Great British Energy Bill

Debate between Baroness Bennett of Manor Castle and Earl Russell

Committee stage
Tuesday 17th December 2024 Lords Chamber

[Baroness Bennett of Manor Castle (GP)]

My Lords, very briefly, I offer Green group support for Amendment 56 and, in particular, Amendment 116, which has broad support, as we see from the signatures. I declare my interest as a member of the advisory committee, as I think it is now called, Peers for the Planet. The noble Baroness, Lady Young of Old Scone, has already said many of the things I was going to say. I just add that I can go back even further than she did, to the Pension Schemes Act 2021. That was an historic moment, with climate being written into a finance Bill for the first time ever.

I have been in your Lordships’ House for five years, and we have had win after win, as the noble Baroness just outlined. It really is time for us to stop having to bring this to the House to be inserted, taking up so many hours of your Lordships’ time to get us to the point at which clearly the Government should have started.

I will add an additional point to what the noble Baroness, Lady Young, said. In the recent election, Labour explicitly said that it was aiming to take a joint nature and climate approach to its way of operating the Government. This surely has to be written into the Bill.

To set the context, a nature recovery duty was discussed in the other place. My honourable friends Siân Berry and Adrian Ramsay were prominent in that, along with people from other parties. We are one of the most nature-depleted corners of this battered planet, but our statutory duty is at the moment only to stop the decline, not even to make things better. We surely cannot be creating such an important new institution as this without building nature into its statutory obligations. The Government regularly remind us that the economy and GDP growth is their number one priority, but the economy is a complete subset of the environment. The parlous state of our environment is an important factor in the parlous state of our economy.

[Earl Russell (LD)]

My Lords, I will speak very briefly to Amendment 116, in the name of the noble Baroness, Lady Hayman, to which I have added my name. I am sorry the noble Baroness is unable to be here today, and I wish her well. I thank the noble Baroness, Lady Young, and the noble Lord, Lord Bourne, for speaking to this amendment.

The amendment would give Great British Energy

“a climate and nature duty requiring it to take all reasonable steps to contribute to the achievement of the Climate Change Act 2008 and Environment Act 2021 targets in exercising its functions and delivering on the objects in clauses 3 and 5”.

We face a climate change issue and a nature issue; they are interlinked and co-dependent. The actions that we take on climate change cannot be at the expense of biodiversity and nature, particularly in our seabed, which locks up so much blue carbon. We are still developing our understanding of just how important that is, and how susceptible the seabed is to disturbance. The two are interlinked and interdependent, and they have to be seen together. The more that we can do this across all our public bodies, the better we will be.

A nature recovery element to the proposed duty would give GB Energy statutory direction to invest in clean energy projects that meet the highest of environmental standards. It is really important to make sure that the work GB Energy does on climate change also supports nature. That would give it a key concentration in its broad decision-making and investment decision-making, as well as in projects, project management and delivery. A nature recovery duty would give GB Energy the power to use nature-based solutions and to review what it does and hold itself to account, and for us in Parliament to do the same.

The Crown Estate Bill and the Water (Special Measures) Bill have been mentioned already. Both those Bills have had the addition of a general climate change and nature target. This was a welcome development, which I was very pleased to see. I pay tribute to the noble Baroness, Lady Hayman, for the work she has done, and to Peers for the Planet and other Members of this House who were involved in those processes. That target is an important part of our transition.

I was pleased to see the same amendment proposed to the GB Energy Bill. The noble Baroness, Lady Hayman, worked constructively with the noble Lord, Lord Livermore, to get that done, and they found a wording that worked for both of them in the context of this Bill. The context exists: GB Energy’s primary partner is the Crown Estate, so half of this partnership has a reporting requirement already. At a very minimum, if this amendment is not accepted or amended to make it acceptable, the amendment in the Crown Estate Bill has to be mirrored in this Bill. I have tabled an amendment in a later group which picks up on that work and seeks to make sure that that happens.

These are important matters. I hope that this amendment can be carried forward. Labour made a commitment in its manifesto not only to fight climate change but to protect nature. It is important that the institutions that this Government set up to fight climate change also implement Labour’s other manifesto commitments.

Contracts for Difference (Sustainable Industry Rewards) Regulations 2024

Debate between Baroness Bennett of Manor Castle and Earl Russell

Monday 13th May 2024 Grand Committee

[Baroness Bennett of Manor Castle (GP)]

My Lords, I have some technical questions, although I begin by broadly welcoming the Government’s direction of travel on this. It really is urgent that we proceed with offshore and floating offshore wind schemes.

I have two questions, one of which refers to the Procurement Act, which I spent more hours than I care to remember debating in this very Chamber when it was a Bill. How does this provision fit with the social value provisions in the Procurement Act? These measures would seem to be carved-out and very narrow provisions within that, so I am wondering how those two legal elements interact. My other question is, this provision provides a mechanism for offshore and floating offshore wind; how will this impact potentially on bids for solar, hydro and other schemes? Will it create a disadvantage for smaller-scale schemes, particularly community schemes?

[Earl Russell (LD)]

My Lords, I note that this SI has not been the subject of any report by the Secondary Legislation Scrutiny Committee. On these Benches, we broadly welcome the SI and its intention to grow the green economy. The UK is one of the best-placed countries in the world for developing and deploying offshore wind to help to provide energy security and meet our net-zero commitments. In 2023, a record 49 terawatt hours, 17% of the UK’s total electricity generation, was produced by offshore wind energy. The UK is aiming to triple its offshore wind capacity in the next six years and desperately needs a successful wind auction this year after the failure to attract any bids from offshore wind developers for the last round of contractual auctions.

The green economy in the UK grew by 6% last year and is crucial to delivering economic growth, the just transition and our climate goals. There are worries about the level of support for future investment in the UK offshore wind sector, and this SI is broadly welcomed on these Benches for recognising this and aiming to improve the situation.

This SI applies contracts for difference sustainable industry rewards—SIRs—which, it is said

“will help to address recent supply chain challenges that could otherwise hinder the deployment of offshore wind (OFW) and floating offshore wind (FOW). They will do so by providing additional revenue support to OFW and FOW developers, through a series of lump-sum payments in addition to their regular CfD payments, should they invest in the economic, social, and environmental sustainability of their supply chains”.

Carbon Dioxide Transport and Storage Revenue Support (Directions and Counterparty) Regulations 2024

Debate between Baroness Bennett of Manor Castle and Earl Russell

Monday 13th May 2024 Grand Committee

[Baroness Bennett of Manor Castle (GP)]

My Lords, the noble Lord, Lord Jones, spoke about a war on carbon. Of course, that is a war we should not be having to fight. The arrival of these regulations is an expression of failure over decades. We have continued to dig up and burn coal, oil and gas, and now, having done all that damage to the natural carbon capture and storage—the best possible form of it, which nature has done for us over hundreds of millions of years—we are trying to find a mechanism to undo some of that damage. Yet what we are doing here is establishing an expensive, top-down framework for a technology that does not yet exist at any scale and which, if successful, will create natural monopolies.

This novel industry has zero customers and no guarantee that there will be any in the future. It will be heavily dependent on the Government to adopt an energy and industrial strategy down a route that makes the carbon capture and storage industry possible. It is heavily centralised, risky and expensive, which must be contrasted with the decentralised, readily available and readily deployable technologies that exist as an alternative to CCS. What the Government are proposing with these regulations are huge subsidies for decades, in the hope that at some point there will be economic developments that will start to reduce the cost to the taxpayer. This means that our situation is a bit like the problem we have with incinerators, whereby we build incinerators with contracts to supply them with waste for decades and then have to generate the waste. The Government are really combining science fiction with dinosaur thinking here.

I feel some sympathy for the Minister, because these regulations have landed in your Lordships’ Committee in a rather unfortunate week. To quote the Energy Mix website, referring to the carbon capture and storage industry,

“Industry Navigates Very Bad Week”.

This article reflects two developments in Canada, where Capital Power has cancelled a 2.4 billion Canadian dollar carbon capture and storage project at its Genesee generating station, saying that it is “technically viable” but “not economically feasible”. It also reflects, as the Canadian national organisation Environmental Defence said,

“the latest failure in carbon capture’s terrible track record”.

This project had already received 5 million Canadian dollars from the Government of Alberta and was being set up for further tax breaks and support from both the federal and provincial Governments. It is just not working.

The other bad week to which the website referred concerned figures that have come out of Boundary Dam Unit 3, a project worth 1 billion Canadian dollars. It promised to capture 90% of the CO₂ that was being generated but, in fact, its capture rate has been only 57%. This gives me a question to ask of the Minister—and perhaps of the Labour Front Bench—about the regulations before us and the Government’s plans: if there are contracts promising a certain rate of capture but that rate of capture is not met and they fail to deliver what is promised, with the potential to cause considerable damage in this new industry, what will be done? I note that the Toronto Globe and Mail is saying that there are

“continuing tensions between industry and the federal government about the extent to which public dollars will be used to provide”

for this industry.

With that in mind, I note the Minister’s comments in his introduction. I also note paragraph 5.10 of the Explanatory Memorandum to the directions, eligibility and counterparty regulations and paragraph 5.9 of the Explanatory Memorandum to the directions and counterparty regulations, both of which refer to the importance of information being deployed publicly, as well as the Minister’s comments about commercial confidentiality. In so many areas of public provision, we have seen real problems with people hiding behind a total lack of transparency arising from that coverall of commercial confidentiality. Can the Minister assure me that that will not happen in this case?

[Earl Russell (LD)]

My Lords, I rise to speak to both of these SIs. I note that neither of them has been subject to any report by the Secondary Legislation Scrutiny Committee.

Both SIs relate to carbon capture, usage and storage—CCUS—and are broadly welcomed on these Benches. I will not partake in any debate on CCUS today. It is a suite of technologies that enable the mitigation of carbon dioxide emissions from large point sources, such as power plants and refineries, and the removal of existing CO₂ from the atmosphere. In short, CCUS is one vital tool in the toolbox to help us reach net zero.

The Government envisaged building a competitive, self-sustained CCUS market in the UK. I note that, as of today, no commercial-scale CCUS projects are up and running. CCUS could provide economic growth potential as part of the transition to net zero—£1 billion of government money has already been made available for investment in four potential clusters, which aim to be capable of storing 20 to 30 megatonnes of carbon dioxide by 2030—but CCUS has had a slow and slightly rough start in the UK.

The revenue, directions, eligibility and counterparty SI establishes the process by which the Secretary of State can direct a carbon capture counterparty to offer to contract with an eligible carbon capture entity. It also sets out the requirement that certain information must be published by the counterparty in respect of contracts entered into, as well as the requirement on the counterparty to notify the Secretary of State promptly if it is likely to be unable to perform its functions. This instrument concerns the implementation of industrial carbon capture business models, or ICCBMs—there must be a better acronym—which are intended to support the ambition set out in the net-zero strategy to deliver carbon capture, usage and storage, or CCUS, in four industrial clusters. The ICCBMs have been designed to incentivise the deployment of carbon capture technology by industrial and waste users who often have no viable alternative, as the Minister set out, and are similar to contract for difference schemes.

My questions on this SI relate to the future review and scrutiny of those contracts. As they are commercial contracts—I note that they are in the public domain, but some of this may not be made public—and are signed off by the Secretary of State, can the Minister explain what, if any, further parliamentary scrutiny there will be of these processes? These contracts are for new and in some cases yet unproven technologies, so how will value for money be ascertained and reported back to Parliament in future, especially given that the SI allows for the amendment of those contracts in future and no statutory review is envisaged? I welcome the response to the consultation and the changes, including the use of the term “energy recovery generating station” and around the exclusions and support.

Because of time, I will not go through all that the SI on carbon dioxide transport and storage does. It seeks to help establish first-of-the-kind infrastructure in the UK to transport and permanently store the carbon dioxide that has been captured. It provides Exchequer-funded revenue support to mitigate the financial risks of the initial investors. The investment in this infrastructure is welcome, and I recognise the need for it, but what level of financial support is envisaged at this stage? If none is required now but money is perhaps required at some later point, can I ask if and how Parliament might be consulted on that and what limits are in place on those future financial investments in this scheme? If more money goes in, how will that be reported and noted by Parliament?

My other questions relate to parliamentary oversight and scrutiny of the new types of technology and new contracts—what they are delivering and whether they are delivering value for money, how they are monitored and how Parliament gets future say in scrutiny of them.

Finally, in relation to both SIs, the process is delivered via commercial contracts, and both SIs allow for alterations and a requirement on the parties to inform the Secretary of State if the counterparty is unable, or likely to be unable, to fulfil its role as entered into. What, if any, dispute resolution mechanisms exist here between the department and the contractors? I am particularly interested in what legal dispute resolution mechanisms exist to give adequate oversight of this process to Parliament before any potential legal disputes end up in court.