Economy: The Growth Plan 2022

Baroness Sheehan Excerpts

Monday 10th October 2022 Lords Chamber

[Baroness Sheehan (LD)]

My Lords, it is a pleasure to follow the noble Baroness, Lady Stroud. I start by congratulating the noble Baroness, Lady Gohir, on an excellent maiden speech—I am sorry she is not in her place. Whoever would have thought that there would be two Shaistas in the House of Lords?—make of that what you will.

It seems that in her youth, the Prime Minister confused the great tradition of liberalism with libertarianism when she joined my party. Perhaps, despite her education, she had missed the central tenet of liberalism: do no harm. Untrammelled freedom, free from responsibility, is far from what it means to be a Liberal Democrat. If I may indulge myself a little, I shall read the first sentence from our constitution:

“The Liberal Democrats exist to build and safeguard a fair, free and open society, in which we seek to balance the fundamental values of liberty, equality and community.”


The key word here is “balance”. Our ambitions are diametrically opposed to hers, and I am proud she decided that the Liberal Democrats were not the party for her.

Instead, the Prime Minister identified ideological soulmates within elements of the Conservative party, and the so-called mini-Budget is ideologically driven. It is a Budget that unashamedly signals that this Government want to install an economy in which growth is driven by a “me, me, me” culture, one in which the law of the jungle will reign supreme. The “Do no harm” principle is ignored. The poor and vulnerable are asked to bear more of the tax burden, to shoulder more of the pain of inflation, while incomes and benefits for some stay the same. At the same time, the rich receive tax cuts, oil and gas giants bank eye-watering increases in profits, other big businesses make even greater profits and bankers take home even bigger bonuses.

My message to the Government is: stop the harm. Ditch the high ideology and grapple with the imperatives of the day. Help the most needy in our society. They cannot afford to pay double the energy costs of last year and cover the economic ineptitude which led to higher borrowing costs. Invest in education and R&D, without which the holy grail of growth will ever remain a pipe dream.

It is meaningful, long-term investment in R&D, skills and training that will drive the innovation and technology needed to meet the challenge of climate change. Without this investment, we will see the rest of the world forge ahead and grow without us.

In concluding, I associate myself with all previous remarks condemning the Government’s actions on obstructing green growth and loosening protection of the environment. I want to stress two points. First, the issuing of new licences for the exploration and production of oil and gas is reprehensible, as is removing the ban on fracking. Can the Minister assure your Lordships’ House that taxpayers will not be left to pick up the cost of dismantling the inevitable future stranded assets? Secondly, can the Government just get on with launching an information campaign on what people can do to reduce energy use? If, for ideological reasons, they cannot bring themselves to do this, they should get out of the way of others who can.

Energy Bill [HL]

Baroness Sheehan Excerpts

2nd reading
Tuesday 19th July 2022 Lords Chamber

[Baroness Sheehan (LD)]

My Lords, it is a pleasure to follow the noble Lord, Lord Whitty; we agree on so very much. There may be some small differences of emphasis, not just with the noble Lord, Lord Whitty, but with others who have spoken today, that I hope I can add and bring to the debate.

I wanted to speak in this debate because I am concerned about what is happening to our planet. I do not believe the Government have seized the opportunity in the Bill to go to the nub of the issue. Before continuing, I register my interest as a director of Peers for the Planet. I think it is worth saying a few words at the outset about the fundamentals of climate change because that is the reason why many of the measures in this Bill have been brought forward. The question for me is: does the Bill move us in the right direction with a laser-like focus, at the speed needed to address climate change?

My noble friend Lord Bruce of Bennachie spoke about the mission of climate change, and that is what I really want to know: does this Bill address that mission? Energy is at the very nub of climate change, because the mass production of energy by burning fossil fuels to power the Industrial Revolution has led to the most rapid build-up of carbon dioxide in the atmosphere that our planet has ever experienced.

Today has seen the UK hit a temperature of over 40 degrees Celsius—imagine that—for the first time ever. What we need to do is to move the energy sector away from oil and gas and into the modern era. In May this year, the Mauna Loa Observatory in Hawaii recorded a concentration of carbon dioxide in the atmosphere of 421 parts per million. This is the highest ever recorded and has a direct bearing on the extreme weather events we see with increasing frequency.

For me, this figure has a particular relevance and significance. It was the last part of the discussion I had in 1989 with my fellow master’s degree students at Imperial College when we were doing a master’s in environmental technology. I will just put out there that I graduated with a distinction. The reason I bring this up is that, as a group of young scientists learning about the science behind climate change more than three decades ago—and in two decades’ time I will be able to stand here and say “five decades ago”, as my noble friend Lord Bruce did when speaking of his efforts to move forward energy efficiency—we were hugely concerned about the rise in carbon dioxide due to the Industrial Revolution. In the short period in geological time between 1850 and 1989, the concentration of carbon dioxide rose substantially: from 280 parts per million, its level for the previous many hundreds of thousands of years, to 350 parts per million—in the blink of a geological eye.

There was consensus that going over 400 parts per million would be a catastrophe and that mankind should do all it could to keep it under 400 parts per million. Well, that figure has been well and truly breached; the concentration of carbon dioxide is rising by 2 parts per million every year, and accelerating. We talk a lot about tipping points, but as we look at the extreme weather events we are witnessing, we can see that they are happening with greater and greater frequency and becoming more and more extreme. Who before last year had heard of the heat domes that engulfed north-west America, or atmospheric rivers? We really do need to sit up, take heed and realise that we have to act with speed. That is crucial. Are we doing that in this Bill?

It is important to dwell on why this Bill is a disappointment to so many of the people who really care about climate change, and raise their voices and act with conviction on it. It is a missed opportunity. As many previous speakers have said, it is a missed opportunity to tackle our demand for and waste of energy, as well as energy efficiency in households. Energy efficiency is universally acknowledged as an absolutely necessary first step in our fight to keep global warming to within 1.5 degrees centigrade. It must be absolutely essential given the temperature and weather extremes that we are already seeing; we have already reached a global climate rise of 1.1 degrees centigrade. It is our ambition to keep it to within 1.5 degrees centigrade, but even if all the promises made last year at COP 26 are realised and kept, we would still see a rise of 2.4 degrees centigrade by the end of the century. We are not doing enough; we have to do better.

I go back to energy efficiency. The Minister has said:

“The cheapest energy is that which we do not use.”


He is on board, but there is nothing in the Bill on energy efficiency. Perhaps I can put to the Minister the same question that I did in the debate on the IEA’s report, Net Zero by 2050:

“A 2015 report from the Association for Decentralised Energy states that 54% of energy of energy produced in this country is wasted, equivalent to more than half the average UK annual electricity bill, or about £592, in 2015. The report said that the amount wasted was equivalent to the power generated by 37 nuclear plants. Maybe the situation is better now than it was in 2015. If so, can the Minister update the House? If the data are not to hand, can he write to me and place the letter in the Library?”—[Official Report, 15/6/22; cols. 1657, 1646.]


I have not yet received a response to my question, but I hope that the Minister will take this further opportunity to reply and, if the data are still not to hand, write to me; that would be very welcome. Perhaps he could include information on how the reforms of the UK’s energy systems in the Bill will address this issue.

Can the Minister say whether there are any plans to incentivise the upgrading of owner-occupied properties, which have fallen woefully behind those in other sectors? Does he think that the minimum efficiency standards are enough?

I also want to ask about the local authority delivery scheme, which is coming to a close. Local authorities are going to play a central part in meeting our net-zero targets, and this is one small way in which they could do so. I am sure that they would welcome more information on how they can play their part.

A major barrier to retrofitting for energy efficiency is the lack of a skilled workforce. It is one of the reasons behind the failure of the green homes grant. I wonder whether addressing this shortfall in skilled labour will be a priority for the Government. We are going to need a skilled workforce, not just in retrofitting our homes but if we are to deliver a just transition. We speak so much about it, but we really need to give the people who work in fossil fuel industries and the oil and gas sector the opportunity to retrain so that they can transfer their skills to other energy sectors. Some polling has been done showing that this is what they want to do—they want to stay in the energy sector. They understand the energy sector and would like to be able to contribute further to energy provision.

I have dwelt on tackling energy waste and making homes more efficient because this is low-hanging fruit. Frankly, it is astonishing that so little has been done to date to tackle it. I hope that the Minister will work with those of us who want to rectify the situation. I am sure that he will; I know he thinks that energy efficiency is something that ought to be tackled.

The future technologies in carbon capture, usage and storage that the Government are focused on are unproven at scale. There is nowhere in the world where it is working. Denmark has some small projects but there is nowhere in the world that we can point to and say that that is what we want to do. Gas will of course be a transition fuel. No one is suggesting that we turn off the taps today. I challenge the Minister to find anywhere in Hansard where I have said that the taps must go off today. It is a transition fuel. We know that we have to move towards a fossil fuel-free future in a sensible way, but we must take hold of the opportunities that we have. We must look at what is working and at what our innovation and technology has already delivered: clean, green energy with zero pollution. These are the industries we ought to be looking at.

Presumably a vast proportion of the £100 billion investment that will be unleashed by this Bill will go towards carbon capture, usage and storage. However, we are misdirecting our efforts and incentivising the wrong industries. Carbon capture, usage and storage may be useful in mitigating the miniscule amount of fossil fuels that we will need as we transition to net zero, but that will be an ever-diminishing amount. I am not sure that the Bill in this form recognises that gas will not make up a vast amount of our energy needs—that is a fact. Perpetuating the future of fossil fuels by investing in big projects for carbon capture, usage and storage is not the right way to go and is very short-sighted.

I want to say something very quickly on stranded assets. Russia’s invasion of Ukraine has left us all reeling, but two wrongs do not make a right. It would be a mistake to use the short-term Russia-Britain gas issue to decelerate progress on the move away from fossil fuels. To use this as an excuse to invest billions in new fossil fuel infrastructure would be a crime, but this is what the Government are proposing to do—for example, by opening up a new round of licences for exploration in the North Sea this autumn. These new fields would not come online until long after the window to act to keep the global temperature rise within 1.5 degrees centigrade has passed. We are trying to limit global temperature rises to 1.5 degrees centigrade. How will the opening of new fields that come online after the date by which we need to do this has passed help? Much-needed investment in wind and sun will be diverted, and stranded assets would proliferate.

In the debate I tabled last month on the International Energy Agency’s report, Net Zero by 2050, the question of stranded assets was raised. The noble Lord, Lord Lilley, who I am sorry to say is not in his place, dismissed stranded assets, saying that the cost would be borne by those foolish enough to be saddled with them. Although I acknowledge that the noble Lord, Lord Lilley, is far more au fait with the workings of the fossil fuels sector than I, I am pleasantly surprised to hear he thinks it will be the investors in new fields who will be saddled with the losses. Can the Minister confirm that the costs of stranded assets will be picked up by those who seek to profit by them and not by the UK taxpayer?

--- Later in debate ---

[Lord Moylan (Con)]

My Lords, it is a privilege to speak after the right reverend Prelate and to hear of the encouraging things happening in his diocese. We also heard him mention the fact that they have a cost. He is possibly the first speaker in this debate who has drawn attention to cost; I shall spend quite a lot of my time talking about exactly that.

This is a technical Bill but it has a simple purpose: to give effect to the British energy security policy. In my view, that means ensuring that energy is available abundantly and affordably to the British people and to British industry and businesses, and also that energy is, as far as possible, secure against external shocks. That is how we maintain and enhance our prosperity, and any other statement of the Government’s objective would appear to me to be traducing the obligations we have to the nation.

Net zero is not an energy strategy but a constraint on how we might achieve our energy strategy. Nobody seriously thinks that the UK’s commitment to achieve net zero by 2050 will have any significant effect on the heating of the planet, since we produce only 1% of global emissions. At best, it is setting an example to the world; its practical effect will be very small indeed. The core strategy for this Government has to remain abundant and affordable energy for the UK. If my noble friend on the Front Bench disagrees about that, I am sure he will say so when he winds up. The question is how the Bill and the energy strategy it effectuates measure up to that objective. It is a mixed bag and, like other speakers, in the interests of time I will be fairly selective about the parts of the Bill I choose to focus on at this stage.

One of the things the Bill does is encourage investment in wind power. Despite claims that the cost of wind power is constantly falling, that is simply not true. Although it has fallen from its early days, it is ceasing to fall; the fall is declining as a result of the maturity of the industry, as you would expect with any industry that matures. But even if the marginal cost of wind power can be brought down to something close to zero—in other words, that it is similar to nuclear power in that regard—none the less, the capital costs required would still require subsidies, in addition to the feed-in tariff, and these are very large indeed when it comes to offshore wind.

Moreover, despite providing in excess of 20% of our energy, there are many days when wind power falls close to zero, and much the same can be said of solar. This means that gas generation has to be available to take up the slack at those times. I heard the noble Baroness, Lady Sheehan, envisage a day when demand for gas would be zero. I do not understand what source of power she imagines will take up the slack when the wind is not blowing and the sun is not shining.

[Baroness Sheehan (LD)]

I challenge the noble Lord to say where I said that the need for gas would be zero. I said it would be minuscule.

[Lord Moylan (Con)]

I am happy to accept the correction from zero to minuscule because it does not change my argument in the slightest. I thought I had said close to zero, but either way I am more than happy to accept the word “minuscule”. I was hoping when the noble Baroness stood up that it would be to tell me what fuel it was that was going to take up the slack in the place of gas.

To make demand for gas intermittent in order to match the intermittency of wind power is, in the words of Professor Sir Dieter Helm,

“devastating to the economics of gas generation and for two reasons”.

First, it takes a much longer time to recover the capital costs, and, secondly, because the gas power is demanded only intermittently, the cost of producing that supply increases as well. So in addition to the high cost of wind generation, we have to take account of an inevitable increase in the cost of electricity generated by gas simply to match it and make up for the intermittency. Professor Helm is a great supporter and advocate of net zero. His complaint is that we are not being honest with the British public about the costs of it. My noble friend the Minister will be able to say whether he thinks the Government are being honest with the British public and that Professor Helm has got it wrong, but net zero is not cheap and the Government need to level with the public. They need to show that their energy strategy is affordable.

Then we come to the question of abundance. The noble Baroness, Lady Blake, referred, as did other speakers, to Russia’s illegal war in Ukraine. My worry was that she had not taken account of how radically that has changed our situation, but my worry on that score rather fell away when I heard my noble friend Lord Howell of Guildford. He explained very clearly that it is not some minor event; it is a radical change in the energy supply market, and it goes to the question of whether we are going to be able to maintain abundant supplies.

The noble Baroness called for three things to happen simultaneously as a result of the Bill: she wanted to cut bills, increase security and tackle climate change—I hope I have referred to her correctly. My point is that you cannot have all three. The second two require higher bills because the cost of them is largely borne by bill payers rather than taxpayers. Even if you take it out of the bills and put it on to the taxpayers, the taxpayers are of course the bill payers with a different hat on.

There are things in this Bill that I agree with. I was particularly pleased to see the reference to the promotion of nuclear fusion. It may be a very long way off—nuclear fusion as a solution has always been a long way off—and that makes one a bit sceptical, but I have confidence that something can be done. Nuclear fusion is of course an extremely clean form of energy, not like nuclear fission, and the UK Atomic Energy Authority is a leader in the field. At the moment there are half a dozen places throughout the country competing to be the home of the UK Atomic Energy Authority’s spherical tokamak, which is going to take forward Britain’s next step in developing the prospect of genuine nuclear fusion. If anything, I would encourage the Government to spend more money, as I am told that that would speed up the work; that is all very good. Nuclear fission will be core to providing our baseload, and I welcome the work the Government have done to promote that as well. But large amounts of gas will remain absolutely indispensable to our energy mix—all the more so the more we rely on wind and solar.

The gaping hole in this Bill and this strategy—not only the hole referred to by my noble friend Lord Howell of Guildford, in that we are not sufficiently encouraging increased oil production among the oil producers—is, as far as our domestic policy is concerned, its failure to put increased domestic production of gas at the heart of our energy strategy.

--- Later in debate ---

[Lord Callanan (Con)]

First, let me thank all noble Lords for their contributions to what I think has been an excellent, important and constructive debate. I will attempt to answer as many of the questions asked as possible, and of course, I look forward to debating many of these issues further as the Bill proceeds through Committee.

One of the most pressing issues facing many hard-working households and businesses today is the cost of living, particularly the cost of energy. Unsurprisingly, many noble Lords—including the noble Baronesses, Lady Blake and Lady Hayman, and my noble friend Lord Howell—asked how the Bill will address this issue. The Government are acting now to protect households from the full impact of rising prices with a package of financial support worth £37 billion.

However, the cost of living crisis is not just about providing support today. It is also about ensuring that we have an energy system that is affordable for many years to come. This Bill will create a more cost-efficient energy system by increasing innovation and competition, for example by introducing competition in onshore electricity networks and attracting investment in a strong, low-carbon energy sector. The Bill will also help to reduce our exposure to volatile gas prices.

My noble friends Lord Moylan and Lord Howell and the noble Baroness, Lady Sheehan, touched on the important issue of energy security. It is an absolute priority for this Government. Thankfully, Britain benefits from highly diverse and flexible sources of gas supply and a diverse electricity energy mix, which ensures that households, businesses and heavy industry can get the energy they need. I am happy to confirm that the UK is in no way dependent on Russian gas. We have highly diverse sources of gas supply, providing us with one of the largest liquified natural gas import infrastructures in Europe, for which, I am happy to say, the EU is particularly grateful at the moment, as we support it. Natural gas has an important ongoing role to play in future as the UK decarbonises its energy system. However, how natural gas is used will need to change to eliminate the CO₂ associated with burning it.

In response to my noble friend Lord Moylan, affordability is of course absolutely key to delivering on our energy strategy. The value for money of the measures that we introduce is completely critical.

As many noble Lords have noted, this is a wide-ranging Bill. I welcome the many questions that were asked in the debate about the wider energy sector; most of them do not necessarily relate to the Bill but I will nevertheless attempt to address them anyway.

A number of noble Lords, including the noble Baronesses, Lady Blake and Lady Sheehan, and the noble Lords, Lord Bruce and Lord Whitty, raised the knotty subject of energy efficiency, which we have debated long and hard in this House. Let me say at the start that huge progress is already being made on the energy efficiency of UK homes. We are investing more than £.6.6 billion over this Parliament to improve energy efficiency. However, cost of living pressures mean that now is not the right time to bring in additional requirements for home owners regarding further regulations on minimum energy efficiency standards. However, we will bring forward measures at a more appropriate time.

The noble Lord, Lord Bruce, asked if the Government will introduce windfall taxes back into the oil and gas industry. The energy profits levy will raise around £5 billion in its first 12 months, which will go towards supporting people with the new cost of living measures announced by the previous Chancellor.

The noble Lord, Lord Whitty, asked about the programme of policy statements and secondary legislation. To implement the commitments in this Bill we will of course publish policy statements for the Lords Committee stage, helping your Lordships to understand the intention of the regulation-making powers in the Bill and the next steps which will follow that.

The noble Baronesses, Lady Hayman and Lady Bennett, and the noble Lord, Lord Lennie, asked about onshore wind. On consultation, we are going to introduce a clear route which enables local communities and authorities to work together to signal their support for onshore wind and for onshore wind developers to respond quickly to this. On planning guidance, while we will not introduce wholesale changes to current planning regulations for onshore wind in England, we have committed to developing local partnerships for a limited number of supportive communities which wish to host new onshore wind infrastructure in return for appropriate benefits, including, for example, lower energy bills.

The right reverend Prelate the Bishop of Carlisle, the noble Baroness, Lady Bennett, and my noble friend Lady McIntosh all spoke about community energy. Through the introduction of UK-wide growth funding schemes, the Government are enabling local areas to tackle net-zero goals in ways that best suit their particular community needs.

The noble Lord, Lord Bruce, asked if there would be enough electric vehicle charging points. We are committed to ensuring that an inclusively designed EV charging network is available that works for all consumers.

My noble friend Lord Moylan asked what will take up the slack when the wind is not blowing and the sun is not shining, which is an important question. The Government’s long-term ambition is to increase our plans for the deployment of civil nuclear power up to 24 gigawatts by 2050, which would be around 25% of our projected 2050 electricity demand.

The noble Baroness, Lady Boycott, and my noble friend Lady McIntosh asked about the use of waste for energy. I can inform both that the forthcoming biomass strategy will consider evidence on the likely support for and sustainability of biomass feedstocks and the best use of biomass across the economy to help us achieve net zero.

I turn to some of the points made about measures in the Bill, starting with pillar 1. The noble Baroness, Lady Hayman, and the noble Lord, Lord Bruce, mentioned the cost and viability of heat pumps—a matter dear to my own heart. With the low-carbon heat scheme and other policies, we are confident that the instalment cost of heat pumps will come down significantly over the coming years as the market scales up, making heat pumps an increasingly attractive and affordable option for more and more UK households.

The noble Baroness, Lady Hayman, also questioned whether hydrogen was the appropriate technology for heating homes. Indeed, that is a very good question to pose. It has the potential to make a contribution to fully decarbonising heat by offering consumers a future heating option that works in a very similar way to natural gas, but without the carbon emissions. However, it is important to point out that hydrogen for heat is not yet an established technology. Much further work is required to assess the feasibility, costs and potential benefits. As part of that, a neighbourhood trial will start next year, with a hydrogen village expected to go live in 2025. This is all part of the plan to work out the feasibility of the wide scale use of hydrogen for home heating.

The noble Baroness, Lady Sheehan, the noble Lord, Lord Whitty, and the noble Baroness, Lady Bennett, all questioned whether CCS was an appropriate technology for the UK. The Climate Change Committee has described carbon capture usage and storage—CCUS—as

“a necessity, not an option”

for the transition to net zero, which will enable the UK to deliver upon its global climate commitments. Contrary to what some noble Lords said, CCUS is a proven technology with CCUS projects operating safely globally, in countries such as Norway, the US and Canada. CO₂ storage is a mature and safe technology.

The noble Lords, Lord Bruce and Lord Whitty, spoke of the need to accelerate CCUS delivery and have a clear deployment plan. I agree with them; we remain committed to industrial decarbonisation across all nations and regions of the UK. As we work towards net zero, we are clear that CCUS will continue to play a key role in the process. In April 2022, the British Energy Security Strategy restated our commitment to support the deployment of four CCUS clusters by 2030. Following on from a process to select the first CCUS track 1 clusters to be deployed by the mid-2020s, we intend to bring forth further details on the outcome of phase 2 emitter projects in due course.

My noble friend Lady McIntosh and the noble Baroness, Lady Boycott, asked about the hydrogen levy. The detailed design of the levy is ongoing, including decisions on where it will be placed in the energy value chain. The levy design will reflect wider government priorities and policies to ensure that consumer energy bills are, of course, affordable and that the costs are distributed fairly. We anticipate some public engagement on options for the detailed levy design in early 2023.

I move on to some points that were raised on pillar 2 of the Bill. I thank the noble Baroness, Lady Blake, and the noble Lord, Lord Ravensdale, for their positive stance on the independent system operator. We are also seeing that across the energy sector. I was asked about the timeline for implementation. BEIS and Ofgem are currently working with National Grid and the electricity system operator on the next steps. Depending on several factors, including the passage of legislation and continued discussion with key parties, the ISOP could be established by or in 2024.

The noble Lord, Lord Whitty, asked about the interaction with Ofgem and National Grid. The Bill actually provides a power to set out a strategy and policy statement for the ISOP; that is where the Secretary of State will set out their direction for Ofgem and ISOP. The Bill also provides for Ofgem to license and regulate the ISOP, overseeing its activities in its capacity as the independent regulator.

My noble friend Lady McIntosh raised the important point about why heat network customers do not get protection equal to that of gas and electricity consumers. That is because heat networks typically buy their energy through commercial contracts, which are not covered by the existing default tariff price cap. However, I am pleased to confirm to my noble friend that the legislation provides the BEIS Secretary of State with powers to introduce a price cap, should it be necessary to protect consumers.

The noble Baroness, Lady Blake, asked whether the Bill provides the overhaul needed for the heat networks sector. I very much believe that it does. To address her points on poor design and maintenance, about which I agree, the Bill will include minimum technical standards. It will also introduce powers to regulate decarbonisation; as mentioned, it will also enable powers to set price caps.

The noble Lord, Lord Ravensdale, asked whether zoning, which will of course be run by local authorities as the most appropriate bodies, can be extended beyond heat networks. Our strategic approach in the Heat and Buildings Strategy follows, in our view, the grain of the market. Our policy levers are aligned to certain points of action; for example, when people are replacing their heating systems. Extending zoning to other technologies in our view risks removing choice for households and businesses when consumer choice over heating technology will be best for the transition.

The noble Lord, Lord Bruce, asked about the effectiveness of the price cap. That is a valid question. The price cap remains, of course, a temporary measure until competition in the market improves. BEIS is currently considering what reforms are needed for energy retail market regulation to ensure that the market is resilient and sustainable and continues to protect consumers.

On the points raised that come under pillar 3 of the Bill, the noble Baroness, Lady Blake, asked for more detail on the nuclear decommissioning measures. The proposals do not result in any relaxation in the standards for public protection. Former nuclear sites will continue to be regulated by the relevant environmental agency and the Health and Safety Executive, rather than the Office for Nuclear Regulation, which will regulate health and safety at work activities. She also questioned the reach of the Bill’s core fuel resilience powers. These measures, also raised by the noble Lord, Lord Teverson, are intended to be used in a light-touch way to complement the additional voluntary approach. The Government will use these powers in a proportionate way, including providing for certain rights of appeal and consultation requirements.

The noble Lord, Lord Bruce of Bennachie, and the noble Baroness, Lady Bennett, raised a question in relation to the disposal of nuclear waste. The Bill makes provision in relation to geological disposal facilities which will encapsulate and isolate radioactive waste at great depths. Nuclear Waste Services, the developer of the geological disposal facility, is confident it can meet the additional requirements from new nuclear as set out in the British Energy Security Strategy.

Moving to the point raised by the noble Baronesses, Lady Bennett and Lady Jones, in their double act, about dumping radioactive waste in the sea, of course, disposal of radioactive waste in the sea is banned by international conventions and let me be absolutely clear that no part of a geological disposal facility will be in the sea. The waste will be isolated deep underground, within multiple barriers, to ensure that no harmful quantities of radioactivity reach anywhere near the surface environment.

My noble friend Lord Howell and the noble Viscount, Lord Hanworth, both asked about small modular reactors. Through the nuclear fund, we are providing funding to support research and development for a small modular reactor design and we are progressing plans to build an advanced modular reactor demonstration by the early 2030s at the latest.

The noble Lord, Lord Ravensdale, asked whether the Government could make sure that nuclear power is eligible for the renewable transport fuel obligation, including hydrogen produced from nuclear power. I know this is something we have had exchanges on in the past. We believe this would be complex and would require firmer, further evidence for industry to understand how exactly it might be compatible with wider RTFO eligibility criteria.

I welcome my noble friend Lord Moylan’s support for the promotion of nuclear fusion, and I also welcome the support from the noble Lord, Lord Bruce of Bennachie, for the continuation of North Sea oil and gas production. Perhaps he would like to have a word with his noble friend, the noble Baroness, Lady Sheehan, about this important point, although I welcome her confirmation that she is now apparently in favour of gas as a continuity fuel. My point, which I keep making to the noble Baroness, is that since we produce only about 40% of our own gas in the North Sea and we still import considerable quantities of LNG to be used as a transition fuel, it makes eminent good sense, in my view, to obtain those reserves from our own resources in the North Sea, which of course is of much lower carbon intensity than LNG. I am sure we will continue to have these debates going forward.

[Baroness Sheehan (LD)]

Will the Minister address the point made by the noble Lord, Lord Whitty, as well as by me, that the gas we produce in the North Sea no longer belongs to us? It is a global commodity and has to be traded as a global commodity.

[Lord Callanan (Con)]

It is produced by private sector companies under regulation, and there are interconnectors connecting us to the continent. I am sure that the noble Baroness would want us to support the EU in its time of need at the moment. With our energy terminals, those interconnectors play a crucial role in helping our EU friends with their current difficulties. It is of course a global commodity and the price is set globally. However, if the noble Baroness’s question is about carbon intensity, the carbon intensity of domestically produced resources is much lower than imported LNG. As I have pointed out a number of times before, I fail to see why it is, in her view, more sensible to import gas through LNG rather than getting it from our own North Sea resources. I am sure we will have that debate many times again in future.

Finally, I will deal with the challenge from the noble Lord, Lord Teverson, regarding smart meters. I can tell the noble Lord that we have now installed 27 million smart meters in the UK, and the vast majority of SMETS1 meters have now been upgraded with software upgrades to SMETS2 standards, so that they operate exactly the same as SMETS2 meters and provide full smart meter functionality. Only this morning, I met the DCC to review the progress on that upgrade and was told that the number of meters still to be migrated is tiny—a few tens of thousands of early meters that the DCC will continue to attempt to migrate; if that does not work, they eventually may be upgraded to full SMETS2 meters.

I have addressed most of the points raised by noble Lords. I am sure that noble Lords will say if I have not covered all their points, but we will debate these matters further in Committee. Many of the points made were things that noble Peers would like to see happen separately and outside the provisions in the Bill. However, I think that most of the measures received a wide degree of support in your Lordships’ House. I look forward to continuing this constructive engagement and detailed scrutiny as the Bill progresses through Committee.

Global Energy Sector

Baroness Sheehan Excerpts

Wednesday 15th June 2022 Lords Chamber

Asked by

[Baroness Sheehan]

To ask Her Majesty’s Government what assessment they have made of the report by the International Energy Agency Net Zero by 2050: A Roadmap for the Global Energy Sector, published in May 2021.

[Baroness Sheehan (LD)]

My Lords, the gathering pace of extreme weather events, far earlier than scientists predicted, is the planet telling us that “enough is enough”. The IPCC states that

“some of the changes already set in motion—such as continued sea level rise—are irreversible over hundreds to thousands of years.”

The International Energy Agency, created in 1974, is an autonomous intergovernmental organisational hosted by the venerable OECD. It accepts that climate change is real and happening now. It has put its shoulder to the wheel and used its awe-inspiring expertise in the global energy sector to produce a report that is a road map to meet the net-zero target by 2050, keep global warming to 1.5 degrees and, crucially, safeguard our way of living. This is a report commissioned by our own Government. They should find succour in the IEA’s conclusion that there is a pathway by which net zero by 2050 is achievable, and in how the IEA has dotted the “i”s and crossed the “t”s and detailed how the challenge can be met.

In introducing this debate, I openly declare that I stand with those international agencies and am a fully paid-up member of the “We must act now—this is a climate emergency” brigade. I also declare that I am a director of Peers for the Planet. I suspect that others may be contributing to this debate from a standpoint either of denying that climate change is real or that reaction to it is overenthusiastic. I hope that they will make a declaration on that and on membership of any groups that promote those points of view early on in their contributions.

There is a chant among children in playgrounds, “Sticks and stones may break my bones, but words will never hurt me.” It is so right. Words alone will not undo the deep damage that we humans have inflicted on our planet and its life support systems. I am not a violent person. Rather than sticks and stones, the metaphorical carrot would be my preference, and it seems to me that Russia’s invasion of Ukraine has shown us the real carrot, the real prize: to rid ourselves once and for all of dependence on essential energy supplies from geopolitically unstable and unpredictable sources of energy. That carrot is being dangled in front of us at a time when alternative sources are available, sources that are free from the taint of human rights abuses, free from dependency on rogue regimes that have heads of states with delusions of grandeur, cheaper by far, and becoming ever more so than fossil fuel sources.

Instead, we have the prospect of infinite clean energy from the sun, wind and ground, generated on domestic soil and available for domestic use rather than destined for the global trading floor and the highest bidder, as would be the case for oil and gas from UK waters, because pumping more gas out of the North Sea will do precisely nothing to ease the energy crunch and cost of living crisis in the UK. Supply from UK waters in the North Sea will make not so much as a dent in the shortage of global supply, and it is not ours anyway—we sold our assets in the North Sea decades ago. Maybe the noble Lord, Lord Lilley, who I am delighted to see is taking part in this debate, will confirm this, given his background as a practitioner in the oil trade. I look forward to his contribution to this debate and hope that we will be able to find some common ground.

Investing in new fossil fuel infrastructure would be a wilful act of self-harm. It shows a complete lack of imagination in analysing the science, programming in our knowledge of how the earth has moved through cycles of extreme weather over the millennia, and not taking on board that giving the finely balanced forces of nature a sharp shove risks damaging our planet irreversibly for the foreseeable future. I accept that there are uncertainties, as there always will be in science, but who can deny that the planet is creaking and who, until last year, had heard of heat domes or atmospheric rivers? If the planet cracks, there is no planet B to which we can evacuate. Common sense says that we must ensure our future.

Serendipitously, the steps that we can take are a win-win scenario. The IEA’s authoritative report lays out the wins very clearly in Net Zero by 2050: A Roadmap for the Global Energy Sector. Its findings are quite explosive. It says that net zero by 2050 is a tall ask but that it is doable. If the world followed its road map, it would reap huge benefits—benefits which include millions of new jobs, many of them skilled, in manufacturing, construction, engineering et cetera, with the option of deployment where there is the greatest need for quality jobs. Millions more green jobs would be created than if investment was pumped into fossil fuels. Economic growth would exceed expectations, all the while ensuring clean, stable and affordable energy supplies, resilient against the vagaries of rogue regimes. What is not to like?

What must we do to get there? First, the report recommends a major worldwide push to increase energy efficiency. Would it not make sense to put a stop to the hideous waste of energy through leaky pipes, transmission lines and walls and rooves of buildings? A 2015 report from the Association for Decentralised Energy states that 54% of energy of energy produced in this country is wasted, equivalent to more than half the average UK annual electricity bill, or about £592, in 2015. The report said that the amount wasted was equivalent to the power generated by 37 nuclear plants. Maybe the situation is better now than it was in 2015. If so, can the Minister update the House? If the data are not to hand, can he write to me and place the letter in the Library?

The IEA has just published its report, The Value of Urgent Action on Energy Efficiency. The report says that by doubling the global economy’s energy efficiency from 2% to 4% each year this decade, we could avoid 30 million barrels of oil per day, about triple Russia’s 2021 production, and 650 billion cubic metres of gas per year, which is four times the amount that Europe imports annually from Russia.

Secondly, the Government must engage with the public. The Climate Change Committee’s analysis shows that 40% of the changes needed to get to net zero require some sort of behaviour change. BEIS’s own public attitudes survey shows a whopping 85% of people are concerned about climate change but lack information about how best to do their bit. Why is there no government strategy to improve climate education to encourage the behaviour change necessary to reach net zero by 2050?

Thirdly, the IEA’s analysis has shown that there is no need to build new supply infrastructure for transitional gas. We already have all that we need, and more, to tide us over until we have the renewables in place for the vast majority of our energy needs, and mitigation measures in place for the minuscule amount of gas that may still be needed by 2050. Can the Minister explain why the Government think it necessary in the British Energy Security Strategy to announce a new licensing round in the autumn for new North Sea oil and gas projects that will not deliver for many years? Why is that preferable to investing in renewables, which will generate energy much quicker and more cheaply and have zero risk of becoming stranded assets?

Why do our Government handle the oil and gas sector with kid gloves and insist on continuing support for it despite clear evidence that support for the sector is incompatible with reaching their own statutory target of net zero by 2050? This is exemplified clearly in last month’s energy profits levy. The framework includes doubling investment relief for oil and gas companies, but no such tax relief for investment in renewables or for demand-side measures has been proposed. This is Jekyll and Hyde politics. It is as if the Government were being held to ransom by hardcore climate deniers on their own Benches.

International Energy Agency Report

Baroness Sheehan Excerpts

Tuesday 26th April 2022 Lords Chamber

[Lord Callanan (Con)]

To respond to that point would take longer than I have for this answer, but I disagree with the noble Baroness—although I have great respect for her—that biomass is not renewable. This has been studied at great length, and supporting Drax and other power stations to move to renewable sources of power with waste wood is an environmentally responsible thing to do, in our view. The energy pathway for that is audited.

[Baroness Sheehan (LD)]

My Lords, in response to my Written Question of 24 March about government plans to encourage people to turn their thermostats down, the Minister referred me to the Met Office’s WeatherReady campaign. This turns out to be a web page to help people prepare for severe-weather measures, such as putting on sunscreen and drinking more fluids. Therefore, let me put the question a different way: when will the Government launch a full-throttled campaign asking the British public to turn down either the heating or the air conditioning? This will save money, end once and for all our import of Russian gas, show support for Ukraine and reduce greenhouse gases—everything the Government say they want to achieve.

Behaviour Change for Net Zero

Baroness Sheehan Excerpts

Thursday 31st March 2022 Lords Chamber

[Lord Callanan (Con)]

The noble Lord makes an excellent point. Indeed, we are doing just that. I mentioned earlier that we have something like £7 billion-worth of support through some of the schemes I mentioned, including the social housing decarbonisation fund, the home upgrade grant and the local authority delivery scheme. All of those are focused on helping those on the lowest incomes in society to insulate their homes to reduce their energy bills.

[Baroness Sheehan (LD)]

My Lords, can I confirm that the Minister just said that the Government were not open to carrying out a consultation on behavioural change strategy with respect to climate change? If that is the case, it is really quite sad, because businesses are trying to lead the way, but they cannot reap the full benefit of their actions without a clear lead from government.

[Lord Callanan (Con)]

The Government are providing a clear lead. We were one of the first countries in the world to legislate for net zero; we have provided a number of different strategy documents, pointing the way, across a whole range of sectors, to how we can meet net zero, and we are working very closely with business. We are delighted to see that so many different international companies have signed up to our net- zero pledges. We will continue to work with them and continue to encourage people to make greener choices.

COP 26

Baroness Sheehan Excerpts

Monday 28th March 2022 Lords Chamber

[Lord Callanan (Con)]

Clearly, Brazil signed up to the declaration at COP 26 along with 140 other countries covering over 90% of the world’s forest. It is important for us to continue working with Brazil and countries representing some 75% of trade in agricultural commodities to try to move those countries’ trade towards more sustainable means.

[Baroness Sheehan (LD)]

My Lords, the IPCC estimates that spending on adaptation needs to reach $127 billion per year for developing countries by 2030, but at the moment adaptation spend accounts for just a fraction of that, and for just 4.8% of tracked climate finance. Do the Government accept that spending on adaptation and mitigation needs to be equal? If so, is that something which will be achieved during our year of the COP presidency?

[Lord Callanan (Con)]

Clearly, we are working with other like-minded countries to try to deliver the maximum resources possible for developing countries to help them to adapt to the effects. I am very proud of our contribution of £11.6 billion of international climate finance over this five-year period.

Gazprom Energy

Baroness Sheehan Excerpts

Thursday 24th March 2022 Lords Chamber

[Lord Callanan (Con)]

I am not sure what point the noble Lord is trying to make here. We are not pursuing a war on the Russian people; many Russian individuals are just as opposed to this war as we are. We have a constantly evolving round of sanctions—the Foreign Secretary announced another 65 sanctioning proposals this morning—and some 1,000 individuals and businesses have been sanctioned. However, we have to be careful to differentiate between Russian state entities, those linked to Putin, and perfectly legitimate Russian individuals.

[Baroness Sheehan (LD)]

My Lords, the Government have said that Gazprom has been sanctioned and will no longer be able to issue debt or equity in the UK. Can the Minister say what that means? The British people want to be sure that no money from Gazprom is going to the Russian state to finance its vendetta against the Ukrainian people. Can the Minister categorically state that that is happening?

[Lord Callanan (Con)]

As I said, it is difficult for me at this stage to comment on individual cases. However, we keep the whole sanctioning regime under constant review and new rounds of sanctions are constantly announced. It is difficult in this case because of the large numbers of essential businesses, schools, hospitals, et cetera that have contracts with Gazprom UK, but we will keep these matters under review.

Subsidy Control Bill

Baroness Sheehan Excerpts

Lords Hansard - Part 1 & Report stage
Tuesday 22nd March 2022 Lords Chamber

[Baroness Bennett of Manor Castle (GP)]

My Lords, I rise with great pleasure to follow the noble Lord, Lord Whitty, who has powerfully and clearly introduced this group of amendments. I will offer the Green group’s support for Amendments 3, 51 and 61. Were we not in a state of continual juggling of different Bills, I am sure that we would have attached one of our names to them.

Amendment 3, on which the noble Lord indicated he is likely to test the opinion of the House, is particularly important in considering the negative effects. I am influenced in that view by a visit I made yesterday to a village called North Ferriby and a site threatened with the development of an enormous Amazon warehouse, with significant environmental effects. From those environmental effects flow effects to people’s lives and well-being. It is the absolute reverse of levelling up in that it is making people’s lives much worse. It is clear that, when talking about economic development, there is inadequate consideration of local environmental effects and the broader effects on the state of our world.

However, I rise chiefly to speak to Amendment 5 in my name. Rather than trying to stop damage, this amendment is trying to lead the Government in a positive direction, which could help them deal with some of the issues facing them today and will be tackled by the Chancellor tomorrow.

Amendment 5 is all about helping small-scale community energy projects to make a big impact in the energy system. In Committee, the Minister suggested that community energy is not within the scope of the Bill, but I hope we might see a broader response today, and at least a positive response and acknowledgement from the Minister that this is a huge lacuna in government policy that desperately needs to be filled.

This amendment adds community energy to the list of circumstances that may be used to determine a subsidy, where the generator is a community energy project. What we see is that the rural community energy fund is soon winding down, despite its success. The Minister and I have, in another context, discussed the lack of any other community energy schemes, despite the Government’s promises to deliver them.

You might ask, “Why would subsidies be needed?” The fact is that community schemes often need early-stage seed funding to get them to the stage where they can seek investment. Without that, many communities, desperately keen to set up their own scheme, are never able to get one off the ground. What we are talking about is perhaps something like an electric car club, where a community can generate its own energy. I saw this in Stroud a few years ago: solar panels on the roof of a doctor’s surgery powered an electric car club car. This had all been supported by community investment and was run by the community, with the nature of the project being chosen by the community.

It is clear that this can unlock more than £64 million in private capital investment. It is an incredible opportunity for public money to kick-start a community-led green revolution. Importantly, thinking about the levelling-up agenda, this means that communities with money can put it into their local community and get the money circulating around that community. This is a cost-effective way of unleashing the possibility of many new green jobs.

I am not expecting the amendment to pass today, but there is a huge opportunity here. The crisis the Government are facing is clear: the cost of living crisis and concern, particularly in the context of the tragic situation in Ukraine, about energy self-sufficiency. But there is energy all around us: energy from the sun, the wind and people within communities desperate to help tackle the climate crisis and meet the needs of their own communities. Let us make sure that we have a subsidy scheme that can support all that physical and human energy and put it to good purposes to improve the lives of us all and our environment.

[Baroness Sheehan (LD)]

My Lords, I rise to speak to Amendments 3, 51 and 61, to which I have added my name. I have checked with the Public Bill Office that my name is on those amendments—it is online but it has not made it to the printed copy. I should also add that I am a director of Peers for the Planet.

The reason I have added my name to these amendments is that I feel strongly about this. I hope that the noble Lord, Lord Whitty, will be press Amendment 3 to a Division if the Minister is unable to meet us half way or come some way towards what we are looking for, which is some recognition of an alignment with our climate change and natural environment concerns.

Just last month the IPCC published its sixth report, which is full of dire warnings about the climate. Time is running out and we are fast approaching a 1.5-degree rise. The raw science tells us that we really have to act now. The concentration of carbon dioxide in the atmosphere is at an unprecedented 419 parts per million; it has never been at that level, records show, in the last 800,000 years. It is going up in a straight-line vertical trajectory at the moment, so we really need to act as quickly as we can. The NASA website shows that many other of the planet’s vital signs are moving in the wrong direction and those adverse changes are accelerating.

A Bill laying out a new subsidy regime is an important policy lever to meet our climate ambitions. However, as things stand, there is a deafening silence on climate and nature alignment in the Bill. Amendments 3, 51 and 61 seek to fill that void, not in a prescriptive manner but by allowing the Government to determine how the aims should be achieved. Notwithstanding what the Minister’s response will be to the amendments, I hope that nevertheless he will confirm from the Dispatch Box that the guidance to the Bill will specifically include how public authorities should approach climate and wider environmental considerations with respect to subsidies. The Minister said as much in his letter to my noble friend Lord Purvis but it would be good to have it reiterated on this occasion.

[Baroness Hayman (CB)]

My Lords, I support Amendments 3, 51 and 61. I declare my interests as set out in the register.

The amendments seek to ensure that considerations around net zero and the environment are embedded in the legislation at the stage of principles, at the stage of guidance and at the stage of reporting. They are very similar to amendments well discussed in Committee. I have to say that when responding to those amendments the Minister did not show even a modicum of delight; he said that we were banging on—although he did not use that term—about our favourite topics, a term he did use, and said he had a sense of déjà vu. I am afraid it is déjà vu all over again, because these issues are too important for us not to return to them.

I believe there is a disjuncture in the Government’s attitude. When responding, the Minister made absolutely clear the Government’s view that

“net zero is of critical importance.”—[Official Report, 31/1/22; col. GC 159.]

That is not something between us. He also recognised the relevance of the subsidy regime that we are discussing in achieving the Government’s aims, and pointed out that environmental and net-zero schemes had already been agreed under the interim subsidy control mechanism. So we have a situation where the Government recognise the severity of the climate crisis, the fact that economically we need to shift the economy and growth into a sustainable pattern and into areas that will be productive in terms of jobs—and, indeed, will create the sorts of jobs that support the levelling-up agenda we were just talking about, because they are the sort of infrastructure jobs that go across the country—and that we need to support jobs that will provide energy security in future.

Russian Oil and Gas Imports

Baroness Sheehan Excerpts

Monday 7th March 2022 Lords Chamber

[Lord Callanan (Con)]

We have a very ambitious hydrogen strategy and it is perfectly possible that hydrogen will be one element of our campaign to decarbonise the UK economy. We will shortly be moving towards a hydrogen business model and we will attempt to roll out hydrogen production. However, again, no decisions are imminent, and it will be a few years before we know the full potential that hydrogen can offer.

[Baroness Sheehan (LD)]

My Lords, Germany has announced a £222 billion plan to transform its economy between now and 2026. Central to that is to wean itself off fossil fuels fast. Where is our big plan for immediate climate-compatible action?

[Lord Callanan (Con)]

I do not think the noble Baroness is quoting a very good example. The Germans have made a singular mess of much of their policies by phasing out nuclear power, which has resulted in the burning of much more coal. I am not sure that that is an example of what the noble Baroness wants us to follow. We have an excellent plan in this country. We have a much bigger renewable sector than Germany, which puts far too much reliance on gas from Russia and now may well be paying the consequences.

Global Warming

Baroness Sheehan Excerpts

Thursday 3rd March 2022 Lords Chamber

Asked by

[Baroness Sheehan]

To ask Her Majesty’s Government further to the finding by the Mauna Loa Observatory that carbon dioxide in the atmosphere reached 419 parts per million in May 2021, what advice they have received from their Chief Scientific Adviser about the implications of global warming for the United Kingdom.

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

Her Majesty’s Government and advice from their Chief Scientific Adviser are informed by the latest scientific evidence as presented by the Intergovernmental Panel on Climate Change. The panel’s report set out how, as carbon dioxide concentrations in the atmosphere rise, global temperatures are also expected to rise, with severe impacts globally. Risks to the UK are assessed in the UK’s climate change risk assessments, which are informed by the Climate Change Committee’s independent assessments.

[Baroness Sheehan (LD)]

I thank the Minister for his reply. The figure of 419 parts per million is the highest ever recorded over the last 800,000 years and it is a direct indicator, based on hard science, of a rapidly changing climate and consequent irreversible damage to our ecosystems. The BBC reports that in January 2020 some hard science was presented to the Prime Minister in the form of a slide show at a teach-in organised by Sir Patrick Vallance and led by Professor Stephen Belcher of the Met Office. It is said to have convinced the Prime Minister to take climate change seriously and that must mean keeping fossil fuels in the ground. Was the Minister present and will he ask for a similar teach-in for all government departments?

[Lord Callanan (Con)]

No, I was not present, but we have regular meetings with all the advisers who inform government policy on this matter. I know the noble Baroness has a strong view about “leaving fossil fuels in the ground”, but we require gas as a transition fuel. In the context of the recent crisis in Ukraine, surely even the noble Baroness can see the logic of obtaining that transitional fuel from UK sources.