard for workers. Transporting waste to disposal facilities can have noise and traffic impacts for local residents.

The existing environmental legislation, which the clause does not modify, was developed with land remediation in mind. It allows the operator to apply to the relevant environmental agency for a permit to dispose of suitable low or very low-level radioactive waste on site. Applications are subject to robust analysis, and an environmental permit would be granted only if disposing of the waste on site would be a safer and more sustainable option than excavating it and transporting it to disposal facilities elsewhere.

Finally, the clause will allow operators to apply to the ONR to exclude those disposal facilities for nuclear waste that do not require a nuclear licence from the nuclear licensed site boundary. To be clear, the clause does not constitute a relaxation in the standards for public protection. It aligns with UK radiological protection law, international standards and UK Health Security Agency guidance.

Clause 258 will bring an international agreement on nuclear third-party liability into UK law. Its aim is to lower the financial and regulatory burden on low-risk radioactive waste disposal facilities. Sites that meet the criteria will be exempted from the requirement to make provision for third-party claims. Injuries or damages will instead be covered by ordinary civil law, which is robust, proportionate and established. The clause allows the Secretary of State to set out by regulation the conditions that must be met to be excluded from nuclear third-party liability under the OECD Nuclear Energy Agency’s criteria.

The clause includes limits for radioactivity concentration that disposal facilities must meet. Only facilities with sufficiently low concentrations of radioactivity and negligible nuclear risk will be exempted from the requirement to hold nuclear third-party liability. The measures will help to ensure that the UK has sufficient disposal facilities for low and very low-level waste as the decommissioning of the UK’s legacy facilities accelerates and new nuclear projects are developed.

Clause 259 gives effect to schedule 20, which amends the Nuclear Installations Act 1965 to enable UK accession to a second international nuclear third-party liability treaty called the convention on supplementary compensation for nuclear damage. Nuclear third-party liability regimes aim to ensure that victims of a nuclear incident have access to adequate compensation. They also support investor and supply chain confidence by channelling liability to the nuclear operator and placing limits on their liability. The UK already has a robust nuclear third-party liability regime, being party to the Paris and Brussels agreements. The schedule 20 amendments to the 1965 Act that enable UK accession to the CSC will enhance the existing UK regime. Accession to the CSC enhances several of the benefits of our current nuclear third-party liability regime.

Government amendments 124, 125, 126, 127, 128, 129 and 132 make minor and consequential changes to schedule 20 to ensure the accurate implementation of the CSC. They will ensure that, following accession to the CSC, the UK does not inadvertently close off routes to compensation for nuclear damage. That applies to countries and victims that are currently able to claim under our existing nuclear third-party liability regime. To establish that, they seek to remove unnecessary consequential amendments as a result of the further amendments tabled. The changes also ensure that victims from a non-nuclear CSC state can claim under the appropriate conventions.

--- Later in debate ---

[Andrew Bowie]

I could not agree any more wholeheartedly with or put it any better than my right hon. Friend. For energy security reasons, it is vital that we maintain all options that are open to us. That does not in any way impede, get in the way of or stand contrary to our overarching net zero ambition.

[Alan Brown]

On that point, as the Minister agrees with his colleague, is the Minister saying that he needs to keep coal generation as an option, on the table, beyond the planned phase-out date? Because that is what I just heard.

[Andrew Bowie]

No, the planned phase-out date of October 2024 is extant and something that we are working towards. However, it is important that we ensure that, as part of our electricity baseload, we have access to the relevant energy sources so that we ensure this country’s energy security. Given the situation with energy security in central Europe and, indeed, worldwide, that should be understood by everyone.

[Alan Brown]

If the Government allow the licensing of a new coalmine, how will that help energy security? The Minister has just committed to phasing out the use of unabated coal by October 2024, so, by the time a new coalmine is operational, it certainly will not add any energy security.

[Andrew Bowie]

The hon. Gentleman heard my answer to that very point. I do not think I need to labour it much more.

--- Later in debate ---

[Andrew Bowie]

I very much question the figures that the hon. Gentleman has just put to the Committee. I stress that it is really important that we ensure that the industries in the United Kingdom that rely on coal are able to rely on a domestic source for that coal—British coal—and not on imports from overseas, which will actually increase carbon emissions.

[Alan Brown]

rose—

[Andrew Bowie]

I give way to the hon. Gentleman.

[The Chair]

Order. May I just point out that some of these interventions are getting a little bit lengthy? We have a whole debate—one other Member has already indicated that she wants to speak—so colleagues can make speeches if they wish.

[Alan Brown]

I will be brief, Dr Huq. On the Minister’s point, is it not the case that up to 85% of the coke that will be exported to the EU is coming out of coal in Cumbria? Does he agree with the figures of Lord Deben, the chair of the Committee on Climate Change, which state that the new Cumbrian coal mine will emit about 400,000 tonnes of CO₂ a year, equivalent to 200,000 cars being added to the road?

[Andrew Bowie]

Now I am getting confused, because I have some figures coming from over there and other figures coming from over there. It is important that we ensure that industries that rely on a source of coal are able to rely on domestic sources of coal. This clause, proposed by the Labour party, would prevent that from happening, harm future investment, harm jobs and harm our progress.

--- Later in debate ---

[Andrew Bowie]

The hon. Lady is hearing me explain at great length why the position of the Government is what it is.

Clause 272 seeks a minimum export guarantee scheme. Community energy projects can already access power purchase agreements, which are arrangements for the continuous purchase of power over a given period with market-reflective prices. For example, Younity, a joint venture between Octopus and Midcounties Co-operative, already purchases electricity from more than 200 community groups of all sizes. It has PPAs of varying contract lengths, from six months to five years. Renewable Exchange has also enabled more than 100 community projects to sell electricity via PPAs since 2018.

When we introduced the smart export guarantee, we consciously moved from a consumer-funded subsidy model to a competitive market-based system with cost-reflective pricing. That was in line with the vision to meet our net zero commitments at the lowest net cost to UK taxpayers, consumers and businesses. Introducing a fixed price would be a step backwards, as it requires all energy consumers to pay more than the market price for electricity to subside local communities that benefit from community energy projects. An electricity export guarantee indexed to the wholesale price is inconsistent with the Government’s aim to decouple renewable generation from a wholesale price linked to the marginal cost, usually fossil fuel generation or gas. A static export price could also dampen price signals needed in the system, for example, in the use of intraday batteries.

History suggests that such a support scheme would have only a minimal impact on deployment. For example, deployment of community energy projects over the final five years of the much more generous feed-in tariff subsidy scheme was still very low. These projects are also typically more expensive than larger utility-scale renewable projects, with small solar and onshore wind projects between 50% and 70% more expensive. The proposal would be mandatory for suppliers with more than 150,000 consumers, and would therefore introduce a huge new administrative burden. Suppliers would face the additional one-off costs of putting in place process and IT infrastructure, as well as ongoing costs of managing the scheme, which would be passed on to consumers in higher bills. It is likely that it will disproportionately impact smaller suppliers, sitting just above the 150,000 customer threshold.

Similarly, on clause 273 it is the Government’s view that a local tariff is unlikely to result in a better price for consumers. Suppliers would incur potentially significant costs in setting up and delivering the scheme. They would also have to recoup the additional costs, which we anticipate would be via the service fee and would therefore be recoverable only from local consumers. A small-scale low-carbon generator is also unlikely to guarantee a supply of electricity to local consumers at all times. Suppliers would have to buy additional wholesale energy to cover all local consumer demand, while continuing to charge for all other supply costs incurred. The local tariff would also need to reflect the export price paid to the generator. Presumably that is intended to ensure that local consumers benefit from cheaper export prices, but it would create an unintended outcome whereby higher export prices benefit the generator and increase the tariff price.

I hope that I have explained at length why I, as the Member for West Aberdeenshire and Kincardine, am espousing this position. I reassure the Committee that I am working with my officials to explore what other credible options are available to support the community energy sector. Indeed, work continues as we speak. We are taking these issues seriously, but for the reasons that I have provided I will oppose the clauses.

[Alan Brown]

The Minister says that he is working with his officials, but assuming that the Government majority on the Committee will reject clauses 272 and 273, what opportunity is there for mechanisms to be introduced to support local energy?

[Andrew Bowie]

As much as I know that we are all aghast at the thought of the Committee finishing and the Bill going back to the House, that will not be the end of our journey together. We will gather again on Report and Third Reading, so there will be ample opportunity for the hon. Gentleman to speak on the Bill at that stage, and for any changes that might be required to it.

Energy Bill [ Lords ] (Ninth sitting)

Debate between Andrew Bowie and Alan Brown

Committee stage
Tuesday 13th June 2023 Public Bill Committees

[Alan Brown]

I know; I was just linking to where the clause came from and wanted to put these matters out there.

I do support the clause, although the future homes standard is effectively only for England. I have already raised my concerns that the Government are not moving fast enough, because they are still at the consultation stage. Subsection 1(d) is really important. The Government should publish an action plan showing how they are going to bring forward the future homes standard. That will give certainty to developers. They need to plan ahead for the technical requirements that they need to apply to new housing developments. It is important that a look-ahead is given to developers as soon as possible.

In terms of all the other targets, given that some of them go beyond the life of this Government anyway, I find it hard to understand why the Government are so reticent to accept the targets for energy efficiency installs. We can argue about whether Labour did more installs than are currently happening in terms of the number of energy efficiency measures, but the most important thing is the upgrading to EPC band C, to which the clause refers.

The Government can talk about the progress they have made in getting properties to EPC band C, but it is still only hovering around the 50% bracket, and that is after 12 years in government. If they are going to hit the target by 2035, there is no doubt that much more structured delivery plans will have to be put in place. Clearly, the properties that we can tackle today are the ones that are most easy to upgrade. It is going to get harder and harder the further into the programme we go. It is important that the Government are held to account on their targets and that they come forward and say how they are going to meet those targets.

Finally, on ironies, I agree with what the Labour party has been saying on energy efficiency, but this has come just after it has done a U-turn on the green new deal and the green investment it promised us all. I will leave it there, but there are a lot of contradictions on both sides, I would say.

[Andrew Bowie]

It is a pleasure to respond to the debate. There is some confusion at the minute. Indeed, I was slightly confused at the beginning of the debate, given that the hon. Member for Southampton, Test seemed at one stage to be whipping on behalf of the Government and giving advice to Conservative Members— I urge all colleagues on this side not to listen to his words. If I am not mistaken, he was suggesting that the clause we are against was tabled by the Government in the other place; Baroness Hayman is a Labour peer and Lord Foster of Bath is a Liberal Democrat peer.

--- Later in debate ---

[Alan Brown]

I thank the Minister for giving way again. In this clause that the Government are trying to take out, there is reference to upgrading homes—it is a condition that the Government must abide by—

“where practical, cost effective and affordable”.

Can he provide a definition of what is practical, cost-effective and affordable? I could not get that out of the previous Secretary of State for Business, Energy and Industrial Strategy.

[Andrew Bowie]

What is practical and affordable will obviously be determined by individual circumstances and the market conditions at the time. Let me also say that I would have welcomed any acknowledgement from the Scottish National party, who are in government in Scotland, that we are working together across these islands to improve insulation and that we have made great progress as an island nation in getting towards 50% of all homes being rated EPC level C or above.

As I was just going on to conclude, we will take no lectures from the Labour party on the costings of projects, given that just last week it had to announce a staggering U-turn on its £28 billion investment in green technology and jobs, and it is yet to come up with any answer about how it will fund the £100 billion of pledges that it has announced thus far.

In terms of costings, a plan, moving this country forward, delivering on insulation and delivering on this entire green strategy, I have much faith in the Government’s position and in what we are seeking to do here today. That is why I advise all my colleagues to vote with the Government this afternoon.

Question put, That the clause stand part of the Bill.

Energy Bill [ Lords ] (Eighth sitting)

Debate between Andrew Bowie and Alan Brown

Committee stage
Tuesday 13th June 2023 Public Bill Committees

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

Will the Minister give way?

[Andrew Bowie]

I rather expected that. I am happy to.

[Alan Brown]

I thank the Minister; he almost invited the intervention. This is about consultation on matters that are fully devolved. We had a meeting, and the Minister expressed sympathy for our position on the need to find a way to strengthen the “consult” language so that it is not the Secretary of State imposing something. I wonder if he has any further information on that.

[Andrew Bowie]

I thank the hon. Member for his question. I received a letter from the Energy Minister in the Scottish Government, Neil Gray, just last week—I am formulating a response just now—on the very issue of consultation and consents. Discussions are ongoing as to the exact form that will take.

Clause 175 outlines the parliamentary procedures required for the regulations made under clause 174.

Clause 176 establishes that the Gas and Electricity Markets Authority—commonly referred to as GEMA—and the Northern Ireland Authority for Utility Regulation can recover the costs of regulating heat networks using gas and electricity licence fees. The Bill allows the recovery of costs for other bodies operating within the regulatory framework, such as the code manager and other bodies appointed to administer specific functions in regulation. The Government previously consulted on their proposed approach to cost recovery and received broad stakeholder support. The clause will facilitate the implementation of that approach and ensure that heat network regulation is sustainably and fairly funded.

Clause 177 provides power for the Secretary of State to designate, via regulations, GEMA as the licensing authority for the purposes of the Heat Networks (Scotland) Act 2021. The Scottish Government and other stakeholders have agreed to Ofgem being the regulator across all of Great Britain.

Clause 178 enables the Secretary of State to amend, via regulations, the Heat Networks (Scotland) Act 2021 to give the licensing authority compliance monitoring and enforcement powers under that Act. We intend to designate Ofgem as the licensing authority. That designation and the regulations will allow Ofgem to carry out this regulatory role in Scotland. Regulations under this clause must provide that offences created by the regulations are triable summarily only and punishable by a maximum of three months in prison or a fine not exceeding £200, or both.

[Alan Brown]

I thank the Minister for giving way again. He mentioned the possible imprisonment of up to three months. That seems to cross over into the Scottish justice system, because the Scottish Government have effectively set a presumption against short sentences. This would clearly be a short prison sentence, so how would that work in reality, against the wishes of sentencing legislation in Scotland?

[Andrew Bowie]

The hon. Member makes a good point. As I said, the Scottish Government have agreed to Ofgem being the regulator across Great Britain. I will go away and find a detailed answer to his point, which is well made—indeed, it is important to my constituents—about how the crossover will work with the Scottish justice system. It is a completely devolved competency, which we, of course, respect.

Clause 179 provides definitions for the interpretation of this chapter’s clauses. The clause defines “the Department” as the Department for the Economy in Northern Ireland and “the NIAUR” as the Northern Ireland Authority for Utility Regulation.

Schedule 16 covers heat network regulation. Part 1 of the schedule provides definitions of the terms used in the schedule. Part 2 allows the Secretary of State to make regulations about the regulator’s objectives. The main objective of the regulator will be to protect the interests of current and future heat network consumers. Part 3 covers heat network authorisations. The authorisation regime will ensure consistent standards across the industry, raising consumer protections. To carry out regulated activities, persons will be required to comply with conditions of authorisation, and the regulator will have the powers to enforce compliance.

Part 4 covers code governance in relation to heat networks, and part 5 covers the installation and maintenance of licences. Holders of licences will have the additional powers required for installing and maintaining heat network equipment. The regulations may require the regulator to be satisfied that the person applying for the licence is suitable, as well as the criteria they must use when making this judgment.

Part 6 covers the enforcement of conditions in licences or authorisations. The regulator is able to issue orders and penalties when a person is likely to contravene or has contravened a condition. Orders can be used to require compliance with a condition. If breaking a condition has caused damage, loss or inconvenience for a consumer, the regulator can make a consumer redress order.

Part 7 covers the regulator’s powers of investigation. Although it is not considered appropriate to introduce a price cap on the cost of heat provided by heat networks now, the Government do intend to provide for the regulator to investigate whether the prices charged are disproportionate. That enables the regulator to take enforcement action against authorised persons charging disproportionate prices.

Part 8 covers step-in arrangements. The purpose of the arrangements is to facilitate the transfer of a regulated activity in relation to a heat network to a new entity, should the old entity no longer be able to carry on that activity. Part 9 covers the special administration regime. Similar to the provision for other essential services such as gas and electricity markets, this alters the normal administration process to allow for the continued supply of heat. It provides the ability to deploy a backstop should other actions to protect heat supply fail.

Part 10 allows regulations about the supply of heat to premises, including new connections and the metering of supply, and part 11 covers protections for consumers. Part 12 covers payments from the sector to support the special administration regime. It allows for regulations that will authorise the regulator to charge heat networks, via their authorisation conditions, to fund the regime. In that way, the regime spreads the cost of a firm failing across all companies. This is a fair and proportionate way of funding the regime.

Finally, part 13 covers a range of topics, including consultation and co-operation, the objectives of the Secretary of State and Departments across the UK in carrying out their functions, and the creation of offences. I hope Members agree that heat networks play an important role in decarbonising heat and supporting the delivery of our net zero commitments.

--- Later in debate ---

[Alan Brown]

Why do we need this? This is why I also support new clause 39. As far back as 2017, the then director of the Department for Business, Energy and Industrial Strategy director stated that

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

That means that some 6 million homes will have district heating, so it is important that we actually facilitate that to allow the transition to net zero. It is even more important that we provide protection for those 6 million homes, or people will not accept the principle of district heating and we will not get to net zero. At the moment, around half a million homes have some form of either district heating or communal hot water.

The numbers we are talking about mean that I agree with new clause 39 that a price cap is needed. It would give surety and protection to customers, and help avoid bad news stories as well. Even when I spoke two years ago, consumers and landlords were reporting price rises of up to 700%, according to a Heat Trust report. That illustrates the need for a cap and protection, so that people cannot just continue to ramp up costs.

Amendment 101 is a simple amendment, and I hope the Government will consider accepting it. It is almost administrative, but it does have qualities. I have in the past reported the fact that communal heat networks sometimes operate inefficiently because they are not subject to technical standards. Some contractors choose to complete heat system installations that come at the lowest form of capital cost, rather than the more efficient, longer-term operational systems that give whole-life savings. I wonder if amendment 101 would protect against that. Could the Minister advise us on how the new regulations will ensure that it is the most efficient systems that will be installed, to the benefit of customers and consumers?

Previously, the Government’s green energy support programme had to address the fact that some people in district networks were classified as commercial customers. That was because, as the shadow Minister has said, it is in effect small independent companies that operate these networks. We need to ensure that those classified as commercial customers are protected as much as domestic customers. I should have intervened on the shadow Minister, but I hope that new clause 39 would provide that protection. We welcome the provision, but in order to convert people to district heat networks, we really need wider, joined-up Government policy.

[Andrew Bowie]

I welcome the broad welcome given by His Majesty’s official Opposition and the Scottish National party to the clauses. I tend to agree with the hon. Members for Southampton, Test and for Kilmarnock and Loudoun. These measures are long overdue, so I thank them again for their positive responses.

I will turn to the points made by the hon. Member for Kilmarnock and Loudoun regarding consent and consult. Notwithstanding my commitment to get an answer for him regarding the criminal justice system in Scotland and how it will interact with these new regulations and their administration in Scotland, I confirm that in the recent letter from the Energy Minister, Mr Gray, the Scottish Government have in fact dropped consent requests on heat networks, so they are very happy to proceed as drafted here. I wanted to give confirmation of that. I will turn to the hon. Gentleman’s other points later.

I thank the hon. Member for Southampton, Test for his amendments, which provide an opportunity to discuss in detail what we are doing here today and why we are not going as far as he suggests we should.

I turn to amendment 101. If not designed and built to high standards, heat networks can experience inefficiencies such as heat losses from the pipes that deliver hot water from the energy centre to homes and businesses. That can lead to consumers paying higher prices and experiencing unreliability of heat supply, as the hon. Member for Southampton, Test said. I reassure him and others that we already have a robust plan to address that issue. The Bill provides for the introduction of technical standards on the design and build of heat networks, which we committed to implementing as part of a regulatory framework in our 2020 heat networks regulation consultation. That will require all new heat networks to be designed and built to minimum standards, and existing networks to make efficiency and performance improvements over time.

As a regulator, Ofgem will enforce the requirement. Heat networks will be required to submit documentation to Ofgem demonstrating that their compliance with technical standards has been certified. As I have set out, the Bill and subsequent secondary legislation will give Ofgem powers to investigate and intervene in networks where prices for consumers appear to be disproportionate compared with systems and similar characteristics, or if prices are significantly higher than those consumers would expect to pay if they were served by an alternative heating system. Ofgem will also enforce minimum standards on the reliability and quality of the heat supply. I hope that reassures hon. Members, including the hon. Member for Southampton, Test, that the Government are already taking steps to improve efficiency on heat networks and—to address some points made by the hon. Member for Kilmarnock and Loudoun—to protect consumers from high prices and unreliability.

I turn to new clause 39, which was tabled by the hon. Member for Southampton, Test. Ensuring heat network consumers are protected from high prices and unreliability is our principal reason for introducing heat networks regulation, so I am pleased to see hon. Members recognising the importance of addressing the issue. I appreciate that they will want to see the sector regulated as soon as possible, which is one of the reasons we are progressing the Bill at this pace. However, it would not be possible nor sensible to ask Ofgem to require a licence regime within three months of the Bill receiving Royal Assent. Secondary legislation authorisation conditions are needed to enable Ofgem to operationalise as a regulator. We will conduct public consultations with industry and consumer groups on secondary legislation and authorisation conditions before they come into force. We expect heat networks regulation to come into force shortly after that.

I recognise that hon. Members want to ensure that heat network consumers do not pay disproportionate prices. However, we do not believe that a price cap is suitable for the sector, given its nascent and incredibly diverse state across the country. A price cap also risks heat network insolvencies prior to step-in arrangements being embedded into the regulatory framework. The Bill provides the Secretary of State with powers to introduce a price cap in future, should one become appropriate once the market has matured. I reassure hon. Members that we are taking steps to tackle high prices across the board.

--- Later in debate ---

[Alan Brown]

Can the Minister give us more information on the mechanisms in the Bill that allow the Government to bring forward a cap in future?

[Andrew Bowie]

As has been set out in the Bill and explained this morning, the powers will be given to the Secretary of State, determined at a point in future when the sector matures, which is exactly the process by which he can introduce a price cap. I think we have gone through that this morning.

[Alan Brown]

Will the Minister write to me to give a little more detail on that?

[Andrew Bowie]

Yes, I am happy to write to the hon. Gentleman and provide more detail on exactly that point.

The Bill and subsequent secondary legislation will give Ofgem powers to investigate and intervene in networks where prices for consumers appear to be disproportionate compared with systems with similar characteristics. It will also be able to investigate and intervene if prices are significantly higher than those consumers would expect to pay if they were served by an alternative heating system. We are taking action to address current high prices in the heat network sector. The energy bills discount scheme, which runs from 1 April 2023 to 31 March 2024, provides support to heat networks with domestic end consumers.

On conditions around treating customers fairly and ability-to-pay assessments, I am pleased to inform hon. Members that the Government already plan to consult on introducing comparable levels of service and protection to consumers in other regulated utilities as part of a public consultation on heat network consumer protection rules. We will publish that consultation in due course. I hope that reassures hon. Members that the Government are already taking steps to deliver regulation and tackle high prices in this sector. I therefore ask the hon. Member for Southampton, Test not to move his amendment 101.

Question put and agreed to.

Clause 171 accordingly ordered to stand part of the Bill.

--- Later in debate ---

[Alan Brown]

I realise that this is an introductory clause and the Minister was doing some scene setting. The clause mentions load control signals and digital communications. I draw the Minister’s attention to my written parliamentary question No. 186867, submitted following a meeting I had with representatives of the Energy Networks Association. They tell me that to take forward a proper smart grid, the energy network companies need additional radio spectrum access. The Government need not just to put in place regulations, but to facilitate that radio spectrum access.

In response to my question, the Minister for Energy Security and Net Zero, the right hon. Member for Beverley and Holderness (Graham Stuart), said that the Government are moving forward on the issue with a study and a calculation of costs. I know that the Under-Secretary cannot write a blank cheque, but the reality is that radio spectrum access will be needed. I just put that on his radar.

[Andrew Bowie]

I thank hon. Members for their questions and points. The hon. Member for Kilmarnock and Loudoun is right that this is just an introductory clause; we will talk about the regulations in much more detail during the rest of the morning and this afternoon. I thank him for putting that point about radio spectrum access on my radar.

The smart energy market is at an early stage. That is why we are regulating. We need to ensure that consumers and businesses, and indeed the grid and access to it, are protected. We intend to regulate in close consultation with industry and in a way that allows the market to evolve and supports innovation.

Question put and agreed to.

Clause 192 accordingly ordered to stand part of the Bill.

Clause 193

Energy smart regulations

Question proposed, That the clause stand part of the Bill.

--- Later in debate ---

[Alan Brown]

Before the Minister goes on too far, what timescale does he anticipate for the introduction of regulations under clauses 193 and 194 to mandate smart appliances?

[Andrew Bowie]

I am not able to give any firm dates right now, but the Government’s hope is that we will move quickly to consultation on the regulations as soon as the Bill receives Royal Assent.

Relevant economic actors will be required to monitor and report on their compliance with the terms of the regulations, as well as to take specified steps to remedy any non-compliance. Clause 195(2) includes provision for a range of investigatory powers to track and assess non-compliance for use by enforcement authorities. Those include powers of entry, inspection, search and seizure, and powers to enable the testing of energy smart appliances by enforcement authorities. Finally, the Secretary of State may make payments or provide resources to the enforcement authority for the purpose of enforcing the energy smart regulations.

Clause 196 establishes that energy smart regulations may impose a range of sanctions for non-compliance. A full list of offences will be set out in the final regulations, on which the Government will consult publicly and which will be subject to debate in both Houses. I hope that answers the question from the hon. Member for Kilmarnock and Loudoun. The clause sets out several offences, including contravening requirements imposed by enforcement authorities or knowingly providing false information to enforcement authorities. Punishments for such offences will be provided for in regulations. The punishments will not include imprisonment. Regulations may also allow enforcement authorities to recover their costs by means of civil fines.

Clause 197 makes provision for the regulations to include a right of appeal to a court or tribunal against a requirement or civil penalty made by an enforcement authority. The right of appeal to a court or tribunal against a requirement or penalty for non-compliance, as set out in energy smart regulations, can include, but is not limited to, provisions set out in subsection (2). The right of appeal can be extended by the regulations beyond those parties against whom the requirement has been imposed. The Secretary of State may revoke or amend subordinate legislation, including an Act of the Scottish Parliament or the Senedd, where they consider it appropriate for the purpose of any provision falling within subsection (2).

Clause 198 sets out the procedure by which energy smart regulations will be made. The clause begins by setting out that energy smart regulations made under clause 193 may provide for exemptions or exceptions in their coverage. It requires the Secretary of State to consult before making regulations that subject a specific type of energy smart appliance to regulations or that amend the list of relevant purposes in clause 193. It also sets out the cases in which the affirmative scrutiny procedure is to be used when making regulations under clause 193. I commend the clauses to the Committee.

Question put and agreed to.

Clause 193 accordingly ordered to stand part of the Bill.

Clauses 194 to 198 ordered to stand part of the Bill.

Clause 199

Power to amend licence conditions etc: load control

Energy Bill [ Lords ] (Seventh sitting)

Debate between Andrew Bowie and Alan Brown

Committee stage
Thursday 8th June 2023 Public Bill Committees

[Dr Whitehead]

This debate enables us to count off a few clauses—clauses that are all good stuff. They clarify and facilitate the role, function and activity of ISOP. We have indicated that we would like ISOP’s remit to be widened as far as possible. On the high-level objectives in clause 121, an objective on net zero could shape the widening of ISOP’s responsibilities, because obviously that is what we are all about now, as far as the grid and various other things are considered. A wider remit for ISOP in facilitating net zero is clearly to be desired; that may be a basis on which to build on ISOP’s powers and activities in future.

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

As I said earlier, I support the principle behind ISOP, and I support clauses 121 to 123, and will not vote against them. I want to explore a point with the Minister. The explanatory notes on the clauses highlight possible conflicts and tensions between the role of ISOP and the impact of Government policy—of what the Government do. For example, paragraph 345 of the explanatory notes outlines that there is

“a duty on the ISOP to carry out its functions in a way that it considers is best calculated to promote…net zero”.

It also acknowledges that while ISOP is not making decisions on generation mixes, it should still be

“proactively identifying and creating opportunities to facilitate the transition”

to net zero.

Paragraph 347 to the explanatory notes confirms the imposition of a duty on ISOP

“to carry out its functions in a way that it considers best calculated to promote a coordinated electricity and gas”

grid in the interests of the efficiency and economic operation of the grid. Paragraph 352 says:

“The ISOP will take a whole-system approach to coordinating and planning Great Britain’s energy system”.

That is all very logical, and I agree with the principles set out there—they are certainly the most important functions of ISOP in many ways—but how does the Government regulator allow for that, and how do the Government take into account the ISOP’s recommendations?

The Minister rightly pointed out the differences between what the ISOP is looking at and the fact that policy and implementation is the role of Government. To give an example, the National Grid Electricity System Operator already predicts that there will be less nuclear in the grid in any future scenarios compared with what the Government are promising about new nuclear, and that in 2024-25 a quarter of electricity generation will be from nuclear. The reality is that that will not happen. The National Grid ESO does not allow for that in future scenarios, yet the Government still tell us that that is their policy. That is already a clear conflict before the ISOP is up and running.

What if the ISOP says to the Government that instead of spending £35 billion to £40 billion on a new nuclear station at Sizewell C it could much better balance the system by recommending extra energy efficiency measures, battery storage, pumped-storage hydro or a smarter grid, which we keep hearing about in the plan going forward? What if the ISOP says that we should upgrade the grid urgently between Scotland and England, which would help to better balance the system and deploy renewables better, and get rid of the £4.6 billion in constraint payments that National Grid ESO paid last year to turn windfarms off because there was not sufficient grid capacity? How do the Government deal with the recommendations of the ISOP? Some of the suggestions that I have outlined would meet the aims outlined in clauses 121 and 122 and in the explanatory notes.

We are still to come to clause 131, but in this context it puts a duty on the ISOP to monitor and review developments, including technological changes and Government policies. It seems to me that the Government can make policies that undermine the ISOP’s recommendations; then the ISOP has the responsibility to review Government policy and start all over again. That does not seem very efficient, so the Minister needs to give a bit more clarity on that.

Clause 123 is on the strategy and policy statement, which is long overdue from the Government. On 30 March, in answer to a written question that I submitted, I was advised:

“The Government has consulted Scottish and Welsh Ministers on a draft SPS and taken their comments into account. The Government intends to publicly consult on an updated draft soon.”

When will we get that draft, given that clause 123 reiterates the responsibility of the Government to provide that strategy and policy statement?

[Andrew Bowie]

I thank the hon. Gentleman for his questions. There is not a conflict of interest between the ISOP and Government policy. The ISOP will not be solely, or even primarily, responsible for delivering net zero. That is the responsibility of the Secretary of State and the Department for Energy Security and Net Zero—or any future iteration of it. Delivering on the net zero targets will require a comprehensive approach across a range of policy areas, and the ultimate responsibility will lie with Ministers across Government. However, their decisions will be informed by information and analysis from the ISOP, and the ISOP’s own decisions will make a contribution—for example, in areas such as electricity and gas network design, or the development of new balancing or ancillary services. I know the hon. Gentleman agrees that net zero is a whole-economy project.

In answer to the hon. Gentleman’s question about how the ISOP will be held accountable, the ISOP will be a limited company, and the Secretary of State is the sole shareholder, holding ultimate responsibility for the effective corporate governance of the organisation. The Secretary of State will appoint the chair of the board, who will be responsible for leading the strategic direction of the ISOP.

The hon. Gentleman asked why it was decided not to extend the advisory role to the devolved authorities, and about the strategy and policy statement. The Bill relates to energy, which is a reserved matter, as he knows. We therefore consider that going beyond UK Government and Ofgem for a statutory duty to provide advice would create an undue burden on the new ISOP. Any costs to the provision of advice will fall on bill payers across Great Britain; the provision of advice should be focused on achieving benefit for all GB bill payers. As the hon. Gentleman knows, we are upgrading the grid between Scotland and England; it is a priority of this Government to upgrade the grid across the entire United Kingdom. In answer to his last question, the strategy and policy statement is forthcoming soon.

Question put and agreed to.

Clause 121 accordingly ordered to stand part of the Bill.

Clauses 122 and 123 ordered to stand part of the Bill.

Clause 124

Licensing of electricity system operator activity

Question proposed, That the clause stand part of the Bill.

Energy Bill [ Lords ] (Sixth sitting)

Debate between Andrew Bowie and Alan Brown

Committee stage
Thursday 8th June 2023 Public Bill Committees

[Andrew Bowie]

To answer the hon. Gentleman’s substantive point on why we are not incorporating the Government’s own target of 600,000 heat pumps per year by 2028, there are compelling reasons why we believe it would be unwise to set any particular target in the enabling powers in the Bill. The setting of scheme targets is best suited to the making of regulations. That is in part because that is when the best assessment of the relevant market conditions can be made, so that targets do not exceed what is viable and result in unintended consequences, which we would be worried about had we put the target on the face of the Bill.

[Alan Brown]

Will the Minister give way?

[Andrew Bowie]

I will come to the hon. Gentleman’s questions in a moment, if he will be so patient. It is also because it is very possible that the scheme, under those powers, might be best focused not on any entire ambition for the deployment of one or more low-carbon heating technologies, but on a particular subset of that overall aim, such as retrofit properties but not new builds. That would ensure flexibility.

[Alan Brown]

I understand that the Minister does not want the targets to be on the face of the Bill; does that mean the Government plan to bring forward secondary legislation to facilitate the targets?

[Andrew Bowie]

That will be a matter for secondary legislation. I am sure that the hon. Gentleman and other Committee members cannot wait for the Secondary Legislation Scrutiny Committee to debate the detail of that.

I will answer the hon. Gentleman’s original questions. He asked why the Bill does not introduce the 900,000 heat pump installations recommended by the Climate Change Committee’s balanced pathway to net zero. Indeed, he asked why our aim is to introduce two thirds of that number, 600,000. The Government’s ambition for developing the heat pump market this decade is strategically compatible with all future heating scenarios, including those where hydrogen plays a major role. I know that the hon. Gentleman is fully aware of that, given his interest in hydrogen.

The CCC pathway, which suggests a market of 900,000 installations by 2028, assumes a minimal role for hydrogen in 2050. By contrast, it is interesting that the CCC’s hydrogen-led pathway suggests a much more modest deployment rate of heat pumps in earlier years. The Government believe that the step-change ambition for building a heat pump market as set out, which does not pre-empt wider strategic decisions in the middle of this decade, is the most prudent approach to this investment.

In answer to the hon. Gentleman’s second question, the building regulations will continue to set a performance-based standard, rather than mandating or banning the use of any technology if we do not want to head down that route. However, homes built under the future homes standard will be zero-carbon ready, with low-carbon heating and high levels of energy efficiency. I can confirm that 70,000 heat pumps a year are now being installed in the United Kingdom.

Question put and agreed to.

Clause 106 accordingly ordered to stand part of the Bill.

Clause 107

Further provision about scheme regulations

Question proposed, That the clause stand part of the Bill.

--- Later in debate ---

[Alan Brown]

There is another hydrogen trial ongoing—the H100 project in Fife, which is the world’s first trial of green hydrogen for heating and hot water. Like the hon. Member for Southampton, Test, I hope that that experiment is successful.

That trial in Fife highlights the issues that we are debating today. Will the Minister update the Committee on the number of properties signed up to H100? Investigative journalists have reported that the £1,000 sign-up offer was not enough of an inducement to make households sign up. That is the conundrum: it is fine to say that there will be a financial incentive or a consumer offer—the Minister says that we will never need to resort to using the powers in these clauses—but it is clear that some people are reluctant to sign up. If the financial inducement is not enough, how will the Government and the gas operators take those people with them and get this over the finishing line?

It is absolute critical that we take people with us. It is critical that consumers understand the offer they are getting, the risk and the way that the hydrogen trials are being undertaken. It is important that there is transparency in the reporting of the trials. In particular, we need to understand how risks and leakages will be reported. The worst thing that can happen is for rumours or wrong perceptions to circulate.

Amendment 118 is intended to give people an alternative to being part of a hydrogen trial. I support that principle, but that still leaves us with the dilemma of what happens if a household says, “I don’t want to be part of a hydrogen trial and, by the way, you can forget these heat pump things. I am quite happy with my methane gas, thank you very much.” What would happen in that circumstance?

That brings me to the Minister’s argument on Second Reading that the powers will not be used to either force people into the hydrogen trial or leave them disconnected from the gas network. What happens if not enough people are signing up? Frankly, the Government will then have a dilemma. If they want to facilitate these hydrogen trials, they need enough people on the hydrogen network, otherwise the trials will not be sufficient to get an understanding of, or see, the proper operation and benefits of hydrogen.

What will the Government do if not enough people are signing up? How will they facilitate people signing up without forcing them, and how will they get these powers to be successful in terms of mass criticality? There is the old phrase, “You can’t make an omelette without breaking some eggs.” It might well be that the Government are going to upset some people, but they will have to be honest about it. Just saying, “There is no way we will use the powers in the Bill” might be unintentionally disingenuous. I am curious what the Minister’s thoughts are. It is fine to say that the Government will not use them, but that remains to be seen.

[Andrew Bowie]

I thank hon. Members for their comments. The hon. Member for Kilmarnock and Loudoun is absolutely right that there is a third village trial, which has not been referenced this morning. That is, of course, the H100 trial in the kingdom of Fife. I will endeavour to get an answer to him on how many households have chosen to take part in that. I do not have the figure to hand, but I will write to him with an updated number.

On the other two trials, final decisions have yet to be made on the locations, and details of the exact processes are a matter for the companies and operators engaging in the trial. I thank the hon. Member for Southampton, Test for his amendment. It is very important that we discuss the issues he raised. We have always been very clear that nobody will be forced to use hydrogen, and alternative heating solutions and appliances such as electric heating systems and cookers will be offered for those who do not take part in the trial. As my noble Friend Lord Callanan confirmed in the other place, all consumers in the trial location will have the right to decide whether they use hydrogen or an alternative heating solution for the duration of the trial.

The requirement was clearly established in a joint letter from the then Department for Business, Energy and Industrial Strategy and Ofgem to the gas transporters, which set out the requirements that will have to be met before any funding is provided to the next stages of the trial. It is on the shoulders of the operator to prove that they have community consent to proceed with the trial in a given location. This is a fundamental requirement for the trial. The gas transporters need to demonstrate that they have a viable plan for providing alternatives, otherwise His Majesty’s Government will not proceed with the trial proposal. This obligation will also form part of any future funding agreement.

[Alan Brown]

I think that goes to the heart of what I was getting at. The Minister is saying that the Government will not proceed if not enough people sign up and give consent to the gas network companies. Are the Government basically saying that people effectively get their own referendum or mandate to decide whether the Government’s trials on hydrogen go ahead? It seems to me that it is fundamental to Government policy to test this out, but they are actually saying that by default citizens will decide whether the trials are going ahead or not. That could completely derail Government policy.

--- Later in debate ---

[Alan Brown]

I will be quick. I am quite happy to support the clause. Bill Gates said just the other day that the technology has moved much quicker than even he believed. The Minister will be well aware that one of the possible technologies that will be deployed in the Scottish cluster is direct air capture. With this clause and the Bill coming through, it makes it even more imperative that the Scottish cluster is given the support it needs and the track 2 timeframe is confirmed, so that we can get the legislation in place and deliver the carbon savings that the Government want to see.

[Andrew Bowie]

I do not disagree. As the hon. Member knows, I am a passionate advocate of carbon capture, utilisation and storage and the clusters emerging across the United Kingdom. As I know he supports and champions, we have already spent over £40 million supporting the Scottish cluster as a UK Government.

Question put and agreed to.

Clause 118 accordingly ordered to stand part of the Bill.

Clause 119

The Independent System Operator and Planner (“the ISOP”)

--- Later in debate ---

[Andrew Bowie]

Before I expand on the Government’s position and explain why we will not accept new clause 1 or the hon. Gentleman’s amendments, I will acknowledge absolutely that connections and connection timelines are the biggest challenge we face—for electrification to grid, for driving our economy forward in the way we seek to and for reaching our net zero goals. Every single day for the past few months, but in particular this week, I have been engaging with DNOs, transmission operators, Nick Winser who conducted the independent review, Ofgem and the National Grid ESO about what we can do to drive down those timelines. At a critical point, part of that will be the creation of the ISOP. For the benefit of those who might be slightly confused, that is what we refer to outside the Bill as the future system operator—ISOP and the future system operator are one and the same thing.

I will now turn to the question asked by the hon. Member for Southampton, Test about why an advisory board would make ISOP risk-averse and not fully independent. We are concerned that, rather than enhancing independence, the members of such a board would likely hold various energy sector conflicts. That could crystallise in many ways, including resistance to systematic reform, advice to pay compensation to energy sector participants or an incumbent bias that would seek to frustrate new market entrants. Establishing an industry-led advisory board for the ISOP would be similar to establishing one for the Climate Change Committee—it is not required for an organisation that needs to remain independent, such as the Climate Change Committee, which we are using as the basis for how we proceed.

A prime consideration of the ISOP consultation was that the body should be independent from day-to-day Government control and from other energy sector interests. That is why we need to ensure that the ISOP is a trusted and independent voice within the energy sector.

[Alan Brown]

Again, I am in favour of the ISOP and happy to support that, but will the Minister give us some timescales? How soon after the Bill receives Royal Assent will the ISOP be up and running to authorise the independent operator?

[Andrew Bowie]

I am happy to answer the hon. Gentleman. The aim and the ambition is for the FSO/ISOP to be up and functioning by the middle of next year.

I turn to amendments 95, 96 and 97, tabled by the hon. Member for Southampton, Test. The Government agree that those are all things that the ISOP needs to bear in mind, but we think that the balance in part 4 would be distorted by calling them out in the high-level illustrative list of the ISOP’s initial functions in the clause.

On amendment 95, matters already of concern to the existing system operator will continue to be a concern to the ISOP, in particular as it seeks to promote system efficiency under clause 121. On amendments 96 and 97, we understand that a closer relationship between the system operator and the distribution system operators—indeed, closer relationship across all energy networks—will allow for better co-ordination and ensure optimal system-wide planning. However, we do not think that such things should be included in the high-level illustrative list of the ISOP’s initial functions. A new collaboration duty is not necessary as that lies at the very heart of our vision for the ISOP. The importance of co-ordination across networks is made clear by clause 121(4)(a) and the whole systems duty in 122(1)(c).

Clause 120 empowers the Secretary of State to designate the ISOP, doing so by granting a power to the Secretary of State to make the first designation of a person as the ISOP and, if needed, to revoke that designation and issue a new one. I commend clauses 119 and 120 to the Committee.

Energy Bill [ Lords ] (Third sitting)

Debate between Andrew Bowie and Alan Brown

Committee stage
Thursday 25th May 2023 Public Bill Committees

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

It is a pleasure to serve under your chairmanship, Dr Huq. I will make only a few comments. I will not object to these clauses, which I realise are important, but I share the concerns expressed by the hon. Member for Southampton, Test. It is critical that we have confidence in proper parliamentary oversight, and in Parliament being able to hold the regulator and particularly the Secretary of State to account. I am slightly concerned that the clauses give the regulator too much power to decide what they report on, how they report and what information they bring forward. As the Minister described, it is up to the regulator to explain why they have not brought forward a statement, for example. We need more than that. It should not be at the whim of the regulator whether to bring forward a statement; if they do not bring one forward, they should say why. It is for the Secretary of State to make sure that these things happen, obviously with parliamentary oversight.

Subsection (2) says:

“That description must include the objectives of each relevant project.”

Clearly, we need a lot more than just the objectives; we need to know how the objectives are being met. I know that the Minister will not want to make the Bill too prescriptive about what goes in the report, but we need that to include, for example, details of the efficiency of the project. Cynics say that carbon capture does not capture enough of the emissions, whereas obviously the industry says that we can capture 95% of them. I want to see how efficient projects are, and how they contribute to meeting net zero.

There are concerns that carbon capture might lead to the burning of more fossil fuels, so we need to understand the level of extraction of fossil fuels, what the inputs and outputs are, the emissions from any extractions of fossil fuels, and where the fossil fuels come from, including whether they come from other countries; we need to know that when it comes to meeting that wider net zero objective. Those are the things that I would want set out, so that I could question the Secretary of State in Parliament on them and make sure that we have confidence in how these objectives will be met.

[Andrew Bowie]

I thank the hon. Members for Southampton, Test, and for Kilmarnock and Loudoun for their questions.

I am very glad that the hon. Member for Kilmarnock and Loudoun has spoken, because it gives me a chance to congratulate him on his team’s success last night, which probably staved off their relegation from the Scottish premier league. They are not quite making Europe, as some other teams did last night, but that is still quite good. On his questions about what should be in the annual report, that is already set out. It should be: progress on activities described in any forward work programme for that year; the extent to which activities proposed in the forward work programme for the previous year had not been delivered, and the reasons for that, as well as the proposals to remedy that; how the delivery of the programme’s functions have been contrary to any strategy and policy statement that has been designated; and any enforcement action pursued by the economic regulator.

Of course I share the concerns that both hon. Members expressed that any report laid before Parliament should be open, accessible and visible. Of course, there is precedent for this; reports are laid before Parliament by Government all the time. Of course, it is incumbent on Parliament to hold the Secretary of State to account once the report is laid before Parliament. It is in the gift of this Parliament to call any Secretary of State to the Floor of the House, as we have seen over the course of the past six years in particular, to explain in detail any reports that have been laid before Parliament and to take any questions from any Member of the House from any party. That process, which is well established in our Houses of Parliament, is the one by which we will proceed with this report.

Question put and agreed to.

Clause 39 accordingly ordered to stand part of the Bill.

Clauses 40 and 41 ordered to stand part of the Bill.

Clause 42

Transport and storage administration orders

Question proposed, That the clause stand part of the Bill.

[Andrew Bowie]

I am happy to speak to clauses 42 to 49. Chapter 4 of the Bill provides for a special administration regime for licensed carbon dioxide transport and storage companies. In the unlikely event that a carbon dioxide transport and storage company becomes insolvent, the Secretary of State, or the economic regulator with the Secretary of State’s permission, may apply to the courts for the appointment of a special administrator. The objective of the administrator would be to ensure that services continue until it is unnecessary for the administration order to remain in force for that purpose.

Given the importance of carbon dioxide transport and storage networks to support carbon reduction from a range of emitters—many of which will be supported by Government—the importance of those networks in delivering net zero and the need to ensure that networks are maintained and decommissioned safely, in a company insolvency scenario the interests of creditors, which usually take priority in a normal administration, may not align with the public interest in keeping the network operating. The ability to apply a special administration regime in the event of a carbon dioxide transport and storage network company insolvency would enable services to continue for emitters connected to a network.

Clause 42 defines some of the relevant terms for this chapter that are necessary for the effective functioning of the legislation. It also requires that the relevant administrator must perform its functions as administrator to achieve the objectives set out in clause 43.

Clause 43 establishes that the objective of transport and storage administration is to secure that the activities authorised by the licence commence or continue in a manner that is efficient and economical, and that ensures the safety and security of the transport and storage network, or the part of the network to which the licence relates, until the company can be rescued as a going concern. The administrator also has the option to transfer all or parts of the undertaking to run as a going concern. Special administration is intended to act as an interim solution, rather than a long-term fix. If the ongoing operation of the transport and storage network is no longer viable in its form, the Secretary of State may wish the Government to take ownership and/or transfer the network assets to facilitate a restructuring or the safe decommissioning of the assets, using the statutory transfer scheme provided for in chapter 5 of this part of the Bill.

I turn to clause 44. Under the proposed special administration regime, if a carbon dioxide transport and storage company is running out of funds or likely to become insolvent, the Secretary of State, or the economic regulator with the consent of the Secretary of State, can apply to the High Court for a special administration order, which will allow a special administrator to be appointed. The Energy Act 2004 provides for special administration regimes in the energy sector. In order to establish the process and procedure for carbon dioxide transport and storage administration orders, the Bill extends the provisions of the Energy Act 2004 to transport and storage administration, with the appropriate modifications. As provided for by these amendments, the detailed procedural rules governing the establishment of a transport and storage administration will be set out in secondary legislation.

At present in the energy sector, section 159(3) of the Energy Act 2004 applies the power in section 411 of the Insolvency Act 1986 to make separate insolvency rules for each of the supply, network and smart meter communication device company special administration regimes. Clause 45 amends section 159(3) of the Energy Act 2004 to allow the Secretary of State additionally to make company insolvency rules for carbon dioxide transport and storage.

Clause 46 enables the Secretary of State to modify the conditions of a carbon dioxide transport and storage company’s economic licence while an administration order is in force. As the Secretary of State may provide financial support to a transport and storage company that is subject to an administration order to secure the objectives of the special administration regime, the power is intended to allow the Secretary of State to recover any financial support provided. Under that power, the Secretary of State may modify the licence to include conditions relating to the recovery of amounts owed to the Secretary of State in relation to financial assistance given while an administration order is in force, and the raising of funds for the purpose of meeting expenses arising in relation to the administration order. Before making any licence modifications, the Secretary of State must consult the economic regulator and any relevant carbon storage licensing authority.

The Enterprise Act 2004 conferred powers on the Secretary of State to make consequential amendments to insolvency legislation. As the special administration regime for carbon dioxide transport and storage companies contains several provisions from the ordinary administration and insolvency regimes, the use of those powers in the Act may affect the special administration regime in the Bill. Clause 47 therefore extends the power of modification or application conferred on the Secretary of State in sections 248, 254 and 277 of the Enterprise Act to make such consequential amendments to chapter 4 as the Secretary of State considers appropriate in connection with any other provision made under those sections of the Act. That will ensure that the special administration regime for carbon dioxide transport and storage is maintained as broader insolvency law evolves, and that it adopts the same approach taken in other recent special administration regime legislation. Not providing for such a power could have detrimental impacts on the operability of the special administration regime in the event of a relevant company’s insolvency.

[Alan Brown]

The Minister mentioned special admin-istration regime legislation. Given the Government’s review, I wondered how the special administration regime process worked for Bulb Energy, and what lessons had been learned? Has that had an impact on the legislation?

Energy Bill [ Lords ] (Second sitting)

Debate between Andrew Bowie and Alan Brown

Committee stage
Tuesday 23rd May 2023 Public Bill Committees

[The Parliamentary Under-Secretary of State for Energy Security and Net Zero (Andrew Bowie)]

I thank the hon. Gentleman for his multiple questions. Given the number of them, I will write to him with greater detail, but the point at which the Secretary of State’s power to grant licences is transferred to Ofgem will depend on developments in the market in the early years of the operation and the evolution of carbon capture, usage and storage. We are in the nascent stages of this technology. It is standard practice for the Secretary of State to have a power over something like this before it is transferred across to Ofgem. As I said, the timing will depend on market forces as the technology develops and matures.

The hon. Gentleman asked when the first licences will be granted. Licences will be granted to transport and storage operators for track 1 CCS clusters for deployment in the mid-2020s, subject to the final decision of Ministers. The final decisions on any Government support will be taken only if a CCS cluster represents value for money for the consumer and the taxpayer. He referred to subsequent clauses that deal with these issues directly; we will come to his other questions when we debate those clauses, and I will be happy to engage in more detail then.

[Alan Brown]

What is going on when it comes to the Department and Ofgem building up and sharing expertise? They are both looking at licensing. As the Minister said, with this nascent technology, there is a whole ramping up, so we need to ensure that the right resource is allocated to the right place to move forward.

[Andrew Bowie]

I completely agree. We will share expertise with Ofgem as we move forward. This is a whole new technology being deployed in the United Kingdom, and the expertise being developed in the Department will of course be shared with Ofgem, so that when the regulator takes responsibility for licensing, it will have at its fingertips the ability to conduct the processes properly.

Question put and agreed to.

Clause 7 accordingly ordered to stand part of the Bill.

Clause 8

Power to create licence types

Question proposed, That the clause stand part of the Bill.

--- Later in debate ---

[Andrew Bowie]

Clause 10 enables the future allocation of carbon dioxide transport and storage licences to be determined on a competitive basis. The Government’s current carbon capture, usage and storage cluster sequencing programme is a fair and transparent process. It determines which operators of carbon dioxide transport and storage projects are eligible to be granted a transport and storage licence and any associated Government support according to published criteria.

The future process for granting licences will need to balance a range of considerations and, depending on the evolution of the sector, it may be appropriate for it to be carried out according to competitive procedure. The power to make regulations in clause 10 enables that. It is a discretionary power; while a competitive approach may bring overall value for money and benefits for taxpayers and consumers—

[Alan Brown]

Can I ask about the overall sequencing? We have the track 1 costs at the moment, but we still do not have certainty on track 2. We are talking about future tenders and competitiveness. Clearly, at the moment only the ones in track 1 can effectively apply for licences. If we are looking for overall value for money, surely we need to completely open the field, as it were, so that we have more companies and projects competing and pushing each other on that competitive cost base as well.

[Andrew Bowie]

As the hon. Gentleman knows, we have launched a track 2 process; there will be an update on timings in the summer. Of course, we want to open up the process to as many companies and organisations seeking to get into this technology as possible, but it is really important that the appropriate steps are followed to get to that stage. That is why we are proceeding at pace with track 2 and why we will update everybody concerned with that in the summer.

Whether a competitive process is appropriate in the enduring regime will depend on how the CCUS market develops, including the anticipated number of market participants—that relates to the answer I just gave to the hon. Member for Kilmarnock and Loudoun. Any regulations that may be made under the power would first be subject to consultation with the economic regulator and the devolved Administrations, and they would be subject to the affirmative procedure.

--- Later in debate ---

[Andrew Bowie]

Clause 11 makes general provisions regarding the conditions of transport and storage economic licences. The licence allows an operator to charge network users for delivering and operating the network. The licence conditions will set out the allowed revenue that the licence holder is entitled to receive, which will reflect its efficient cost and a reasonable return on its capital investment. The conditions of the licence will also include requirements on the licence holder that they must comply with or consent to.

In order that the economic regulator may cover the cost of administering the licence, the clause additionally confirms that the licence may contain conditions requiring a payment to be made to the economic regulator during the term of the licence. Any money received by the economic regulator pursuant to the conditions must be paid into the consolidated fund.

[Alan Brown]

Will the Minister give way?

[Andrew Bowie]

Yes, I will.

[Alan Brown]

I thank the Minister for giving way; I noticed an eye-roll, though.

[Andrew Bowie]

Nothing personal.

[Alan Brown]

The Minister referred to the regulator assessing the allowable rate of returns in a fair chance model. How does that square with the interim period when the Secretary of State will grant licences? How do you make that assessment of value for money and fair returns, and will there be any scope to revisit that? If we look at networks and transmission systems, Ofgem had to reduce the allowable rate of returns in the next investment period, because it had been allowing network companies to make too much money. What safeguards are there to ensure that there is a review following an initial assessment of what would be a fair rate of return?

[Andrew Bowie]

The hon. Gentleman makes reasonable and sensible points. He is right that we have to ensure that the same regulations that will apply to Ofgem when it administers the process in future apply also to the Secretary of State and the Department when administering it in the interim. He is right, too, that there need to be safeguards and that Parliament overall will have responsibility for holding the Department to account—as it does the Government, in every respect, when it comes to making such decisions. I commend the clause to the Committee.

Question put and agreed to.

Clause 11 accordingly ordered to stand part of the Bill.

Clause 12

Standard conditions of licences

Question proposed, That the clause stand part of the Bill.

--- Later in debate ---

[Dr Whitehead]

The clause itself is brief, but refers to schedule 1 and to the interim power of the Secretary to State to grant licences. As the Minister said, that power will come to an end on a date to be determined at a point when the industry is well established and the Secretary of State therefore no longer has to exercise the interim power. Who decides when the industry is well established? If that is the Secretary of State, is it not a rather circular way of bringing to an end the power of the Secretary of State to grant licences on an interim basis? If the Secretary of State decides that the industry is not that well established, he or she will presumably continue to grant interim licences forever.

Presumably, we want to reach a point when the Secretary of State does not grant licences in his or her own right and Ofgem or the economic regulator does, but we do not appear to have any mechanism in the Bill, other than something to be determined at a particular date, whereby the Secretary of State switches off his or her own power and switches on an Ofgem power. It would be helpful if the Minister could clarify that. There may be something in the legislation that I have not noticed, but it appears from schedule 1 and the clause that there is not a clear switch-off mechanism, other than the intention to do so when the market is mature.

[Alan Brown]

To follow on from that point, and the point that I made earlier, I know that the Minister said that he would write to us, but I am interested in how he envisages the sequencing and the interim period coming to an end. Although he said that in terms of value for money it is up to Parliament, and us as parliamentarians, to hold the Government to account, if the interim period goes on for a long while and individual licences are granted effectively on an ad hoc basis, it will be almost impossible for parliamentarians to hold the Secretary of State to account. We will continually be told that the information is commercially sensitive, so we will be unable to access it. I want a bit more clarity on how this will all come together in a more transparent manner.

[Andrew Bowie]

To address the points made by the hon. Members for Southampton, Test and for Kilmarnock and Loudoun, we recognise that visibility and clarity are of the utmost importance when talking to industry and, indeed, the wider country about where we are headed regarding CCUS. I can think of nothing that the Secretary of State, whoever that might be, would like more than to be able to give the power to Ofgem to determine licences. However, that depends on just how mature the sector is and the stage at which the Secretary of State determines it to be right.

The point about clarity, which I have just mentioned, is important. That is why my right hon. Friend the Member for Kingswood (Chris Skidmore) mentioned in his net zero review in March the need for a road map for CCUS. The Department agrees that that is important. We have committed to setting out a vision for the CCUS sector. That work is ongoing, and we will keep stakeholders and parliamentarians updated as we work up our road map and increase the clarity on where we are headed, and to what timescale, and when we expect such a transition period, during which the Secretary of State will hold that power, to come to end.

Question put and agreed to.

Clause 16 accordingly ordered to stand part of the Bill.

Schedule 1

Interim power of Secretary of State to grant licences

Amendment made: 2, in schedule 1, page 245, line 31, leave out from beginning to second “the” in line 32 and insert—

“(d) after subsection (10) insert—

‘(10A) For the purposes of subsection (5)’”.—(Andrew Bowie.)

This amendment corrects a cross-reference and renumbers a subsection.

Schedule 1, as amended, agreed to.

Clause 17

Termination of licence

Question proposed, That the clause stand part of the Bill.

--- Later in debate ---

[Alan Brown]

What happens if any of the bodies do not give information to the economic regulator in the requested timeframe?

[Andrew Bowie]

They would be subject to the same stringent actions as have been set out, and in the interim the Secretary of State would determine what action should be taken in that respect.

Clause 27 gives the Secretary of State a power to require information directly from a carbon dioxide transport and storage licence holder, to ensure that he has access to information needed to support the effective conduct of his CCUS functions. The clause does not enable the Secretary of State to share or publish the information. To ensure protection of sensitive information, information provided to the Secretary of State will remain protected under the Data Protection Act, and an information request cannot be made to obtain information protected by legal professional privilege or, in Scotland, confidentiality of communications.

Energy Bill [ Lords ] (First sitting)

Debate between Andrew Bowie and Alan Brown

Committee stage
Tuesday 23rd May 2023 Public Bill Committees

[The Parliamentary Under-Secretary of State for Energy Security and Net Zero (Andrew Bowie)]

As ever, it is a pleasure to serve under your chairmanship, Mr Gray, and particularly for the first time as a Minister on a Public Bill Committee. I am sure you will keep me on the straight and narrow over the next few weeks. I look forward to working with you and members of the Committee as we scrutinise this landmark and, as you described it, mighty Energy Bill.

To begin, I want to remind Members of the purpose and background of the Bill. The Energy Bill will provide a clearer, more affordable and more secure energy system. It will liberate private investment in clean technology, reform our energy system so that it is fit for purpose, and ensure the safety, security and resilience of the energy system.

I turn first to amendments 75, 76 and 81, tabled by the hon. Members for Southampton, Test and for Bristol East. Amendment 75 seeks to expand the definition of a transport and storage network user in clause 1 to refer additionally to users who may seek to use carbon dioxide taken off a transport and storage network, not just those who are seeking to transport and store carbon dioxide for its permanent geological storage.

Although there are many uses for carbon dioxide across industrial sectors in the UK, including fertiliser production, cement, lime, and food and drink, as the hon. Member for Southampton, Test set out—indeed, there was little in what he said with which I found myself disagreeing—not all these applications result in the permanent abatement of carbon dioxide. For some of those products, the carbon dioxide is ultimately released back into the atmosphere.

The Government’s aim in prioritising support for the deployment of carbon capture and storage in the UK is to incentivise large-scale, permanent abatement of carbon dioxide and the establishment of a transport and storage infrastructure, which is essential to achieve net zero emissions. Carbon capture and usage technologies resulting in the permanent abatement of carbon dioxide could represent only a small abatement potential as compared with carbon capture when the carbon dioxide is disposed of by geological storage. For those seeking to use captured carbon dioxide, alternative options are likely to be available, such as off-taking carbon dioxide directly from an emitter before it enters a transport and storage network. For those reasons, the Government do not consider the amendment to be necessary or appropriate.

Clause 2 establishes a prohibition on operating at a geological carbon dioxide storage site or providing a service of transportation of carbon dioxide by pipeline without a licence. Amendment 76 seeks to expand the scope of this licensing requirement to include licensing the use of carbon dioxide that has been captured and transported. The licensing requirement in clause 2 is intended to establish a regulated investment model for the transport and storage of carbon. This is a “user pays” economic regulation model that involves the network users—power and industrial emitters—paying for the transport and geological storage of the carbon dioxide that they produce. Licensed transport and storage companies will be able to recover their investment in the transport and storage network through the fees charged for transport and storage services. This model provides long-term revenue certainty for investors to pool through the invested needed to establish and scale up carbon dioxide transport and storage infrastructure here in the UK.

As pipeline, transport and storage assets have monopolistic characteristics, oversight by Ofgem, the independent economic regulator of carbon dioxide transport and storage, will ensure that users are protected from anti-competitive behaviour and that costs are economic and efficient. A model of economic regulation for delivering carbon dioxide transport storage was identified as the preferred option following the Government’s 2019 consultation on business models for carbon capture, usage and storage.

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

The Minister mentioned Ofgem. What discussions were had with Ofgem about its capability, expertise and resources to deal with what is going to be a whole new suite of competencies for Ofgem?

[Andrew Bowie]

Of course, none of this is without its challenges, and Ofgem recognises that. However, I have regular conversations with Ofgem and the Department is happy that it is indeed scaling up its capability, to enable it to deal with not only the new carbon capture utilisation and storage procedures that we are discussing but the whole range of areas in which Ofgem will have a role as we move towards a net zero future. Given the aims and purpose of the economic licensing framework that clause 2 establishes, I hope that the hon. Member for Southampton, Test will agree to withdraw his amendment.

Amendment 81 seeks explicitly to include within the scope of the term “revenue support contract” a contract for the use of carbon capture. We understand that to mean a contract to support carbon capture and usage. The carbon capture revenue support contracts are intended to support the deployment of carbon capture technologies. The Bill allows for carbon capture revenue support contracts to be entered into with eligible carbon capture entities. Broadly, a carbon capture entity is a person who, with a view to the storage of carbon dioxide, carries on activities of capturing carbon dioxide that has been produced by commercial or industrial activities, is in the atmosphere or has dissolved in seawater.

Storage of carbon dioxide is storage with a view to the permanent containment of carbon dioxide. It is important to emphasise that provisions in the Bill may therefore allow for a broad range of carbon capture applications, including those carbon capture entities that utilise the carbon dioxide, resulting in the storage of carbon dioxide with a view to its permanent containment. Decisions on which carbon capture entities will receive Government support are to be made on a case-by-case basis. Prioritising support for carbon storage is considered essential to help deliver our decarbonisation targets.

--- Later in debate ---

[Andrew Bowie]

New clauses 33 to 36 would insert provisions for the review of the strategy and policy statement, and procedure requirements for the designation of such a statement.

The Bill already contains a number of measures to deliver a cleaner, more affordable and more secure energy system for the long term, as set out by the long title, so there seems to be little to be gained from the proposed new clause 33. The Government’s approach to these matters will be informed by the strategy and policy statement provided for under the Energy Act 2013, on which we are currently consulting.

I turn to new clauses 34, 35 and 36. The 2013 Act introduced a power to designate a strategy and policy statement setting out the Government’s strategic priorities for energy policy in Great Britain, the roles and responsibilities of those implementing such a policy and the policy outcomes to be achieved. The strategic priorities of the Government’s energy policy are to be taken as a whole. They include, but are not limited to, our targets under the Climate Change Act 2008, reducing costs for consumers, tackling fuel poverty, and securing a diverse and viable long-term energy supply. The strategy and policy statement power in the 2013 Act is not specific to the measures contained in any specific Act. The power is wider, and it enables the strategy and policy statement to cover any or all of the Government’s strategic energy priorities, wherever they are set out.

On 10 May 2023, the Government published their consultation on a draft strategy and policy statement for energy policy in Great Britain. We are seeking responses until 2 August, and we intend to designate a final strategy and policy statement by the end of this year. Designation of a strategy and policy statement will ultimately be a decision for Parliament, not for the Secretary of State. I hope that hon. Members are satisfied by those reassurances.

[Alan Brown]

Will that be a wider strategy and policy statement that goes to Ofgem? An overarching energy policy has long been outstanding.

[Andrew Bowie]

I believe that that was made clear. As I said earlier, we are working with Ofgem to ensure that it has the capabilities to deal with all of this. In terms of a national policy statement for Ofgem moving forwards, there will be a series of announcements over the next few months and, indeed, the year that will enable Ofgem and the future service operator to get into a position where they are able to deal with what we introduce through the Bill and other statements.

Clause 1 establishes Ofgem as the economic regulator for carbon dioxide transport and storage. It also establishes the principal objectives and statutory duties for both the Secretary of State and Ofgem in carrying out their functions under part 1 of the Bill. Transport and storage networks will act as the enabling infrastructure for carbon capture and storage from a range of sources, including power plants, industrial facilities, low-carbon hydrogen production and, potentially, direct air capture.

The economic regulation model provides long-term revenue certainty for network operators while protecting network users from monopolistic behaviours, as has already been described. The Government consider that Ofgem is the most appropriate body to act as the economic regulator for carbon dioxide transport and storage, due to its experience and expertise in the economic regulation of the overall energy sector. The selection of Ofgem as the regulator has received broad support from the industry. The principal objectives set out in clause 1 reflect the balance of considerations for a nascent carbon dioxide transport and storage sector.

--- Later in debate ---

[Andrew Bowie]

Clauses 2 to 6 relate to the licensable activities for carbon dioxide transport and storage.

Clause 2 establishes the prohibition on the transport of carbon dioxide by pipeline and its geological storage without an economic license regulated by Ofgem. As carbon dioxide pipelines for storage and site infrastructure are likely to be operated as regional monopolies, a framework of economic licensing and regulation is designed to prevent anti-competitive behaviours. Licensable activities will initially include the transportation of carbon dioxide via onshore pipelines and offshore pipelines, and the operation of an associated geological storage facility. The clause enables other methods of transportation of carbon dioxide to become licensable activities, should that be considered appropriate as the carbon capture and storage market evolves.

Non-pipeline methods of transportation—shipping, road or rail—are expected to form part of wider carbon dioxide transport and storage networks. These methods of transport are particularly important for dispersed sites, where there are emitters who wish to have their carbon dioxide captured and transported for permanent storage, but are not suitably located to join a transport storage network by pipeline.

While non-pipeline methods of transport will have an important role in the development of carbon capture and storage networks, the Government consider that there is currently insufficient evidence to justify economically regulating non-pipeline methods of carbon dioxide transport. As those methods of transportation have differing characteristics from pipelines, with a potential lower cost of entry and an ability for multiple asset-running in parallel, competitive regional markets may emerge naturally for non-pipeline transportation of carbon dioxide. However, should competitive markets not emerge as anticipated, that may be rationale for future regulatory intervention. The ability of the Secretary of State to bring activities within the scope of the licensing framework is particularly important, given the financial support provided by the Exchequer to support carbon capture facilities and to ensure appropriate and effective protections can be put in place for users of the network.

I turn to clause 3. Any future use of the power established in clause 2 to extend the economic regulation framework to other methods of transporting carbon dioxide, should that be considered appropriate, would be subject to statutory consultation, as provided for in clause 3. Under the provisions of the clause, the Secretary of State is required to give notice of their intention to make regulations to extend the licensing framework to other methods of carbon dioxide transportation. That would include statutory consultation with the economic regulator to confirm the rationale for market intervention and consultation with the devolved Administrations.

Clause 4 sets out the territorial scope of the economic licensing framework for carbon dioxide transport and storage. The economic regulatory regime established by chapter 1 and part 1 of the Bill will extend to all parts of this United Kingdom. The licensing regime and economic regulation will also apply to transport and storage activities offshore, both in the UK’s territorial seas and in waters designated as a gas importation and storage zone under section 1(5) of the Energy Act 2008.

Clause 5 provides for the Secretary of State to grant exemptions from the requirement to hold a carbon dioxide transport and storage licence. That provision is important to ensure that the prohibition established by clause 2 operates effectively and as intended and does not, for example, impact or inhibit activities that it is not considered appropriate to economically regulate.

For example, exemptions are a means by which a small-scale operator would not be burdened by licensing costs and obligations that could be considered disproportionate to the scale of their operation. However, exemptions should not enable a competitive advantage over licensed operators. Exemptions will be set out in the way of regulations and may be granted either to a class of persons or to an individual person. A statutory consultation process is set out in the clause, to ensure that appropriate notice is given ahead of making exemption regulations and to allow for representations to be made.

Clause 6 provides for the Secretary of State, by way of regulations, to be able to vary, withdraw or revoke exemptions from the licensing requirements that have been granted under the provisions of clause 5. As market circumstances change, it is conceivable that certain activities, categories or classes of activity that are appropriately exempt from economic regulation in the early years of CCUS deployment may, as the sector matures, be considered more appropriate for licensing and regulation, or the particular activity that was subject to exemption may itself develop or change. That will ensure that any exemptions granted remain appropriate as the UK CCUS industry matures. I hope that the Committee will agree that clauses 2 to 6 should stand part of the Bill.

[Alan Brown]

rose—

Oral Answers to Questions

Debate between Andrew Bowie and Alan Brown

Tuesday 23rd May 2023 Commons Chamber

[Mr Speaker]

I call the SNP spokesperson.

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

It is nearly 10 years since a £1 billion carrot was dangled for Peterhead carbon capture and storage, which was then withdrawn post-referendum. We are now getting told that the UK Government have £20 billion to spend on carbon capture and storage, but the reality is that not one penny of that is ringfenced for Scotland, and indeed there is not even a budget line for that £20 billion. Instead of another jam tomorrow pledge focusing on nuclear, why does the Minister, who comes from the north-east of Scotland, not focus on getting the Scottish cluster track 2 status so that it can get up and moving?

[Andrew Bowie]

I thank the hon. Member for that question, but frankly I am fed up with the SNP talking Scotland down, and indeed talking the Acorn project down. The UK Government have already spent £40 million supporting the Acorn cluster, which is in a very good position as we proceed with track 2. It would be good if, for once, the SNP was to talk that up and work with us, rather than the opposite.

[Alan Brown]

It would be good if the Minister gave us certainty instead of just blustering.

Energy UK has confirmed that the Brexit trading arrangements are adding more than £1 billion a year to our energy bills and, last year, nearly £5 billion was paid in constraint payments. That is all money that could have been used to upgrade the grid. It could have paid for pumped storage hydro that could have procured a greater level of our world-leading tidal stream technology. It could have funded the Acorn CCS or green hydrogen. Instead of adding £6 billion to our bills, will the Minister tell us how many Scottish jobs have been held back by this lack of investment?

[Andrew Bowie]

When it comes to bluster, SNP Members are certainly subject matter experts. On support for Scottish billpayers, as I said, over the past winter this Government were paying half of everybody’s energy bills in this United Kingdom. [Interruption.] The hon. Member says that that is thanks to the North sea, but that is the very North sea industry that he and his partners in the Green party would close down tomorrow. This Government support the oil and gas industry for our whole UK moving forward.

Oral Answers to Questions

Debate between Andrew Bowie and Alan Brown

Tuesday 18th April 2023 Commons Chamber

[Mr Speaker]

I call the spokesperson for the Scottish National party.

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

If we want a proper just transition and greater supply chain security, we need new manufacturing facilities for renewable energy components. Which suppliers and manufacturers has the Minister spoken to about creating new manufacturing facilities in Scotland? How many new Scottish manufacturing and renewable energy jobs do this Government intend to create?

[Andrew Bowie]

We are absolutely committed to building a UK-based supply chain, and that includes, of course, new jobs in Scotland. I would be delighted to meet my Scottish Government counterparts and the hon. Gentleman to discuss how we can progress that further and faster. If we are going to have an even more successful renewable energy industry in this country, it is essential that we have a UK-based supply chain. That is what this Government are committed to achieving and, moving forward, I would be happy to work with anybody so that we can do that.

[Alan Brown]

Obviously, I am happy to meet the Minister and work with him, but what I heard right there was that there is no plan for manufacturing jobs in Scotland, no plan to match fund the just transition fund, no answer to the job losses at Harbour Energy and no firm commitments on timescales for Acorn, and that the tidal stream funding has been halved. There is nothing happening to match the Inflation Reduction Act in the United States and the EU support packages. Is it not the case that at the moment just transition are simply warm words for this Government and that much more needs to be done?

[Andrew Bowie]

Absolutely not. I have gone through in detail exactly what we are doing in Scotland. Indeed, his colleague, the hon. Member for Cumbernauld, Kilsyth and Kirkintilloch East (Stuart C. McDonald) suggested that there was far too much in my initial answer to demonstrate what we are doing to support transition in Scotland. We will continue to do that, while championing jobs and opportunities across the whole United Kingdom, including in Scotland. That means investing in new technologies and renewables, and supporting our oil and gas industry as it transitions. All of that is possible because Scotland remains in the United Kingdom, which would not be the case if the hon. Gentleman had his way.

Independent Review of Net Zero

Debate between Andrew Bowie and Alan Brown

Thursday 9th February 2023 Commons Chamber

[The Parliamentary Under-Secretary of State for Energy Security and Net Zero (Andrew Bowie)]

I thank the Backbench Business Committee for securing this important debate, and my right hon. Friend the Member for Kingswood (Chris Skidmore) for publishing the report and pushing for this debate.

Before I move to the subject of the debate, it will not have escaped the notice of Members—in fact, it has been referenced a few times—that I stand here as a Minister on behalf of the brand-new Department for Energy Security and Net Zero. As my right hon. Friend suggested, this is the first debate for this new Department, on my second day. I hope that demonstrates our commitment to net zero. The Department’s laser-like focus will be on securing a long-term energy supply, bringing down bills and halving inflation, giving the UK cheaper, cleaner and more secure sources of energy—something covered in great detail in part 2 of this excellent report.

The report and the creation of the Department align wholeheartedly with the great strides the UK has already made in our actions to tackle climate change. In 2019, my right hon. Friend the Member for Kingswood and the former Prime Minister, my right hon. Friend the Member for Maidenhead (Mrs May), ensured that the United Kingdom became the world’s first developed country to set a legal commitment to reach net zero by 2050. That was followed by our 10-point plan for a green industrial revolution, published in November 2020. We built on that momentum in October 2021 by publishing the net zero strategy, which set out a detailed pathway to meeting our carbon budgets and net zero targets. That was followed by the British energy security strategy in April 2022, accelerating our ambitions on cleaner energy.

As Members will be aware, since publishing the net zero strategy, the economic conditions have changed significantly, due primarily to the Russian invasion of Ukraine. Energy prices and inflation rose sharply—the former to record levels. In the light of that, in September last year the Government appointed my right hon. Friend the Member for Kingswood to chair an independent review of our approach to meeting our net zero 2050 target, to ensure that we deliver on our legal commitment to reach net zero by 2050 in a way that is pro-business and pro-growth, given the change in the economic landscape.

I am delighted that the results of my right hon. Friend’s independent net zero review were published on 13 January 2023. I wholeheartedly thank him and congratulate him on his work. This is a substantial and thorough report. I assure him that I will read it in full very soon, and that a full Government response will follow later this year. As we have heard, the independent review of net zero heard from businesses, academia, individuals and local government across the country that net zero is creating a new era of change and opportunity. It confirms that the Government have understood that the benefits of net zero far outweigh the costs and have acted on that for some time. It explains the opportunities and benefits of net zero for individuals and the economy, and specifies the action needed in individual sectors of the economy, through to how we enhance the role of local authorities, communities and the individual to deliver a just tradition. [Interruption.] If those on the Opposition Front Bench would listen rather than chuntering from a sedentary position, I said I would read it in full. I have read the report, but I will read all 120 recommendations in full and we will reply in full later this year.

Furthermore, the report reconfirms that the 2021 net zero strategy is still the right pathway, based on modelling on the most cost-effective net zero energy system in 2050, and that the policy should go ahead.

[Alan Brown]

Will the Minister give way?

[Andrew Bowie]

I will not, given that I have made a commitment on time.

The review of net zero recognises that we have all made a great deal of progress through leveraging our international leadership in COP26. The proportion of the world committed to net zero has risen from 30% of global GDP to 90%. His Majesty’s Government have committed more than £2 billion to support the transition to zero-emission vehicles. That funding has focused on reducing barriers to adopting such vehicles, including offsetting the higher upfront cost and accelerating the roll-out of charge point infrastructure.

I take issue with the tone taken by the hon. Members for Bristol East (Kerry McCarthy) and for Brentford and Isleworth (Ruth Cadbury), who claimed that the Government had done nothing on climate. It was a Conservative Government who legislated for net zero. It was a Conservative Government who hosted COP26, and we look forward to working with the UAE as it looks to deliver COP this year to carry on that excellent work. It was a Conservative MP who brought forward the legislation for net zero—indeed, the same MP who wrote the report that we are debating. It was a Conservative Government who hosted the green trade and investment expo in Gateshead last year.

Unlike the Opposition, I am proud that we are leading the way in developing and exporting green technology. There were 430,000 green tech jobs in this country, worth £41.2 billion, in 2022. Companies like Catagen in Belfast, which I visited late last year, are developing green hydrogen and the e-fuels of the future. The hon. Member for Bristol East talked about onshore wind but completely ignored offshore wind. We are the world leader in offshore wind. We have the four largest offshore wind farms in the world off the coast of this island right now.

Despite all that, we are not resting on our laurels. We are raising our ambitions to ensure that we deliver net zero and realise the benefits. In last April’s British energy security strategy, we raised the ambition to deliver up to 50 GW of offshore wind by 2030, including 5 GW of floating offshore wind. We have already invested millions in offshore wind, securing many jobs and up to £320 million of Government support for fixed-bottom and floating wind ports and infrastructure.

To accelerate a reduction in energy demand—[Interruption.] If those on the Opposition Front Bench listen, they might learn something from what we are announcing today in response to the report. To accelerate a reduction in energy demand, the Government announced a long-term commitment in the 2022 autumn statement to drive improvement in energy efficiency to bring down bills for households, businesses and the public sector, with an ambition to reduce the UK’s final energy consumption from buildings and industry by 15% by 2030, against 2021 levels. That will be supported by an additional £6 billion commitment to 2028 and the launch of a new energy efficiency taskforce, further details of which will be announced in due course. By 2030, 95% of British electricity could, if we work together, be low carbon, and by 2035 we will have decarbonised our electricity system, subject to security of supply.

I turn to the concerns raised by my right hon. Friend the Member for Gainsborough (Sir Edward Leigh). As a Member representing a vast rural constituency with a similarly vast road network, I hear the concerns about the EV charging network and the protection of farmland for food security. The Government take this incredibly seriously, and in due course the Department for Environment, Food and Rural Affairs and our Department will publish plans for how we speed up the roll-out of the EV charging network and ensure food security while meeting our net zero ambitions.

We continue to build on the strong progress we have already made. We have many exciting policy announcements in the coming year. The Energy Bill, which is going through Parliament right now, will deliver an energy system that is cleaner, more affordable and more secure. We are committed to publishing an update to our green finance strategy early this year, setting out how we will mobilise finance for the UK’s energy security, climate and environmental objectives, and maintain our position as a leading green finance hub. We will set out the next steps of the United Kingdom’s emissions trading scheme in response to last year’s consultation. We have committed to adopting a zero-emission vehicle mandate, requiring that a percentage of manufacturers’ new car and van sales be zero-emission each year from 2024.

[Alan Brown]

The Minister is talking about green finance. What about the key recommendation that the UK Government have to do more funding-wise, particularly to offset the Inflation Reduction Act in the United States? We have the electricity generator levy here. The US is incentivising investment in renewables. Will the UK Government address that?

[Andrew Bowie]

This Government are committed to incentivising investment in renewables across the piece, working with the energy sector and others. In the full response to this report, which I assure Members will come later in the year, we will set out more plans in that regard. The hon. Gentleman is right; that is something we need to do.

New technology will be critical to the transition, and this comes back to the point made by the hon. Member for Bath (Wera Hobhouse) about phasing out fossil fuels. Of course we need to move away from a reliance on fossil fuels as our energy baseload. That is why we are transitioning. That is why Offshore Energies UK has its “Vision 2035” to make the North sea the first net zero basin in the world. We continue to work with the oil and gas sector as it produces the energy we require and will need for many years to come, and as it invests in the new technologies of the future, including carbon capture and storage—a technology in which there are many projects across the country.

United Kingdom Internal Market Bill

Debate between Andrew Bowie and Alan Brown

Wednesday 16th September 2020 Commons Chamber

[Alan Brown]

As I said earlier, the Tory Chair of the Public Administration and Constitutional Affairs Committee, the hon. Member for Hazel Grove (Mr Wragg) has stated clearly that the Bill will create new powers of reservation. It is ripping up the devolution settlement. When will Conservative Members understand that there is a massive difference between protecting devolution and protecting the powers of the Scottish Parliament and what they see, which is an SNP Scottish Government? It is about respecting devolution and the Scottish Parliament.

[Andrew Bowie]

I would have to see the details of what my hon. Friend the Chair of PACAC said. I would have to study it before responding, but I must stress that creating more powers is not ripping up the devolution settlement. That is not the case. The founding father of devolution, Donald Dewar, a Scottish Labour Member—there are not many left in this place these days—stated that devolution was a journey, not a one-way street. We need to have a discussion about where powers are best held, and that is what we are doing here today.

What is most remarkable about these arguments and the amendments that have been tabled by the SNP today is that they are drafted by parties that want to take Scotland and Wales back into the European Union. The SNP made much yesterday, and has again today, of the Competition and Markets Authority and the Office for the Internal Market, while the hon. Member for Glasgow Central (Alison Thewliss) spoke about autocratic Ministers of the Crown spending in Scotland. The hon. Member for Midlothian (Owen Thompson) yesterday decried the need for the Office for the Internal Market, claiming it was unnecessary, undemocratic and appointed, and complaining that it would

“decide whether a Bill met the test of the internal market, putting permanent constraints on the Scottish and Welsh Parliaments and the Northern Irish Assembly.”—[Official Report, 15 September 2020; Vol. 680, c. 248.]

That is quite remarkable from a party determined to take Scotland back into the European Union, but then maybe I missed the complaints from SNP Members when, in August 2015, the unelected and unaccountable European Commission suspended the payment of more than £45 million to the Scottish Government, under the European social fund, due to accounting “irregularities” and because it had not been given specific assurances from the Scottish Government as to how the money was being spent.

I must also, then, have missed hon. Members’ complaints to the—again—unelected and unaccountable European Commission when it threatened to fine the Scottish Government £125 million for botching up the farm payments system in 2015-16. I hate to break it to the SNP, but the restrictions placed on member states in order to preserve the internal market of the European Union are much—inordinately—more prohibitive than anything we are proposing here today.

After Brexit—indeed, because of Brexit—the Scottish Government will be free to spend, and indeed mis-spend, and free to exercise their expanded and increasing powers as they see fit. Nothing in the Bill threatens that in any way whatsoever—no powers to curb spending or cut revenue, no powers to fine for messing up payment systems, more money, more power, protecting jobs. What on earth is it in the Bill that the SNP could be objecting to so much? Why on earth is the SNP so happy to accept EU cash, with all the rules and regulations around spending and how it is spent, but will not allow the British Government to spend directly on specific projects that will benefit the lives of individual Scots?

Covid-19: Future UK-EU Relationship

Debate between Andrew Bowie and Alan Brown

Wednesday 15th July 2020 Commons Chamber

[Alan Brown]

I will not withdraw the factual assertion I made that we have handled the covid-19 pandemic in Scotland better than the UK Government. And if we are talking about population, we can do that pro rata. The death rate in England is far, far higher than in Scotland. There are still daily deaths occurring every day in England and, as I have said, there are none in Scotland. That is nothing to do with having a lower population—zero is zero.

[Andrew Bowie (West Aberdeenshire and Kincardine) (Con)]

I suggest that it does this House a disservice if people outside see us haggling over which country has had fewer deaths—frankly, I think it does Members on both sides of the House a disservice—so I would like to go back to the hon. Gentleman’s comment on the summer statement last week. He spoke about how the UK Government’s funding had bypassed Scotland. That is an untrue statement. What it did was bypass the Scottish Government, and once again, that shows that unless the money has the stamp of the Scottish Government on it, the SNP does not accept that money being spent here can benefit the people and businesses of Scotland.

[Alan Brown]

The hon. Gentleman knows that that is part of the whole debate about a power grab. The UK Government are trying to bypass the Scottish Government, so he is right in that, because they want to stick a Union flag on it—well, that trick does not work either. I go back to my earlier point: he is one of the Scottish Conservative MPs who stands up and brags about Barnett consequentials, but it is a sad state of affairs that we are expected to be grateful for Barnett consequentials, which come from a UK Government plan on how to spend money in England. They look at England’s needs and apply money to be spent based on England’s needs. We then get a wee share of that money and we are supposed to say, “Thank you very much, UK Government. The broad shoulders do us so well.” That is not how it works. In the Budget process, Scotland’s needs are never taken into account and people in Scotland understand that.

UK Oil and Gas Industry

Debate between Andrew Bowie and Alan Brown

Tuesday 25th February 2020 Westminster Hall

[Andrew Bowie]

I was not aware that no major companies were involved in the project; I think it is important that they should be. If we are to try to engage Government and get governmental support, the industry must lead the way, to show that it has confidence in the technology first.

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

Far be it from me to override what the hon. Member for Stockton North (Alex Cunningham) says, but I have just come from a breakfast briefing on carbon capture and storage, and BP is involved in the Teesside cluster. Hopefully that addresses that concern.

On the vital need to develop carbon capture and storage, does the hon. Member for West Aberdeenshire and Kincardine (Andrew Bowie) agree that the UK Government cannot pick just one project? At least a few clusters must be given the go-ahead in the forthcoming couple of years.

[Andrew Bowie]

I thank the hon. Gentleman for his intervention and for enlightening Members about BP’s involvement in the Teesside carbon capture and storage project. I agree with him. He has foresight, because what he said was exactly where I was going next in my speech. We need at least five projects across the UK if we are going to come anywhere near reaching our target in the next few years.