Climate Change Act 2008 (International Aviation and International Shipping) Regulations 2026
Baroness Bloomfield of Hinton Waldrist Excerpts(4 weeks, 1 day ago)
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Baroness Bloomfield of Hinton Waldrist (Con)
My Lords, I thank the Minister for introducing today’s regulations. I know my noble friend Lord Moynihan is disappointed not to be here for this debate—the second one in a week on an instrument that we all believe will be deeply damaging to the economy. He offers his apology as he has to attend a long-standing political appointment to which he is committed. I declare my interest as the unremunerated chair of Eq.flight, working towards the development of nuclear-derived sustainable aviation fuel.
This House voted to regret last week’s instrument due to the nationwide effects that it will have on our economy and our way of life. Although this week’s is not quite so wide-ranging, we regret that the Secretary of State is taking his economic wrecking ball to two specific industries.
Before I speak to the economic impact that this statutory instrument and other associated measures the Government are taking will have, I first note that the implementation of the instrument raises concerns. The Explanatory Memorandum states:
“The exact methodology for determining the UK’s share of IAIS emissions for the purposes of measuring and reporting emissions from CB6 onwards will be determined separately by the Secretary of State, and before laying the first annual statement of UK emissions for the CB6 period”.
The Government are putting the cart before the horse.
International aviation and shipping will be expected to comply with regulations to help the Government reach their net-zero target without being told how and even when their emissions will be measured. But I note the Minister’s explanation of the methodology of the calculation of emissions for carbon budget 6 period.
This is becoming a worrying trend within the department. Two weeks ago, my noble friend Lord Moynihan rightly pointed out that the legislation brought forward to implement the RO to Exchequer policy in Northern Ireland was done without a comparable offer having been agreed with the Northern Ireland Assembly. Now, entire industries are to be expected to comply with net-zero policies without being told how to do so. Regardless of the policy’s aim, that is not how to instil business confidence in the Government’s plans. I hope that the Minister can today outline when we can expect to see the accounting methodology and more generally reassure the House that the department takes the practical implementation of policy as seriously as it does the principles behind it.
On the economic impact, this instrument is merely a formalisation of the Government’s recent drive to ensure aviation and shipping compliance with net zero. It will set into statute the adverse effects that government policy is already having. By carbon budget 7, shipping emissions are projected to have been reduced by more than 60%, at a net cost of more than £1 billion annually. This is to be done primarily through fuel switching. To incentivise this transition away from carbon-intensive fuel, the Government have extended the UK ETS scheme to the sector, at an up-front cost of more than £0.25 billion. That is despite the fact that alternative fuels still cost four times more than conventional fuel, while there are only two shore power facilities in the country.
The industry has said that these shortfalls would be manageable if the Government set out a clear revenue recycling plan to reinvest ETS proceeds into maritime transition, but they have yet to do so. The result is that the ETS scheme will operate as a tax rather than as a decarbonisation incentive for the industry that moves 95% of the UK’s goods. I hope that the Minister can outline how net zero-derived revenue will be recycled back into these industries in his response.
Similarly, the aviation industry will be forced to transition not through economic incentives but through state-mandated demand management. CB7 states that the supposed cost savings that net zero will bring the sector will come almost entirely through a reduction in demand operating capabilities. This will not happen naturally, but through “demand management” that will
“increase ticket prices, either directly through taxes or indirectly through technology costs”.
That is a highly unnatural market distortion. The industry will be forced to invest in net-zero technology, and if that fails in reducing emissions to the Government’s desired extent, they will simply raise taxes. This too is expected to cost over £1 billion annually by CB6.
These regulations incorporating these sectors into carbon budget accounting will now present an incentive for future regulations upon them. My worry is that aviation and shipping will now be seen as fair game to be sacrificed for the Government’s rushed drive to net zero. Given that the impacts of current regulations have already been highly damaging, I hope that the Minister will be able to reassure us that the regulations are entirely formal and that these sectors will not be subjected to future punitive measures.
Baroness Bloomfield of Hinton Waldrist (Con)
My Lords, I thank all noble Lords for their contributions to this important debate and genuinely take note of their comments.
It is the speed of the rush to net zero that is harming our industry. I accept the entirely correct focus of the noble Lord, Lord Hunt, on the 1.5 million jobs and the contribution to the economy of the burgeoning green economy. However, these Benches are united on the focus needing to be on cutting energy bills. Our grandchildren will equally never forgive us if we destroy our economy with high energy prices. That must be a concern for us all. We currently have electricity prices which are four times higher than those of the US. That is the issue that we need to address.
Let us not ignore warnings from Tony Blair, who said that the net-zero policies being pushed forward are “unaffordable, ineffective” and “politically toxic”, or Gary Smith of the GMB, who recently said that the policies being pursued by the Government are “economic madness”. Even Unite the Union said:
“No ban without a plan”.
These points are worthy of consideration because the North Sea issue is very important. While everyone was distracted by Makerfield, an important referendum was, in effect, being undertaken in Aberdeen South. It was an overwhelming rejection of both measures in these climate change carbon budget regulations and the Government’s currently policy on the North Sea, which is referred to.
Having said all the above, I beg leave to withdraw the amendment standing in the name of my noble friend Lord Moynihan.
King’s Speech
Baroness Bloomfield of Hinton Waldrist Excerpts(2 months, 1 week ago)
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Baroness Bloomfield of Hinton Waldrist (Con)
My Lords, it is a great pleasure to open this debate on behalf of His Majesty’s loyal Opposition. I am delighted that this debate will include the maiden speeches of several noble Lords. I look forward to hearing from my noble friend Lord Blackwater, whose historical understanding and insight into Britain’s constitutional makeup will be an asset to the whole House. The noble Lord, Lord Dixon of Jericho, with his experience at Citizens Advice and in advocating for society’s most vulnerable, brings a public-facing experience to the House from which we shall all benefit. The noble Lord, Lord Hobby, has had an extensive career within the education sector, and I know I speak for the whole House when I say that his expertise will be welcomed and appreciated in this important forthcoming education legislation. Lastly, the noble Baroness, Lady Leaman, brings to the Liberal Democrat Benches a wealth of experience, and I look forward to supporting her campaign to address the scourge upon our society that is violence against women and girls.
I will first briefly touch upon education, beginning with the SEND system. This Session will introduce legislation that recognises the crucial moment we find the system in. Costs are ballooning and councils are flailing, and it is the most vulnerable children who are the worse off for it, yet the impression remains that there will be no additional departmental spending until 2029, when central government will absorb SEND provision. When this occurs, it will account for £4 billion of the £6 billion annual shortfall, and that is before we account for the projected council deficits of £14 billion. I hope that the Government will, in due course, set out a timeline to deal with these costs.
I reflect briefly on the impact of the Government’s policies in the past Session. We began with a new tax on education, advertised as an equaliser, which has served only to funnel more children into a struggling state sector. The number of pupils leaving private schools is now almost four times more than the 3,000 originally estimated due to the Government’s policy. That tax was meant to be one half of a trade-off that helped recruit 6,500 new teachers. That plan has failed: there are in fact 400 fewer teachers now than when they took office.
Under-25 apprenticeship starts are down, gender-questioning guidance has been watered down, parental and school freedoms have been reduced, and the Government have yet to put forward a concrete policy regarding poor-value degrees which shackle graduates with decades of spiralling debt. My noble friend Lord Markham will speak to that latter point, but I can only hope that the Government recognise the damage of these policies in the last Session and will have learned something from them.
Turning to the focus of my contribution—energy— I declare my interest as an independent consultant to Terrestrial Energy, a US nuclear technology company developing generation 4 advanced nuclear technologies. In the light of the still mounting costs of energy, I shall use this opportunity to give an overview of the policies that have brought us to this point and highlight the need to change course in order to prevent this Session’s legislation rendering us entirely energy dependent upon undependable power and unreliable imports.
The Secretary of State is doubling down on his headlong rush towards renewables without properly acknowledging the consequences of this approach. Britain continues to suffer some of the highest wholesale electricity prices in the world. Since the Government were elected on the promise to reduce energy bills by £300, they have risen by £73. Meanwhile, constraint costs reached £1.7 billion in the past financial year, while balancing costs stood at £2.7 billion. By the Secretary of State’s 2030 target, those combined costs are projected to rise to £15 billion.
The blind pursuit of renewables is costing the British economy and the British people. The problem is not renewable energy itself, but rests on the fact that there is currently an absence of perspective and balance in the Government’s strategy. The Secretary of State is committing the country to intermittent power generation without ensuring that sufficient firm power exists to support it. Hoping that the wind will always blow and the sun will always shine cannot and will not deliver a competitive, affordable and secure energy sector. What it will do is leave the British public increasingly dependent upon the whims of the weather, while paying for the privilege.
The Secretary of State does at least quietly acknowledge the need for firm power. We welcome his acceptance of the Fingleton regulatory review and look forward to working constructively with the Government on its implementation in the forthcoming nuclear regulation Bill. Nuclear power should form the future foundation of our national energy system. It remains the only source of low emissions and firm power capable of delivering genuine domestic energy security. However, the Fingleton reforms will have to cut through the layer upon layer of environmental and planning bureaucracy that has paralysed development. We will see whether the Government are really going to take on the many MPs in the parliamentary Labour Party and the Green Party when it comes to accelerating the delivery of new-build nuclear.
Recent nuclear projects have been characterised by soaring costs and ever-extending construction timelines. Environmental impact assessments and planning procedures have too often become more burdensome than the construction of the plants themselves—and that is before we even begin to discuss the procurement of the most cost-effective technology. We welcome the announcement of the Rolls-Royce SMR development at Wylfa, but it is disappointing that building will not commence until 2030. Meanwhile, there is ample room on that site for a gigawatt-scale development as well, to commence development much earlier alongside Rolls-Royce.
All these projects need skills, and there is an acute shortage at all levels, from technical skills—welders, electricians and general engineers—to apprentices both graduate and postgraduate. I was pleased to hear the Minister’s comments on this skills shortage for renewables, but I encourage the Government to consider establishing an SMR fleet technical education centre in North Wales to complement the work of the Bangor University nuclear department at M-SParc. There is also an urgent need for a thermal hydraulics facility and a materials test reactor to put us at the forefront of global research. If we are to build global expertise in this field, we need to start developing this critical infrastructure now, not only to provide technical support and training facilities for the operating fleet here and overseas, but to create high-value clusters around these technologies of the future.
I sincerely hope that the forthcoming legislation will address these shortfalls, but such reforms will inevitably take time to produce results. Given the projected timelines for Hinkley Point C and Sizewell C, nuclear power is unlikely to provide reliable, large-scale firm power before the mid-2030s. In the meantime, we must still rely upon oil and gas as the foundation underpinning intermittent renewable power. The Secretary of State knows this. Last year, he instructed NESO to ensure that 40 gigawatts of backup electricity generation is available by 2030 through new gas-fired power stations to guarantee supply when wind and solar output is low. Yet, while he acknowledges this, the Government have simultaneously pursued policies that make oil and gas less secure and more expensive. Indeed, the flagship policy in the energy independence Bill will be the statutory ban on the licensing of new onshore oil and gas fields in the North Sea.
Gas still accounts for roughly a quarter of our annual energy consumption, half of which is imported. Banning new licences will only increase our reliance on these foreign imports. Increasing reliance on imports makes little environmental sense; in fact, it is positively damaging. The average carbon emissions intensity of North Sea gas production is 24 kilograms of CO2 per barrel of oil. The Jackdaw field, were the Secretary of State to approve it, would produce just 8.5 kilograms per barrel of oil. That is what the ban on licensing will prevent. And what will replace it? In its place, we will be reliant on imported LNG, which has an average carbon emissions intensity of 85 kilograms per barrel of oil. That is not a sustainable energy policy.
Similarly, banning new licences only makes us less secure. Renewables and firm power are inseparable. Wind and solar provide only as much security as the reliable backup capacity supporting them. By relying on imported LNG, we make ourselves very vulnerable to international instability. The most recent war in the Middle East demonstrates precisely why dependence is so dangerous. What happens when the Ras Laffan is disrupted? What happens when global shipping lanes close? What happens when another international crisis sends imported energy prices surging overnight?
We have already seen, specifically across the Iberian Peninsula, the very real risks associated with instability in energy supply. Blackouts become a real risk and carry with them profound economic and human consequences. We constantly hear that the North Sea is a declining basin, yet for 40 years annual projections have repeatedly underestimated the remaining reserves. Norway was supposedly written off in 2010, yet last year it produced 4.1 million barrels of oil a day compared with the United Kingdom’s 1 million. It drilled 49 exploration wells—us, none. The only thing that separates many of these fields is an arbitrary line across the continental shelf.
With constantly improving technology supplemented by AI, the potential to exploit undiscovered reserves remains substantial. The companies are ready to invest; the expertise exists. All that is lacking is a Government willing to reconsider their own self-defeating policy.
Beyond the environmental incoherence and insecurity inherent in the Government’s policy lies the question of cost. The Minister will no doubt continue to argue that oil and gas prices are set internationally and that increasing domestic production therefore brings little benefit. But this ignores the economic reality. The more Britain develops its own reserves, the less exposed we become to international supply shocks, whether in the Middle East or elsewhere. Greater domestic supply does not insulate us entirely from global markets, but it does improve resilience and it reduces the current exposure to volatility.
Secondly, quite apart from production levels, the Government still exercise enormous influence over energy costs through taxation. The reason why energy bills now sit £73 higher than when the Government took office is not merely international pricing; it is that the Government are accelerating towards net zero while loading additional policy costs and levies on to consumers to fund that transition.
Even if wholesale prices were to halve over the next five years, forecasts suggest that consumers would still face electricity bills 20% higher than they currently stand. It is no wonder that, faced with these burgeoning costs, the Treasury’s own economic modelling predicts that energy-intensive sectors will be forced to cut over 160,000 jobs this year. That loss is a direct result of deindustrialising, high-cost policies and, thus, entirely lies at the Government’s feet.
The economic principle remains straightforward: if you reduce taxation and regulatory burdens, you reduce costs, and the market does the rest. If the Government were serious about lowering bills, they would consider the Conservative proposal to scrap the renewable obligation scheme, which currently guarantees some wind farms prices three times above the market rate for electricity. They would repeal the energy profits levy, stimulating investment and protecting jobs in the north-east of Scotland, and they would remove the carbon taxes which continue to inflate electricity costs for households and businesses alike.
Jobs are declining and bills are rising. Far from increasing our energy security, the Government’s current approach risks making Britain more vulnerable to blackouts and more dependent upon unstable imports.
True energy independence requires reliable, firm power on which the wider system can safely operate. In the long term, I hope sincerely that nuclear energy will fulfil that role, but, until the necessary reforms are enacted and new nuclear capacity is operational, we face a straightforward choice: imported oil and gas, or domestically produced oil and gas. The latter is environmentally preferable, supports British jobs, generates revenue for public services, reduces exposure to international instability, and helps moderate costs for consumers. The Government remain trapped within a dogma that serves no one except the most rigid net-zero ideologues. The forthcoming legislation gives Ministers an opportunity to rethink that approach. They should seize that opportunity, reduce the tax burden, restore investment confidence and allow domestic production to proceed. If they do that, Britain may yet achieve genuine energy independence.
Climate Change: Government Action
Baroness Bloomfield of Hinton Waldrist Excerpts(2 months, 1 week ago)
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Lord Whitehead (Lab)
The question of food production is obviously bound up, among other things, with how the environment of our country is changing due to the effects of climate change and what effect that has on crops and food production security in general. The Government are actively involved in ensuring that the way we produce food is brought up to date with the changes that are taking place and, indeed, giving support to farmers and agricultural communities in making those changes. It is a very important part not just of the mitigation of climate change but of adaptation, and that is something that the Government take very seriously.
Baroness Bloomfield of Hinton Waldrist (Con)
My Lords, Drax emits more than 13 million tonnes of carbon dioxide annually, more than the six largest gas power plants combined. Despite this, it has recently been reported that it is ditching its plans for carbon capture and storage technology. Given this fact, and that Drax receives nearly £0.5 billion in supposedly green subsidies, can the Minister outline whether the Government are reconsidering the entitlements they currently offer the power station?
Lord Whitehead (Lab)
The noble Baroness will understand that the arrangements that were made for Drax as far as the period up to 2032 is concerned are half as costly as the support arrangements for Drax which were made under the previous Government and they require Drax to produce much less power and be a marginal power producer, along with other power stations, rather than the baseline arrangements that there were previously. The Government have acted to both curtail and balance what Drax is doing, but this agreement ends in 2032 if Drax does not undertake further activities to ameliorate its emissions from biomass—which, admittedly, is lower carbon in the first place—so watch this space. The present arrangement is running its course on a better basis than previously, but there is undoubtedly more to come if Drax does not stand by its obligations for the future.
Energy Prices Act 2022 (Extension of Time Limit) Regulations 2026
Baroness Bloomfield of Hinton Waldrist Excerpts(3 months, 2 weeks ago)
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Baroness Bloomfield of Hinton Waldrist (Con)
My Lords, I thank the Minister for bringing forward this statutory instrument, which introduces a minor amendment to the Energy Prices Act 2022 by extending the Secretary of State’s power to grant renewables obligation certificate funding by six months.
His Majesty’s Opposition do not oppose this instrument in principle. It is right that the Government’s efforts should be focused on the controllable—namely, policy costs. Indeed, it is welcome that the renewables obligation to Exchequer policy demonstrates the Government’s understanding that their choices have a direct impact on people’s bills; that is why the scheme is being advertised as proof of the £150 that the Government promised to take off energy bills.
However, reducing energy bills by shifting the costs from household bills on to general taxation is a rather disingenuous way of achieving government policy. Whether it is the Government or energy suppliers who pay the upfront fee to Ofgem, the cost of ROCs will still be borne by the public and the cost of renewables will continue to apply. Every time the sun shines, solar farms will receive one or two ROCs per megawatt hour, earning them up to double the wholesale price. Every time the wind blows, offshore wind farms will get almost three times the wholesale price, or £240 per megawatt hour. When these farms are forced to turn off due to insufficient grid capacity, they are in receipt of high-constraint payments of more than £200 per megawatt hour.
The renewables obligation deal will last for another 11 years. These costs are going nowhere, and nobody but the British public is going to fund them. The only result of the RO is to Exchequer policy, and this instrument will mean that the public are made less conscious of what they are funding. Absorbing costs into general government spending may make the cost of the renewables programme more discrete, but it will not save the public purse any money.
The upshot of this is that the renewable transition must be underpinned by a cheaper and more reliable source of energy. The immediate way of achieving this is through oil and gas, which we already manage by importing LNG from Norway and the Middle East. I completely agree with the substance and sentiment of my noble friend Lord Ashcombe’s contribution to this short debate. I am aware that this is not the topic of today’s debate, so I will brief, but the intermittent nature of renewables and our current capacity issues mean that we still need to rely on oil and gas. Even during the current war and the subsequent international spike in oil and gas prices, those prices are still cheaper than subsidised renewables. We have the opportunity to divorce ourselves from the vicissitudes of international affairs by exploiting our North Sea reserves, yet the Secretary of State remains as dogmatic as ever. He seemed to toy with the idea of domestic production over the Easter break but, as we sit here today, production at Jackdaw is still yet to commence.
This is in the Government’s control. If they really are committed to reducing energy bills, then, along with subsidising renewables in the long term, they should allow us to produce our own oil and gas in the short term. I hope that the Minister will at least agree with that sentiment; I look forward to his response, in particular to the four intelligent questions posed by my noble friend Lord Ashcombe.
Lord Whitehead (Lab)
My Lords, I thank noble Lords for their valuable contributions to this debate. I will try to respond to their concerns—including those of the noble Lord, Lord Ashcombe, who went a bit beyond this particular SI but nevertheless made important points and asked questions that deserve a response.
The noble Lord’s first concern was about whether I can outline a pathway towards permanent legislation here. I agree with him that permanent legislation is always better than re-sunsetting an original sunset clause from previous legislation, as he mentioned. Of course, the Energy Prices Act 2022 was put in place at a time of high crisis as far as energy bills were concerned—not completely dissimilar issues to the ones we face today, but rather more concerned with gas than with oil and fuel generally. Nevertheless, it is a piece of legislation that was designed at least in part to be sunsetted. In essence, what we are doing in this present crisis is re-sunsetting an Act that was originally intended to be sunsetted in the first place. It is quite right that we should bring that sunset request back to the House when we are making it.
Nevertheless, it is a much better idea to have legislation that properly fits the bill in the long term, which is the Government’s intention right now. I mentioned that we will probably want to come back one more time with a sunset extension, in order to make sure that these changes work properly in the long term, but, after that, there should be legislation in place to make a permanent arrangement that is properly workable for the future. Of course, the phrase “when legislative time permits” has a variety of interpretations attached to it, but it is basically a question of finding out to which bit of legislation you can attach this permanent version of a sunset clause. It might be the EIB, but there may be other legislation—we will have to see as we go forward. However, I can give an absolute commitment that we are dedicated to making sure that this happens in the not-too-distant future in order to regularise the circumstances over the longer term.
The noble Lord asked what we are doing to make sure that critical gas infrastructure remains viable. This is a subset of the understanding that, although the use of gas is declining substantially in Great Britain and will continue to do so, the overhead costs and infrastructure issues will remain. It is essential, therefore, that we make sure that the infrastructure is as viable as it can be in the long term and that the whole system does not fall down because we have a lower amount of gas going into and out of it. The Government are actively involved in undertaking that.
By the way, I might add that the increasing amount of biomethane and biogas going into the system—at present, it is about 7% of the total system—will go some way towards assisting the viability of long-term infrastructure. It is certainly this Government’s intention to increase, where possible, the amount of biomethane and biogas going into the system. That gives some indication of where we are on LNG imports, which, as the noble Lord mentioned, have a higher carbon footprint than natural gas, which in turn has a much higher footprint than biogas. At the moment, about 14% of our gas supplies are coming in via LNG. One of the advantages of an increased amount of biogas in the system is that it directly removes the need for LNG to come into the system. All other things considered, something like a 2% increase in biomethane going into the system would be the equivalent of turning around six LNG tankers and them not coming to UK shores at all.
On energy imports in general, the UK has a diverse supply. The noble Lord mentioned the substantial element of supply played by the Norwegian gas fields, some of which are landable only in the UK and not in Norway itself. There is also the continuing supply from the North Sea. I have mentioned LNG, which comes from diverse sources; at the moment, only 1% comes from sources in the Middle East, so that issue will not overturn the security of the gas system in the near future. I hope that I have given fair thought to the noble Lord’s valuable contribution.
I turn to the supportive and helpful contribution of the noble Earl, Lord Russell. He is right to add that this is the right thing to do right now, bearing in mind that we very much want to make sure that, in a time of such volatility, domestic and commercial bills are pressed downwards as far as is possible. The two measures I have mentioned rearrange the ways in which bills are charged to some extent, but they nevertheless have the real effect of bringing those bills down considerably. He is quite right to seek an assurance that that is not just a temporary fix for the time being but will be put on a more permanent basis; we are looking to secure legislation to make sure that that happens.
The noble Earl rightly mentioned information sharing on these measures and other measures that are likely coming forward to push down bills. He should be aware of the Utilities Act 2000 (Amendment of Section 105) Order, which has enabled the sharing of more detailed data than DESNZ currently holds between the department and Ofgem. The aim of that order is to ensure that more detailed data is properly safeguarded and is used for the intended purposes, not others. I hope that the noble Earl can be reassured on that basis.
I turn to the valuable contribution of the noble Baroness, Lady Bloomfield. It is true that these measures shift the burden of the legislation from particular consumers to more general taxation purposes. That is a fair thing to do, in terms of generally sharing the burden of increased electricity prices, but I accept that the Government are very much involved in making sure that, by changing the way the electricity market works, prices are much lower over a longer period of time.
Electricity and Gas (Energy Company Obligation) (Amendment) (Specified Period) Order 2026
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Baroness Bloomfield of Hinton Waldrist (Con)
I thank the Minister for his introduction of this statutory instrument. This order extends the energy company obligation end date by nine months to ensure an orderly transition for consumers and suppliers to help meet existing targets. This extension was determined following consultation and following the calls of business. On that basis, we on these Benches support the order.
The ECO was established to help households reduce energy consumption and lower heating costs. Since it was launched in 2013, around 4.4 million measures have been installed in 2.6 million properties, up to the end of September 2025. ECO4 is the latest version of that scheme, beginning in 2022. It has meant that approximately 949,800 measures have been installed in around 281,000 households.
It is of course right that, where there were non-compliant installations, installers fund the repair work, overseen by Ofgem and insured by further on-site audits. We have already committed to working cross-party to ensure that affected households receive the remediation they deserve. We understand that the Government now seek to end this scheme and replace it with their warm homes plan to provide loans and grants to households instead; indeed, they have claimed that this will result in a £150 cut from the average household bill.
However, although the end of the ECO scheme means that households will no longer pay the levy through their energy bills, the new plan will be funded through taxation. There is no clarity, therefore, that this will end up saving taxpayers money in the long term; indeed, the new taxpayer funding initiative, coupled with rising energy costs—particularly now—and already high installation costs, mean that it looks increasingly unlikely that the Government will be replacing the ECO with an improvement. Have the Government made any assessment of how much taxpayers will save overall? To what extent are these projections reliant on projected energy costs, which will now be redundant? Oil prices are already 50% higher than in the OBR’s projection last week.
I appreciate that these questions are about issues that are outside the Minister’s control, but they have ramifications for the Government’s policy. Is it really wise to push forward with tax-and-spend green policies, which will likely do little to reduce costs, at a time of global instability? I understand that these are also developing events and that they do not directly relate to the functioning of the ECO.
Returning to that, it would be helpful to clarify how much money taxpayers will now be expected to pay to cover the cost of this new extension period. As I have stated, I support the extension to ensure an orderly transition, but the public must know what they will pay. I restate our support for this order to help consumers and suppliers but, more broadly, we remain concerned that the Government’s plan will, ultimately, not save taxpayers money. I look forward to hearing the Minister’s response.
Lord Whitehead (Lab)
I thank noble Lords for their constructive contributions to this afternoon’s debate; I hope to respond to their points in a similarly crisp and succinct fashion.
First, the noble Baroness, Lady Bloomfield, asked how much taxpayers will pay for the extension of the ECO. The answer is: nothing. The ECO will continue exactly as it has previously, except it will be extended by nine months. There will be no new obligations, only the continuation of obligations that are already in place. Of course, there will be an opportunity to make sure that the remediation that will be necessary for a number of treatments is carried out in good time, and will be sorted out and finished by the time the ECO comes to an end.
Of course, the ending of ECO4 will in itself save bill payers a considerable amount of money. Indeed, as the noble Baroness knows, ECO4 is, in effect, an obligation on energy companies, which they passed on to customers in the form of bills. Alongside the cost of some other legacy obligations, such as the renewable obligation, the removal of that obligation and the end of ECO4 will remove, as I said, around £117 of costs on average from household energy bills across Great Britain.
It is true that the new warm homes plan is underwritten from general taxation, but it is a substantial transfer from direct customer bills to general taxation, with the resulting saving that I have outlined. The warm home scheme is a far more far-reaching programme over a longer period, with a substantial investment of up to £15 billion in it. In the long term, that will be judged by the difference between what has been put in it and what has resulted from the energy savings coming about as a result of the warm homes plan— this will, obviously, be further savings to customers’ bills—as well as by the efficiency with which the warm homes plan is put into place.
The noble Earl, Lord Russell, asked about the arrangements for remediation in properties that the Government consider should be undertaken during the period of the extension of the ECO4 programme for nine months. As I am sure he will know, the NAO report considered that almost all of the external wall insulation measures had major issues requiring remediation; to put that into context, that is about 40,000 treatments, as compared with the 1 million-plus treatments that there were in ECO4 overall, but external wall insulation was a particular problem for the scheme. To a lesser extent, that applies also to internal wall insulation: 29% had major issues requiring remediation, and the NAO considered that a smaller number of treatments had possibly falsified claims attached to them.
Part of the task of this extension is to ensure that those remediations, which are down to the installers to put right, can be done during the period of the ECO extension. The noble Earl raised the possible issue of what the position is if we have got to the end of the period of extension and some of the remediations have not been done. I emphasise that these remediations are being done by obligated installers, first, but also under a strengthened trust mark arrangement for oversight, with increasing audits, site inspections and various other things as regards non-compliance detection and enforcement. So, the people who have to do that remediation will be known about, clearly, and Ofgem has taken the action of writing to all of the people who are possibly in a position where they can have remediation undertaken in order to offer them the opportunity to go on a register for remediation.
This is driven to some extent by installers and to some extent by customer demand for that remediation, and it is backed up by a strong code that makes sure that it gets done. Even if that strays beyond the end of the extension of ECO, it is not the end of the story as far as that remediation is concerned. It will be done. If it is in danger of life and limb it has to be done immediately, but if it is less serious, as it were, it has to be done during the course of that extension.
We think the Government have a good belt-and-braces position as far as those remediations are concerned, and that ECO can come to an end in an orderly fashion. That is quite important in terms of the issues that both the noble Earl and the noble Baroness mentioned about whether there is a cliff edge between what is happening with the end of ECO4 and the beginning of the warm homes plan. Among other things, this extension will mean that there is less of a cliff edge. Indeed, in conjunction with industry, the Government are active in holding round tables to enhance the ability of industry that has invested in ECO4 to transition to activity under the warm homes plan. I hope that it will not be such a cliff edge as the noble Earl mentioned and will run reasonably smoothly—if not necessarily entirely smoothly—into the warm homes plan itself, and therefore a lot of the investment that various companies have put into ECO4 can be realised through the warm homes plan.
High Temperature Gas-Cooled Reactors
Baroness Bloomfield of Hinton Waldrist Excerpts(6 months, 1 week ago)
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Baroness Bloomfield of Hinton Waldrist
To ask His Majesty’s Government what plans they have for the National Nuclear Laboratory to work with the Japan Atomic Energy Agency to achieve early deployment of high temperature gas-cooled reactors in a mutually beneficial manner.
The Minister of State, Department for Energy and Net Zero and Department for Science, Innovation and Technology (Lord Vallance of Balham) (Lab)
The Government will publish very soon the advanced nuclear framework, setting a pathway for privately led advanced nuclear projects. The framework will introduce an assessment process, identifying credible projects that are potentially deliverable within the UK. We would welcome a proposal regarding deployment of a Japanese HTGR, Japanese-led or alongside a UK partner. UKNNL is open to proposals from any country, including Japan. Any developer can approach UKNNL to discuss support.
Baroness Bloomfield of Hinton Waldrist (Con)
I thank the Minister for that encouraging Answer and welcome him and all Peers to nuclear in Parliament week—my happy place. The Minister will know that HTGRs are classed as AMR technology and the UK is on track to be the first country outside Russia to produce HALEU, the base fuel for AMRs. I think the Minister will agree that the MOC between NNL and JAEA signed in 2023 is too modest. Does the Minister agree that it would be highly desirable in terms of securing the UK supply chain and employment to accelerate the commercial development of Japanese HTGR technology in the UK? In this regard, would he perhaps undertake to engage with his Japanese counterpart to provide the necessary commitment to progress this technology?
Lord Vallance of Balham (Lab)
We have two MOCs with Japan. One, as the noble Baroness rightly said, was signed in 2023, and a second, on HTGRs and fuel, was signed in 2024. We have regular meetings with our Japanese counterparts. Japan has long been held as an important collaborator for us in nuclear. The last of those meetings, the 14th, was held on 3 December last year, and we will continue with regular interactions with the Japanese, who we certainly view as extremely important partners, particularly in this area.
Net Zero: Civil Society and Faith-based Organisations
Baroness Bloomfield of Hinton Waldrist Excerpts(6 months, 2 weeks ago)
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Lord Whitehead (Lab)
The noble Earl will be aware of the many actions that the Government are undertaking to ensure that young people are committed, involved and energised as far as climate change and net zero are concerned. That is among the reasons why we have developed the Youth for Climate and Nature panel, which is part of our Energising Britain plan. It is also the case that some of the highest commitment to the green transition to low-carbon energy is to be found among young people, and they therefore need to be fundamentally included at both the community and faith level in the work that we are doing.
Baroness Bloomfield of Hinton Waldrist (Con)
My Lords, notwithstanding the Minister’s original Answer referencing the Government’s Energising Britain plan, the Government’s shortened clean energy objective is disfiguring huge swathes of the countryside and alienating local communities. A 180-kilometre transmission line is being built from Norwich to Tilbury; Carmarthenshire residents have been locked in a battle with authorities over pylons for over two years; and most recently a new 71-acre substation is being proposed in north Cumbria despite opposition from locals. Given that by the time many of these projects are completed undergrounding cables will have become far more affordable—already, comparative costs for undergrounding have plummeted from 10 to four times that of overgrounding—does the Minister believe that this approach is the best way to win the support of rural communities for net zero?
Lord Whitehead (Lab)
The noble Baroness will be well aware of the tremendous amount of work that needs to be done on the infrastructure changes to bring about net-zero energy for the future. Of course, that entails bringing forward new infrastructure—which, by the way, the previous Administration completely fell down on in terms of the green transition—but that needs to be done, in terms of the theme of our discussion today, with the involvement of local communities and local areas in getting that new infrastructure in place in a satisfactory way. The question of undergrounding or otherwise of cables for the future is something that clearly needs to be considered, as does the overall benefit of that new infrastructure for those communities in terms of bringing their bills down, bringing clean energy to their communities and making sure that the green transition is carried forward as best as possible at local level.
Oil and Gas Authority (Carbon Storage and Offshore Petroleum) (Specified Periods for Disclosure of Protected Material) Regulations 2026
Baroness Bloomfield of Hinton Waldrist Excerpts(7 months, 1 week ago)
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Earl Russell (LD)
My Lords, we welcome these regulations, which seek to establish a necessary legal framework for the public disclosure of protected carbon storage information and samples. These are crucial steps towards fostering a transparent culture in the UK’s nascent carbon capture, usage and storage—CCUS—industry. As has been said by others, CCUS is essential for the UK to meet its net-zero carbon targets and budgets—particularly as set out by the Climate Change Committee—and the sector is projected to support up to 50,000 jobs and significant future economic growth. As has also been pointed out, the UK’s continental shelf is estimated to hold up to 78 billion tonnes of theoretical CO2 storage capacity, so this is essential in helping us meet these targets and creating the green jobs and growth of the future.
We support the principles of transparency set out in Parts 2 to 4 of the regulations, which govern the storage data obtained by the OGA, operating as the North Sea Transition Authority—the NSTA. We welcome the approach, as set out, of clarifying data based on levels of commercial sensitivity; this is sensible and pragmatic. We also welcome the decision that non-commercially sensitive items will be published straightaway. For more sensitive material, the NSTA has established clear and time-limited protection periods before disclosure. For example, detailed well information, protected carbon storage samples and computerised model information may generally be disclosed, but only after a period of two years. These two years are designed to protect licensees with sufficient exclusivity for the data they have paid to acquire.
On the regulations that relate specifically to the two-year period for the disclosure of computerised model information—relating specifically to the creation of CO2 storage models that stimulate flows of fluids in storage complexes—the NSTA has acknowledged the need for further detailed consultation. Does the Minister know when those further consultations might be completed?
Other data is classified as highly sensitive, particularly in relation to storage resource information, quality of CO2 that could be stored and substrate geology—that kind of thing. I note that the NSTA provides the ability, but not the obligation, to disclose protected material, so licensees will have an opportunity to make representations concerning the delay or withholding of disclosure. That protective mechanism is important, and I recognise the need for it in the regulations, but I simply ask the Minister: what is the minimum timeframe for representations that the NSTA will guarantee to licensees before commercially sensitive protected material is disclosed?
We generally welcome these regulations and think that they are crucial for the development of this sector. This instrument is crucial for safety and for ensuring that there is a balance between the sharing of information and protecting what is commercially sensitive. We feel that, in general, the balance is in the right place here. We support these regulations as they will help underpin the successful, transparent and efficient development of the UK’s potential CCUS industry. But we urge the Government to address these essential questions of implementation, technical definition and scope, in order to ensure that the regulations achieve their full potential.
Baroness Bloomfield of Hinton Waldrist (Con)
My Lords, I thank the Minister for introducing these regulations. As has been explained, these are technical measures designed to update the periods during which information relating to carbon storage licences and offshore petroleum wells remain confidential, and to ensure a more consistent and timely approach to public disclosure. We recognise the intention behind the instrument: improving the flow of information, supporting effective regulation and giving industry greater clarity and certainty.
We on these Benches recognise the importance of transparency, accuracy and timely publication of data in the offshore sector. Carbon capture and storage will continue to play an important role in meeting the UK’s future energy needs, and the North Sea will remain central to that effort for years to come. It is therefore right that the regulatory framework keeps pace with technological and operational developments and that that information is accessible and consistent across the sector.
Heat Networks (Market Framework) (Great Britain) (Amendment) Regulations 2025
Baroness Bloomfield of Hinton Waldrist Excerpts(7 months, 1 week ago)
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Baroness Bloomfield of Hinton Waldrist (Con)
My Lords, I thank the Minister for setting out the purposes of these regulations. We welcome them, so I shall not overburden him with questions beyond those already asked by previous speakers. It is somewhat frustrating that I did not spot the error in the amendments to Regulation 56 in the current Regulation 10; I must do better. These measures represent another step towards the full regulatory framework for heat networks that consumers have waited too long to see. From January 2026, the full authorisation regime and the special administration powers are due to come into effect—a significant milestone that we welcome wholeheartedly.
As the Minister said, we must be clear about the situation facing many people with heat networks. Years of unregulated, decentralised heating have left households paying high and unpredictable costs, receiving confusing bills and unable to switch supplier or seek meaningful redress. Citizens Advice has warned that, for some, bills have doubled or even tripled, which is simply untenable.
Therefore, while we support these regulations, their success will depend entirely on effective implementation. A framework on paper is not enough; consumers need enforceable, practical protections. As the noble Baroness, Lady Bennett of Manor Castle, rightly identified, it is essential that Ofgem is fully prepared and properly resourced to take on its new responsibilities from 27 January. It must be able to intervene when prices are unfair, when service standards fall short and when vulnerable households are at risk of disconnection. Clear complaints processes must be in place, and operators must be held to account. Like the noble Earl, Lord Russell, I would be grateful if the Minister can provide assurances today that Ofgem will be ready from day one, with no gaps or uncertainty for existing heat networks customers.
The introduction of a special administrative regime is similarly welcome. But, again, the test will be in its delivery. Consumers must have confidence that, should a provider fail, essential heating will continue uninterrupted, particularly for households in the winter months. The demand and use of heat networks will continue to play an increasingly important role in our energy system, and it is vital that this regulatory framework is implemented swiftly and effectively. Consumers must be able to rely on heat that is affordable, transparent and properly overseen. Without that assurance, the sector will not expand at the scale required.
These regulations take us closer to a regime that commands consumer confidence; the task now is to ensure that the protections set out in the Energy Act are delivered in practice for the half a million households that depend on these networks.
Lord Whitehead (Lab)
I thank noble Lords for their valuable contributions to this debate. A number of them go to the heart of why we are doing what we are doing today: the question of the state of many of the older heat networks that exist in this country. They are very far from the sorts of standards that we would expect to bring forward in new heat networks, and they have often operated with very sub-optimal arrangements for many years, to the considerable detriment of customers.
Therefore, the regulatory regime that we are introducing should give an enormous amount of succour to those who have suffered under those heat networks over a long period. As mentioned by the noble Baroness, Lady Bennett, there are heat networks from the 1960s and the 1970s which simply have not updated what they do, and they will be held accountable for what they do in these networks by the new regime under Ofgem. Ofgem can introduce fines for the systems if they are found wanting and, as a measure of last resort, can ensure that those networks are transferred to the running of another organisation entirely.
The noble Baroness, Lady Bennett, also mentioned the report encompassing a number of these issues from Citizens Advice, and that is why its work as a consumer champion is so important. I can assure the noble Baroness that Ofgem will be ready for regulatory commitments. It has raised no questions about its capacity to introduce these regulations and to make sure that they work to maximum capacity from day one. Ofgem will, however, take action such as collecting pricing data and various other things to refine how the regulations may work over the early period of their operation.
I can assure the noble Baroness, Lady Bloomfield, and the noble Earl, Lord Russell, and all the noble Lords who raised concerns, that Ofgem will therefore be ready for regulatory commencement. Ofgem will be publishing what methodology will be used to determine reasonable pricing. This has recently been consulted on by Ofgem. However, the exact benchmark of what is considered fair pricing will not be published first, so that heat networks do not move their prices to the top of that benchmark.
Overall, therefore, I assure noble Lords that the scheme will work to the best of its design and ability from the word go and will properly encompass all the many and varied types of heat network we have in operation, with a view to bringing them all up to the same standard, rather than down to the same standard, for the future. Indeed, the instrument simply builds on previous regulations by introducing amendments that will expand the authorisation regime that Ofgem will implement. We have also heard mention of deemed contracts, which will be in place to ensure that the rights of households and their supply of heat are protected, even when there is no formal contract in place.
I am sure noble Lords will want to join me in thanking the District Energy Association heat authority, which tried to put a voluntary system into operation to secure compliance and uprating of systems. That has worked for 10 years. In itself, it has worked very well, but it encompasses only part of the heat network arena. This will cover everybody, so it will be a great step forward in that respect.
On the question of consultation, I understand that the four public consultations that have already taken place, dating back to February 2020, have informed the regulations, but the detailed Ofgem authorisation conditions and associated guidance are still being consulted on and will certainly be published before the authorisation regime commences on 27 January.
In conclusion, I consider that these regulations, which will include the most vulnerable, will now make sure that pretty much everybody enjoys statutory protections. Heat networks are indeed the future, and we must do everything we can to support their growth and instil confidence in that growth as it takes place. Sound and proportionate regulation is therefore central to delivering this and I beg to move.
Drax
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Lord Whitehead (Lab)
We did that because the conclusion of a contract for 2027-31 ensures that Drax continues to produce a very large amount of energy, which is very important for the country; that it does so under enhanced sustainability requirements; and that it moves from being a baseline producer to a dispatchable producer, with a top level of 27% of output within that contract. There is also the implied understanding that the contract will pave the way towards moving to CCS on the back of the contract, making Drax a net-negative producer in the long term.
Baroness Bloomfield of Hinton Waldrist (Con)
My Lords, in 2021, Drax was axed from the S&P green bond index over doubts that its practices were carbon neutral. That decision seemed to be endorsed by that famous “Panorama” programme. I bow to the noble Baroness, Lady Jones of Moulsecoomb, for her detailed knowledge of forestry, but it appears that Drax has been importing wood pellets from old-growth forests, even before accounting for the emissions caused by transporting the biomass here from abroad. Given that this is patently not a green company, does the Minister agree that the subsidies for 27% of Drax’s generation capacity are unwarranted and should be withdrawn? Further, if Drax is found to be non-compliant and closes down, does he also agree that the land and extensive grid connections could be better used in the Government’s SMR programme?
Lord Whitehead (Lab)
No, I do not agree that the various connections relating to Drax could be better used for an SMR programme, because of the particular location of Drax within the cluster in the north-east of the country, which is particularly important for carbon capture and storage, and, indeed, hydrogen. Drax plays a part in that process in that area. The noble Baroness perhaps ought to read the report that is before us very carefully, because it does not actually say that Drax has sourced old-forest timber. Timber is sourced from third parties, goes into the Drax pellet facility, and may or may not to Drax’s knowledge include old-forest material—which, by the way, is outlawed by the Government of British Columbia. There are a number of questions to answer, but not necessarily for Drax. There are a number of people who perhaps have questions to answer as well.