COP 27: Outcome

Baroness Blake of Leeds Excerpts

Tuesday 6th December 2022 Lords Chamber

[Lord Callanan (Con)]

My noble friend makes a very good point of course. Our 1% is not going to make a massive difference, but there are also opportunities attached to it. Our rollout of renewables is going extremely well. We have one of the largest selections of offshore renewables in the world, which has enabled the cost to come down. It is an example we have set through our contracts for difference scheme, and now renewables—particularly offshore wind renewables—are coming in at a fraction of the cost of fossil-fuel generation, so the market is also helping to drive these matters, and of course provides excellent export potential for our industries.

[Baroness Blake of Leeds (Lab)]

My Lords, as well as the net-zero priorities highlighted at COP 27, the Russian invasion of Ukraine has of course underlined the need to move away from oil and gas and on to homegrown, cheap, clean energy sources that guarantee our energy security. Why have the Government been doubling down on this in regard to fossil fuels, including the loophole to save generators’ profits, while continuing to block the cheapest, cleanest, quickest forms of power —onshore wind and solar?

[Lord Callanan (Con)]

As I said in response to the previous question, we have one of the fastest rollouts of renewables in the developed world. We have the second largest share of offshore wind after China, but there is undoubtedly still a need for gas as a transition fuel. It makes sense therefore to use that transition fuel from our own North Sea resources, rather than importing it, in a very carbon-heavy manner, in LNG.

Climate and Ecology Bill [HL]

Baroness Blake of Leeds Excerpts

Committee stage
Friday 18th November 2022 Lords Chamber

[Baroness Hooper (Con)]

My Lords, at Second Reading I was happy to support the principle of this Bill as a way of plugging the gap in the Environment Act 2021, as then outlined by the noble Lord, Lord Redesdale. I appreciate the reasons he has outlined again today for his decision to concentrate solely on the nature loss reversal target to make the Bill more focused. I therefore support the amendments he has outlined in this respect.

We should not lose sight of the dramatic facts, which have been referred to not only by the noble Lord, Lord Redesdale, but by the noble Lord, Lord Green. The UK is one of the most nature-depleted nations on earth. Frankly, I was extremely shocked and surprised when I first heard this fact. Many will be surprised, especially now at the end of COP 27, where everybody was rather focusing on the problems in Amazonia. I feel this is an appropriate moment to mention how delighted we are to welcome President Lula’s statements in Cairo yesterday in respect of Brazil’s policies in this area.

In the United Kingdom I am heartened by Defra’s 10-point plan, issued in September, which asks for urgent investment in

“solutions that halt and reverse the decline of biodiversity by 2030.”

It seems to me that this ecology Bill, as I hope it will be at the end of these proceedings, ties in with and will support that objective. I will be interested to hear from my noble friend the Minister the Government’s views and the ways in which the Bill can help further the Government’s aims.

In looking at statistics in the area of biodiversity, we should not forget that the major part of the UK’s biodiversity is to be found in the overseas territories—places such as Tristan da Cunha, the Falkland Islands, St Helena, and so on. My only query to the noble Lord, Lord Redesdale, is the extent to which he has had contact with the Governments of the overseas territories in forming his decisions on the Bill.

I would also like to hear from the Front Bench the Government’s view on how any future plans to create legally binding targets to deliver their environment policies, which include the provisions of the Bill, will be implemented by the devolved Governments of Scotland, Wales and Northern Ireland, who have their own responsibilities in this respect. I support the amendments and the principle of the Bill.

[Baroness Blake of Leeds (Lab)]

My Lords, it is extremely welcome to have the Bill return for Committee, and I appreciate the opportunity to take part and to continue to raise issues that we feel are not being met by this Government and are within our grasp to make a real difference on.

Again, I commend the leadership shown in this area by the noble Lord, Lord Redesdale, in bringing the Bill forward. I also commend Zero Hour for providing us with all the important briefings to support and improve the quality of our debates, and of course I commend all the campaigners across the country who have worked hard to raise the issues concerned and to push them to the forefront of the political agenda. In today’s debate, I thank the noble Lord, Lord Green, in particular, for sharing his expertise, which added a richness to the discussions at hand.

I turn to the Bill and note all of the comments about the impact of the amendments tabled by the noble Lord, Lord Redesdale, and what they actually mean. I welcome the decision to give the Bill a more concise focus. I believe that steps to make it more amenable to the Government of course mean that it is more likely to see actual action, which is the reason that we are all here. So I am pleased to support these amendments.

As we heard, the Bill as published had various joined-up objectives: imposing a duty on the Government to introduce a strategy for reducing the UK’s

“overall contribution to global greenhouse gas emissions to net zero”;

establishing a “Climate and Nature Assembly” to advise the Government; and giving additional duties to the Climate Change Committee and the Joint Nature Conservation Committee. These all remain important aspects, but this group of amendments will leave us with a five-clause Bill with just one major objective for the Secretary of State: a duty to ensure that the UK

“halts and reverses its overall contribution to the degradation and loss of nature in the United Kingdom ... by ... increasing the health, abundance, diversity and resilience of species, populations, habitats and ecosystems”

and by

“fulfilling its obligations under the UNCBD and … the Leaders’ Pledge for Nature”.

The case for tackling biodiversity loss, climate change and environmental risks to public health is clear. Research from the Natural History Museum—I am pleased that we have had its input—found that the UK is last among G7 countries in terms of how much diversity survives, and it sits in the bottom 10% of all countries globally. It is worth us all repeating these statistics.

As we have heard, we are one of the most nature-depleted nations on earth. Much damage has already been done, and letting it continue would be even more alarming. Some of our most iconic and much-loved British animals could soon be extinct, including the red squirrel, the wildcat, the water vole, the dormouse and even the hedgehog. We have already seen a two-thirds decline in flying insect numbers in England in just the last 16 years. Thousands of badgers continue to be killed, authorised by this Government—in my view unnecessarily—and there are also bee-killing neonic pesticides. The Government have also failed to act to stop illegal hunting or effectively limit peat extraction and moorland burning.

If the Government fail to deliver on their environmental targets, their promise to protect at least 30% of our land, waters and ocean by 2030 is in serious doubt. It is no surprise that environmental groups, including the RSPB, the Wildlife Trusts and the National Trust, have accused the Government of an attack on nature by their policies, such as weakening environmental protections in investment zones, the retained EU law Bill and threatening to downgrade new environment-friendly farming subsidies.

The Government have cut funding for national parks by 40% in real terms over the last decade, leaving our most precious nature sites in crisis. Their plan to make up the shortfall is “through private investment”, without giving any further detail on what that will look like. They also failed to set new 2030 biodiversity targets in line with their legal requirements under the Environment Act 2021, and there is no current suggestion of when these will be set. Perhaps the Minister can comment on this in his remarks.

The Labour Party has committed to putting the environment and climate at the heart of its agenda and delivering nature-positive action which halts and reverses the loss of biodiversity by 2030, for the benefit of all people on the planet, as is the ask of the Bill. That element of reversing will make the real difference between the Government’s position and what is necessary. The Environment Act commits to halt species decline but fails to reverse decline and does not tackle broader biodiversity loss.

Without revisiting all the discussion at Second Reading, again I ask the Minister to tell us about progress towards a plan to tackle these messages. Also, where is the positive engagement strategy? Taking the public with us is so important in this agenda and, as we have discussed previously, a wider communication and education strategy is so important as we go forward.

The Government should back the Bill and commit fully to what is necessary to save our natural environment.

[The Parliamentary Under-Secretary of State, Department for Business, Energy and Industrial Strategy (Lord Callanan) (Con)]

My Lords, I join all other speakers in congratulating the noble Lord, Lord Redesdale, on securing this Committee for his Private Member’s Bill today and on continuing to highlight this vitally important issue. I particularly welcomed his comments on red squirrels. When I was a Member of the European Parliament for the north-east, I was a proud member of the European Squirrel Initiative—that major NGO at the forefront of the debate—and of course, Northumberland is on the front line of the battle to preserve red squirrels, which persist primarily in Scotland; the greys have managed to eradicate them for most of England. In my view, we need to pursue an eradication policy of the greys—my noble friend Lord Randall also mentioned that important issue.

We do not have to shy away from the fact that nature is in decline around the world. That is exactly why we are setting a legally binding target in England to halt the decline in species abundance by 2030. This ecology Bill deems “species abundance” too limited and seeks to widen this to include habitats and ecosystems. However, in our view, species abundance is a good proxy for the health of the wider ecosystem. The indicator we will use to track progress includes over 1,000 representative species for which we have robust data. Between them, these species depend on the majority of habitats found in England. Action to achieve the species abundance target will necessarily require the creation and restoration of wider habitats and ecosystems.

This target is an ambitious one—indeed, it is world-leading. We will take determined actions to halt the decline of nature, but those actions will not stop once we meet that target. We know that halting the decline in nature is not enough and we will continue to take action naturally leading to a reversal of that decline. That is why we have consulted on long-term targets to increase species abundance, improve the red list index for species extinction risk, and create or restore more habitat—all by 2042. Five-yearly interim targets will help the Government to stay on track.

Furthermore, the overall suite of targets, including on water and air quality, will put nature at the centre of all government policy-making for generations to come. We will confirm all our long-term environmental targets as soon as practicable and will set out our approach to meeting them in our revised environmental improvement plan in 2023.

Greenhouse Gas Emissions Trading Scheme (Amendment) (No. 3) Order 2022

Baroness Blake of Leeds Excerpts

Thursday 3rd November 2022 Grand Committee

Having said that, clearly, I welcome the fact that this SI has come forward and that flights between GB—hopefully Northern Ireland as well in future—and Switzerland will be subject to the emissions trading scheme. From that basis, I support this SI.

[Baroness Blake of Leeds (Lab)]

My Lords, I, too, thank the Minister for his full explanation of the SI before us today. I have a feeling that we will have many opportunities in future to discuss the success and progress of emissions trading schemes in general, and I am fairly certain that there will be a focus on this at COP 27 next week. I look forward with interest to seeing progress generally.

Obviously, the situation with Switzerland had to be resolved. I am pleased that this instrument has come before us today. I thank the Minister for his explanation about Northern Ireland and the impact of the impasse in the Assembly, including what effect that is having in this area. I have a couple of questions. What assessment has been made of the impact of flights to Switzerland not being included in the UK ETS during the period between leaving the EU and the start of next year, when this instrument comes into force? Is there any way that this could have been avoided? Hindsight is a wonderful thing, of course.

The impact on the public sector will be mainly in the form of additional revenues from the auctioning of land for these flights. Have the Government made an estimate of the value of that? Generally, are there any other, similar gaps that the Government are looking to close? Are they looking to develop the ETS by extending elsewhere in a similar manner? Obviously, this is a complex area for operators working in this space. Do the Government think that aircraft providers will need any additional guidance to make changes as a result of this instrument? If so, what steps are the Government taking to provide this?

In spite of those questions, I am pleased to see this measure in front of us today; I look forward to seeing it move forwards.

[Lord Callanan (Con)]

I thank noble Lords for their contributions. I am particularly grateful to the noble Lord, Lord Teverson, for sharing his holiday experiences with us all. I expect he will bring his photograph album next time. I was going to say that it would show him lying on the beach but, of course, there are no beaches in Switzerland; perhaps he will be lying on the lakeside in Switzerland. I am grateful to both noble Lords for their support for these proposals and their questions.

This Order in Council, as it will be, will enable the inclusion of flights from Great Britain to Switzerland within the definition of aviation activity and bring them within the scope of the UK ETS for the start of the 2022-23 scheme year. As I said, we will seek to include flights from Northern Ireland as soon as the Northern Ireland Assembly is functioning.

In response to the noble Baroness, Lady Blake, although UK-Switzerland flights amount to approximately a quarter of a megaton of CO₂, which is less than 0.2% of the UK ETS cap for the 2023 scheme year, this legislation will enable us to uphold our agreements with Switzerland and the UK Government’s commitment to the 2020 government response. Clearly the proposals will ] not have a significant impact on the costs of participating in the UK ETS for the vast majority of participants, although aircraft operators running flights between Switzerland and Great Britain will of course see a slight increase in their obligations as a result of the expanded scope.

As the noble Lord, Lord Teverson, correctly stated, to reduce the risk of carbon leakage, a proportion of UK ETS allowances are allocated to aircraft operators for free, which they can use towards their scheme obligations, and flights from Great Britain to Switzerland will be able to apply for a free allocation entitlement. In the Government’s response to the Future of UK Carbon Pricing consultation, we committed to reviewing the UK’s approach to free allocations to ensure that carbon leakage is appropriately mitigated. It supports the UK’s high climate objectives and preserves the incentive to decarbonise, which is what we want. The commissioned economic research on aviation carbon pricing found minimal risks of carbon leakage for the aviation sector under the current scope of the UK ETS, and the consultation proposed three potential phase-out trajectories of aviation-free allocation. The consultation also explored potential updates to the UK ETS free allocation methodology, including benchmarking and updating activity data and how we account for new operators.

Furthermore, as set out in the energy White Paper, the UK net-zero review and, most recently, the Developing the UK’s Emissions Trading Scheme consultation, which was published in March this year, the Government remain open to the possibility of linking the UK ETS internationally. Under the terms of the TCA, the UK and the EU agreed to co-operate on carbon pricing, including through giving consideration to linking our respective carbon-pricing schemes.

The noble Baroness, Lady Blake, asked what assessment has been made on flights to Switzerland not being included since leaving the EU and the instrument coming into force, and whether or not that could have been avoided. When establishing the UK ETS, our priority was to ensure, as far as possible, continuity of coverage. That included an agreement with the EU to cover flights between the UK and the EEA in the UK ETS and the EU ETS. The EU-UK Trade and Cooperation Agreement provided for coverage of the EU ETS for flights from the EEA into the UK and set a precedent for including departing flights without, at the time, a full linking agreement. We will follow this precedent for flights between the UK and Switzerland. Flights from the UK to Switzerland will indeed represent a very small proportion of the total flights and emissions within the UK ETS.

In addition, the noble Baroness, Lady Blake, asked whether the Government think that the aircraft provider will need additional guidance and what steps we are taking. In total, UK ETS auction revenue in 2021 added up to £4.3 billion. We estimate that the UK ETS will raise over £6 billion in 2022 if prices remain at or around the current level, which is an average of £80 a tonne for the first six months of 2022. Once the legislation is laid, the Environment Agency will get in touch with aircraft operators to clarify exactly what their new obligations are.

I think I have dealt with the questions noble Lords asked. I therefore commend this draft order to the Committee.

Climate Change: Behaviour Change

Baroness Blake of Leeds Excerpts

Thursday 3rd November 2022 Lords Chamber

[Lord Callanan (Con)]

The noble Lord has made the point and I am sure the watching millions will be fascinated to know of his support for the game industry.

[Baroness Blake of Leeds (Lab)]

The importance of behaviour change to deliver reductions in climate emissions is significant and acknowledged. To achieve the necessary change in behaviour, we know that alternatives need to be in place: for example, to achieve a modal shift in travel by increasing the use of public transport. Against the backdrop of chaos and a major loss of confidence caused by frequent cancellations and delays to rail services, especially across the north, can the Minister update us on progress towards setting up the new Great British Railways body intended to improve performance and thereby contribute to reduced emissions from the transport sector?

[Lord Callanan (Con)]

I will certainly ask my DfT colleagues to update the noble Baroness on where we are with the new Great British Railways body, but much of the chaos and cancellations we have seen in train services have been caused by the trade unions, which she is close to.

Warm Home Discount (Scotland) Regulations 2022

Baroness Blake of Leeds Excerpts

Tuesday 11th October 2022 Grand Committee

[Baroness Blake of Leeds (Lab)]

I thank the Minister for his very full explanation. I start by expressing regret that this scheme is necessary in the first place. I think all of us recognise that while fuel poverty is really high profile at the moment, it is a scourge that has been with us for a long time, as reflected by the fact that the original scheme came in in 2011. Many people and families have struggled to pay their bills for a very long time. Of course, as outlined by the Minister, we recognise the support that has been given for the extreme circumstances we have found ourselves in recently.

I do not want to spend too much time going through the detail. I recognise that there has been extensive debate on the England and Wales scheme in the Commons and in this place, and that these regulations are bringing in the necessary additions to meet the requirement to have a separate scheme for Scotland, as has been outlined. We recognise that point, but I would like further clarification and reassurance that the Scottish Government are happy with the outcome of the debate and consultation as it has gone forward. That is very important; obviously, there are peculiar circumstances in terms of the responsibilities of the Scottish Government and the role that the UK Government have to play.

As we have heard, most respondents to the second consultation agreed with the proposed extension of the current scheme until 2026, but the other question that came up was whether it was possible to have an earlier review of the scheme given the circumstances people are facing at the moment. There is concern generally about the higher fuel poverty rates in Scotland that the evidence suggests. Obviously, concerns were raised about the method for apportioning spending to Scotland, and some asked for higher apportionment to reflect those higher rates. I think it is fair to say that some energy suppliers also expressed concern about the additional costs of running two separate schemes, in England and Wales and in Scotland, and I do not know whether there is any assessment of what that additional spend will be.

Of course, it was probably inevitable that there were many requests for the value of the rebates to be increased. I understand that the rebate is fixed at the level proposed for consistency with the England and Wales scheme, but I will leave that issue there as something that will probably come up in the Minister’s response. I wonder if there are any comments to be made on how we will assess the situation as we go forward into continuing uncertain times.

The way the scheme is structured means that the cost of the rebates will be passed on to consumers in Scotland. My understanding is that the suppliers will pass on the cost of the scheme to their customers. This is estimated to come out at about £19 per dual fuel account, which is an increase from £14 under the current scheme. The Minister is shaking his head; I take from his response that he has a comment to make on this. I look forward to hearing that this is not the case. The reason I raise it, of course, is because we are seeing across the whole of the UK more and more people starting to struggle to pay their energy bills—and an additional cost for some who might not be eligible for this rebate scheme is probably not sustainable and could end up forcing more people into needing to take part.

I shall leave my comments there. It is very important that we approve the regulations so that we can get them into place, so families can benefit as quickly as possible. I end my comments with the general view that I hope we are not losing sight of the wider imperative of moving forward with schemes that will actually reduce the need to use fuel. I am thinking of home insulation, for example. There is some uncertainty at the moment, and I would welcome reassurance that the work that has started will be continued and, indeed, increased.

[Lord Callanan (Con)]

I thank the noble Baroness very much indeed for her questions. She deserves admiration for being the only Member to turn up to discuss this important issue, so I am grateful to her for that. I am happy to confirm that the Scottish Government are very satisfied with the scheme before us today; in fact, they asked us to implement it on their behalf. They originally talked about doing a separate scheme for ECO and the warm home discount for Scotland, then they decided that they could not and therefore requested us to launch the process and implement it for Scotland. That is why we are debating these regulations separately from the England and Wales regulations. So not only are they satisfied with it but it is at their request that we do this.

On the noble Baroness’s question about a review, it would be possible for the Scottish and UK Governments to carry out a review and consult on amendments to the scheme, should they consider it appropriate. We are apportioning a fair amount to Scotland; it is equivalent to 9.4% of the overall spending, which is proportionate to the number of domestic gas and electricity meters in Scotland compared to the rest of Great Britain. This is higher than Scotland’s proportion of the population in Great Britain, which was 8.4% in mid-2020, and it will also exceed its share of means-tested benefits recipients. This approach makes it fairer for consumers across England, Wales and Scotland, ensuring similar levels of cost and benefit across consumers.

On the administration costs of the schemes, the scheme in Scotland is a continuation of the current scheme, so there would be limited additional burdens in implementing it, and there would be continuity for suppliers. The reform of the scheme in England and Wales will reduce the administrative burden of running the scheme compared to the current one, and flexibility to transfer the broader group into industry initiatives will reduce the burdens for suppliers with low or zero broader groups in Scotland.

On the noble Baroness’s point about the cost of the scheme on energy bills—I think that she cited the figure of £19—the ECO scheme and warm home discount form part of the so-called green levies, which the noble Baroness will recall the Chancellor announcing, rather than being funded through bills. The scheme will be funded, at least for the next two years, by the Exchequer directly under the energy price guarantee scheme. So we are continuing with the scheme as previously, but the suppliers will be refunded by the Exchequer from that.

The noble Baroness also asked a very important question about our insulation schemes. As she will know, we have insulation and energy efficiency schemes of about £6.6 billion through a number of different initiatives. I am thinking of the home upgrade grant, the social housing decarbonisation fund, the public sector decarbonisation scheme, the local authority delivery scheme, and so on. I am happy to confirm that they are continuing, as well as the ECO scheme, which is also part of the obligations on suppliers. Indeed, I am happy also to confirm that we are extending it. As part of his recent Statement, the Chancellor announced an ECO plus scheme, which will be worth about £1 billion over three years. We are currently working on implementing it, and we will bring a regulation back to this House to discuss its further implementation in future.

I hope that has dealt with all the noble Baroness’s queries. Again, I commend the draft regulations to the Committee.

Horizon Europe

Baroness Blake of Leeds Excerpts

Thursday 8th September 2022 Lords Chamber

[Lord Callanan (Con)]

I am sure that the Prime Minister will be having many conversations with EU leaders and the European Commission. I am not sure that another letter would make a tremendous difference to the EU’s position on this; in my view, it is being incredibly unreasonable. We will continue to work with the EU. We have co-operation in a number of areas, so it is a win-win situation in which both sides benefit, and we want it to continue.

[Baroness Blake of Leeds (Lab)]

My Lords, innovation thrives on collaboration, as we have heard. Delaying resolving the relationship shows that the UK is not stepping up to face the challenges of the future. We must accept our responsibility in this relationship. We have heard that organisations such as the UK Dementia Research Institute are on course to become world leaders in the field, but they need the collaboration of the brightest and the best of Europe. What assessment has the Minister made of the impact that the uncertainty around the UK’s association with Horizon Europe is having on the UK’s research field?

[Lord Callanan (Con)]

There are some negative impacts: the current uncertainty is damaging for scientific co-operation. There are many researchers who want to get on with the job, and we have put in place transitional arrangements to help them in the meantime. We want all that co-operation to continue. The noble Baroness cites some good examples, and this is exactly why we want to associate to Horizon Europe. We call on the EU to do that and to finalise the agreements that it freely entered into and signed. I am sure that the House is united in wanting that to continue.

Energy Bill [HL]

Baroness Blake of Leeds Excerpts

Committee stage
Wednesday 7th September 2022 Lords Chamber

[Baroness Liddell of Coatdyke (Lab)]

Thank you very much. This is another one on future-proofing. The amendment says,

“leave out ‘function on any’ and insert ‘relevant function on any relevant’”

person. The reason is that these delegation powers could be interpreted as being broad and non-specific, and it would be some comfort to insert this language to ensure it is clear that the Bill is referring only to the powers relating to revenue support regulations, and that these will be appropriately delegated to a person with the right capabilities. It seems to open a door that makes us feel a little bit uncomfortable and I think it would be a very sound way to go forward to accept the terms of this Amendment 40. I beg to move.

[Baroness Blake of Leeds (Lab)]

I add my welcome to my noble friend Lady Liddell and I am certain that my noble friend Lord Foulkes will be thinking of organising a party to celebrate her return to Westminster.

I cannot add to the comments she made on her amendment. I completely support what she said. I feel that there is a bit of déjà vu here and that we are going over ground we covered in our first session on Monday, but I think it is really important that we emphasise again, through the amendments that my noble friend Lord Lennie and I have put down, how important it is that we have clarity in all aspects of the Bill. I want to emphasise again the need to ensure that all aspects are future-proofed, thereby giving all parties the confidence that matters of probity, security and appropriate appointments are always taken into account in key positions. It is unfortunate that we need to emphasise this aspect, but I think experience will tell us that it is a very necessary part of all the processes that we bring in place.

To recap briefly, in Amendment 42 we would like to insert the phrase “fit and proper”. As we have said before, this is not the first time this has been used—it was used in the National Security and Investment Bill. Through this amendment we make sure that it is the responsibility of the Secretary of State personally to deem the individual as fit and proper.

Amendment 44 specifically refers to the need for the hydrogen counterparty to be

“a fit and proper person”.

The aim is to make sure that responsibility is very clearly accounted to the Secretary of State.

The explanatory statement for Amendment 64 says:

“If the Secretary of State needs to find a new counterparty, this amendment requires that they must ensure they are a fit and proper person, as with previous amendments in our names”.


I do not think that at this point in the state of affairs we can emphasise enough just how important it is to have accountability, clarity and the ability to have straight- forward lines of communication.

[Lord Teverson (LD)]

I did not like to address the amendments tabled by the noble Baroness before she had addressed them herself. I welcome the amendment tabled by the noble Baroness, Lady Liddell; I think it adds clarity. I absolutely agree with the amendment that the noble Baroness, Lady Blake, has just gone through. I think “fit and proper” is used many times throughout certainly financial services secondary legislation, and when it comes to hydrogen production it seems to me that this is something that is really key. I look forward to the Minister arguing that people in this position should not be fit and proper people, and I pass over to him.

--- Later in debate ---

[Lord Oates (LD)]

My Lords, I declare my interest as a member of the UK Hydrogen Policy Commission. I do not disagree with any of the amendments, and having a stringent green hydrogen standard is important. However, it is also important to stress that hydrogen is for use not only in home heating—I share some of the noble Baroness’s scepticism about that—and there are very significant uses of hydrogen at present in the chemical industry and as a feedstock in fertilisers. They must clearly be the priority, and we certainly need green hydrogen for that, which is a lot of green hydrogen. Although I absolutely share the ambition on tight standards for green hydrogen, we will definitely need it there, and in some of those hard-to-decarbonise areas such as steel production and the building industry. We should absolutely use it for purposes where electricity is not an easy solution, but let us not talk it down or talk about it as if it is a solution only to home heating, where I agree it probably is not practical.

[Baroness Blake of Leeds (Lab)]

Just to add to that list of uses, I am interested in the development of the hydrogen village, as outlined in the Bill, which is a really interesting example. There are also other uses in transport, for example, which are very well advanced, and we very much look forward to the outcome of those debates.

I do not want to prolong the debate, but the obvious question to me is that a standard has been established and had extensive public consultation and multiple engagement sessions with experts by stakeholder groups, as I understand it. I just wonder why we would want to undermine all that work and complicate the situation by suggesting that the Secretary of State could override the standard. Perhaps the Minister could, in his summing up, give us a very clear explanation of how any changes to the standard and protection might be achieved, to ensure that stakeholders and the public are kept informed, as this is, as we have heard, an area of both enthusiastic response and concern.

[Baroness Bloomfield of Hinton Waldrist (Con)]

I thank the noble Baroness, Lady Liddell, and the noble Lord, Lord Foulkes, for their amendments in this group.

Amendments 43, 45 and 48 seek to ensure that the question of who is an eligible low-carbon hydrogen producer is determined solely by regulations that set objective criteria against which to assess eligibility, and in doing so must reference the low-carbon hydrogen standard.

Amendment 58 seeks to clarify that a low-carbon hydrogen producer must be eligible to receive support, which the other amendments would ensure means that they are compliant with the low-carbon hydrogen standard. Amendment 46 has a similar purpose; I thank the noble Baroness, Lady Bennett, for it and for her encouraging comments about the policy.

Amendment 47 seeks to introduce an emissions standard for low-carbon hydrogen production and would require the Government to target support at areas that cannot benefit from other cleaner, more efficient or cost-effective decarbonisation processes. I thank the noble Baroness, Lady Worthington, for this amendment.

A low-carbon hydrogen producer is defined in Clause 61(8) as

“a person who carries on (or is to carry on) activities of producing hydrogen which in the opinion of the Secretary of State will contribute to a reduction in emissions of greenhouse gases”.

The intention of this definition is to ensure that support under hydrogen production revenue support contracts may be provided only in respect of low-carbon hydrogen production that contributes to our decarbonisation ambitions.

Clause 61(3) places a duty on the Secretary of State to make provision in regulations for determining the meaning of “eligible” in relation to a low-carbon hydrogen producer. This approach to defining eligibility in regulations is similar to that taken for low-carbon contracts for difference in the Energy Act 2013. The regulations that define the term “eligible generator” for low-carbon contracts for difference have themselves been updated since they were introduced in 2014 as the industry and technologies have evolved; this has proved a flexible and enduring approach since 2014.

This duty is required as the Secretary of State is only able to direct a hydrogen production counterparty to offer to contract with an eligible low-carbon hydrogen producer. An allocation body will also be able only to give a notification to a hydrogen production counterparty specifying an eligible low-carbon hydrogen producer to offer to contract with. It is not practical to define an eligible low-carbon hydrogen producer in the Bill because eligibility may change over time as the industry and technologies evolve. The Government plan to consult on these regulations by early 2023.

The Government consulted on a UK low-carbon hydrogen standard last year, and a government response was published in April this year. This world-leading standard sets out a greenhouse gas emissions threshold as well as other criteria for hydrogen production to be considered low carbon, and sets out in detail the methodology for calculating the emissions associated with hydrogen production. This includes the steps that producers are expected to take to prove that the hydrogen they produce is compliant.

The standard was developed following a public consultation and multiple engagement sessions with industry and academic experts, including the Hydrogen Advisory Council and its low-carbon hydrogen standard working group. As set out in the response to the consultation on a low-carbon hydrogen business model, published in April this year, we are proceeding with our proposal to require volumes of hydrogen produced to meet the UK low-carbon hydrogen standard in order to qualify for and receive funding under the business model. The low-carbon hydrogen standard is set out in guidance and we expect it to be updated over time to ensure that it remains fit for purpose and reflects our growing understanding of how new technologies work in practice, including how hydrogen production interacts with the broader energy system. I hope that gives some comfort to the noble Lord, Lord Oates, and the noble Baroness, Lady Blake, that the standard may well change over time as our understanding of the practice grows.

With a focus on investor confidence, our current approach gives a significant degree of certainty about eligibility, which will provide prospective investors and developers with the clarity and transparency that they need to bring projects forward. While the low-carbon hydrogen standard is an integral part of the low-carbon hydrogen regime, direct reference to an emissions standard in this legislation would undermine both the need for the standard to be capable of evolving over time and the need for the legislation to be certain. The approach currently set out in the clause makes best use of regulations for setting eligibility and guidance that can be more responsive to the evolving nature of the low- carbon hydrogen standard.

Amendment 58 seeks to insert “eligible” in Clause 70(1)(b). We do not consider this necessary, as the reference to

“that low carbon hydrogen producer”

in subsection (1)(b) is referring back to the

“eligible low carbon hydrogen producer”

in subsection (1)(a).

The noble Baroness, Lady Worthington, mentioned the production of methane and it being an unhealthy by-product of hydrogen, and that a green hydrogen lobby group which I was not aware had been consulted. I will certainly take that back to the department. We have numbers on the rate of hydrogen per kilogram of greenhouse gas emissions compared with the low-carbon hydrogen standard, but I will be delighted to write to her, rather than befuddle everybody with the science here.

I therefore ask that the noble Baronesses and noble Lords withdraw and not press Amendments 43, 45, 46, 47, 48 and 58, but thank them for helping to test the robustness of the Government’s decarbonisation ambitions.

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Moved by

[Baroness Blake of Leeds]

52: Clause 66, page 58, line 4, leave out “relevant market participants (see subsection (8))” and insert “the Consolidated Fund or gas shippers”
Member’s explanatory statement
This amendment means the Secretary of State may put a levy on gas shippers, but may not put it on gas or electricity suppliers, thus taking responsibility away from levies to households.

[Baroness Blake of Leeds (Lab)]

I shall speak also to Amendments 54 and 62, tabled in my name and that of my noble friend Lord Lennie. Clauses 66 and 67 set out a series of powers to raise a levy or levies to fund the hydrogen business model. Detailed design of these will be subject to further consultation, which I hope and assume will take place thoroughly and may indeed reach similar conclusions to those put forward in this group of amendments.

--- Later in debate ---

[Lord Callanan (Con)]

I understand the point made by the noble Baroness. I have also seen the models of where it is most likely that hydrogen would be used, and I have considerable sympathy for many of the points that she made. As to the where it will be used, it will clearly be in industrial processes and heavy-goods transportation. These would be more likely uses than home heating or decarbonisation, but it would possibly play a role. Nevertheless, as I said, I have taken note of what has been said in the Committee and understand the points that have been made. If the noble Baroness allows me, I will take them away to look at, and possibly revisit them at Report.

Amendment 56 seeks to impose restrictions on when the hydrogen levy can be introduced to fund the hydrogen business model. This will help to unlock potentially billions of pounds worth of investment in hydrogen that we need across the UK. The Government are committed to ensuring that long-term funding is provided through the hydrogen business model, and the provisions in the Bill do not require the Government to introduce the levy by a particular date. We do not expect the levy to be introduced any time before 2025, and so we do not expect it to have any impact on consumer bills before then, at the earliest. Decisions regarding when to introduce the levy will take into account wider government policies and priorities, including considerations related to energy bill affordability, which is always at the forefront of our considerations.

The first set of regulations under Clause 66, establishing the levy, will also be subject to the affirmative resolution procedure, so we would fully expect Parliament to exercise its role, and particularly your Lordships’ House to scrutinise how the Government intend to exercise those powers.

Amendment 56 would, in my view, introduce restrictions that are unnecessary, given the Government’s approach to decisions related to when to introduce the levy and the parliamentary scrutiny requirements that would be associated with any relevant secondary legislation.

Amendment 57 seeks to protect consumers by introducing a requirement for the Secretary of State to publish a specific consumer impact report before making regulations under Clause 66, establishing a hydrogen levy. As I mentioned, the parliamentary procedure for the first set of regulations that establish the levy will help ensure that the levy receives sufficient scrutiny from Parliament. Crucially, I can tell the Committee that it is already the Government’s intention to publish an impact assessment alongside the draft regulations made under Clause 66. I hope noble Lords will recognise that the amendment is unnecessary and feel able to not press their amendments.

[Baroness Blake of Leeds (Lab)]

I thank the noble Lord for his comments and welcome, as we all do, the commitment to revisit one of the amendments from the noble Baroness, Lady Worthington. We look forward with interest to that. However, on some of the other aspects, there will be conversations between now and Report, and I am fairly confident that we will come back to discuss what is, in our view, a really important area. With those comments, I beg leave to withdraw the amendment.

Amendment 52 withdrawn.

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[Lord Callanan (Con)]

My Lords, in moving Amendment 65 I shall speak also to Amendments 66, 147, 149 and 190 standing in my name. These amendments will allow the Secretary of State to modify the licences of certain gas and electricity market participants in Great Britain and Northern Ireland. They will also allow the Secretary of State to modify documents maintained in accordance with these licences, such as industry codes, or agreements that give effect to such documents. The Secretary of State will be able to make such modifications only for the purpose of facilitating or supporting enforcement of, and administration in connection with, hydrogen levy obligations.

As I have said, decisions on the detailed design of the levy are pending. However, it is likely that persons other than the levy administrator will need to perform functions, provide services, and/or provide information and advice that support and facilitate the administration and enforcement of the levy. This power is required in order that the Secretary of State can modify relevant licences and codes to support and facilitate the administration and enforcement of the levy. In particular, it is required so that the Secretary of State may make modifications to support or facilitate persons who are parties to relevant industry codes to take on roles related to the levy’s administration and enforcement.

I can tell the Committee that there is precedent for this type of provision, with similar powers contained in the Energy Act 2013 and the recent Nuclear Energy (Financing) Act 2022. Provisions in the Energy Act 2013 were used to make licence and code modifications in relation to the contracts for difference regime. This power will help future-proof the levy, enabling the Secretary of State to implement licence or code modifications in order to accommodate any future changes to the levy design.

I can reassure your Lordships that these amendments of course include a requirement for the Secretary of State to consult the holder of any licence being modified and such other persons as the Secretary of State considers it appropriate to consult before making any modification. This will help ensure that relevant bodies are engaged in any potential modifications.

In addition, before making modifications under this power, the Secretary of State must lay a draft of the modifications before Parliament, where they will be subject to a procedure analogous to the draft negative resolution procedure used for statutory instruments. This also allows for additional scrutiny for any proposed modifications under this power. I beg to move.

[Baroness Blake of Leeds (Lab)]

Briefly, I thank the Minister for that explanation. I am sure, looking back at comments made earlier this afternoon, that the team opposite cannot be happy with the number of government amendments that are coming through on the Bill at this stage—I hope that will be taken up on a serious note on this and other Bills that have come forward.

The only slight question I have is that we talk about consultation as though everyone understands exactly how it happens and everyone is happy with the way it is done. Is it possible to be slightly more specific about who else might be consulted apart from the owner of the licence? I would also like some reassurance around the openness and transparency of a process to make sure that all parties are aware of any changes made in the future.

[Lord Callanan (Con)]

I am happy to reassure the noble Baroness that the relevant consultations will of course take place on any changes made.

Energy Bill [HL]

Baroness Blake of Leeds Excerpts

Committee stage
Monday 5th September 2022 Lords Chamber

[Baroness Bennett of Manor Castle (GP)]

My Lords, I rise briefly, having attached my name to Amendment 23 in the names of the noble Lord, Lord Lennie—who, of course, by the nature of these structures has not yet spoken on it—and the noble Baroness, Lady Blake of Leeds. I attached my name only to Amendment 23 but Amendments 27 and 35 form something of a package; they all express concern about requiring regulation so that licences must be only

“granted to fit and proper persons”.

As I was contemplating these amendments, I thought of the Oral Question earlier today in which my noble friend Lady Jones of Moulsecoomb took part, which looked at the situation we have now with the water companies in the UK. There is an obvious parallel with the crucial nature of the water companies and their fit and proper behaviour—and, without reopening that debate, their use of resources et cetera. If we are to go forward with carbon capture and storage at scale, it is obviously crucial that it is absolutely trustworthy and reliable, including in financial terms. We are talking about long-term investments for which we need real stability and certainty. The other parallel that occurred to me in contemplating this group was what happened with carbon offsetting—a phrase that has a bad odour in many parts of the world where we have seen a great deal of cowboy behaviour and many problems occurring.

Putting in this explicit “fit and proper persons” test, which, as the noble Lord, Lord Lennie, explained, is drawn from the National Security and Investment Act, is a very good parallel. If we are to securely store this carbon for the long term, in a manner that means the state does not have to step in to try to clean up a mess left by a private company, this is one way of attempting to ensure that that happens.

[Baroness Blake of Leeds (Lab)]

My Lords, it gives me great pleasure to contribute on this set of amendments. I add my admiration and support for my noble friend Lord Foulkes, who has stepped into the breach admirably in the unfortunate absence of my noble friend Lady Liddell. I very much look forward to her return. I also add my thanks to the Minister for giving us time today to discuss this very important Bill; I think all of us recognise its significance at this time. Without reopening the debate from Second Reading, it is clear to us all that there are gaps. We need to take the opportunity to fill those gaps, given the state of crisis that the country is entering.

I want to speak to the amendments in the name of my noble friend Lord Lennie, starting with Amendments 21 and 22. They seek to make it clear that a licence can be granted for transportation or storage, or both if wanted, but that a licence need not be granted for everything. The activities that Clause 7 relates to are

“(a) operating a site for the disposal of carbon dioxide by way of geological storage; (b) providing a service of transporting carbon dioxide by a licensable means of transportation”.

We have to acknowledge the importance of this section of the Bill. Indeed, the Climate Change Committee has referred to all of this area as a necessity, not an option, particularly as we move forward and technologies improve. As drafted, the Bill provides a single licence for both but, given that they are separate activities, we see no reason why individual licences could not be provided for each activity—even if it may be the case that most of the persons carrying out these activities carry out both.

A broad portfolio of technologies is needed to achieve deep emissions reductions, practically and cost effectively; carbon capture and storage is just one of them. In the International Energy Agency’s sustainable development scenario, in which

“global CO₂ emissions from the energy sector fall to zero on a net basis by 2070”

carbon capture and storage

“accounts for nearly 15% of the cumulative reduction in emissions, compared with the Stated Policies Scenario. The contribution grows over time as the technology improves, costs fall and cheaper abatement options in some sectors are exhausted. In 2070, 10.4 Gt of CO2 is captured from across the energy sector”.

This would provide more flexibility for a developing market, with the intention of driving down price within it.

We have already heard just how expensive carbon capture is and how, despite its importance for achieving clean energy, it has been rather slow to take off. According to the IEA, there were only around 20 commercial operations worldwide midway through last year. Commentators often cite carbon capture as being too expensive and unable to compete with wind and solar, given their falling costs over the last decade, but to dismiss the technology on cost grounds would be to ignore its unique strengths, its competitiveness in key sectors and its potential to enter the mainstream of low-carbon solutions. I am pleased that the Government have not done this. However, as we have made clear, we feel that not enough attention has been given to solar and onshore wind, in particular. It is important that we take whatever steps we can to make the market as attractive as possible and encourage licensing from fit and proper persons.

The noble Baroness, Lady Bennett, has already spoken to the next set of amendments, particularly Amendment 23. We feel that the phrase “fit and proper”, having already had a usage in the National Security and Investment Act, is something that we should take very seriously. The aim of these amendments is to put the responsibility on the Secretary of State to personally deem the individual fit and proper.

Perhaps the greatest concern that we have to acknowledge is the environmental risk associated with long-term storage of captured CO_2, as any gradual or catastrophic leakage would likely negate the initial environmental benefits of capturing and storing CO₂ emissions. It is worth itemising those key risks, just so that we have them on record. First, there are technical hazards: we know that the construction of plants needed to capture and process CO₂ can be complex. Whether for new facilities or retrofitting and enabling the separation of CO₂ from other gases, there are inherent technical exposures in the CO₂ separation process relating to the compression and cooling of gases flying through pipes and the use of chemical solvents, for instance.

Secondly, on fire and explosion, as we know, there are lifting, handling and accidental damage risks at carbon capture plants, as is the case at any construction site. When carbon-capture technology is retrofitted to operate in industrial plants or facilities in typically high-hazard locations such as power stations, the risk of accidental damage and subsequent fire and explosion risks to existing assets might be enhanced. As I have stated, the risk of leakage must clearly be the subject of much consideration as we go forward.

Business interruption is another risk that we have to acknowledge in the failure to meet the carbon goals as they are laid out. Pure carbon dioxide gas can be compressed so that it reaches its dense and supercritical phase. In some cases, it can instead be cooled, which transforms it into a liquid state. Mechanical failures or breakdowns affecting this stage of the process could lead to lengthy business interruptions for clients. If the captured CO₂ cannot be transported, this may affect the emissions targets and carbon credits committed to by clients. Therefore, the need to look at all proper precautions is absolutely vital, and the persons tasked with doing this need to have the confidence of the whole sector.

Amendment 24, in the name of my noble friend Lord Lennie, would make regulations related to carbon dioxide transport and storage licence applications subject to the affirmative procedure. Surely it is sensible that Parliament has a full say in any regulations to ensure that licensing is done both to encourage carbon capture and storage and to ensure that it is properly safeguarded.

We have to see this in the context of an enormous possibility to create significant numbers of jobs—the estimate is 50,000 by as soon as 2030—across industry, power, transport and storage networks. It is absolutely essential that the confidence is there and that all the people who will be engaged in the work we intend to do are properly protected wherever possible.

[Lord Callanan (Con)]

My Lords, this group of amendments considers the licensing of carbon dioxide transport and storage, and I thank everyone for their contributions. I will speak to Amendment 25, in my name, which relates to the definition of “decommissioning costs”. Carbon dioxide transport and storage licence holders will be expected to establish decommissioning funds for each of their transport and storage networks. These funds will accrue money over the operational life of the network to pay for the expected offshore decommissioning and post-closure costs associated with the network.

As originally drafted, the Bill enables the Secretary of State to make regulations about the provision of security for decommissioning in relation to carbon storage installations. This is to ensure that regulations could require relevant persons to provide security for costs that reflect the full range of decommissioning obligations that arise in relation to carbon transportation and storage activities.

Regulations will provide the framework for how the decommissioning funds are to ensure that the funding is secure and available when it is required to pay for the decommissioning and post-closure obligations. The costs are likely to be those associated with the obligations that the licence holder will have under the permit, which could include costs associated with preparatory works between closure and the commencement of decommissioning activities and post-closure monitoring.

As noble Lords will be aware, a series of amendments has been tabled relating to the financing of the decommissioning of carbon storage assets, and I look forward to the forthcoming debate on those amendments. Should our amendments be accepted to apply these decommissioning fund powers to the new defined term “decommissioning costs”, explained in Amendment 70, the previous definition of “decommissioning and legacy costs” becomes redundant and should therefore be omitted from Clause 11.

I will move on to the amendments tabled by noble Lords in this group. Amendment 17, tabled by the noble Lord, Lord Foulkes, and the noble Baroness, Lady Liddell, seeks to amend the scope of the prohibition on operating a CO₂ transport and storage network without an economically regulated licence. Although there is an existing framework for the licensing of carbon dioxide storage activities, established under the Energy Act 2008, that Act provides for technical regulation to ensure the secure geological storage of carbon dioxide. It therefore does not provide any powers in relation to economic regulation.

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[Lord Teverson (LD)]

I asked specifically that all these amendments be grouped together because they have one aim: to make sure that there is a coherence between policy measures and the net zero pathway that is the Government’s own aim. Of course, the Government have undertaken to produce a government strategy and policy statement and the Bill requires a statement focusing on CCUS to be produced as well. However, our contention is that there is no current requirement for policy and infrastructure planning processes to be based on a consistent set of assumptions about the future. That means, in practice, that two projects could get a green light despite being justified by incompatible visions of system need, ensuring that one would ultimately be left stranded. Of course, that does not lead to confidence in this area. So there could be incompatible visions.

For instance, hydrogen electrification visions of the future involve very different supporting infrastructure, and a lack of coherence could create expensive infrastructure which, at the end of the day, is unusable or redundant. The strategy provides an opportunity to set out the latest set of assumptions, projections and decision methodology and I am sure that is what the Government want to do to underpin their policy, to which other processes should align. What we are really trying to do in these amendments is to make sure, practically, that the actions that arise from the Bill are coherent and tie in with the policy statements of the Government. It seems absolutely straightforward to me: it is that missing link, if you like, that pushes together intent in these various areas and makes sure that the strategy is coherent in its delivery. It is as simple as that and I hope the Government and the Minister will look favourably on that approach. I beg to move.

[Baroness Blake of Leeds (Lab)]

I do not have an enormous amount to add to the comments of the noble Lord, Lord Teverson. I highlight again the significance of linking strategy and policy: that is crucial. We will discuss in future debates the issues around the role of the ISOP and its independence, and, particularly in the context of this afternoon’s debate, look at long-term thinking, making sure that we get all the checks and balances in place. We are in a very fast-moving environment and need to make sure that we are absolutely on top of all the changes that are taking place. The noble Lord, Lord Teverson, highlighted the risk of lack of coherence: we need to make sure that everything is nailed down, line by line, and I am sure we will have further discussion on these areas as we go through different aspects of the Bill. I look forward to the Minister’s conclusions on this group of amendments.

[Lord Callanan (Con)]

I thank the noble Lord, Lord Teverson, for his amendments, beginning with Amendments 38 and 112. The Bill provides that the Secretary of State may designate a CCUS strategy and policy statement to set out the strategic priorities of the Government in formulating their CCUS policy. This would also need to take account of any statement designated under Section 131 of the Energy Act 2013. The Secretary of State must carry out their functions under this part in the manner they consider is best to further deliver the policy outcomes set out in the statement. In addition, parliamentarians will have the opportunity to consider any draft CCUS strategy and policy statement before it can be designated, as is provided for by Clause 91(10). Setting out in a strategic policy statement possible scenarios for policy change would start to introduce considerable uncertainty for both investors and the regulator which would, in my view, hamper the stability of the sector.

Amendment 120 to Clause 98 would require that, when making regulations establishing or adjusting a low-carbon heat scheme, the Secretary of State must publish a statement demonstrating how the scheme would deliver in line with both the carbon capture usage and storage strategy and policy statement and any overall strategy and policy statement provided for by the Energy Act 2013. Of course, I agree with the noble Lord in his principle that policy-making should be aligned with the broader strategy and the latest science: that is why all policy on heat and building decarbonisation is and will continue to be developed in line with wider government energy and decarbonisation strategy. As we said in a recent government response to a consultation, the plan to introduce, for instance, the market-based low-carbon heat scheme is aligned with the aim to expand the deployment of heat pumps towards 600,000 installations per year by 2028. I am afraid I do not agree with the noble Lord, and therefore do not believe that requiring another series of publications each time new regulations are made is ultimately necessary. I therefore hope he will feel able to withdraw his amendment.

Turning to Amendment 128, Clauses 108 and 109 will enable the safe and effective delivery of a village-scale hydrogen heating trial to gather vital evidence to help make decisions on the potential role of hydrogen in heat decarbonisation. I reassure the noble Lord that trial development is already following the latest science. This amendment would delay the introduction of new regulations which are focused on the protection of consumers until two strategy and policy statements are published. The exact contents of these documents would also need to be properly consulted on before they are issued.

Energy Bill [HL]

Baroness Blake of Leeds Excerpts

2nd reading
Tuesday 19th July 2022 Lords Chamber

[Baroness Blake of Leeds (Lab)]

My Lords, I am grateful for the opportunity to debate this Bill today. I look forward to the contributions that will be made from across the House, and in particular to the closing comments from my noble friend Lord Lennie.

As the Minister mentioned, it is hard to think of a more appropriate day than today to hold this debate. That, together with the illegal Russian invasion of Ukraine, now approaching the end of a fifth month, means this is a very important moment for us to consider the sheer scale of the task ahead of us. It is clear that the Energy Bill is needed, and in this regard it is very welcome. However, we will need to consider what is missing from the Bill.

For the millions of families facing the catastrophe of soaring energy bills, I am afraid the Bill is another missed opportunity as it does not tackle the scale of the issue. It is a missed opportunity to tackle the cost of living crisis; a missed opportunity to bring forward the emergency energy efficiency measure we so desperately need; and a missed opportunity to deliver the green energy sprint that could bring down bills while creating tens of thousands of skilled jobs for future generations if the necessary training programmes and supply chains are developed.

Long-term reform of the energy market is of course necessary, but it must come alongside urgent action to cut bills, strengthen our energy security and tackle the climate crisis now. This Bill will do nothing to buck the Government’s record of failure on these issues as it stands, but perhaps there is an even bigger issue at hand: the Government who presented this Bill already no longer exist. By the time the Bill is in Committee, they will have been entirely replaced. While the leadership selection is still weeks away, we have already heard candidates putting internal politics ahead of science, evidence and the future of the country, at the same time as we experience the dangerous impact of climate change first hand. The country needs to know urgently what their commitment to net zero, for example, really is. I am pleased that they have all finally, publicly committed to net zero, but I have to say that it took a very long time for some of them to get to that point. I cannot ask the Minister to commit to what a future Government will do, but it is important to make the point regardless.

A decade of failed energy policy has left energy bills too high and the UK’s energy system too weak. This Government simply cannot answer the biggest challenges our country faces. While there is a lot in the Bill—243 clauses, as we have heard, covering three pillars, much of which we welcome—what really stands out, as I have said, is what is missing. Where are the urgent measures to help families with soaring energy costs that the Government could be offering, such as delinking the low price of renewable energy from the high price of gas? Where are the desperately needed measures for a green energy sprint that can bring down bills over the years to come? Where is the end to the effective ban on onshore wind—the quickest, cheapest way to reduce reliance on insecure international gas supplies, so starkly exposed by the current crisis in Ukraine? Where is the much-needed extension and upgrade of the national grid?

Where is the long-term mission for home insulation, beginning with the insulation of 2 million homes this year? The UK’s record on energy efficiency in housing is woeful. We need changes to planning law and building regs brought in immediately to stop the building of substandard homes and start closing the gap between our performance and that of other European countries—where, I am afraid, we rank among the lowest.

The Bill is simply not up to the problem at hand. Clauses 1 to 111 and Schedules 1 to 5 address leveraging investments in clean technologies. This sounds great, until you realise that 97 of these clauses and all five schedules relate to carbon dioxide and hydrogen, and that only 14 relate to new technology. Of those 14, 10 clauses are dedicated to low-carbon heat schemes which the Secretary of State “may” make provision for. I am afraid this hardly feels like the sprint to green energy that is needed.

The next six parts of the Bill relate to a pick and mix of energy system reform. There are some welcome and interesting ideas here. The Future System Operator consultation, published earlier this year, set out what we already knew—that the current approach towards delivering net zero was lacking—so the establishment in Part 4 of an independent system operator and planner, ISOP, for the electricity and gas supply sectors is particularly welcome. An expert, impartial body with the duty of facilitating net zero is exactly what is needed. As the pre-existing electricity system operator, which is expected to be at the heart of this new body, has pointed out, it is vital to ensure that ISOP is independent and free from actual or perceived conflicts of interest. It is further welcome that it will be established as a public corporation with operational independence from the Government. Can the Minister expand on the scale and timeline for implementation?

Also found in the second pillar are small pushes in the right direction on the energy company obligation, smart meters and heat networks, but, as is the theme with the Bill, these positive steps are just too timid. We welcome the regulations introducing ECO4 just last week but they are little more than a small step in the right direction on efficiency, and a small step in the wrong direction on bill prices. The provisions expanding the powers in this Bill, while positive for smaller suppliers, appear to be even less significant. Where is the wholesale movement on efficiency that is needed?

As for smart meters, we have heard again and again how their rollout is being developed, facilitated or extended. The provisions in the Bill do not seem to change anything. This is a major consumer issue that could be fixed through the Bill, especially if proper attention is given to using gathered data effectively. That is exactly what we need right now. Why will the Government not mandate the rollout of this legislation, rather than continuing to dither?

The provisions on heat networks are the most welcome in this area. Heat network consumers are currently woefully unprotected; regulation offering much-needed safeguards to the 480,000 consumers who currently use them is long overdue. With the number of heat networks, and the number of consumers they will supply to, expected to grow significantly in our efforts to reach net zero, this is even more pertinent and so we welcome them. However, that perhaps makes the legislation even more disappointing, in a way. It does not encompass the reality and misses yet another opportunity. These systems are poorly funded and poorly maintained; they should be renewable but are not; and they are not covered by the price cap. The legislation fixes none of these much wider issues and it is hard to see this as anything but a failure in the grand scheme of things. Where is the overhaul that heat networks really need?

The third pillar of the Bill contains provisions on maintaining the safety, security and reliance of energy systems across the UK. At this time more than ever, any additional risk of fuel shortages would be most unwelcome. Ensuring that the Government can take steps to maintain or improve fuel supply resilience, if they are needed, is welcome. It is important, however, that any powers introduced are not overextended or misused. I note the factsheet response but would be keen to hear more from the Minister on how far the powers can go—an area I am sure we will discuss at later stages of the Bill’s passage.

There are other welcome provisions in this pillar. There are also a number of provisions in Part 12 on the civil nuclear sector, including on waste storage, decommissioning and more. I would be keen to hear more from the Minister on decommissioning, where I understand we will be reducing ONR regulation as set out under the 1965 Act, which is now deemed unnecessary. The benefits of this have been clearly set out and I understand aligning with international law but, given what is at stake, the more reassurance from the Minister on this being a safe move, the better.

Those are just a few of the areas that need to be addressed, and we will look to do so at later stages if the Government do not. However, I need to ask when a coherent, cross-cutting communication strategy will be ready and when the promised energy advice service will be up and running. Taking public opinion with us and delivering through local networks will be critical to achieving the changes in behaviour that will underpin progress. We have seen from earlier versions of the energy security strategy that agreement on a number of areas is possible, not least onshore wind and solar. We hope the new Prime Minister will not abandon the ambition to deliver.

I am grateful for the amendments that the Minister shared with us this morning. We will be looking at them in greater detail. But the point, running through the Bill, is about not abandoning ambition to deliver when that is exactly what is needed now—ambition and a real commitment to urgency. The scale of the challenge will not be met with anything less.

Energy: Prices and Supply

Baroness Blake of Leeds Excerpts

Thursday 14th July 2022 Lords Chamber

[Lord Callanan (Con)]

My noble friend will understand that I am not going to get into discussing emergency situations. Anything as drastic as that is extremely unlikely. All parts of Europe benefit from interconnected supplies of electricity and gas. It helps to secure both our energy supplies and resilience for our future, and that of other European countries.

[Baroness Blake of Leeds (Lab)]

My Lords, I declare an interest as vice-president of the Local Government Association.

The Government’s failures in energy policy go back over a decade, including on energy efficiency. Homes are still being built that do not meet minimum standards of efficiency and will require significant retrofitting in the near future to meet legal standards. As mentioned in the recent Climate Change Committee report to Parliament, the promised future homes standard and changes to the planning system have not yet been delivered. Can the Minister inform us, either now or in writing, how many homes not meeting minimum standards of efficiency have been built since the close of consultation in January 2021? Also, how many planning permissions are in place to allow the building of such substandard homes before June 2023? How many housing units does that amount to?

[Lord Callanan (Con)]

The noble Baroness is asking for some detailed statistics which I do not have to hand, but I will certainly write to her about that. There is a considerable uplift in the building regulations coming next year. The future homes standard is coming in 2025 and when it is introduced, the carbon efficiency of homes will be increased by about 75%.