Battery Strategy (Science and Technology Committee Report)

Baroness Walmsley Excerpts

Wednesday 23rd November 2022 Grand Committee

[Baroness Walmsley (LD)]

My Lords, as a member of the committee, I thank the noble Lord, Lord Patel, for his excellent chairing of our inquiry and his introduction today. I also thank all the committee staff and advisers, who have done such a good job. We heard from a very wide range of experts, to whom I am also grateful.

The subject that we chose could hardly be more apt for this week, as COP 27 comes to an end, since batteries and fuel cells should play such a crucial role in our ability to mitigate climate change and reach net zero. I am pleased to note that, since the report was published, the Government have met a number of our recommendations, committing to phase out non-zero emitting HGVs by 2040 and publishing the hydrogen and critical minerals strategies, about which more later. However, our witnesses suggested that the Government have a long way to go if they are to realise the potential of the UK’s role in the production and use of batteries and fuel cells.

As the noble Lord, Lord Liddle, pointed out, even the media have noticed that, unfortunately, we have already lost the race to become a global leader in the production of lithium-ion batteries. As the noble Lord, Lord Patel, warned, this provides a serious danger to our UK automotive industry. If we are even to reach our not very ambitious targets for EV cars and vans on our roads, it will have to be done by importing batteries and complete vehicles, and we can be held to ransom by China. The rules of origin laws coming in in 2027 will also mean higher costs and loss of markets, unless we can increase our own production. My noble friend Lord Teverson called it a timebomb, and he was right.

The Government have stated an ambition to build eight gigafactories to manufacture batteries by 2030, but we have only one, and Britishvolt is struggling to obtain its investment in its proposed factory in the north-east. Is that because investors are unsure of the Government’s support and commitment in the long term? I suspect so. Can the Minister reassure us?

As our witnesses told us, there is an opportunity to take a lead on next generation alternative battery technologies, such as solid-state, lithium-sulphur, sodium-ion, et cetera. Focus and funding of research and development of those new technologies is crucial. However, as the noble Lord, Lord Patel, mentioned, the funding of the Faraday Institution is guaranteed for only two years and has no allowance for inflation for that time, meaning a real-terms cut. That means that there will be no PhD cohort starting in October 2023 or 2024. Will the Minister please look at this?

In addition, there is no significant funding in the Faraday Institution project for redox flow batteries needed for static batteries for power storage. As my noble friend Lord Teverson said, this will be essential as the demand for power, for recharging and other things, increases. Will the Minister talk to UKRI about this issue? The Faraday Institution has also brought together a consortium of seven partners to develop a world-leading prototype solid-state battery, but at least two of the partners have either taken themselves abroad, as is the case with Johnson Matthey, or are struggling to fund their battery factory—the case with Britishvolt. So how will this affect the objectives of that consortium? Badly, I suspect.

To encourage uptake of EVs in the domestic market, we need to look at the factors that deter purchasers and fleet owners: cost, range and the charging network. On cost, the Government have just removed the grant that was available to reduce the price premium, and last week they announced that EVs will have to pay vehicle excise duty from 2025. Indeed, some will have to pay a very high rate of VED, because they are expensive. What is the sense of this, if we are going to reach or exceed our targets? The range is gradually increasing as the work progresses on making lithium-ion batteries more efficient. But this will take time, which makes the motorway and major road charging network even more important. Having queued up many times to use the only working charger of two at a service station, I am painfully and personally aware of this, as is my noble friend Lady Randerson. Our committee recommended a vastly increased number of public charging facilities, since many people cannot charge at home. What are the Government doing to speed this up?

Something could be done right away, however, to encourage people without a home charger to get an EV: reducing the VAT on power downloaded from public chargers. This is at 20%, whereas people like me who are charging at home pay only 5%. Can the Minister do this right away? The cost of upgrading the power supply to serve workplace chargers is high, which will deter blocks of flats, workplaces, petrol stations, supermarkets, et cetera; will the Government increase the support for this?

Skilled workers have been mentioned by several speakers. To reach our targets, we need many thousands of skilled workers for the manufacture and maintenance of batteries, fuel cells, vehicles and the chargers and grid needed to service them. The Government have set out a number of industry training schemes, as my noble friend Lady Randerson noted, but there was no new funding announced in the Autumn Statement for the further education colleges that will be key to delivering them. Was that an oversight by the Chancellor?

As the noble Lord, Lord Lilley, pointed out, many of the essential materials needed for current batteries are not found in this country, and the new critical minerals strategy is important here. However, we hear from researchers that there is no pathway and that funding for delivering the strategy is minimal. Can the Minister assure us that there will be more funding coming down the track?

One way to ensure the pipeline of minerals and deliver a sustainable circular economy is through recycling, as my noble friend Lady Sheehan pointed out. The early batteries were difficult to recycle, but this can be made easier through recycling by design. Can this be made mandatory through regulation, at least for those made here? I think that there is one recycling facility for these materials in the UK; batteries are having to be shipped to France for the recovery of vital materials. I understand that the University of Exeter is working on the reuse of cobalt, lithium and rare-earth elements, but we need development and manufacturing facilities too. What are the Government doing about that? My noble friend Lord Teverson also talked about reuse for static batteries for grid balancing.

I make two final points. First, given that some renewal energies are intermittent, there will be a need—in addition to a smart grid, smart meters and so on—for the Government to ensure that energy providers offer variable tariffs to customers to incentivise behaviour change and spread demand across the day. What are Government doing about this?

As my noble friend Lord Teverson said, there is also the need for large-scale battery storage to even out our supply. They also have a role in ensuring that no precious captured energy from wind or solar is wasted. I have always thought it was a terrible waste to have to pay wind turbine operators to stop the blades turning when the wind is blowing, when grid demand does not match supply. Will the Government widen the remit of UKRI, the Faraday Institution and the UK Battery Industrialisation Centre to include static batteries?

I have not yet mentioned fuel cells and hydrogen but, to be very brief, they have an important role in heavy transport, marine and rail as well as space heating, such as in Japan. What are the Government doing to encourage more research on this? As regards reaching net zero, however, only green hydrogen produced by electrolysers has a serious role to play. What is really needed is a large-scale demonstration plant onshore, near to a major wind farm, to use the excess energy to produce green hydrogen. Can the Minister say whether there are any plans for this? We will also need hydrogen storage. Let us not make the same mistake as we did with gas, when the Government allowed the removal of the gas storage capacity, which has caused such a serious problem since Russia invaded Ukraine.

Our report calls on the Government to make many changes and to speed up our progress, particularly since transport is such a major contributor to our emissions. I look forward to the Minister’s positive reply.