Energy Bill [HL]

Debate between Baroness Worthington and Lord Lennie

Committee stage
Monday 16th January 2023 Grand Committee

[Baroness Worthington (CB)]

My Lords, I must start with an apology. My train was delayed for 45 minutes and many others were cancelled, so I am just about here on time. I thank my noble friend Lord Ravensdale for stepping in just as we started.

I am delighted to be here to speak to the amendments in this group which relate to the part of the Bill that seeks to take further powers to ensure that we have fuel resilience in our country. Amendments 213 to 219 seek to extend the scope of the Government’s proposals so that we have a more inclusive definition of fuel resilience beyond oil and liquid biofuels that includes gas.

The measures in this clause are a set of broad powers to allow the Government to ensure that economic activity in the United Kingdom is not adversely affected by disruption to core fuel sector activities, reducing the risk of emergencies affecting fuel suppliers. They give powers to the Government to issue directions for the purposes of managing risk, reducing potential adverse impacts and facilitating recovery from disruptions to core fuel sector activities.

The powers given to the Government by the Bill are extremely wide and potentially concerning, but I will come on to that. In essence they allow the Secretary of State to direct any core fuel sector participant to do anything for these purposes. More reasonably, they also allow the Secretary of State to require information and that certain types of incidents be reported. Leaving aside the wide-ranging nature of the powers for now, we have tabled these amendments to inquire why the definition of fuels excludes gas from the resilience proposals. I am sure I will be told that a draft version of the Bill was shared with the BEIS Select Committee, that no reference was made to gas as a core fuel and no complaints were made at that point. However comments from the committee in November 2021 were informed by the fuel shortages of autumn 2021 and since then we have seen a sharp spike in gas prices and some constraints on the supply of gas, which were exacerbated by the invasion of Ukraine. I should note that in 2021 the UK imported around 60% of its gas for use in all sectors. Although we have North Sea gas, we are by no means self-sufficient, so interruptions to fuel supplies raise problems. Gas is the sector where we remain very exposed—but that is certainly not true of biofuels. If we compare the two, the volumes are completely different and it seems odd to include biofuels but exclude gas.

Helen Thomas wrote last week in the Financial Times:

“The Rough offshore gas storage facility, partially reopened … by Centrica”


last year after having been closed for five years,

“has been steadily withdrawing gas … At about 54 per cent full … it is far from the 80 per cent-plus levels on the continent. And European storage capacity … is about 25 per cent of annual consumption compared with less than 1 per cent for the UK”.

That is equivalent to only three days, so we can see how tight some of these margins might be if there are disruptions. That could have left the country very short, especially had this winter’s weather been harsher than it has been.

Rough is not being refilled because the facility is being operated on a merchant basis rather than the strategic one which the Government might perhaps prefer. Whereas Governments in Europe can mandate storage, here, we are relying on Centrica to find a place where future prices make sense to it commercially to take storage into Rough, and it is of course looking for a decent return rather than strategic fuel resilience. The journalist added that no one thinks that storage operated on this basis will provide security of supply, and I tend to agree. I would be interested in the Minister’s thoughts on this question and on what more the Government could and should be doing to include gas in their fuel resilience strategy and indeed in this legislation.

It seems sensible that we would want the same powers, should we need them, to issue directions and to require reporting of incidents and the provision of information. Had we experienced a more severe winter, we could have come seriously unstuck, and I would like to understand how the Government would have intervened to ensure that critical businesses and households were prioritised. That is obviously an issue of some concern to the Government, given that these powers are being taken. Do the Government already have the necessary powers? If so, where are they and how would they work? I would be interested to hear more about that.

I have tabled Amendments 220 and 221 because I am seeking clarification and expressing concern about the wide-ranging nature of the types of financial assistance the Bill will allow. Certain types may be required, but why does the Secretary of State need powers to make grants, effectively, to firms involved in refining, transporting and storing fuels that are commercially very lucrative? We have all seen the headlines about how much money these companies are making, and it seems odd to take such a broad power, which could mean that public money was being spent with no requirement to pay it back to the public purse. It seems unnecessarily broad, providing the equivalent of a grant, and I would like to understand the justification for it. When looking ahead to the transition to net zero, we have described how we need to provide more public money, but it is right to say that investors in the current fossil-fuel-based energy system should have enough resources to ensure that they can meet regulations set by government without the need for further public money. That is a point that needs answering.

This is also arguably a sector that we would expect to go into managed decline as we look to electrify most of the demand being met by the current provision of these fuels, so it may be appropriate for assistance to be given. Transition loans, guarantees or even the Government taking a stake could be required to make the transition happen swiftly and in an orderly fashion, but simply giving out public money with no strings attached seems rather reckless. I would like to understand the specific circumstances and conditions under which a grant would be appropriate. If that cannot be dealt with in detail here, I would be happy to receive a letter outlining a case study that could justify this use of public money, given the economic climate we find ourselves in.

Finally, Amendment 222 is a modest proposal relating to the reporting of such financial assistance to Parliament. I could not see any reference in the Bill to the notification of Parliament in relation to these financial forms of assistance—only in relation to the scrutiny of statutory instruments or guidance. Is it really the Minister’s intention that this assistance would not be made public until BEIS’s accounts are published, which would obviously be after the horse has bolted and we would have to comb through the footnotes to understand what forms of financial assistance had been given under Clause 222? I feel quite strongly that, if it is important enough to have its own separate regime, it should be important enough to brief Parliament and there should be a protocol for notifying us of the intention to use these powers.

I have drafted an amendment that I hope the Minister will accept. If not, I look forward to assurances from the Dispatch Box about how and when Parliament will be notified before the expenditure is committed. With those remarks, I beg to move.

[Lord Lennie (Lab)]

My Lords, we on these Benches are generally supportive of the amendments in the name of the noble Baroness, Lady Worthington, but I would like to ask the Minister about some specifics.

Three key powers are taken under the Bill: the direction-making power, the information power and the financial assistance power. I am particularly interested in the information power. The government fact sheet states:

“The information required from industry will be limited to what is necessary and Government will work with industry to minimise any administrative burden incurred.”


What practical protections will be in place to ensure that this information is limited in this way, and what, in practice, is meant by:

“Government will work with industry to minimise any administrative burden incurred”?

I would welcome a response to those questions. If the Minister cannot answer today, writing will do.

Energy Bill [HL]

Debate between Baroness Worthington and Lord Lennie

Committee stage
Monday 12th December 2022 Grand Committee

[Baroness Worthington (CB)]

My Lords, I too am glad to be back debating energy. As has been noted, we find ourselves in a completely different sent of extreme weather events today, but I am glad that we have all been able to make it here to resume this important discussion.

Since we last met, emergency legislation has gone through on some of the issues that we raised in Committee and at Second Reading on the need for a short-term response to the energy crisis bearing down upon us. The Bill is very much about long-term measures, so it is right and proper that the Government supplemented that legislation with faster-paced legislation. However, there were many provisions in that rather hurried legislation, which I know has caused concerns in the market, so the Government have to work hard to deliver the right signals to investors and to businesses around the country that the transition will be orderly and consistent and can encourage investment across the piece. I am sure we will come back to debating the net effect of all the Government’s measures on energy in later clauses.

Amendment 117 relates to the setting up of a low-carbon heat scheme. Specifically, the amendment would change the provision that the Secretary of State “may” by regulations make provision for the scheme to “must” and apply urgency to the challenge of bringing forward those regulations by requiring that they are passed within 12 months of the Bill being enacted.

The reasons are self-evident. If we are to solve the problem of our reliance on volatile fossil fuels, which are also contributing to air-quality problems and climate change, we need to get on with the electrification of heat. The scheme would move us along in that direction and give investors confidence that there is a market that they can plan for and invest in. We therefore urge the Minister to reassure us that the regulations will be passed with all due haste and brought in in good time, and I look forward to hearing from him on the timetable within which we might see the regulations.

Amendment 118 seeks to add to the Bill statutory requirements for and deadlines by which we will stop selling the gas-based boilers currently going into properties. I support that in principle, although I imagine that there will be concerns about the specificity going into primary legislation. However, it is essential that we give clarity to the manufacturers of existing boilers that the Government are serious about ending their current dominance.

I receive, as I am sure everyone does, a lot of correspondence about hydrogen-ready boilers. That needs to be unpacked. I do not know what can be done to prevent the mis-selling of that concept, but it is borderline mis-selling because it is very unclear whether hydrogen-ready boilers are even possible. I therefore think it has more to do with the manufacturers preserving the status quo than with their genuinely seeking to be involved in the transition. Lots of technical advisers tell me that simply saying that something is hydrogen-ready is not sufficient and that it is very difficult and complex to achieve, so I have some sympathy with Amendment 118.

Amendment 121 seeks to except hydrogen if it is compliant with the low-carbon hydrogen standard. In previous debates I have made it clear that I do not deem the low-carbon hydrogen standard sufficient. It is a number that has been put out there, but I do not think it takes into account all the effects of hydrogen on the climate specifically. Hydrogen is a greenhouse gas, as we have talked about previously. The global warming potential of hydrogen needs to be taken sufficiently into account when we consider a low-carbon hydrogen standard, and I do not think it has been, so I am a little nervous about us putting the provision in as it stands because I do not consider that standard tight enough.

The Government’s amendments on opening up the opportunity for the regulations to apply to manufacturers seem entirely sensible. We have to decide the right point at which regulation would be most efficient to drive this. The manufacturers may well be the right place for this, or they may not, but having that option seems correct to me.

In Amendment 122, the Opposition Benches seek to include specificity in relation to the heat pump market. Again, I can see the logic of that. I am sure it is probing amendment, more than anything else, to get clarity on the scale of the market that we expect. I doubt that it could survive in primary legislation, but I am sure it is there to try to elicit positive statements so that the heat pump sector can move in this regard.

Amendment 119 concerns cases where it is not possible to fit heat pumps. It is a difficult amendment to legislate on. Very few of the properties where a large enough heat pump or geothermal source can be installed cannot electrify heat. Therefore, I believe that the amendment is not necessary.

I very much look forward to hearing the response to the group. As I have said, it is of primary importance to get moving, and to get investors moving, so that we can start to have a manufacturing sector that is enabled by those regulations as quickly as possible. I beg to move.

[Lord Lennie (Lab)]

My Lords, 95% of UK homes are centrally heated and most CO₂ emissions come from burning fossil fuels, contributing to about 30% of the UK’s total greenhouse emissions, about half of which is from heating our domestic properties. Will gas boilers be banned in 2025? As part of the future homes standard, new homes will be able to install only energy-efficient heating systems and will produce 31% lower emissions compared to the current levels. The standard will come into effect in 2025. The International Energy Agency has also stressed that no new gas boilers should be sold after 2025. The UK’s official climate advisers recommend that all gas boilers should be banned by 2033 to end the UK’s further contribution to climate change. That is the background to the amendments being moved.

We support Amendment 117 tabled by the noble Baroness, Lady Worthington, which adds a bit of the oomph by replacing “may” with “must” in relation to the low-carbon heat scheme. Amendment 119, in my name, would ensure that the Secretary of State, in making a low-carbon heat scheme, must

“provide a plan for low-carbon heating in homes where it is uneconomic or unfeasible to have a heat pump (large, rural, off-grid homes etc.).”

Amendment 121 seeks to allow

“heating appliances that use hydrogen produced to the Low Carbon Hydrogen Standard (blue hydrogen) to be included in low-carbon heat schemes.”

I note what the noble Baroness, Lady Worthington, said about hydrogen in general, but if we are going to have hydrogen, let us have blue hydrogen at this stage.

Amendment 122 states:

“Sub-paragraph (i) seeks to include the Government’s own figures for heat pumps in the Bill. Sub-paragraph (ii) seeks to include the number of heat pumps in the latest figures on recommendations from the CCC. And sub-paragraph (iii) seeks to oblige manufacturers producing gas boilers to turn to minimum 25% production of heat pumps by 2028 to facilitate the clean heat transition.”


Government Amendment 123

“makes it clear that a low-carbon heat target set by virtue of clause 100(1)(c) or (d) may be set, in the case of a manufacturer, by reference to heating appliances of the manufacturer that are supplied or installed, whether by the manufacturer or someone else.”

Government Amendment 124 simply corrects a drafting error.

Amendments 117, 119 and 121 relate to Clause 98 in Chapter 1, on low-carbon heat schemes, of Part 3, on new technology. Clause 98 provides the Secretary of State with powers to set up a regulatory scheme through secondary legislation to encourage the sale and installation of low-carbon heating technologies, such as electric heat pumps. Clause 98(3)(b) allows for this to include, for instance, hybrid heat pump systems that involve both a heat pump and a fossil fuel boiler. This is welcome, but our primary concerns are when and how the powers will be used. Amendment 117, tabled by the noble Baroness, Lady Worthington, requires the scheme to be set up within 12 months of the Bill becoming law, and we agree with that.

Amendment 119 seeks to ensure that the Government are aware that there are a number of homes where heat pumps are not the solution, and to address filling this large gap. There is one fundamental flaw with this clause that Amendment 121 seeks to address: it effectively prohibits the deployment of either hydrogen-ready boilers or boilers that use blue hydrogen under low-carbon heat schemes.

--- Later in debate ---

[Baroness Worthington (CB)]

With a Bill of this magnitude, if we are saying that it is a principle that there is a right to refuse, that principle should be in the primary legislation. That is where you put principles—and then the details can be worked out. Nothing in the Bill says that consumers have the right to refuse. I am sure that we are going to revisit this, as it is fundamentally important that principles are enshrined in primary legislation.

[Lord Lennie (Lab)]

Can I briefly support that? The place to put it is under protection of consumers in the Bill. There is a clause entitled “Regulations for protection of consumers”, and the right not to take part in the trial would be one of those protections.