Revised Energy National Policy Statements

Baroness Sheehan Excerpts

Tuesday 22nd February 2022 Grand Committee

[Baroness Sheehan (LD)]

My Lords, it was good last September to finally have sight of the draft updates for the range of energy-related national policy statements, first introduced a decade ago in 2011. I will restrict my remarks today to the infrastructure that we need to deliver net zero with regard to our shorter-term horizons —for example, the rollout of electric vehicles—and will not be tempted to talk about gas and its phase-out.

These updates, according to the Government, focus on regulatory, policy and technology changes to guide those involved in determining development applications for major infrastructure projects in England and Wales. As the noble Baroness, Lady Neville-Rolfe, pointed out, National Grid is going to be crucial in delivering this. It sits at the heart of Britain’s energy system. It is fully behind the net-zero ambitions and is committed to playing a leading role in enabling the transition, as indeed it must, because without its wholehearted commitment the transition would not be realisable. In its briefing, however, it states that while it was looking forward to the reviewed national policy statements, it has been left rather disappointed. In its view—I would say a rather well-informed one—current drafting does not provide the step change needed to deliver the scale and pace of nationally significant infrastructure development that will be needed to meet the Government’s own net-zero ambition.

That should really give the Government cause for concern. There is no sense of urgency or appreciation of the scale or pace of change needed to deliver nationally significant infrastructure development, which lies at the core of what we are trying to achieve here. I wonder whether BEIS is aware of its concerns and is taking them seriously. We are otherwise in real danger of falling short of meeting the challenging targets that the Government have set on electric vehicle ownership, as an example. These cars will need electricity—a lot of it, as the Minister himself said. The current grid, however, cannot supply what we will need. As an aside, and as the noble Lord, Lord Whitty, mentioned, the Government have to take on board the imperative of reducing demand. One quite effective way of doing that, and one that there is growing public concern about, is to make homes more energy efficient. That would take a lot of demand off the national grid, so I feel that is a real missed opportunity here.

There is also concern about what we are hearing from industry leaders about the importance of BEIS’s offshore transmission network review, which is producing a blueprint known as an holistic network design for the onshore and offshore infrastructure required to connect the Government’s target of 40 gigawatts of offshore wind by 2030. Why is the crucial work of the OTNR and the HND not explicitly referenced in the draft NPSs?

Another point of concern is that delivering the scale of nationally significant infrastructure needed will inevitably impact on the local communities and environments that host this infrastructure. Industry must have clear guidance from government on the levels of mitigation and compensation that developers are expected to deliver locally. On the flip side, the communities affected must also have some idea of what they will be up against. Communication with industry and local communities is going to be key. I wonder whether BEIS has taken that on board. Unfortunately, the draft NPSs are silent on these points. Again, can the Minister address that, as it will be really important if the infrastructure behind these policy statements is to be successful?

I add that Energy UK, the trade association for the energy industry, also has real concerns about the lack of a strong focus on net zero. In particular, there is real concern about the fast pace, flexibility and adaptability that will be needed to realise net-zero ambitions. The energy NPSs will therefore need to be revised and updated regularly, certainly more frequently than once a decade, so I ask the Minister: how often will the Government review these NPSs?

Subsidy Control Bill

Baroness Sheehan Excerpts

Committee stage
Wednesday 9th February 2022 Grand Committee

[Baroness Boycott (CB)]

My Lords, I declare my interests as set out in the register and apologise for being unable to attend day one in Committee. I am very grateful to the noble Baroness, Lady Sheehan, for introducing my amendments on that day, and to the noble Lord, Lord Whitty, and the noble Baroness, Lady Hayman, for their support.

Today I am introducing Amendment 63, again with the welcome support of the noble Baroness, Lady Sheehan, and the noble Lord, Lord Whitty. Some of the reasons for this amendment have just been set out. It is linked to my earlier amendments in that it is aimed at ensuring that progress towards achieving our net-zero and environmental goals is reported on and monitored after decisions on subsidies have been made.

Amendment 63 provides that a review of the impact of the subsidy control regime on progress towards achieving net zero and our environmental goals should be included in the annual report prepared by the CMA, as has just been mentioned. The Government have said that the new subsidy regime aims to enable public authorities to deliver

“strategic interventions to support the UK’s economic recovery and deliver government priorities such as … net zero.”

As debated on day one, the framework permits subsidies that support our net-zero goals, but there is very little in the Bill that actually enables subsidies that support or encourage consideration of net-zero and environmental goals in their design and the way they are awarded.

Ultimately, if we do not do this, the Government will not know whether the subsidy regime is delivering on its net-zero and environmental priorities. Tracking underlying progress is absolutely crucial to identifying whether their aims are being met and to understanding what progress or changes we need to further make.

On day one, the Minister said that:

“Net-zero and climate change considerations are not inherent to all subsidies”,


and that placing a principle that considers our climate change and environmental commitments in the Schedule 1 principles

“could lead to public authorities having to do bespoke, possibly onerous, assessments for every single subsidy awarded or subsidy scheme made”.—[Official Report, 31/1/22; col. GC 158.]

The delivery of net zero is one of the key strategic priorities of this Government, but if there is to be no specific principle ensuring that public authorities properly factor this into their decisions, it seems even more important that we put clear monitoring and reporting of these issues in the Bill.

The Bill sets out an overarching monitoring and reporting process, predominantly led by the subsidy advice unit within the CMA, which includes determining

“whether any changes should be made to the regime as a whole or certain aspects of the regime.”

However, absolutely nothing explicitly suggests that this monitoring and reporting process will encompass the impact of the new subsidy regime on achieving the strategic net-zero priority.

With nothing in the Bill that embeds this consideration, it is really difficult, if not impossible, to understand how the Government intend to monitor whether their strategic objectives are being met, or indeed possibly being undermined. The Government have declared a climate emergency, so it seems quite astonishing that we are prepared to put public money towards efforts that could undermine that goal. Indeed, all public money should be put towards anything that makes this goal more available and possible for us all.

[Baroness Sheehan (LD)]

My Lords, I rise to speak to Amendment 63 in the name of the noble Baroness, Lady Boycott, to which I and the noble Lord, Lord Whitty, have added our names.

Before doing so, I want quickly to speak about Amendment 62, which I support. I recognise the less than complete nature of the assessment it advocates, namely the

“assessment by the CMA, on the basis of the reports it has prepared”.

However, those reports are limited to the voluntary or mandatory referrals referred to in paragraphs (a), (b) and (c). I also have some reservations about the reference to the legislation meeting its stated objectives; that is living in hope that a stated objective might actually appear in the Bill at some point.

I thank the noble Baroness, Lady Boycott, for her comprehensive introduction to Amendment 63; it leaves me with little to say. These subsidies will be used by hundreds of public authorities. According to figures I have seen, some 550 public authorities will be able to give out subsidies under this regime. Can the Minister confirm that figure? It is important that many of them fully grasp the importance of their decisions. The Government have said that meeting the net-zero target and levelling up will be policy objectives, but words are not enough. We need to be able to demonstrate that that is the case. This amendment would ensure that it is the case with respect to the net-zero target and other environmental targets. The amendment will be especially necessary if the Government resist that tabled by the noble Baroness, Lady Boycott, which would include a new principle to consider net-zero goals.

Clear and detailed monitoring and reporting of climate change risks and opportunities has been successfully implemented in other parts of our economic system—for example, by the FCA and the PRA through amendments to last year’s Financial Services Act, and by the Pensions Regulator through the pensions Act, also of last year. For the first time, the Pensions Regulator has published guidance on governance and the reporting of climate-related risks and opportunities. Such inclusions in those Acts really help to drive climate alignment across these sectors.

This Bill is an opportunity to do the same in relation to our subsidy control regime. Amendment 63 would allow the Government to continue to claim that they are a global leader on climate change.

[Lord Whitty (Lab)]

My Lords, I have added my name to Amendment 63 but I want to say a couple of things about Amendment 62 because, as we proceed through this Committee, it is clear that there is a bit of fuzziness about what exactly the role of the CMA is. Historically, the CMA and its predecessors have reported effectively on the nature of competition across the British economy but, of course, the issue of state intervention has been left to the European level. Some of us were slightly concerned that the CMA would take over that function after Brexit; in the end, I was sort of convinced that it should, rather than creating a whole new body, but it has to do a number of different things. It has to look after our trade obligations not only to the EU but in all the other trade agreements we have reached, in which we agreed that we will not unreasonably subsidise goods that are traded so as to undercut our trading partners. So, we have a big international obligation—one that can lead to retaliation and all sorts of problems arising with the WTO and other international bodies.

We have all that, but we also have the area of subsidies in the UK. This includes the delicate relationship between the UK Government and the Secretary of State acting for England, the devolved authorities and local authorities. It is a very complex area, and all this is to be landed on a new body within the CMA: the SAU. It is not yet clear whether it will have the resources, expertise and personnel to do that. We have gone along with this, but we need to be clearer on, for example, whether it is a regulator or an overseer and reporter on the activities of the public authorities that are giving subsidies and quasi-subsidies. As we debated earlier in the Bill, this involves a range of things—for example, preferential procurement. At the end of my contribution at Second Reading, I asked the Minister whether my county would be able to give preferential treatment to a local firm because it provided local employment, or whether it had to make sure that the neighbouring county of Wiltshire was not thereby being undercut.

--- Later in debate ---

[Baroness Bloomfield of Hinton Waldrist (Con)]

I hope that that addresses the noble Lord’s concerns.

[Baroness Sheehan (LD)]

Can I ask the Minister about her remarks about the OEP’s remit? I think that she said that it would cover whether the Government are meeting their climate change requirements. However, the OEP’s remit does not cover whether the subsidy control regime is working towards our net-zero targets. What the amendments are trying to say—as we tried to include in the Financial Services Act and the pensions Act, successfully—is that a more granular approach will be needed, which has to be provided by the regulatory authorities within the sectors concerned because, otherwise, we really will not know whether each sector is working towards the net-zero targets that we are all trying to achieve in the timespan that we have.

[Baroness Bloomfield of Hinton Waldrist (Con)]

One of the noble Baroness’s concerns was that there was no overarching principle for the Government’s drive towards net zero. I think that the Environment Act provides the overarching context for whatever we are doing. As I say, the Office for Environmental Protection will also scrutinise the Government’s progress towards targets annually. I do not know what further level of granularity the noble Baroness wishes to apply.

[Baroness Bloomfield of Hinton Waldrist (Con)]

There is also the Climate Change Act, as my noble friend has just reminded me.

[Baroness Sheehan (LD)]

I shall not repeat what I have said, but I do not think that the OEP will be able to tell us whether the subsidy control regime is working in the way that subsidies are being allocated in terms of meeting our climate change requirements. There is precedent in this, as I keep saying, with the Financial Services Act and pensions Act, and the actions that the Pensions Regulator took on the back of that Act. They all speak volumes as to how important it is to have each sector being held to account. Those are the points that the noble Lord, Lord Whitty, and the noble Baroness, Lady Jones, made. Every single sector within the country needs to be shown to be pulling its weight and we need to know where we have to put in greater effort, if it is not working towards the net-zero targets.

[Baroness Bloomfield of Hinton Waldrist (Con)]

I understand the noble Baroness’s concerns, but I am not able to go further than I have done at the Dispatch Box. On the point that the noble Lord, Lord Whitty, made about the steel industry, followed up by the noble Lord, Lord Wigley, we are directing subsidies towards greening industries like that, so we can invest in electric arc technology, and hydrogen as well. It is part of an overall drive by this Government to be consistent with the environment principles that we have laid out.

Subsidy Control Bill

Baroness Sheehan Excerpts

Committee stage
Wednesday 2nd February 2022 Grand Committee

Amendment 68 would allow decisions to be made on individual subsidies under a scheme subject to an appeal to the Competition Appeal Tribunal. It cannot be right that individual subsidies can effectively be hidden from scrutiny, thus requiring entire schemes to be challenged on the basis of concerns on one or two individual subsidies given within them. We will come on to discuss transparency matters shortly, but I hope the Minister can help move this debate forward a bit. Again, we are focusing in on the issue of transparency and trying to shine a light on decision-making and the financial contributions and support that would be given. With that, I beg to move Amendment 21.

[Baroness Sheehan (LD)]

My Lords, I added my name to Amendment 24. I also support Amendment 21, which is closely related, and Amendment 68, which has real implications in addressing limits on enforcement for subsidies that may have been misdirected. I thank the noble Lord, Lord McNicol of West Kilbride, for tabling these amendments and for his very able introduction of them.

To my mind, Amendments 21 and 24 have been tabled to try to establish why the Government wish to disapply the subsidy control principles and the energy and environment principles from a subsidy merely because it has been given under a subsidy scheme. According to the excellent Library briefing on the Bill, the Government have said that a subsidy scheme is a means for public authorities to award a number of subsidies to enterprises on a discretionary basis, as opposed to awarding subsidies on a case-by-case basis to individual enterprises. To use the Minister’s words, the Government want to try to create a “minimally burdensome” scheme. It would make it quicker and easier for subsidies to be given if this were to be the case.

As drafted, the Bill says that subsidy schemes must be made by a public authority only if the subsidies provided for by the scheme will be consistent with the subsidy control principles laid out in Schedule 1—I hope noble Lords are still with me; I think it will make sense in Hansard—or, where relevant, the energy and environment principles laid out in Schedule 2. That is all well and good. A subsidy made under a subsidy scheme must comply with the principles laid out in Schedules 1 and 2, so you would think it would be open to review on that basis and enforceable as such. But you would be wrong, because Clause 12(2) states that

“‘subsidy’ does not include a subsidy given under a subsidy scheme.”

Why? It does not make any sense. Hence Amendment 21 is needed to take out this nonsense, so that the subsidy control principles can apply to all subsidies.

Similarly, Amendment 24 would remove Clause 13(2) so that the energy and environment principles can also apply to all subsidies. Given that there is a threshold for transparency and accountability of about £500,000 for subsidies given under a subsidy scheme, that will very quickly add up to millions of pounds, for which, as the Bill is currently drafted, there will be no scrutiny. That would not serve businesses or the Government.

Amendment 68 is necessary because Clause 70(2) says that the CAT cannot be asked to review a subsidy decision if the subsidy was given under a subsidy scheme; only the subsidy scheme itself can be reviewed. That makes a nonsense of the enforcement regime because no route will then exist to review whether a subsidy complies with the subsidy scheme. To the question of when a subsidy is not a subsidy, the answer is when it is given under a subsidy scheme. Surely the Minister can see the absurdity of such a position. Every subsidy must be available for review if necessary. That is why these amendments are necessary. I thank the noble Lord, Lord McNicol of West Kilbride, for tabling them.

[Lord Fox (LD)]

My Lords, it is with great pleasure that I follow my noble friend Lady Sheehan and the noble Lord, Lord McNicol, in support of these amendments. Subsidy schemes seem to be designed as monoliths with no granularity at all. Why is that one of the central theses of this Bill? What possible advantage do the Government seek to gain, other than the ability to hide what money is going to whom? To those of us on this side of the Committee, that appears to be what is going on.

Amendment 21 would ensure that subsidy schemes cannot be used to hide subsidies that would, if they were stand-alone subsidies, be reported, as my noble friend set out. It is clear to all three of us that there is huge scope for significant and expensive subsidies to be hidden in these schemes. That seems to be the only reason why this is in the Bill. I am sure that the Minister will want to explain the reasons, because that must be the response to these amendments. I am sure that we will all be happy to throw our hands up if we are wrong and there is a hugely important reason why this is needed for the operation of the subsidies.

Amendment 24, co-signed by my noble friend, would require individual subsidies given under the subsidy scheme to be judged against the energy and environment principles. Once again, we are back to Monday evening, when my noble friend Lord Purvis posed a question regarding principle G in Schedule 1. The noble Lord, Lord Callanan, got to answer it; I suppose that this time it is the turn of the noble Baroness, Lady Bloomfield. During that debate, the Minister seemed to make it clear that sustainability considerations are indeed implicit in every aspect of the Bill. He suggested that, by implication, there must be some benefit for these things to be legal, but there is no explicit reference to that. I apologise if I am putting words in his mouth because principle G says the opposite. Therefore, rather than repeat what I have said, I have invented another one of my little examples, for which I apologise in advance.

Let us say that I have won a subsidy to expand my pottery business. As part of the submission, I cite increased employment and increased local sourcing of services as the beneficial effects that investment in my pottery business would bring. Nothing in the schedule or the rest of the Bill says that I have to benefit the environment by using less energy. If I am successful, I employ 30% more people and use 30% more local services, therefore achieving the scheme’s objectives, while also using 30% more energy to fire my products. That would appear to be how the Bill will work. Therefore, we need Amendment 24 to include consideration of the environmental impact that that subsidy would bring. It is very simple.

Amendment 68 would allow individual subsidies given under a subsidy scheme to be reviewed. Once again, it is cracking open the monolith and being able to look at the granularity within a scheme. Again, it follows my initial points: we need to be able to see inside these schemes for transparency to be available.

--- Later in debate ---

On Amendment 68, as I have just set out—

[Baroness Sheehan (LD)]

On Amendment 21 to Clause 12, if that amendment was agreed to and the line

“In subsection (1) ‘subsidy’ does not include a subsidy given under a subsidy scheme”


was taken out, it would have no impact on a public authority’s ability to continue to allow subsidies under the subsidy scheme. It would not slow the process up.

[Baroness Bloomfield of Hinton Waldrist (Con)]

I take the noble Baroness’s point on that. I would like to discuss it with the team when I have had a chance to look into it more thoroughly.

As I have just set out, under the terms of Clause 70, an interested party may not submit an application for the Competition Appeal Tribunal to review a decision to give an individual subsidy under a scheme. This is to ensure that scrutiny and challenge occur at the scheme level. The noble Lord’s amendment would enable applications for review to be made to the Competition Appeal Tribunal for individual subsidies granted under a subsidy scheme without the requirement for the broader subsidy scheme also to be reviewed.

--- Later in debate ---

[Lord McNicol of West Kilbride (Lab)]

On that point, how would another business or organisation know the subsidy existed if it was part of the scheme?

[Baroness Sheehan (LD)]

May I intervene too, on the same point? If a business does know about a subsidy and thinks it is unfair, it cannot go to the public authority and ask for a review. The bar is so high that the review can only be at the level of the scheme—which the business had nothing to do with designing. The public authority would have to do it. The business has no comeback.

[Baroness Bloomfield of Hinton Waldrist (Con)]

Every grant made over £500,000 will be visible. Noble Lords may be arguing that that bar is too high, but maybe we will come to that at a later stage.

Subsidy Control Bill

Baroness Sheehan Excerpts

Committee stage
Monday 31st January 2022 Grand Committee

[Baroness Sheehan (LD)]

My Lords, I will speak to Amendment 4 in the name of the noble Lord, Lord McNicol of West Kilbride, and I thank the noble Baroness, Lady Blake of Leeds, for her comprehensive introduction. I shall add just a couple of points. I particularly enjoyed the contribution of the noble Lord, Lord Ravensdale, in his introduction to his amendment, and that of the noble and learned Lord, Lord Thomas. They illustrate clearly why the Bill is lacking in detail and clarity, and why Amendment 4, to which I put my name, is totally necessary.

The letter from the Minister last week gave us some hope that, even six months on from when the Bill started its parliamentary progress in the other place, we would have greater clarity and detail on what is meant by the terms used in the Bill—to go back to basics. However, other than broad sums of money around which a subsidy, a subsidy of interest or a subsidy of particular interest may be defined, we have very little—apart from a promise of more detail to come. Even the sums attached to those definitions are liable to change, we are told, so we really are none the wiser.

The referral criteria for the subsidy advice unit—the SAU—relating to a subsidy of interest or a subsidy of particular interest tell us very little. In any case, we are told that the SAU’s report will be non-binding on public authorities, regardless of whether the referral is voluntary or mandatory. This leaves public authorities with very little guidance, and a next-step referral to the CAT is really more draconian than it need be had they been given sufficient criteria before making their applications.

The draft statutory instrument, which the Government published last week, was supposed to shed light on their thinking. It is helpful in some respects but we all know how a statutory instrument can be structured. It leaves too much to the imagination; there are too many gaps which will be filled later. Instead of clarifying what we already have, in fact it introduces a new term of a “sensitive sector”, which we are told will be defined later by an SI. I would be grateful if the Minister could shed some light on that today.

I found the statements on the streamlined routes very helpful. They seem to provide some clue as to the sort of framework that might be applied but, yet again, there are too many gaps. Too much is left to be filled in in the future, when those details are required in the present. As the noble Baroness, Lady Blake, said, the Government want us to take much on trust but trust in the Government is in very short supply at the moment. Those streamlined routes for clean heat and for research, development and innovation are helpful. It seems that some of the fundamentals of those illustrations can be put into the Bill. At least, it would be useful to know the timeframe within which we can expect to see further illustrations. It would be really useful to see a streamlined route, for example—the Minister is coughing; I hope he is okay—for fulfilling their policy of better energy efficiency in the domestic sector.

I agree with the noble Lord, Lord McNicol of West Kilbride, that a clear subsidy strategy needs to be laid out within the Bill, setting out how the Government expect subsidies to be used to provide a wider industrial strategy and progress towards the 2050 net-zero target. Importantly, it would also outline how the new subsidy control schemes work alongside other initiatives, including the shared prosperity fund and the levelling-up fund, details of which would be appreciated sooner rather than later.

The abolition of the industrial strategy last year and the disbanding of the Industrial Strategy Council was, according to the BEIS Commons Committee, a retrograde step. I therefore hope that the Government will give serious consideration to Amendment 4 and the other amendments in this group, and recognise the merits of having greater clarity in the Bill, given the boost it will give business to have long-term consistency and clarity.

[Baroness Jones of Moulsecoomb (GP)]

My Lords, I support these amendments, which are very welcome because they make up for what the Bill lacks. It is a very technocratic Bill, with lots of rules and principles, but it completely misses the opportunity to develop a grand strategy for what we want subsidies to achieve. The economic power of government finance is obviously huge; it can sway the economy for good or bad. Simply constraining subsidy-making powers, rather than planning what we want to achieve for those subsidies, indicates a huge lack of ambition on the part of the Government.

Part of that reflects an insurmountable tension within this Government, from those who are so free-marketing that they verge on being anarcho-capitalists to those who want to use the power of state finance as a way of sucking in voters and making a political legacy for themselves. Both those groups miss the point: that the Government should lead the economy into the future that we want to see and live in—one that would be comfortable for the majority of people. We need strategies for how we are going to deal with achieving net-zero carbon emissions and eliminate poverty. That would be a fantastic thing to want to achieve but, somehow, this Government actually increase poverty. Of course, this is not just about wealth; it is also about well-being. The Bill could be a chance to achieve all those things. However, the Government have to get back to the job they should be doing, which is improving the well-being of the population.

Before I sit down, I want to mention the noble and learned Lord, Lord Thomas of Cwmgiedd. He stood and spoke for five minutes without notes, apart from two scribbled sentences on a scrap of paper that I do not think he even looked at. We should all speak without notes. I am one of the biggest culprits; I cannot.

--- Later in debate ---

[Baroness Jones of Moulsecoomb (GP)]

I am going to ask the Minister four questions. I would like an answer today. If I do not get the answers today, I would like a meeting with him to explain why it is incredibly important that he listens first-hand. One issue I have is that the Government keep bringing us these thin Bills that ought to include things such as the ecological crisis—climate change—but do not. We as an opposition end up tabling all these amendments and then the Government complain because we are taking too long to debate the Bill. My first question is: please will the Government start putting these issues into Bills so that we do not have to keep making the same arguments about the ecological emergency? Why is that not in the Bill?

The subsidy principle should ensure that all our environmental and climate targets are met. Ecologically damaging, polluting industries should be weaned off public money completely and, ultimately, binned. My Amendment 8 would ensure that subsidies contribute towards limiting global temperature rises to 1.5 degrees centigrade of warming. That is what scientists say we must achieve, so our laws should reflect that reality. I hope that the Minister will not insult our intelligence by telling us that the Government are on track to do that; they most definitely are not. I can list an awful lot of legislation that has been passed that is damaging our chances of getting to that lower level of global warming.

My Amendment 33 would prohibit subsidies for fossil fuels and extend the definition of fossil fuel subsidies to include any government policy that makes fossil fuels cheaper than their true cost. This is really important, because fossil fuel subsidies are not just about giving money or tax breaks but include favourable regulatory systems, exemptions from environmental laws and so on. It is essential that we capture all those factors in the calculation of a subsidy.

My second question is a very particular point, and perhaps cannot be answered today. It is about community energy schemes. They are quite important in a lot of local communities. Please can the Minister tell us something about them, perhaps at a later date? I might have to bring back another amendment.

Finally, I am opposing the Question that Clause 51 stand part of the Bill. Nuclear energy is an energy scheme or an environmental scheme. I need an explanation —this is my third question—why nuclear energy is expressly excluded from the energy and environmental principles in the Bill. This seems to allow for favourable subsidy arrangements to be given to the nuclear industry against renewable and zero-carbon energy sources, which will clearly distort the market in favour of nuclear. If nuclear can compete with renewables, let it do so and scrap this exemption. If it cannot compete with renewables in a fair fight, why pursue nuclear at all? This is a probing amendment at the moment, but I will probably bring it back on Report and push a vote on it, because I am so incensed that there is not a fair fight between nuclear, which is potentially extremely polluting, and renewables. My fourth question is: will the Minister meet me so that I can explain all these issues clearly and with much more energy to him?

[Baroness Sheehan (LD)]

It is always a pleasure to follow the noble Baroness, Lady Jones of Moulsecoomb —we are often on the same page. I shall speak to Amendments 9, 10, 12 and 29 in the name of the noble Baroness, Lady Boycott, who is unfortunately unable to be with us this afternoon. I am grateful to the noble Lord, Lord Whitty, who also, sadly, cannot be here this afternoon, for adding his name to the amendments, along with my own. The main purpose of these amendments is twofold. First, they would embed consideration of climate and environmental targets in the Bill, to ensure that they are factored into the decision-making of public authorities when designing and deciding to award subsidies. Secondly, they would ensure that subsidies align with, or at least are not contrary to, our net-zero and environmental targets.

COP president Alok Sharma in a recent speech said that

“inaction or delayed action on climate will create immense risks and costs.”

He went on to highlight the economic opportunities for businesses of acting now and stated that

“my absolute focus for the UK Presidency year is delivery.”

The Government’s own Net Zero Strategy states:

“Our goal is to go even further to embed net zero across government activity. This will mean that government takes net zero into account when taking decisions.”


It further calls for

“a whole system approach to tackling climate change”,

which includes:

“Embedding net zero in a wider range of decision-making levers.”


I have purposely used the Government’s own words.

The fact is that if we do not ensure that alignment with our climate and environmental goals is embedded into new policy frameworks, such as our new subsidy control regime, we risk missing a key opportunity for delivering climate action. Delivery will not happen effectively and quickly unless both net-zero and nature considerations—because nature is inextricably linked to the climate crisis—are consistently woven into the fabric of all that Governments do at every tier of decision-making; not just centrally but devolved Administrations and regional and local government. The Government said in their response to the consultation on the Bill that

“public authorities will be able to take subsidy decisions that facilitate strategic interventions to support the UK’s economic recovery and deliver government priorities such as levelling up and achieving net zero.”

I welcome the Government’s recognition that subsidies can be a valuable way of supporting the achievement of the UK’s net-zero targets. However, there is nothing in the Bill to ensure that subsidies are directed towards interventions that can help to achieve our net-zero and environmental goals or, even worse, to avoid a situation in which subsidies that are contrary to or do not align with these goals could be introduced. Unfortunately, not all public authorities are as focused on delivering net zero as others—the Cumbrian coal mine comes to mind. Without this strategic direction, opportunities could easily be missed. I hope the Minister will agree that we need to include our net-zero and environmental goals within the Schedule 1 principles as laid out in Amendments 9 and 10 from the noble Baroness, Lady Boycott, which would guide decision-making on subsidies.

The Government did, in fact, consider including a specific net-zero principle but decided against this, which is a real shame because including consideration of net zero would not have precluded the achievement of wider policy objectives. It simply provides that when granting any subsidies, not just those related to energy and environment, public authorities must consider whether they align with our net-zero and environmental goals. This would not compromise the Government’s flexible, proportionate approach to the new regime.

It is important that the broader principles in Schedule 1, which apply to all subsidies, provide clear direction to the hundreds of public bodies that will use these rules and embed the consideration of net-zero and environmental goals. This would show strategic direction and leadership from the Government, and support the COP president’s aims for a clear focus on delivery. With the urgency of the challenge ahead of us—to take action to reduce emissions and restore our depleted nature—we cannot afford to miss opportunities such as this to help to deliver it. I hope that the Minister will consider embedding consideration of climate and environmental goals in the Bill and look sympathetically at Amendments 9 and 10.

Amendments 12 and 29 would provide simple clarifications aimed at ensuring that the law stated that the grant of subsidies did not release a beneficiary from its other legal duties in relation to environmental protection. Amendment 12 would clarify, within the principles, that all subsidies should be subject to that prohibition, while Amendment 29 would provide for a stand-alone clause within the general prohibitions with the same effect. We are saying that, without the amendments, there may be perverse incentives and the “polluter pays” principle could well be lost. I look forward to a response from the Minister on those amendments.

I support the amendments in this group in the name of the noble Lord, Lord McNicol of West Kilbride, and the noble Baroness, Lady Jones of Moulsecoomb, which are very much in the same vein as those of the noble Baroness, Lady Boycott.

I want to mention Amendment 33 in the name of the noble Baroness, Lady Jones, about subsidies for fossil fuels. The Minister and I have frequent disagreements on what defines a subsidy, so I am pleased that this amendment has been tabled. I support it because I hope it will give the Minister an opportunity to clarify, first, whether taxpayers’ money should be used to support exploration for new oil and gas fields, and secondly—there are many subsidies but I will restrict myself to two questions—whether the Government should in fairness continue to allow the decommissioning costs of fossil fuels in the North Sea to be met by the UK taxpayer. Oil companies at the moment are pocketing vast sums of pure profit—eye-watering and fairly obscene profits—and we are giving them money on top of that. The Minister will have his opportunity to answer that—I hope he will.

I also welcome the Motion by the noble Baroness, Lady Jones, that Clause 51 not stand part of the Bill, which is a probing amendment. I, too, want to know why nuclear energy is excluded from the energy and environment principles in the Bill; there seems to be little rationale for doing so.

[Baroness Hayman (CB)]

My Lords, I declare my interests as set out in the register, particularly as co-chair of Peers for the Planet. I am grateful for the opportunity to speak to this suite of amendments dealing with climate change and environmental issues. I particularly support Amendments 9, 10, 12 and 29, which have just been so ably introduced by the noble Baroness, Lady Sheehan, and are in the name of my noble friend Lady Boycott, who I know is deeply disappointed not to be able to be here. I did not manage to get my name on the amendments but I am here, so perhaps I can say a few words about the general tenor of this group.

--- Later in debate ---

[Lord Callanan (Con)]

I think we discussed this earlier. I am really not sure of the point the noble Lord is trying to make.

Amendments 12 and 29, tabled by the noble Baronesses, Lady Boycott and Lady Sheehan, and the noble Lord, Lord Whitty, would prevent subsidies that would relieve their beneficiaries from their liabilities as a polluter. Provision already exists in the Bill to protect the “polluter pays” principle for any subsidy in relation to energy and environment. Principle B in Schedule 2 sets this out explicitly:

“Subsidies in relation to energy and environment shall not relieve the beneficiary from liabilities arising from its responsibilities as a polluter under the law of England and Wales, Scotland or Northern Ireland.”


Clause 13(3)(b) ensures that a public authority

“must not make the scheme unless it is of the view that the subsidies provided for by the scheme will be consistent with those principles.”

As I have previously set out, it is right that the provisions in the “polluter pays” principle apply only where they are relevant. That principle has long-standing foundations in UK law—including, most recently, in the provisions of the Environment Act 2021, which I also covered earlier.

Amendment 33 would prohibit subsidies for fossil fuels, including those subsidies that fall within the definition used by the IMF for fossil fuel subsidies. This would include subsidies for fossil fuel development and for the construction of new unmitigated fossil fuel-powered electricity generation, either in the UK or abroad. The principles in Schedule 2 to the Bill will help ensure that energy and environment subsidies contribute to optimal outcomes for UK citizens, recognising the importance of a secure, affordable and sustainable energy system and increasing levels of environmental protection.

I am fully in agreement with the noble Baroness, Lady Sheehan, that inefficient fossil fuel subsidies encourage wasteful consumption, reduce our energy security, impede investment in clean energy sources and undermine efforts to deal with the threat of climate change. However, I cannot accept this amendment because unabated gas-fired generation currently plays a critical role in keeping Great Britain’s electricity system secure and stable. New-build gas generation capacity will continue to be needed to ensure security of supply until clean alternatives are deployable at scale.

[Baroness Sheehan (LD)]

I have a question for the Minister. We have a real problem with fuel poverty and the energy cost of living—indeed, the cost of living everywhere. Energy costs are so high, and they are going to get even higher come April. Does it not worry the Minister—and, through him, the Government —that Shell paid $1.8 billion in tax to Norway in 2020 but, over the same period, it received $99.1 million from our Government in the UK? In that year, the UK was the only country where Shell operates in which it did not pay tax, according to the company’s own annual report on payments to Governments. There is something very wrong here.

[Lord Callanan (Con)]

That is not a subject for today’s debate. I have no idea whether the figures produced by the noble Baroness are accurate, but we have had this debate many times. We are phasing out fossil fuel-required generation. We have one of the fastest deployable rates of renewables in the world. We have the largest offshore wind capacity in the world. I appreciate that the noble Baroness wants to go even faster but, unless she is standing here saying that we should turn the lights out tomorrow, even the Climate Change Committee accepts that we will need gas-fired generation in the years to come. This is a transition, not a revolution, so we will scale down our use of fossil fuels gradually but, in the short term, we will continue to need them.

[Baroness Sheehan (LD)]

I really must challenge the Minister on this. He knows that this is not a question of switching off the lights overnight. The Climate Change Committee has a well-worked-out plan for scaling down our use of fossil fuels. In that plan, we start to reduce our reliance on oil and gas to a point where the only oil and gas we have is mitigated by some form of abatement, in whatever form that may take, by 2050. The plan is not that we continue to use gas unabated until 2050—that just is not the case. It is very misleading to say that.

[Lord Callanan (Con)]

Indeed—[Interruption.] I will let the noble Baroness, Lady Jones, come in as well.

Net-zero Test for New Policies

Baroness Sheehan Excerpts

Tuesday 11th January 2022 Lords Chamber

[Lord Callanan (Con)]

The noble Baroness makes an important point but it is not just government spending that contributes to net zero. Regulatory policies also have an impact. We are spending considerable sums; certainly, within my department we could always do with spending more, but the difficult job that the Treasury and Chancellor have is balancing tax income with net expenditure. Many government departments would, I am sure, prefer to be spending more money at the moment.

[Baroness Sheehan (LD)]

My Lords, just before Christmas, the Government launched a consultation with oil and gas companies on the design of the UK policy for the sector. Can the Minister say, first, whether the consultation will be carried out in accordance with the consensus between scientists and the International Energy Agency that new oil and gas production is incompatible with net zero by 2050? Secondly, how are the Government proposing to give voice to other stakeholders?

[Lord Callanan (Con)]

The noble Baroness and I have also debated this topic at length before. The point she needs to recognise is that, during the transition, there is still a requirement for oil and gas products in the United Kingdom. Liberal Democrats might not like that but it is a fact—unless you are going to stop people driving their cars and turn their gas boilers off tomorrow, and I do not see that being produced on a focus leaflet any time soon. We need to transition to net zero. During a transition period, therefore, the choice is: do we use oil and gas products we generate, creating jobs and paying taxes from UK assets, or do we get them from Russia or Saudi Arabia? I know what I would prefer.

Drax Wood Pellets

Baroness Sheehan Excerpts

Monday 13th December 2021 Lords Chamber

[Lord Callanan (Con)]

No. In a sustainably managed forest, which all our biomass comes from, there will be stands of trees of different ages, which will be harvested in gradual sequence and then replaced as they reach maturity. The market price for biomass is far lower than it is for timber and board manufacture, which are far more valuable. These are by-products from the forestry process.

[Baroness Sheehan (LD)]

My Lords, part of the problem of how we got here is that the Government took at face value the assurances from biomass energy producers that their products were sustainable. Will the Government now commit to implementing a due diligence exercise in future, so that producers have to prove where they have sourced their product from?

[Lord Callanan (Con)]

They already say where their product has come from; this evidence is independently audited. Generators must report against the criteria on a monthly basis and Ofgem performs checks to ensure that the criteria are met and deductions in certificate issuance or payments are applied proportionately for the energy produced. We are already doing the checks that the noble Baroness suggests.

Oil and Gas Authority: Remit

Baroness Sheehan Excerpts

Thursday 2nd December 2021 Lords Chamber

Asked by

[Baroness Sheehan]

To ask Her Majesty’s Government what plans they have to align the remit of the Oil and Gas Authority from seeking the “maximum economic recovery” of North Sea oil and gas, to meeting the United Kingdom’s net-zero emissions commitments.

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

My Lords, even though renewable electricity capacity has grown five-fold since 2010, oil and gas are still essential for our energy needs and are vital to the production of many everyday essentials such as medicines, plastics, cosmetics and household appliances. They will remain so in declining amounts, even in a net-zero world. It is therefore essential that we have a managed transition away from fossil fuels, as set out in our landmark North Sea Transition Deal.

[Baroness Sheehan (LD)]

My Lords, the concentration of carbon dioxide in the global atmosphere stands at an unprecedented 417 parts per million. At the very least, we have to stop exploration for new fields. The truth is that the UK is the most profitable country in the world for large offshore oil and gas projects thanks to our MER policy. Companies can offset all spending on exploration against tax, as well as receiving millions of pounds in direct grants. What plans do the Government have to phase out such inefficient subsidies, as required by the Glasgow climate pact?

[Lord Callanan (Con)]

As the noble Baroness knows, we have some of the most ambitious climate targets of any major economy in the western world and we are committed to net zero; indeed, it is a legal obligation. However, we will still need declining amounts of oil and gas, and the choice we face is whether we wish to use that produced domestically or to import it. In every scenario set out by the reductions, we will still have a requirement for petroleum products.

Onshore Wind Bill [HL]

Baroness Sheehan Excerpts

2nd reading
Friday 19th November 2021 Lords Chamber

[Baroness Sheehan (LD)]

My Lords, I start by thanking the noble Baroness, Lady Hayman, for introducing this Bill. It is absolutely crucial that we address the barriers that have led to onshore wind being neglected and planning applications for it plummeting since the ministerial Statement of 2015 changed the rules on planning guidance. The noble Baroness, Lady Hayman, and other speakers have said a great deal about the planning process and the barriers that face onshore wind, so I will not repeat much of what they have said.

What I really want to concentrate on is why I think it is so important that we use everything in our arsenal to tackle the climate emergency. It was in 1989 that I left the job I was doing then to go back to my scientific roots, to find out what it was that was causing concern about the climate—I was already concerned about the environment in any case. I left to start a master’s in environmental technology at Imperial College. The talk then among the students, and a lot of the lecturers, was about the amount of carbon dioxide accumulating in the atmosphere, and that it was beginning to rise. The Mauna Loa observatory in Hawaii was monitoring it. There was some cause for concern and real agreement among everyone that we had to, at all costs, keep carbon dioxide concentration in the atmosphere to below 400 parts per million. In 2013, the Mauna Loa observatory recorded that 400 parts per million of carbon dioxide in the atmosphere had been breached. Today, the figure stands at 417 parts per million.

Ice cores from the British Antarctic Survey, among other sources, show us that over the last 800,000 years, since we started to collect records of carbon dioxide concentration in the atmosphere, we have never seen concentrations above 300 parts per million. So we are now in uncharted territory. We are seeing extreme weather events that mean we must act urgently. So to me it is a no-brainer that we must do everything we can to get proven, reliable sources of renewable energy that are scalable and cheap and that provide jobs—and we must do that as soon as possible.

Onshore wind is really cheap. There has been some concern about the figures coming out of BEIS. Could the Minister therefore confirm that these figures—I believe they are in its last costings on the levelised cost of electricity, which assess the cost from all sources on a level playing field—show that onshore wind was in fact the cheapest and considerably cheaper than gas? I would really appreciate that. If that is information he does not have at the moment, would he write to me with that? Just from scouring the internet, it is clear that onshore wind is very cheap. The evidence is corroborated by the BBC, the Guardian, Bloomberg and IRENA, the International Renewable Energy Agency. I want to make sure that this is also the case with BEIS.

Before I go on to some of the historic objections that have been raised, the other real advantage—I thank RenewableUK for this information—is the environmental co-benefits that wind farms can bring. I will cite the example that RenewableUK gave of Scottish Power Renewables’ Mark Hill Wind Farm in South Ayrshire, where a former forestry plantation is being restored to give 192 hectares of natural woodland and 800 hectares of peatland. Here we have seen the return of otters, hen harriers, et cetera, and many other environmental benefits to the area.

In the past, we have had historic objections and a lack of community consent. The Survation polls mentioned by the noble Baroness, Lady Hayman, show that those objections are just no longer there. Anecdotally, when I visited friends of mine in Derbyshire 10 years ago, they really objected to the wind turbine that was going to be put up on the hill behind them. This summer, when I visited again, they said they have no further objections and would very much welcome the continuation and expansion of wind power there. These feelings are corroborated by the survey.

Secondly, embedded carbon in the construction of wind turbines was also a concern. RenewableUK tells us that the carbon in the construction will be got back within six months, and the remaining 20 to 30-year lifetime will provide very green energy indeed.

Lastly, on the recyclability of concrete in wind turbines, for many years about 85% of the materials used were recyclable. Today, the new technology means that the resin used in blade construction can be totally recycled, and we are now looking at 100% recyclability.

I really hope the Government will see fit to back this Bill. In order to deal with the climate catastrophe facing us, we have to do everything we can as quickly as we can.

Net-zero Emissions Target: Fossil Fuel Extraction Projects

Baroness Sheehan Excerpts

Wednesday 3rd November 2021 Lords Chamber

Asked by

[Baroness Sheehan]

To ask Her Majesty’s Government what consideration they give to the net zero carbon emissions target set by the Climate Change Act 2008 (2050 Target Amendment) Order 2019 when determining whether to approve new fossil fuel extraction projects.

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

My Lords, as outlined in the Net Zero Strategy, we are driving down our reliance on fossil fuels and have committed to reducing UK greenhouse gas emissions by 78% by 2035. Oil and gas will play a smaller but important role in meeting future UK energy demand, as agreed by the Climate Change Committee. Fossil fuel projects are subject to robust scrutiny from our regulators before receiving consent, including on environmental grounds.

[Baroness Sheehan (LD)]

My Lords, the recent report by the International Energy Agency, which was in fact commissioned and welcomed by the COP 26 president, Alok Sharma, said that to stay within the 1.5 degree limit there can be no new fossil fuel projects. However, Friends of the Earth tells us that there are at least 40 UK fossil fuel projects in the pipeline, the combined annual emissions of which would be almost three times that of the entire UK currently. Given our ambition for COP 26 to keep 1.5 alive, does the Minister agree with the IEA’s director that:

“If governments are serious about the climate crisis, there can be no new investments in oil, gas and coal”?

[Lord Callanan (Con)]

The problem with the noble Baroness’s argument is that we currently get three-quarters of our energy from oil and gas. It is a declining percentage as we decarbonise, but we currently get three-quarters of our energy in that way. Would the Liberal Democrats prefer that energy to come from Saudi Arabia or Russia, or from British workers paying British taxes in the UK, paying contributions to the UK Exchequer? That is the choice that faces us.

Climate Change: Global Temperatures

Baroness Sheehan Excerpts

Wednesday 27th October 2021 Lords Chamber

[Lord Callanan (Con)]

I can reassure my noble and learned friend on that basis. Heat pumps are a mature heating technology and currently the market-leading low-carbon option. I am also delighted to tell him that the largest UK manufacturer, Mitsubishi in Scotland, produces 10,000 of them a year.

[Baroness Sheehan (LD)]

My Lords, the unpredicted intensity of freak events such as the heat dome in the US and Canada has left scientists reeling. Oceanographers are monitoring with concern the anomaly in the Gulf Stream, which helps to regulate our world’s weather, and the cold spot south-east of Greenland is particularly worrying. Does the Minister accept that it is time to stop dicing with the future of our planet, to keep fossil fuels in the ground and therefore to ditch the abominable policy that places a legal duty on our Government to extract every last drop of oil from the North Sea?

[Lord Callanan (Con)]

The Committee on Climate Change has made it clear that we still need fossil fuels for the transition. I remind the noble Baroness that the UK is responsible for only 1% of worldwide emissions. Yes, we must do our bit, which we are—we are a world-leading power in that respect—but we also need to work on a worldwide basis with other nations, because just stopping emissions in the United Kingdom will not solve the problem.