Energy Bill [HL]

Debate between Baroness Worthington and Baroness Liddell of Coatdyke

Report stage
Tuesday 28th March 2023 Lords Chamber

[Baroness Liddell of Coatdyke (Lab)]

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

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

[Baroness Worthington (CB)]

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

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

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

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

Energy Bill [HL]

Debate between Baroness Worthington and Baroness Liddell of Coatdyke

Tuesday 12th April 2016 Lords Chamber

[Baroness Liddell of Coatdyke (Lab)]

My Lords, I will not delay the House unduly, and I draw attention to my entry in the Register of Members’ Interests as the new president of the Carbon Capture and Storage Association. I have some very big boots to fill in the shape of the noble Lord, Lord Oxburgh.

I do not want to replay what has happened to development proposals for carbon capture and storage, I say to the Minister only that there are great opportunities with it, but investors and the industry now need reassurance from the Government. There are interesting developments, not least within our regions. The Dutch are increasing their interest in carbon capture and storage. As we come to the closing stages of the Bill, I ask the Minister to regroup on the issue, to give us back some reassurance and to look to the positive opportunities that lie ahead. Britain can lead in this technology, but it will take some commitment from the Government and the industry. The key thing needed at the moment is reassurance to the industry.

[Baroness Worthington (Lab)]

My Lords, I, too, express some concerns about the removal of the amendment in the Commons. Although I have listened to the argument that it would detract from the intention behind the OGA, I seriously hope that the Government will look back at the primary objectives that they have given it and conduct a timely review—I know that that will happen.

Since we last considered the amendment, we have had two important events. The first was referred to by the noble Baroness, Lady Featherstone: the cancellation of the carbon capture and storage project. I do not intend to debate the whys and wherefores of that, but it is clear that there has been a significant dent in investor confidence. People have invested in good faith in this technology knowing that, to meet our long-term climate targets, we need a form of capture and storage for certain sectors of our industry.

The second big event is the signing of the Paris agreement, when the Government and the Secretary of State, Amber Rudd, played an enormous role in making it the success that it was. That states a very clear target for the world: that we must get our anthropogenic sources, our sources of carbon emissions, matched and cancelled by anthropogenic sinks. That largely means capturing and storing carbon and putting it underground. We need to take that Paris equation seriously.

Energy Bill [HL]

Debate between Baroness Worthington and Baroness Liddell of Coatdyke

Wednesday 9th September 2015 Lords Chamber

[Baroness Liddell of Coatdyke (Lab)]

My Lords, perhaps I may ask the Minister a question relating to new Section 89A introduced by Amendment 34. I drew attention at Second Reading to my entry in the register of interests as a non-executive director of the Offshore Renewable Energy Catapult. I drew attention, too, to some interesting ideas that are developing about the use of decommissioned oil and gas facilities in the UK continental shelf for renewable energies, in particular in the area of offshore wind.

Given that the new sections introduced by the clause relate to the powers of the Oil and Gas Authority, would that be a limiting factor given that these renewable technologies are not hydrocarbons? I find it quite a complicated clause to work my way through. I am seeking to ascertain—it may be that the Minister cannot give me an answer today, but perhaps officials could take a look at it—whether there is protection of the possibility in future of previous hydrocarbon capabilities being used for offshore renewable energy. I took some comfort from the use of the word “facility”, which suggests that there might be some leeway there, but given that I am not a lawyer—although there are people in this Chamber who are—perhaps the Minister can give a slightly better answer to those of us who do not have that kind of expertise.

[Baroness Worthington (Lab)]

My Lords, I am grateful to the Minister for introducing these amendments at the beginning of the second day of Committee. Before going on to discuss them, I am afraid that I want to revisit the issue of the impact assessment. Since our debate on Monday, a partial impact assessment has been issued. The date on the impact assessment as published is 17 June 2015; the date of signing by the Minister is 7 September 2015. What happened in the intervening months? Why was it not made available to us during the Summer Recess? In fact, it could have been made available to us before Second Reading, had it been published closer to the date on which it was presumably drafted.

Now we have it, but it is only a partial impact assessment. We are still missing the impact assessment for the most controversial elements of this Energy Bill—namely, the clauses on onshore wind. Will the Minister give me a strong confirmation that we will have that in good time for our debate on Monday? If that is not the case, we may have to take further steps because this is simply not good enough. The Committee is not being treated in the way that it should be on these issues. This information is important and it is an important Bill. We should not be seeking to rush it through without due scrutiny. That said, I will move on to the amendments.

The impact assessment is interesting, as these things tend to be, which is why we like to see them. It confirms some of the issues that we debated on Monday such as the rapidly changing nature of activity in the North Sea. The impact assessment reiterates that we are seeing a sharp decline in production and investment into the North Sea and times are changing very fast. However, unfortunately, the impact assessment does not give any reassurance that the Government are applying any long-term vision to this issue. On page 10 of the impact assessment, we see that there has indeed been talk in the Government about what to do about these rapidly changing circumstances. Ideas have been discussed and mooted, and four of them are mentioned on page 10. There is absolutely nothing about repurposing the North Sea or considering how it might be reused.

I am grateful to my noble friend Lady Liddell for her contribution. She talked in terms of reuse for renewables, but I am far more concerned, as I am sure the Minister is now aware, with reuse for carbon capture and storage. There is no mention of repurposing a site for storage and no mention at all of decommissioning within the role of the OGA in relation to this moving forward. We have an impact assessment, but it does not exactly give me any great cause for reassurance. I am hoping that we will continue to revisit these issues when we come to Report. They relate very much to the scope of this piece of legislation.

Turning to the amendments, I want to give one illustration of why the scope issue of the OGA is so important. Under Amendment 33, we are being introduced to the concept of the right to appeal. After Clause 56, the amendment would insert new Section 87A, under which an appeal can be lodged if,

“the information required by the notice is not relevant to the exercise of the OGA or its functions under this Chapter”.

On Monday, we had considerable debate about the issue of the functions and the principal objectives of the OGA. Will the Minister reassure me that yet again this reference to the OGA functions includes the need for information to be made available in relation to carbon capture and storage?

I hesitate to go over the ground we went over on Monday, but we need clarity on the principal objectives of this new body. I request that we have the primary objectives as set out in the Infrastructure Act, which amended the Petroleum Act 1998, stated on the face of the Bill. We could have some consolidation. Instead of having to refer back to pieces of legislation that then amended other pieces of legislation, could we not have some clean objectives clearly stated so that we can then interpret all of these powers and changes that the OGA will be overseeing in light of the clear statement of the primary objectives? Those primary objectives must be fit for purpose. They must cover the issues we have raised in relation to decommissioning and repurposing for use in carbon capture and storage.

I hope that the Minister will be able to respond with some reassurances on the general point about the Bill handling but also in relation to that specific issue on Amendment 33. Can he assure me that the appeals will not allow the industry to claim that requiring information in relation to carbon capture and storage activities falls foul of this requirement, being outside the primary objective of the OGA?

Energy Bill

Debate between Baroness Worthington and Baroness Liddell of Coatdyke

Thursday 25th July 2013 Grand Committee

[Baroness Worthington]

I thank the noble Lord for his timely intervention. I could not agree more. It is a shame that those statistics were not trumpeted more. We would all feel very proud that that happened at a time when the rest of the economy was not doing so well. It was not just that there was good growth in that sector but it positively affected our balance of trade. There are very few sectors in which we can say we have a positive balance of trade with China, but in this sector we can. As the noble Lord alluded to, the global average rate of growth in this sector was only 4%, while we were at 4.8%. Tiny nation though we are, our growth in this sector is outstripping much larger nations. We are up in the top six countries in this sector. I am sorry that I am waxing lyrical slightly here but it is important. We are a nation of innovation and entrepreneurial spirit. We were the country that brought the Industrial Revolution to the world; let us not forget that. Let us hope that we will remain at the forefront of this industrial revolution. I know that that sounds like a grand introduction but it is pertinent to this part of the Bill. We really need to make sure that this sector is protected and that no unintended consequences are meted out to it as a result of the Bill.

Why is there an issue? It is probably fair to say that it was already emerging. The renewables obligation has been a good policy that has driven a lot of investment, but we were already hearing that independent generators were finding it difficult to secure power purchase agreements. At the heart of this issue is the problem, alluded to many times throughout our deliberations in Committee, of the vertical integration of the big six. There is no liquid, open competition in generation. We have an oligopolistic system of six vertically integrated companies that dominate. It will come as no surprise that on this side of the House we believe that the time has come to address that. We would have preferred to see genuine market reforms that required the selling of power into a competitive pool, which would be good for competition, liquidity, the independent generators and the consumer. We know that the Government are not yet there but we hope they will join us soon.

It is true that the Bill helps to make the case even stronger for splitting apart that vertical integration because we are moving into a system of contracts for difference. We are moving away from the arguments in favour of vertical integration, which are that you need it to secure finance and build new capacity, but when you have a CFD the argument is, by and large, weakened. There is also a big intervention in the capacity mechanism. The time is therefore coming, if not now then very soon, for the issue to be properly addressed.

I want to say a word about Amendment 55AGA, to which the noble Lord, Lord Roper, has spoken. These proposals, though welcome, come quite late in the day. As has been mentioned, we have known about this problem for two years and yet here we are addressing the issue on the eighth day in Committee and on the final stretch. I think it was the noble Lord, Lord Jenkin, who said that it feels as though we are making things up as we go along. I would not say that it was as bad as that but it does feel as though these measures have been considered quite hastily. Making this a negative resolution risks the ire of the Delegated Powers Committee, which has not yet had a chance to consider it, and we strongly urge acceptance of Amendment 55AGA in order that we may properly scrutinise this complex and rather late addition to the Bill.

I should have said at the start that I want to pay tribute to my colleague, Alan Whitehead, in the Commons, who helped raise this issue. I apologise on behalf of my noble friend Lord Grantchester, who was going to speak to the amendment. He cannot be in his place today but he wishes us every speed.

I have explained why there is an issue and, in the spirit of collaboration and seeking to make the Bill as strong as possible, I should perhaps now explain what I think the solutions are. First, we know that the industry wants to find a resolution to this issue. It is very keen to work with the Government and would like to have proper consultation with the department. It has been mentioned to us that the organised consultation process was slightly opaque. I know that five of the renewables trade associations, as a group, have written to the department requesting more clarity in the consultation process around the detail of these provisions. They are worried about communications not being consistent and they are worried about the timelines. They need reassurances from the department and a clearer process of involvement.

Further to the point made by the noble Baroness, Lady Liddell, this should also include investors, who are absolutely at the heart of the issue. Clause 44 is about facilitating investment and not about liquidity, which is dealt with in Clause 43. It is very important that the consultation process fully involves the investors who will be necessary to get these projects under way.

I have not spoken about the GPAM alternative. I am not sufficiently across the details to know whether the GPAM is a better option than the backstop power but the wording of the government amendment limits the options. At the moment, Clause 44 gives a broad power to do what is necessary. The government amendments would remove that flexibility and narrow it down to the PPA. The PPA may be the right answer but I am not certain that that narrowing down is a good idea. I have been critical of the breadth of some of the powers but in this case, given that it is still in development and that consultation is necessary, I urge the Government to keep open the option of making a different type of intervention if necessary. That would tweak the government amendment. It is important that we do not put all our eggs in a basket that is still being made when we are not quite sure whether it will work.

The industry itself can find solutions. The big six are obviously dominant but there are other players such as independent suppliers who can give PPAs. Unfortunately, the creditworthiness of those suppliers is an issue.

[Baroness Liddell of Coatdyke]

My noble friend is right to draw attention to the fact that there are a range of different institutions that one can talk to. For some of us, one of the easiest things to do would be to have a cup of tea with the noble Baroness, Lady Armstrong, who until two weeks ago was the chairman of a community energy company that has just fallen off the cliff because of the attitude of a major generator. She, of all people, can tell us the view of the independent generators about this period of uncertainty, which is having an impact on people even as we speak. It is a small pro bono operation that has been jeopardised by the attitude of a major generator.

[Baroness Worthington]

I thank the noble Baroness for alerting us to that. As I was saying, there is clearly an issue and a need for intervention. There are existing alternatives for the independent generators. Perhaps one thing that we need to explore is how we can strengthen those independent suppliers. Ecotricity was a very good example. It was set up to build wind farms but found that the way that it could build its business best was to have a supply arm creating its own form of vertical integration. It is a way of creating more liquidity and plurality in the market to help those independent suppliers to buy from the independent generators. That seems logical, so perhaps we can explore how those can be better balanced.

There are also aggregators in the market. One problem that independent generators face is that individually they do not have the capacity to employ traders. The big six all routinely employ traders for all sorts of reasons, and that gives them a massive market advantage from being able to enter the various markets themselves. Aggregation and the provision of grouped trading services is necessary to help to support suppliers. That is another area that we could look at in more detail to see whether something needs to be done to make it more effective.

Finally, if we find, once the Bill is passed and we are on the road towards a low-carbon economy, that independent generators are simply not getting PPAs, we must make sure that we are monitoring the situation closely. I hope that the authority will be given a clear direction to be listening and asking what is happening in the market following the Bill's enactment. I shall end on a hopeful note. If it then transpires that that there is insufficient liquidity and PPAs are not being granted, perhaps the authority will accept that it has not done enough to generate competition in generation.

Energy Bill

Debate between Baroness Worthington and Baroness Liddell of Coatdyke

Tuesday 23rd July 2013 Grand Committee

[Baroness Liddell of Coatdyke]

I should reassure the noble Viscount that the wind farm that I inaugurated was offshore, so he is to be congratulated if he managed to get some money out of it.

[Baroness Worthington]

My Lords, I am grateful to my noble friend Lord Berkeley for tabling this amendment for no other reason than that we found out that very interesting fact. We cannot support this amendment. I have great sympathy with the concerns that have been raised that 25 years may be too long, but the way this amendment is phrased means that it would capture all renewable technologies. There is a great range of technologies that the strike prices are seeking to bring forward, and at the moment it seems that the majority of them might be conversion to biomass. I do not think you would want to lock that in to 25 years. I support the spirit behind the amendment of questioning and trying to understand the different lengths of contracts. That is something that we could discuss, but I do not think this amendment should make its way into the Bill.

We now have the draft delivery plan and the strike prices for renewables. The plan contains some suggested lengths for contracts, but I do not think we yet have anything similar for CCS and nuclear. We are expecting some more information on that in early August, when we will all be having a much deserved and well earned rest. It would be helpful if the Minister were to say something about that in her response.