Energy Security

Baroness Sheehan Excerpts

Monday 5th December 2022 Lords Chamber

[Lord Lennie (Lab)]

My Lords, I thank the Minister for the Statement that we are discussing now. The key announcements in the Statement—the green light for Sizewell C and the return of the Energy Bill—are both overdue, but better late than never, and we welcome both. Nuclear must play a role as part of the balanced pathway to net zero, as the Climate Change Committee says, and we on these Benches support new nuclear projects, so it is about time that the Government finally gave Sizewell C the go-ahead. The reports a month ago that it was being put under review were very worrying after a decade of government dithering, so we are pleased that this has been put to bed.

We also welcome the return of the Energy Bill, which of course should never have been paused while Conservative Party infighting took precedence over national need. We look forward to picking up where we left off next week. Given that this is the second Government since it was paused, my first question is: can we expect any government amendments to the Bill when it returns?

As for the third announcement in the Statement, on ECO+, a drive towards energy efficiency is needed but in reality, at the current rate of installation, the 19 million homes below energy performance band C will not reach that level until the next century—yet this announcement gives neither extra resources to fix that nor any indication of how it will change. Perhaps the Minister can elaborate a bit further and offer some reassurance here.

While we are on energy efficiency, it is one of the best ways to reduce reliance on fossil fuels, but the Government have failed on that over and again. Household energy bills are £1,000 more as a result, and earlier this month we had another reheated announcement with no new resources for energy efficiency. When are the Government going to get a grip on this issue?

As ever, the real problem with the Statement is everything that is not in it. New nuclear and Sizewell C in particular are indeed positive steps, but they are just one part of the pathway to net zero. They simply must be accompanied by a sprint for cheap, clean, homegrown renewables, yet all that we have seen recently instead is another round of government infighting, this time on onshore wind.

Just this week, new research from the ECIU has found that if the moratorium on onshore wind had not been put in place in 2015, turbines could have built to power 1.5 million homes through this winter, reducing the reliance on gas enough to heat more than half a million extra homes. The research also estimated that this will be costing £800 million on bills this winter, so why have the Government not yet cleared this up?

Unless the Minister answers that the Government will finally act in the national interest and end the ban, I am sure his argument will be that it is just up to local consent. But RenewableUK warned this weekend that a planning rule means that renewed permission must be sought from local authorities for every onshore wind farm after an initial 25-year lifespan, with at least two coming up for renewal next year. So we could see existing onshore wind farms starting to disappear, at a time when we desperately need more. It says that the UK could lose 2 gigawatts of capacity by 2032 because of this—more than 14% of the total from this energy source. So when will the Government finally bring the consenting regime in line with other infrastructure?

There is one more thing on onshore wind. In the other place on Tuesday, the Business Secretary suggested that one reason for avoiding onshore wind was that wind turbines are too big to be constructed onshore. As Greenpeace and Friends of the Earth said, this is complete nonsense. So can the Minister confirm whether the Government are aware that the biggest barrier to the development of onshore wind is not turbine size but their policy?

On solar, the story is the same. Back in August, the Prime Minister said he would

“protect our best agricultural land”

from swathes of solar farms—before an apparent change of tack. But just last month the new Environment Secretary repeated this sentiment. This would be a mistake: blocking solar risks preventing the equivalent of 10 nuclear power stations-worth of power being built. It is one of the most cost-effective ways that renewable energy technologies can be deployed today and, importantly, deployed rapidly, with sites able to begin supplying electricity to the grid within six months of beginning construction.

The Committee on Climate Change’s projections state that 40 gigawatts of installed solar capacity will be needed by 2030 to keep on track to achieve net zero by 2050. At the end of 2021, the total installed capacity of solar PV in the UK was under 14 gigawatts. The previous Environment Secretary wanted to block solar power on land entirely; the current one is openly hostile. Neither of these stances will allow us to build the necessary capacity to reach net zero by 2050, let alone any sooner. Will the Secretary of State therefore rule out the plans to block further solar power on land?

I have one final question. Amongst all this, oil and gas giants still enjoy a massive loophole for investing in more fossil fuels. Why do the Government think it right to be leaving billions of unearned, unexpected windfall gains in the pockets of oil and gas giants, forcing the public to pick up so much more of the cost of this support in higher borrowing and taxes in the future?

[Baroness Sheehan (LD)]

My Lords, I thank the Minister for bringing the Statement to the House. I of course also welcome the return of the Energy Bill.

I will start with nuclear, and the Government’s generosity with British taxpayers’ money in rebooting Sizewell C. I understand that common sense has prevailed: reports are circulating that China General Nuclear has been bought out. Can the Minister confirm that that has in fact already happened, and is not just an aspiration? Can he also comment on a recent article in the New Civil Engineer about fears of an 11-year delay to Hinkley Point C, on the back of news of a new contract between the Government and EDF, stipulating that Hinkley C will still be funded even if it does not start operating until 2036? If this were to be the case it would not be surprising, since no nuclear reactor has ever been built on time or on budget.

Finally on nuclear, the Secretary of State in his Statement cites it as a key plank in our bid for energy sovereignty. Can the Minister say where the raw uranium fuel for nuclear power generation originates from? The last time I looked, we do not mine any of it in the UK. I hope the Minister will agree that nuclear cannot be said to be the indigenous energy we need in the same way that energy farmed from our sun, wind and waves undoubtedly is.

Intermittency concerns about energy from renewables are often cited as a reason why nuclear is necessary. However, those concerns have been comprehensively debunked. There are many, much cheaper answers to intermittency if the Government were but minded to invest in them seriously. Energy storage is an example, including in the form of green hydrogen generated from the excess wind power that the grid is unable to harness in real time. There is also pumped hydro, more solar and onshore wind geographically spread out, marine energy, smart energy and demand management et cetera.

I have not even mentioned interconnectors. Can the Minister outline the Government’s view on the Morocco-UK interconnector power project? A project that is expected to provide low-cost, clean energy to more than 7 million UK homes by the end of 2030 with no taxpayer inputs and create 1,350 permanent jobs in the UK is surely worth a mention in any government energy Statement in 2022.

Moving on to fossil fuels, why do the Government persist in preferential treatment for the fossil fuel sector, for example, through subsidies? The OECD reports UK subsidies in 2021 of £200 million on decommissioning, £250 million on oil and gas investment, £1 billion on fuel oil, £1.5 billion on ring-fenced oil and gas trade corporate income tax relief and £2.1 billion on red diesel fuel. That is £5 billion of subsidies, which is unjustifiable.

On investment allowances, I agree with every word that the noble Lord, Lord Lennie, said. In the windfall tax paid by oil and gas extractors, they benefit from an investment allowance. However, no equivalent relief is available for renewable energy generators. This is nothing short of outrageous and will disincentivise investment in that sector.

Finally, on decommissioning, the subsidy regime may be even more costly than the £200 million reported by the OECD, because decommissioning relief deeds risk leaving taxpayers paying out to companies which never made a contribution to the Exchequer. That is madness. Can the Minister say to what extent the Exchequer is exposed to these types of deed? Currently we have no visibility of the assumptions behind those deeds or the liability that might result from them.

In conclusion, a Government who produce a Statement on energy needs which does not give immediate full-throttle support and investment impetus to energy efficiency of the built sector, on-ground solar, onshore wind and community energy projects are a Government who do not get the urgency of the situation the planet faces. The lack of ambition on energy saving is breathtaking. These are the low-hanging fruit which can do so much to wean us off expensive and immoral payments to the Russian pariah state as well as other unstable regions of the world. The Government could and should have done much more on these easy wins if they are serious about energy sovereignty. I am sure that many of these things will come up in the Energy Bill that we will debate next week.

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

I thank the noble Lord, Lord Lennie, and the noble Baroness, Lady Sheehan, for their questions. I will start with nuclear, and I thank the noble Lord, Lord Lennie, and Labour for their support for it. The noble Baroness, Lady Sheehan, and the Liberal Democrats are absolutely wrong on this. The idea that we can satisfy all of our baseload capacity from a little bit of pumped hydro storage, a few batteries and a bit of hydrogen is nonsensical, I am afraid. If the Liberal Democrats are serious about ever being in government, they need to seriously address these issues of how to provide long-term energy security. I am afraid that, at the moment, nuclear is the only carbon-free option that will do so at scale. The option that the noble Baroness talks about produces puny amounts of power.

In the British Energy Security Strategy, we provided a clear, long-term plan to accelerate our energy transition towards net zero and away from fossil fuel prices set by global markets beyond our control, and we are making serious progress towards that. We have more offshore wind than the rest of Europe put together; we have the second-largest offshore wind sector in the world, and the contracts for difference scheme has made a massive difference. I get that the Opposition think we should go even further and even faster, and we are expanding our ambition, but the turbines are being rolled out at a rate of many hundreds a year, and there are a number of supply chain limits. I assure the noble Lord that we will continue to roll them out because, at the moment, it is the cheapest form of generation—albeit intermittent, and we therefore need to provide back-up power for it.

That is why the investment in nuclear was announced. We are confirming the first state backing for a nuclear project in over 30 years, with a £679 million investment to support the UK on our journey to greater energy freedom. We are taking a 50% stake in the project’s development, with EDF. Sizewell C is set to generate reliable and clean homegrown electricity for 6 million UK homes, but it will of course also deliver thousands of high-value jobs in East Anglia and nationwide. We are also working hard to set up Great British Nuclear with support from the industry and our expert adviser, Simon Bowen. Great British Nuclear will aim to develop a resilient pipeline of new-build projects, supporting them through every stage of development. There are a number of exciting developments, such as small modular reactors, which will come on stream in a few years’ time.

--- Later in debate ---

[Lord Callanan (Con)]

I do recall the Question from the noble Baroness. We do not have precise data on how many digital advertising screens there are in the country and what energy they might be using. I do not think we want to get into micromanaging people’s energy consumption to that extent. We do not want the whole country to be in darkness, and there will be some important display screens that provide key information for people—so getting into heavy-handed government dictating to companies when they can switch their advertising screens on or off might be a policy beloved of the top-down, controlling Greens, but I do not think it is a practical solution.

[Baroness Sheehan (LD)]

My Lords, if there is time I would like to ask another question and put the record straight on what I said about energy efficiency. I am fully aware that the Statement mentions energy efficiency, but I was referring to the lack of ambition the Government are showing. I think 15% by 2030 is really not good enough. We need to do so much better, and it is so easy to do so much better that it really is a missed opportunity.

Secondly, I want to talk about the interconnector from Morocco to the UK. The 3.8 gigawatts of energy it will generate is not an insignificant amount. It could help enormously with intermittency. The Minister mentioned the length of the cable that will be required. It will be immensely long, but the good news is that that cable will be manufactured in the UK, in Hunterston in Scotland, Port Talbot in Wales and parts of the north-east of England—so it is a good news story all round and I hope the Government will give it their full support.

[Lord Callanan (Con)]

I think I said in response to the noble Baroness’s earlier question that I welcome this fantastic project and wish the developers well in producing it, particularly as I believe that it can be built without taxpayer support, so we should welcome it even more—and of course we will do everything we can to support such a fantastic achievement. If it can be built, it will produce a very useful contribution to the UK’s energy security.

I have to disagree with the noble Baroness, who does not think a target of 15% by 2030 is enough. I can assure her, looking at the analysis of it, that it is an extremely ambitious target. It will require a huge amount of resource to be put into the sector, both public and private, in order to achieve such a target—but if you do not reach for the stars you will never make it, and it is important that we set an ambitious target. We will do all we can to achieve it.

I said in my initial answer that we are spending £6.6 billion on energy efficiency schemes in this Parliament; the Chancellor committed another £6 billion for 2025 to 2028. We are also consulting on the £1 billion ECO+ scheme. We are doing an awful lot in the energy efficiency space and the answer will actually not be in total cash resources, but in the building up of the supply chain, which is constrained in many aspects at the moment. That is what is providing me with food for thought: to make sure that we actually have the resources on the ground, in terms of materials and personnel, to implement all these ambitious schemes.