King’s Speech

Baroness Liddell of Coatdyke Excerpts

Thursday 18th July 2024 Lords Chamber

[Baroness Liddell of Coatdyke (Lab)]

My Lords, I pay tribute to my noble friend Lord Hunt on the Front Bench; he has a distinguished career behind him and I think he has an even more distinguished career before him. I also pay tribute to my noble friend Lady Hayman of Ullock, who will probably be pestered by me for quite some time. I declare two interests: I am the honorary president of the Carbon Capture and Storage Association and I am also the honorary president of Energy Action Scotland, which is Scotland’s pre-eminent fuel poverty charity.

I was not going to say anything about housing, but I would like to put one point into everyone’s minds. In a cold country like Scotland—and it is a cold and wet country—how houses are built and made available to people is of great importance in dealing with fuel poverty. Fuel poverty is a terrible thing; I have seen it when I was a Member of Parliament, and I would not wish it on anyone.

I was absolutely delighted to see Great British Energy in the King’s Speech yesterday. It took me back to when I was a young economist for the Scottish Trades Union Congress at the time when oil and gas was discovered in the North Sea. Organisations such as BNOC, which became Britoil, settled in Scotland. Not only did we have the engineers, but we also had the people building and those who were dealing with the economic consequences of such a vast industry. That still contributes enormously to the Scottish economy, so it is fantastic that there will be Great British Energy in Scotland as a public energy company.

Great British Energy needs to look at the whole system, including CO₂ and hydrogen infrastructure, which is required for the decarbonisation of industry. I suspect that very few people in the Chamber will be aware that the UK has almost one-third of Europe’s geological storage capability. The potential of all of that is even greater for Britain than it is for all of the EU. There is huge potential in terms of jobs. Something like 70,000 jobs could be created in the energy sector, and, of course, there are great opportunities for taxation. There is an estimated £30 billion of tax revenues once we get to 2030 and on to 2050 and beyond. There is a great opportunity for us to move ahead. Carbon capture, utilisation and storage is an essential solution for reaching net-zero emissions. It plays a vital role in reducing emissions from industries such as steel, cement, chemicals and refining.

There is a vision for CCUS. One of the things that really buoyed me up in the run-up to the general election—like most people, I am always nervous of general elections being committed to one party—was that every time Rachel Reeves, now Chancellor of the Exchequer, made a major speech, she mentioned carbon capture and storage, so we know that in the heart of the Treasury there is an understanding of what can be created. Last night, the Secretary of State for Scotland raised with me the issue of carbon capture and storage, and I felt like dancing out of Dover House for the first time in a very long time, knowing there is that level of support across government.

There are some areas where we need the Government to act. There is the priority of low-carbon energy. We welcome the national wealth fund, because it can be used to secure private investment in industrial decarbonisation technologies, which is very important indeed. The Labour manifesto pledged £1 billion of the fund to support carbon capture, utilisation and storage.

We find ourselves in a situation where, as I mentioned, £30 billion of private investment is waiting to be deployed into CCUS, which could provide great revenue to the UK, but the Government have a window of opportunity to secure the first final investment decisions on track 1 CCUS clusters in the north-west and north-east of England by September this year. That CO₂ infra- structure will deliver industrial decarbonisation, clean hydrogen and flexible low-carbon power. This is such an exciting opportunity to start construction this year on the world’s first large-scale integrated CCUS clusters, and I urge my colleagues on the Front Bench not to forget how great these opportunities are.

The track 1 expansion could be followed by track 2, which is needed to maintain the investment pipeline. The Secretary of State for Scotland mentioned track 2 to me last night. Unless we see progress towards CO₂ infrastructure throughout the regions, and in Scotland in particular, large employers such as our refineries will face an uncertain future and could find themselves in real difficulty participating in the low-carbon fuels market that will emerge around the world. Clarity is urgently needed for the expansion of the first two clusters and the development of track 2 clusters, not just in Scotland but in south Humber. This will enable developers to continue with their planned investment, securing jobs and economic growth where it is most needed. Can my colleagues on the Front Bench give some indication of when we will hear more about what will happen on track 2 clusters?

I am grateful for this opportunity to talk about carbon capture and storage; I came to it as Energy Minister. We do not fully appreciate the extent to which there are opportunities out there that have been untouched until now. We have an oil and gas industry in Scotland and in the north of England that provides great opportunities for jobs, not just here but around the world. Let us add to our investment by getting carbon capture, utilisation and storage up and running.

Energy Bill [HL]

Baroness Liddell of Coatdyke Excerpts

3rd reading
Monday 24th April 2023 Lords Chamber

[Baroness Liddell of Coatdyke (Lab)]

My Lords, I am grateful to everybody who took part on the Bill because I never expected to see carbon capture and storage—I am the honorary president of its association—getting such a good hearing in this House. I put on record my appreciation of the £20 billion that the most recent Budget has decided to expend on carbon capture and storage. We cannot reach the targets on net zero without carbon capture and storage; the noble Baroness, Lady McIntosh, referred to the Danes, who are making fantastic progress on that in their fields. My last point is that we have the capability to capture 7,000 tonnes of carbon in the North Sea and elsewhere. Only Norway has more capacity than that. There is a great future here and, frankly, I am still pinching myself to accept that this House has got behind the Bill. I thank everyone who took part in it very much.

[Baroness Hayman (CB)]

My Lords, I feel that I should say something as everyone else has. There will be two things and they are very brief. One is to echo the hope that we will not have to fight battles again at ping-pong on issues which are absolutely mainstream and in line with the Government’s objectives. They are common-sense measures, particularly on insulation and energy efficiency, and on the remit of Ofgem. The other is that, in declaring my interest as chair of Peers for the Planet, and simply because this is an opportunity to thank those who give us support, I also record my thanks to Emma Crane, Kyla Taylor and David Farrar at Peers for the Planet for the work that they did on the Bill.

Energy Bill [HL]

Baroness Liddell of Coatdyke Excerpts

Report stage
Tuesday 28th March 2023 Lords Chamber

Moved by

[Baroness Liddell of Coatdyke]

2: Clause 1, page 2, line 7, at end insert—
“(d) assist the delivery of greenhouse gas emission targets as set out in the Climate Change Act 2008, including any carbon budgets set under that Act and climate targets specified in subsection (8).”Member's explanatory statement
This amendment places an equivalent principal duty on the Gas and Electricity Markets Authority to assist in the delivery of Net Zero, alongside protecting the interests of current and future transport and storage network users. This would enable Ofgem to better justify and evidence decisions enabling strategic anticipatory investment.

[Baroness Liddell of Coatdyke (Lab)]

Ironically, I am also going to talk about some of the responsibilities for Ofgem in among other issues. If noble Lords look at the Explanatory Statement, they will see that we are talking about how to put in place a setting within which Ofgem can better justify and evidence decisions enabling strategic anticipatory investment.

I make the point that I am the honorary president of the Carbon Capture and Storage Association. The CCSA has grown considerably in the past two years, because of all the interest in carbon capture. We have been marched up to the top of the hill more than once, but this time we hope that we will be able to deliver.

Amendment 2 talks about the importance of enabling rapid network expansion. For us to meet the emissions reduction targets, carbon capture and storage will need to be rolled out rapidly across the UK during the rest of the decade. One role of the CCSA that I find extremely interesting is its interchange with the industry. There are some big companies in it but there are also small, cutting-edge companies involved in the development of how we cope with carbon capture, storage and utilisation.

I ask the Minister to bear in mind that it is not just Ofgem that needs to understands its remit; we need to look further and ensure that, throughout the industry, there is confidence, consistency and certainty, because the amount of money that will have to be invested in this is very considerable. To capture and store 30 million tonnes a year by 2030, as per the net-zero strategy, we will need to go from absolutely nothing to building significant CO₂ infrastructure in a very short space of time, connecting capture projects continually throughout the 2020s. The industry wholeheartedly welcomes the Government’s recent commitment of £20 billion to build the industry up from scratch. It is therefore vital that Ofgem has updated duties that enable it to justify investment to allow for the rapid network expansion to connect more carbon sites to a growing suite of storage sites.

A lot of this is being done elsewhere. We have an opportunity to be leaders in carbon capture, utilisation and storage, but we need help from the Government, and signals need to be given out. Twenty billion pounds is a very large sum of money but it is not enough; it is estimated that around £50 billion will be needed. Some of that can come from private investment—indeed, it is important that it does—but there needs to be the degree of certainty that I spoke about a couple of seconds ago.

In Committee we debated Ofgem’s powers and whether its role in delivering net zero while protecting current and future users of the network is sufficiently clear. My noble friend Lord Foulkes, who is also a signatory to this amendment, stressed this time and again during those debates. The point was also made much more dramatically by the noble Baroness, Lady Hayman. How is it that so many people out there do not think that Ofgem has the right environment, role or powers to deal with the complexity of these issues?

Ofgem’s current set of duties makes it difficult to justify strategic investment in networks, as this would increase costs to current users in the short term. This is the dilemma that has to be got across. This has been an ongoing issue of concern, as raised in the National Infrastructure Commission’s 2019 regulation review, Strategic Investment and Public Confidence, which recommended that economic regulators’ duties be updated to facilitate long-term investment in networks, and, more recently—referred to by the noble Lord, Lord Teverson —in the Skidmore review.

While the Government should be commended—and I do commend them—for proposing that the duties of the economic regulator should include consideration of the needs of existing and future users, a principal duty to deliver net zero by 2050 would help the regulator to effectively balance these two equally important factors. However, it should be noted that, outside of the regulator’s core duties, the Bill includes a further requirement for the regulator to support the Secretary of State in having regard to the Climate Change Act 2008 and the new CCUS strategy and policy statement. That should go some way to addressing this.

However, it is not enough that these mechanisms are not as strong as the regulator’s own duties. This amendment is essential to give the regulator the necessary powers to make decisions that enable the required strategic anticipatory investment on the network. Ofgem will need to be empowered to make well-justified decisions, balancing the interests of current and future transport and storage network users with delivering net zero.

--- Later in debate ---

[Lord Callanan (Con)]

It would depend on what the noble Baroness means by “decommissioning funds”. What would the decommissioning funds be for? In response to the noble Lord, Lord Teverson, I outlined our intention to ring-fence the CCUS decommissioning funds.

[Baroness Liddell of Coatdyke (Lab)]

I beg leave to withdraw my amendment.

Amendment 2 withdrawn.

--- Later in debate ---

[Lord Callanan (Con)]

My Lords, in moving Amendment 16 I will speak also to Amendments 20, 21 and 30 standing in my name.

Amendment 30 further clarifies the scope of the modifications that the Secretary of State can make to certain licences for the purposes of facilitating or supporting the enforcement and/or administration of the hydrogen levy. Before making a proposed modification, the Secretary of State is required to consult the holder of any licence being modified. This will help to ensure that relevant bodies are engaged on proposed modifications. To ensure sufficient scrutiny of proposed modifications, the Secretary of State must also lay a draft of the modifications before Parliament, where they will be subject to a procedure similar to the draft negative resolution procedures used for statutory instruments.

I turn to Amendments 21, 20, and 16. I thank the noble Lord, Lord Lennie, and the noble Baroness, Lady Blake, again for their amendments in Committee. Having considered those amendments, the Government are introducing a new clause on the hydrogen levy provisions, which I hope noble Lords will find satisfying. The new clause will enable revenue support regulations to make provisions for amounts to be paid to levied market participants by a hydrogen production counterparty or hydrogen levy administrator. This includes the pass through of payments received by a hydrogen production counterparty from hydrogen producers under revenue support contracts, such as payments made to the counterparty when the market price of hydrogen is higher than the strike price. This will help to ensure that regulations can make provisions for fair and efficient payments and reconciliation arrangements.

Subsection (3) of this new clause was prompted specifically by consideration of Amendment 62 from the noble Lord, Lord Lennie, and the noble Baroness, Lady Blake, in Committee. This provision enables the Secretary of State to make regulations requiring that customers of levied market participants benefit in accordance with these regulations from payments made to levied market participants by a hydrogen production counterparty or levy administrator. I beg to move.

[Baroness Liddell of Coatdyke (Lab)]

My Lords, I will speak to Amendment 17. I will not take up much of the House’s time, because this is just about consistency.

The Government have defined a UK low-carbon hydrogen standard, which was updated in July this year, and it includes guidance and a calculator tool for hydrogen producers to use for greenhouse gas emissions reporting and sustainability criteria. It has been designed to demonstrate that low-carbon hydrogen production methods can meet a greenhouse gas emissions test and threshold, and this amendment would require the regulations to have regard to that standard when assessing the eligibility of low-carbon hydrogen production. Using the low-carbon hydrogen standard will ensure that there is consistency for the industry and its users, and will provide them with the degree of certainty that they are looking for when developing their projects.

[Baroness Worthington (CB)]

My Lords, I added my name to Amendment 18 in respect of who should be paying a hydrogen levy. I do not consider that hydrogen is going to play a large role in our broader economy. I think it will have specialised uses: it will be used where it is already used, in the production of fertilisers and in certain chemical processes, and it may well be used as a back-up fuel in extremis when we have no other forms of storage. I say that because it is going to be a relatively expensive commodity, it is not going to be easy to handle and it is not necessarily going to be very safe. For those reasons, I think we are overexcited about hydrogen in general, and the Bill is overexcited about hydrogen—and probably, as a result, about carbon capture and storage, which will also be quite expensive.

The reason I lent my name to this amendment is that it seems particularly egregious to expect electricity billpayers to be picking up the price of this expensive commodity, which is not very safe and quite unlikely to be very useful. Therefore, I think it is really important that the Government listen, and listen to everyone outside this Chamber who is saying that we should not be loading any more costs on to electricity consumers but should be doing the opposite. I am looking forward to the Government taking on this issue to redress the balance of how we are tackling climate change and who is paying. At the moment, the electricity consumer is paying nearly everything and the gas consumer almost nothing.

It is time that we started to recognise the value of electricity. It is hugely efficient, and it can be indigenously produced from our nuclear and homegrown renewables and offshore wind. It is that which we should be supporting, not necessarily this rather expensive alternative. Gas, oil and coal companies will continue to promote it, but it is not for the electricity billpayer to pick up the tab. So I fully support Amendment 18.

I would love to hear a little more from the Minister on new subsection (3) inserted by Amendment 20 in relation to the regulations. It is my understanding that that will enable payments to be made back to consumers, but could those regulations also decide not to impose any hydrogen levies on electricity consumers? I would like to understand the extent to which those regulations could solve this problem.