Sunnica Energy Farm Development Consent Application
Claire Coutinho Excerpts(5 months, 2 weeks ago)
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The Secretary of State for Energy Security and Net Zero (Claire Coutinho)
This statement concerns an application for development consent made under the Planning Act 2008 by Sunnica Energy Farm for the construction and operation of a solar photovoltaic electricity generating station, situated across west Suffolk and east Cambridgeshire.
Under section 107(1) of the Planning Act 2008, the Secretary of State must make a decision on an application within three months of the receipt of the examining authority’s report unless exercising the power under section 107(3) of the Act to set a new deadline. Where a new deadline is set, the Secretary of State must make a statement to Parliament to announce it.
The current statutory deadline for the decision on the Sunnica Energy Farm application is 11 April 2024.
I have decided to set a new deadline of no later than 20 June 2024 for deciding this application.
The decision to set the new deadline for this application is without prejudice to the decision on whether to grant or refuse development consent.
[HCWS398]
Energy Efficiency Update
Claire Coutinho Excerpts(6 months, 3 weeks ago)
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The Secretary of State for Energy Security and Net Zero (Claire Coutinho)
Today, I am announcing updates on the boiler upgrade scheme and the clean heat market mechanism. I am also announcing that we are publishing the Government response to the improving boiler standards and efficiency consultation.
Boiler upgrade scheme
The BUS provides grants to encourage property owners to replace existing fossil fuel heating with more efficient, low carbon heating systems. On 23 October, we increased the grant levels for heat pumps to £7,500, making the BUS one of the most generous schemes of its kind in Europe. Since then, applications have risen sharply. October, November and January have been the highest three months for BUS applications, and December applications were up 49% on December 2022. The latest figures for January 2024 showed a 39% year-on-year increase on January 2023, showing that our approach is working. Up to the end of January 2024, 33,424 applications have been made to the scheme, and it has paid out 20,497 vouchers to properties across England and Wales, amounting to just over £113 million.
Today we are publishing our response to the consultation on proposed changes to the BUS. The response addresses changes proposed by stakeholders including the Environment and Climate Change Committee, aimed at broadening the pool of properties eligible for the Scheme. We will:
Remove the requirement for a property to have no outstanding energy performance certificate recommendations for loft and cavity wall insulation—although Government guidance remains that properties should be appropriately insulated. This will address concerns about forcing hard-pressed families to carry out insulation upgrades to be eligible for the scheme by instead empowering them to decide what is right for them.
Increase the capacity limit for shared ground loops from 45kW to 300kW. This will address concerns that the cost of groundworks for ground source heat pumps is a significant barrier to deployment. The change will spread the costs of ground infrastructure, making them a more affordable solution for consumers.
Expand the definition of biomass boilers eligible for the scheme to include those which have a cooking function, provided it is integrated and cannot be controlled separately to the heating function of the property. This will allow a wider range of biomass boiler models under the scheme, thereby widening consumer choice.
Introduce flexibility into the regulations to be able to vary the grant levels more quickly for specific types of property, in future, if needed in response to changing market conditions or future regulation.
Clean heat market mechanism
The Government remain fully committed to supporting the transition to low-carbon heating, including the aim for 600,000 heat pump installations a year by 2028. Today we are publishing an addendum to the Government’s response to the clean heat market mechanism consultation, which was published on 30 November 2023.
In line with our proportionate and pragmatic approach to net zero, we are committed to supporting families to make changes to their homes in a way that does not force them before they are ready or saddle them with unnecessary costs. That is why we increased the boiler upgrade scheme grant by 50%. Our plan is working, as the sustained increase in applications to the scheme shows.
We have recently seen unjustified price hikes for gas boilers by some manufacturers with considerable market power. These pricing decisions have called into question whether the home heating industry, which has four companies dominating 90% of the market, is working as well as it should and delivering the best outcome for consumers. We are calling for the Competition and Markets Authority to conduct a review of the home heating appliance market to understand whether any weakness in competition is contributing to prices being higher than they would be in a well-functioning market.
The Government have scrapped the implementation of the clean heat market mechanism until April 2025, adjusting the launch from 1 April 2024 to 1 April 2025. In doing so, the target levels for 2025-26—set at 6% of relevant boiler sales—and other aspects of the scheme’s design and implementation, would remain as set out in the Government’s November 2023 consultation response.
Improving boiler standards and efficiency consultation: Government response
The Government response to the improving boiler standards and efficiency consultation sets out updated proposals to improve gas boiler system efficiency which will reduce household energy bills. In addition, only if a decision is taken in 2026 that hydrogen will play a substantive role in heat decarbonisation will the Government move to require domestic gas boilers be hydrogen-ready and then only from 2030. The response also set out plans to enable the installation of high-quality, efficient hybrid heat pumps.
We plan to implement most proposals via an update to ecodesign and energy labelling regulations, which would apply in Great Britain. We intend to publish a consultation on draft legislation to give effect to these proposals in due course.
[HCWS341]
Review of Electricity Market Arrangements: Second Consultation
Claire Coutinho Excerpts(6 months, 3 weeks ago)
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The Secretary of State for Energy Security and Net Zero (Claire Coutinho)
After a period of unprecedented disruption and change, our energy sector is now poised to seize the opportunities of the energy transition. We have become the first major economy in the world to halve our emissions, and today we are seeking to build on that progress with the review of electricity market arrangements (REMA) second consultation.
The options in this consultation could save consumers tens of billions of pounds. It will ensure that our electricity markets are fit for the future, and to prepare our electricity system for full decarbonisation by 2035, subject to security of supply.
Reforming the electricity market is key to delivering a low-cost system, driving down both the cost of power itself and the infrastructure needed to deliver it to consumers. The first REMA consultation sought views on the case for change, programme objectives, and a wide range of options. This consultation sets out a much sharper vision for our future electricity market arrangements, significantly narrowing down the remaining options.
The reform options in this consultation have the potential to save tens of billions of pounds from consumers’ bills. Doing nothing is not an option. Existing arrangements will get harder to operate and could lock in a high-cost path to transition. Our analysis suggests that reforming our electricity markets could reduce overall system costs by £35 billion from 2030 to 2050.
This is also an opportunity to unlock massive investment in a cost-effective and secure energy system. An estimated £275 billion to £375 billion in new capacity may be required. Achieving this will require the private sector to work alongside the Government, the regulator and the system operator to help design future markets to encourage large-scale investment.
We are also taking the steps necessary to future-proof the country’s energy security and keep the lights on. With electricity demand set to rise and existing gas plants nearing the end of their lives, the Government will support limited new build gas capacity in the short term, for when the sun is not shining and the wind is not blowing. This is a sensible insurance policy, and independent analysis demonstrates that unabated gas generation will continue to play an important part in the 2030s. The Government have already passed laws requiring new gas plants to be built ready to convert to low-carbon alternatives in the future, and running hours will continue to reduce as more renewables come online. This means the plans will not add to projected emissions and are entirely in line with the UK’s world-leading carbon targets.
The next phase of the REMA programme will finalise the remaining policy options. We expect to provide a summary of responses in summer 2024 and move into full-scale implementation from 2025.
[HCWS333]
Sunnica Energy Farm: Development Consent Application
Claire Coutinho Excerpts(6 months, 4 weeks ago)
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The Secretary of State for Energy Security and Net Zero (Claire Coutinho)
This statement concerns an application for development consent made under the Planning Act 2008 by Sunnica Energy Farm for the construction and operation of a solar photovoltaic electricity generating station, situated across West Suffolk and East Cambridgeshire.
Under section 107(1) of the Planning Act 2008, the Secretary of State must make a decision on an application within three months of the receipt of the examining authority’s report unless exercising the power under section 107(3) of the Act to set a new deadline. Where a new deadline is set, the Secretary of State must make a statement to Parliament to announce it.
The current statutory deadline for the decision on the Sunnica Energy Farm application is 7 March 2024.
I have decided to set a new deadline of no later than 11 April 2024 for deciding this application.
The decision to set the new deadline for this application is without prejudice to the decision on whether to grant or refuse development consent.
[HCWS322]
Oral Answers to Questions
Claire Coutinho Excerpts(7 months, 1 week ago)
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Chris Law (Dundee West) (SNP)
The Secretary of State for Energy Security and Net Zero (Claire Coutinho)
Energy prices are now at their lowest level for two years, with a typical bill set to drop by £238 by April. Our cost of living package totals over £104 billion, or £3,700 per household on average, over 2022 to 2025. We are supporting those most in need, with millions of vulnerable households receiving up to £900 in cost of living payments.
Chris Stephens
Some of us believe in preventative spending. A House of Commons Library briefing last year estimated that the annual cost to the national health service of treating illnesses associated with living in cold or damp housing is £1.4 billion. When wider societal costs are considered, that figure rises to £15.4 billion. Will the Secretary of State confirm whether the introduction of a social energy tariff would cost less than £15.4 billion?
Claire Coutinho
A social tariff means lots of things to different people, but we are supporting vulnerable people with the cost of their energy bills. We supported them last winter, paying on average a half of everybody’s energy bills, and we have made additional payments of £900 to support people. Since 2010, we have increased the proportion of homes that are energy-efficient and insulated to 50%, up from 14%.
Virginia Crosbie (Ynys Môn) (Con)
On energy tariffs, what assessment has the Secretary of State made of the merits of providing residents who are local to energy and nuclear plants with discounts on their energy bills?
Claire Coutinho
I thank my hon. Friend for her doughty campaigning for nuclear—she is our very own atomic kitten. We are very positive about nuclear and have set out plans for the largest expansion of nuclear for 70 years. Overall that will be a good thing for people’s energy bills and the energy security of this country.
Kate Hollern (Blackburn) (Lab)
Jack Brereton (Stoke-on-Trent South) (Con)
The Secretary of State for Energy Security and Net Zero (Claire Coutinho)
The UK has already made tremendous progress in securing investment in green technologies; recent figures indicate that there was £60 billion of investment in the UK in 2023, meaning that since 2010, the UK has had £300 billion of public and private investment in low-carbon sectors. Since I took office in September, we have put in place new policies and signed deals with different countries, and the investment has continued to flow, with plans for around £24 billion of new investment in low-carbon sectors announced by the private sector.
Andrew Jones
I thank my right hon. Friend for that answer. Harmony Energy based in Knaresborough opened Europe’s largest battery farm in Yorkshire in 2022. It has raised the issue of connectivity challenges being a blockage to investment, so I welcome the connections action plan, which aims to cut connection times by up to 90%. Battery farms are critical for energy retention and storage, and are particularly helpful for renewables, so may I ask my right hon. Friend for an update on how the plan is being implemented?
Claire Coutinho
We have set out the most radical reforms to the grid since the 1950s. As the action plan sets out, we are taking action with Ofgem and network companies to accelerate those really important network connections. Network companies are offering earlier connection to battery storage and generation projects. For example, 10 GW of battery storage projects are already being offered connection dates to the transmission network that are on average four years earlier than was originally agreed.
Jack Brereton
The UK’s ceramics sector has invested heavily in energy efficiency technologies, and it is committed to going further, but many of the alternative green technologies are not yet viable, and there are serious risks that too stringent net zero targets will result in carbon leakage, and in offshoring an industry and skilled jobs to countries that have a far worse environmental record. Will my right hon. Friend look seriously at exempting the ceramics sector from the emissions trading scheme, to give the sector the breathing space that it needs to invest?
Claire Coutinho
I commend my hon. Friend’s unwavering commitment to advocating for the ceramics sector in his constituency. The UK Government remain steadfast in safeguarding sectors deemed at risk of carbon leakage, and I strongly encourage the ceramics sector in his constituency to actively participate in the consultation on free allocation policy, which is open.
Caroline Lucas (Brighton, Pavilion) (Green)
A new report from the Green Finance Institute and the Institute for Public Policy Research notes that a lack of public investment and strategy is holding back progress on unlocking private investment, and that the chopping and changing of policy pathways has damaged investor confidence. The Secretary of State likes to say that she has a clear strategy, so will she tell investors what it is? Will she call on the Chancellor to deliver the scale of public investment that we so urgently need to restore investor confidence and lift the UK off the bottom of the G7 league table for private investment, where we currently languish?
Claire Coutinho
I thank the hon. Lady for that question, but I am surprised that she did not welcome the recent news that the UK was the first country in the G20 to halve its emissions since the 1990s, as I know that subject is dear to her heart. As I have said, in 2023, the UK saw around £60 billion of low-carbon private and public investment. We got that extraordinary success by encouraging private investment. Whether through the contracts for difference scheme, our new policies on capital allowances, or the effect of the green industries growth accelerator on the supply chain, the UK is doing everything it can to attract investment, and that is exactly why we have made those achievements.
Kirsten Oswald (East Renfrewshire) (SNP)
Last week, the Scottish Government announced £24.5 million of public investment in a new cable factory, which will attract a further £350 million of inward investment. Does the Secretary of State agree that the best way to increase private investment is for the Government to increase public investment, to signal that the UK is open to green investment? Should not the UK Government therefore invest at least £28 billion a year, so that we can maximise private investment, and so that economic growth from the green transition is also maximised?
Claire Coutinho
As I said, our record on net zero investment is incredibly strong. In fact, I believe the CBI had a report out this morning showing that our net zero sectors have been growing by 9% in the last year. We have set out plans for further investment, whether that is in grid connections, supply chain investment through our Gigafund, or reforming capital allowance. All those things, and not public sector investment alone, attract private investment to this country.
Sarah Jones (Croydon Central) (Lab)
This Government are locked in a doom loop of inertia, and everyone is talking about it. Just this week, the National Infrastructure Commission said that the Government are taking too long, need to move faster, and that greater urgency is required. The CBI report that the Secretary of State mentioned says that
“strong future growth from green businesses is being put at risk”.
Labour’s national wealth fund will crowd in private investment and create thousands of good jobs for plumbers, engineers, electricians and welders. Is blowing our advantage and losing the race for the industries of the future part of the Government’s plan, or do they just not have one?
Claire Coutinho
I thank the hon. Lady for having the chutzpah to attempt that question. If she would like to talk about uncertainty on investment plans, she need only look at those on the Benches behind her, who have performed the most extraordinary flip-flop on that. We have delivered the second highest cumulative amount of recorded low-carbon investment across Europe over the past five years.
Mr Barry Sheerman (Huddersfield) (Lab/Co-op)
Elliot Colburn (Carshalton and Wallington) (Con)
The Secretary of State for Energy Security and Net Zero (Claire Coutinho)
Ofgem’s new price cap means that from April, the average bill is set to drop by £238. This shows that our plan is working: we have halved inflation and energy prices are at their lowest level in two years. Alongside that, we have taken the number of homes that are well insulated up from 14% in 2010 to 50% now. We have recently set out plans to help more customers access smarter energy tariffs, which could save them up to £900 a year.
Alyn Smith
I am grateful for the answer, but one thing my constituents in Stirling do not understand is electricity standing charges. As we have heard, according to Ofgem’s figures, they have rocketed by 138% from £90.84 in 2021-22 to £216.23 in 2023-24. Ofgem has issued a call for evidence, which is to be welcomed, but Ofgem is clearly not fit for purpose on this. Does the Secretary of State agree that it is high time the UK Government stepped in?
Claire Coutinho
The hon. Gentleman is right that Ofgem regulates standing charges and has issued a call for evidence. I think about 40,000 people have given input, and we look forward to seeing the results. However, if he was really worried about the cost of living for families in the country, the SNP would not have taken taxes in Scotland to the highest level in the UK.
Elliot Colburn
The fall in the energy price cap is certainly welcomed by Carshalton and Wallington residents, as is the support for households, but many small and medium-sized businesses in my constituency are still struggling to absorb higher costs. Will the Secretary of State outline in a bit more detail the support that those businesses can access to help with energy bills?
Claire Coutinho
I thank my hon. Friend for recently welcoming me to Carshalton and Wallington. Wholesale energy prices have fallen significantly since last winter, but we are committed to supporting businesses with their energy bills. Last winter alone, we delivered about £7.4 billion to support businesses, covering nearly half of many businesses’ wholesale energy costs. We are continuing the energy bills discount scheme to support eligible businesses with high energy costs until they can take advantage of lower wholesale prices.
Simon Baynes (Clwyd South) (Con)
The Secretary of State for Energy Security and Net Zero (Claire Coutinho)
A lot has happened since I was last at the Dispatch Box. Not only have energy bills fallen to their lowest level in two years—welcome news for families up and down the country—but Britain has become the first major economy to halve our emissions, which is a huge milestone on our journey to net zero, our Offshore Petroleum Licensing Bill has completed its Commons stages, and we are supporting the North sea by protecting 200,000 jobs and using our own gas to heat our homes.
I have signed a new partnership with Canada on fusion energy, which is a technology that could give us limitless energy and one on which Britain is leading the world. We have confirmed the UK’s departure from the energy charter treaty, which was holding back our transition to cleaner, cheaper energy. We have launched a consultation on smart energy tariffs, which could see £900 taken off people’s bills, and today we host our hydrogen investor forum, announcing eight successful projects to make low-carbon hydrogen, with over £27 million of Government support.
Simon Baynes
Residents in Esclusham in my constituency are alarmed by Innova’s plans for the UK’s largest lithium-ion battery storage facility near Bersham. Can my right hon. Friend give any reassurance about the safety of this technology to my constituents, who are concerned about the dangers of pollution, given the noise emitted by such equipment, and by reports of similar facilities elsewhere exploding, catching fire and emitting toxic fumes?
Claire Coutinho
Electricity storage allows us to use energy more flexibly and to minimise energy bills. Grid-scale lithium-ion battery energy storage systems are covered by a robust regulatory framework that is principally over- seen by the Health and Safety Executive. Planning guidance encourages developers and local authorities to consult relevant fire and rescue services on aspects such as location, ahead of any planning decisions being made.
Dave Doogan (Angus) (SNP)
Some 23% of households in Scotland are living in extreme fuel poverty. Energy debt across the United Kingdom has reached £3.1 billion. Age UK estimates that, had the UK Government implemented a social tariff this winter, 2.2 million households would have been lifted out of poverty. The latest costs of unpayable energy debt have once again been heaped on to ordinary taxpayers by Ofgem through the unit rate. What assessment has the Secretary of State made of how much energy debt could be reduced by through the introduction of a social tariff to mitigate totally unaffordable energy bills?
Claire Coutinho
The fact that energy prices are at the lowest level in two years is good news for families up and down the country. We have put in place support, including a package of more than £104 billion to support families—that is £3,700 per household on average. As part of that, we have made £900 cost of living payments to help people in the last year.
Kevin Foster (Torbay) (Con)
Edward Miliband (Doncaster North) (Lab)
Last September, the Energy Secretary claimed she was lifting the onshore wind ban, but in the whole of 2023 and so far in 2024 there have been zero applications for new onshore wind farms designed for domestic electricity supply in England. She said that her decision would speed up the delivery of projects. Why does she think it has not worked?
Claire Coutinho
Let me be clear about our record on onshore wind. Energy production has quadrupled since 2010, when we had 3.9 GW of onshore wind, to 15.4 GW in 2023. We have connected the second highest amount of renewables anywhere in Europe, whereas the right hon. Gentleman’s plans have been widely discredited by industry and would deter billions of pounds of investment in clean energy.
Edward Miliband
The right hon. Lady did not answer the question. I will tell her why it has not worked: because she has left a uniquely restrictive planning regime in place for onshore wind. Her failure is costing families across this country £180 a year on their bills. We know that her policy has failed. She could dump the ban at the stroke of a pen. If she is vaguely serious about clean energy, why does she not face down the headbangers on her Back Benches and lift the ban?
Claire Coutinho
As I said, we have connected the second highest amount of renewable electricity anywhere in Europe since 2010. Our record on renewable energy is clear. This is the most extraordinary deflection that I have seen. In recent weeks, the right hon. Gentleman’s leader has shredded his policy platform on energy. To be honest, I feel quite sorry for him, because thanks to the action of his leader and his shadow Chancellor, he has been hidden away, his policy has been ripped up and it is now obvious to everyone that Labour has no plan for energy.
John Penrose (Weston-super-Mare) (Con)
Sam Tarry (Ilford South) (Lab)
Last week the former Prime Minister, the right hon. Member for South West Norfolk (Elizabeth Truss), shared a platform with an extremist, far-right, climate change-denying conspiracy theorist called Steve Bannon, who claimed that man-made global warming is a “manufactured crisis”. Will the Secretary of State condemn those crazy comments and perhaps distance herself from the former Prime Minister?
Claire Coutinho
I thank the hon. Gentleman for his question. What he should look at carefully is that the UK is the first country in the G20 to halve emissions. If he wants to look at our record, he should look at that. It is absolutely extraordinary that no one on the Opposition Benches has welcomed that news today.
Matt Warman (Boston and Skegness) (Con)
National Grid’s Grimsby to Walpole project will see pylons driven across Lincolnshire’s beautiful landscapes and will take major chunks of some of this country’s best agricultural land out of production. Does the Secretary of State agree that it is vital that residents respond to the consultation that is currently going on, and that National Grid should be told to take into consideration food security as well as energy security when it considers such applications?
Offshore Petroleum Licensing Bill
Claire Coutinho ExcerptsMonday 22nd January 2024
(8 months, 2 weeks ago)
Commons ChamberRead Full debate Offshore Petroleum Licensing Bill 2023-24 View all Offshore Petroleum Licensing Bill 2023-24 Debates Read Hansard Text Watch Debate Read Debate Ministerial Extracts
The Secretary of State for Energy Security and Net Zero (Claire Coutinho)
I beg to move, That the Bill be now read a Second time.
Britain is the first major economy to halve its emissions. That is an incredible achievement. How have we done it? We have increased our renewable electricity capacity fivefold since 2010—nearly half our electricity comes from renewables now, up from 7% in 2010—and just two weeks ago, I set out the largest nuclear expansion for 70 years.
We continue to have some of the most ambitious climate change targets of any major world economy. Here in the UK, we are committed to reducing emissions by at least 68% by 2030 from 1990 levels. Where is everybody else? The EU is committed to 55%, having recently rejected a move to 57%, and the United States is at just 40%. It is clear that, when it comes to climate change, we can be proud of our record and the work that we will do.
We have managed to achieve that while acting to help families with their energy bills. We stepped in to help families struggling with energy prices after Putin’s invasion of Ukraine, and our total support for the cost of living stands at £104 billion—a package that is among the most generous in Europe. Last year, we passed the landmark Energy Act 2023, which lays the foundation for a cleaner and more secure energy system. Our changes to competition, to managing energy consumption and to incentivising investment in new technology will mean billions in savings for consumers as we work towards net zero. We have overseen a huge increase in the number of energy-efficient homes from 14% in 2010 to almost half today, and we are investing more over the next Parliament to continue that important work.
Sarah Champion (Rotherham) (Lab)
The Secretary of State paints a very rosy picture, particularly on renewables, so why has her own energy tsar resigned in protest?
Claire Coutinho
We do not actually have an energy tsar, but we have an energy Secretary of State. I respect the former Member for Kingswood and wish him well in his next job, but if we care about reducing emissions, the question that everybody in this Chamber needs to answer is, “Why would you import fuel with higher emissions from abroad?”
We are investing in more renewable energy, we are starting a nuclear revival, and we will support new technologies, such as hydrogen, carbon capture and fusion. This is our plan to have a balanced energy policy. However, we need to ensure that the transition works for the British public and the British economy. Our plans cannot be based on ideology; they must be based on common sense.
Even the Climate Change Committee’s own data shows that when we reach net zero in 2050, we will still be using oil and gas for a significant portion of our energy. That is because it is not absolute zero; it is net zero. In other words, while our use of oil and gas will diminish rapidly, we will still need both for decades to come. Our Bill will improve our energy security and that of Europe. In the past two years, Europe has had to wean itself off Russian oil and gas. We have responded by tripling gas exports to the continent, and we were a net exporter of electricity to Europe in 2022 for the first time in more than a decade. We do not live in a world in which we can simply turn off oil and gas.
Clive Efford (Eltham) (Lab)
Is the right hon. Lady saying that the only licences the Government intend to issue are for gas and oil destined for the British market?
Claire Coutinho
I am glad that the hon. Gentleman asks that question, because the Labour party has been spouting an awful lot of nonsense when it comes to this area. In the UK, we are blessed with the geological gift that is the North sea—it is an incredible national asset. Virtually all the gas produced there goes straight into the UK gas transmission network, and it is equivalent to about 50% of our overall gas needs. When it comes to oil, 90% of what is refined abroad is refined in Europe. We are a net importer overall.
The question that the hon. Gentleman should answer is this: if Europe did not get that oil from the UK, where would he like Europe to get it from—from Russia, or from further afield? That question is at the heart of the Bill. We know that we are going to need oil and gas—where do we want it to come from? Only an ideologue would argue that we are better off importing dirtier fuels from abroad than using what we can produce at home. However, it is not just energy security that dictates that we should use our own resources; the economic case also shows that introducing annual licensing is the right thing to do.
Sammy Wilson (East Antrim) (DUP)
Does the right hon. Lady accept that, despite the way in which some Members of this House have tried to rubbish that idea and argue that having our own oil and gas does not mean any energy security for the UK, 88% of the gas that we extract at present stays in the UK? Would they prefer to import that?
Claire Coutinho
I thank the right hon. Gentleman for making that point. Not only is it better for energy security, but gas that we bring in from abroad in the form of liquefied natural gas has emissions four times higher, so if Members care about the environment, they should back this Bill.
Domestic oil and gas production adds about £16 billion to the UK economy annually and brings in tens of billions of pounds in tax revenue. To give an example of how that has helped support families with the cost of living, we raised £9 billion in tax revenue last year from the oil and gas sector. That is money that we can use to support families, as we did last winter, paying half the average family’s energy bill, which amounted to roughly £1,500 per household. If we had no oil and gas sector, £9 billion more would have fallen on taxpayers’ shoulders. Why should we concede that tax revenue to other countries? What possible benefit could the British public feel from billions of pounds in tax revenue that could be raised here being sent abroad, all to import fuel with higher emissions?
I now turn to perhaps the most important reason to back this Bill: the workers. There are 200,000 people supported by the sector, in communities such as those in Aberdeen, Grimsby and the north-east of England, and including 93,000 people in Scotland, over 10,000 people in Yorkshire and the Humber, and 14,000 people in the north-west.
Caroline Lucas (Brighton, Pavilion) (Green)
The right hon. Lady knows as well as I do that most of the gas we import comes from Norway, where gas production is half as polluting as it is in the UK, so let us not have all this nonsense about imports being so much higher in carbon intensity, because those from Norway certainly are not. Does she accept the fact that most of the emissions are produced when we consume the oil and gas, and therefore will she start looking at scope 3 emissions and not just the production emissions, which are not the greatest emissions in question?
Claire Coutinho
I thank the hon. Lady for her question, but I think it fundamentally misunderstands the energy market. When we cannot get Norwegian gas and when we have made the most of all of our gas, what is the marginal gas that we use? It is LNG, which produces emissions four times higher than the gas we can produce here. If we produce less UK gas, we will need more LNG.
Coming back to what is a really critical part of the Bill—the workers—a recent report from Robert Gordon University found that a faster decline in our oil and gas sector, which the Opposition are proposing, could halve the workforce by 2030, leading to a significant loss of skills for the future energy sector. Those are the workers whose skills we will need for our future energy production. The same report found that over 90% of the UK’s oil and gas workforce have skills that are transferable to the offshore renewables sector. However, if we do not manage that transition correctly—everybody in the Chamber today agrees that we need to transition—we will lose those very important workers and their skills. It is the same people who are working on oil and gas rigs today who we will need on the offshore wind farms of tomorrow: our subsea installation engineers who lay cables, our technicians who remotely operate subsea vehicles, our divers, our project managers, and our engineering specialists servicing our offshore rigs. Those are all essential oil and gas jobs that we know will be critical in the roll-out of our low-carbon technologies. If we do not protect our world-leading specialists, we will see communities decimated, and ultimately a skills exodus that would put at risk the very transition that we are working so hard to achieve.
Alexander Stafford (Rother Valley) (Con)
My right hon. Friend is making a very powerful point about both energy security and getting those jobs—those British jobs. Recently, I visited the Falkland Islands with a cross-party delegation, and when we met the Falkland Islands Government, they said that they are desperate to unlock the Sea Lion oilfield and to get British workers to operate that field—obviously, the Falkland Islands is a British overseas territory—yet they are being stymied by the UK Treasury, which will not underwrite it. Does my right hon. Friend agree that the next thing we should do is back overseas territories by developing their oilfields, so that we can have good British overseas territories oil and gas in the UK and British jobs in the overseas territories, and support our one big happy Commonwealth and overseas territories family?
Claire Coutinho
My hon. Friend makes an interesting point, and I would be very happy to meet him to discuss it further.
Let me turn to investment in the sector. I think we agree across all parties in the House that we want to be a world leader in clean energy technologies. Here in Britain, we have many competitive advantages, and we want to exploit all of them to have a brighter energy and economic future. Right now, the oil and gas sector is investing in hydrogen, carbon capture and offshore wind. A well-managed transition helps ensure that as we get more investment and grow these sectors people can transition alongside in an orderly and organic way. To shut down the oil and gas sector too soon would not only risk that investment, make it harder to do the transition and see those sectors grow more slowly, but risk people’s livelihoods.
The Offshore Petroleum Licensing Bill will give the industry the certainty it needs to invest in this important sector. If we need oil and gas in the decades to come, it should come from Britain where it can. Using the resources on our doorstep to benefit Britain is simple common sense. This new legislation will require the North Sea Transition Authority to run an annual process for new exploration and production licences on the UK continental shelf, subject to key tests being met: first, that the UK is projected to remain a net importer of both oil and gas; and secondly, that carbon emissions associated with UK gas are lower than for imported liquefied natural gas. These tests are in place to provide assurance that proceeding with annual licensing remains the right thing to do.
This Bill will provide the industry with certainty on the future of licensing rounds, increasing investor and industry confidence. It will increase our energy security, protect 200,000 jobs, secure tens of billions in tax revenue and help us reach net zero. Members should not just take my word for it; voices across industry recognise the need for new licences for net zero and for our energy security. In fact, Stuart Payne, the chief executive of the North Sea Transition Authority, recently wrote that
“producing as much of the oil and gas we need as possible domestically is the right thing to do, for security and the economy.”
Offshore Energies UK has said:
“The UK needs the churn of new licences to manage production decline”.
National Gas has said that by backing gas today
“we can create jobs, secure energy independence, deliver net zero, and keep costs down for households and businesses.”
The general secretary of the GMB has said that not proceeding with new licensing risks
“leaving the UK even more dependent on energy imports to heat homes and power industry in future. That’s bad for our national security and prosperity.”
I have no doubt that the Opposition will whip their MPs against the Bill. They want to shut down new oil and gas licences, and they have been very clear about that. I suspect there are many in the Labour party who understand what turning off the taps would mean for British workers, and they will vote against this Bill with a heavy heart. They know that the right hon. Member for Doncaster North (Edward Miliband) has got this wrong. Is it not just common sense that, if we need oil and gas, it should come from UK waters rather than from foreign and often unreliable regimes abroad? Is it not better to produce our own gas instead of shipping in liquefied natural gas that has four times the production emissions of our own? Is it not right that the billions of pounds in tax that we raise from this sector stays here rather than being sent abroad? Is it not the position of an ideologue to say, “We will not support 200,000 British workers, but we are happy for those jobs to go to Russia or further abroad”?
The position of the Labour party and the SNP is not right for the environment, not right for the economy and not right for the energy security of this country. As the head of the GMB warned this weekend, it would be “exporting jobs” for the sake of “importing virtue”. It would mean thousands of jobs lost, communities decimated, tax revenue forgone, and all so that the right hon. Gentleman can appease his friends in Just Stop Oil. They are putting the interests of extreme climate ideologues over those of ordinary workers.
What of Labour’s wider energy policy? The truth is that, when it comes to this critical policy area, its policies are as clear as mud. We know that it hinges on borrowing £28 billion, which would mean thousands of pounds in extra taxes for every family. While we are cutting taxes, the Opposition would see them soar, which is not what the people of this country need. The right hon. Gentleman should level with the British public: what taxes would he raise to pay for this extra £28 billion of borrowing? When he was shadow Business Secretary, he said that £28 billion is the “scale of investment required”. The Opposition have said that they need to spend £28 billion to meet their 2030 decarbonisation ambition. So why will the right hon. Gentleman not set out which taxes he would raise? How is he going to squeeze more money out of hard-working families to achieve his 2030 pipedream? If he really thinks £28 billion in extra spending is essential, he should have the courage to explain how much worse off taxpayers will be.
While the Labour party struggled to back its own plans, over the past few months we have secured £30 billion-worth of private investment in clean energy. That is the difference between them and us: we know private investment is key to transition, but they would rather taxpayers shoulder the costs alone through more borrowing and higher taxes.
That is the choice the House must make today: do we support the oil and gas sector and the private investment that comes with it or do we leave taxpayers to foot the bill? We cannot afford to lose the skills, the revenue or the investment the sector provides; to do so would put net zero in jeopardy. We must deliver this transition in a proportionate, pragmatic and realistic way, ensuring that we make the most of the energy we produce right here in the UK.
That is common sense, and that is what the legislation represents. With this Bill we will protect 200,000 jobs, strengthen our energy security, secure tens of billions of pounds in tax revenue, ease the transition to renewable energy, and supply ourselves with gas that has only a quarter of the production emissions of LNG imports. Or we could follow the approach of the Opposition and decimate communities that rely on the oil and gas sector, rack up borrowing by £28 billion a year, send taxes soaring to pay for it and send British jobs and tax revenue abroad, all to import fuel with higher emissions. The choice is very clear: we are on the side of common sense, not ideology, and I commend this Bill to the House.
Edward Miliband (Doncaster North) (Lab)
I beg to move an amendment, to leave out from “That” to the end of the Question and add:
“this House, while affirming the need for urgent action to tackle the UK’s energy insecurity, the cost of living crisis, and the climate crisis, and for a managed, fair and prosperous transition for workers and communities, declines to give a Second Reading to the Offshore Petroleum Licensing Bill because mandating annual oil and gas licensing rounds will not reduce energy costs for households and businesses as the Secretary of State for Energy Security and Net Zero has stated, will not enhance energy security, offers no plan for the future of the UK’s offshore energy communities, will ensure the UK remains at the mercy of petrostates and dictators who control fossil fuel markets, is entirely incompatible with the UK’s international climate change commitments and is a totally unnecessary piece of legislation which will do nothing to serve the UK’s national interest.”
I want first to express my deep condolences to the families of the two people killed by storm Isha and my sympathies to all those facing power cuts and disruption from the storm.
The proposed legislation we are considering today will not cut bills or give us energy security, drives a coach and horses through our climate commitments and learns nothing from the worst cost of living crisis in memory, which the British people are still going through—a cost of living crisis caused by our dependence on fossil fuels. Since the launch of the Bill two months ago, the case for it has disintegrated on contact with reality. Let me remind the House of the series of unfortunate events that has befallen the Bill since its publication. On day one—launch day—the Energy Secretary went on TV with the big reveal, telling the public the Bill would not cut bills. Next we discovered from confidential minutes of the North Sea Transition Authority that it thought the Bill was unnecessary and compromised its independence. [Interruption.] The Minister for Energy Security and Net Zero, the right hon. Member for Beverley and Holderness (Graham Stuart) says from a sedentary position that that is not the case. He is wrong and I will read him the minutes:
“the Board expressed a unanimous view that such a proposal was not necessary for the NSTA…The Board noted that the proposal would significantly challenge one of the tenets of independence for the NSTA”.
Claire Coutinho
As the right hon. Gentleman is enjoyably quoting the NSTA minutes not its on-the-record comments, will he also support its position that we should maximise all of the oil and gas production in the North sea?
Edward Miliband
That is not the NSTA position, as I have discussed with it.
Next, Lord Browne, the former CEO of BP, attacked the Bill and said it was
“not going to not make any difference”
to energy security. Then Britain’s most respected climate expert, Lord Stern, pilloried it as “a deeply damaging mistake”. Then on the eve of COP—the conference of the parties—the former Prime Minister the right hon. Member for Maidenhead (Mrs May), who signed net zero into law, said she disagreed with the Bill; to my knowledge, she does not support Just Stop Oil.
Edward Miliband
Of course I don’t.
Then the former COP president—[Interruption.] Let’s be serious. Then the former COP president the right hon. Member for Reading West (Sir Alok Sharma), a man respected around the world who we were lucky to have playing that role at COP26, said the Bill was
“smoke and mirrors…not being serious…the opposite of what we agreed to do internationally”.
Finally, their own net zero tsar—the man they trusted to guide them on questions of energy—is so disgusted by the Bill that he is not in the Chamber today. In fact, he is so ashamed that he has fled to the Chiltern Hundreds. That is certainly getting a long way away from the right hon. Lady the Secretary of State and her policies. It shows how far people will go. It is not so much the oil and gas extraction Bill but the Conservative MP extraction Bill that she is putting forward today. The former net zero tsar said:
“I can no longer condone nor continue to support a government that is committed to a course of action that I know is wrong and will cause future harm.”
We should take all these voices—Lord Browne, the former Prime Minister, the former net zero tsar and the former COP President—[Interruption.] I will come to all the arguments that the Secretary of State made, if she will give me a minute, as I develop my argument. The bigger point is that we face massive challenges as a country, but it is not the scale of our problems that is so apparent today, but the smallness of the Government’s response. We have a risible two-clause Bill that she knows will not make any difference to our energy security, because everyone who knows anything about this subject says so.
As the Bill has fallen apart, the Government have thrashed around to try to find a rational justification, and they have made one futile argument after another. Let us take each in turn. The first argument was that the Bill will cut prices. In case the House is thinking, “Did they really make that claim?”, the claim was made by the Prime Minister in a tweet. At 9.57 am on launch day, he said that the Bill will
“help reduce energy bills as we’re less exposed”—
Edward Miliband
The Secretary of State nods, but I put on record my thanks to her, because she has been an internal one-woman rebuttal unit against the Prime Minister. She went on breakfast TV—before the tweet, so we might call it a prebuttal—and said that the Bill
“wouldn’t necessarily bring energy bills down, that’s not what we’re saying.”
She is right, because oil and gas is traded on international markets.
Claire Coutinho
If the right hon. Gentleman had read the full quote, I said that indirectly, through support to the renewables sector, the Bill brings down bills. The fact that we can raise tax to help people with the cost of living also brings down bills. If he would like to bring down bills for people in this country, he should back this Bill.
Edward Miliband
That is great, because the Secretary of State anticipates my rebuttal of the second bad argument for this Bill, which is the argument she has just gone on to make. She said that the tax revenues we get from fossil fuels justify this policy, and we have heard it again today. If anything, that is an even more complete load of nonsense than the Prime Minister’s argument, because these are the facts: it is our reliance on fossil fuels that has caused rocketing energy bills. That meant that the Government were forced to step in to provide support for households and businesses [Interruption.] Ministers should just listen.
The cost to Government of the support with bills has far outweighed any tax revenues. According to the Office for Budget Responsibility, the windfall tax receipts from oil and gas companies raised £25 billion, and the cost of Government support is more than £70 billion or, the Government say, £104 billion. The idea that our dependence on fossil fuels can be justified by the tax revenues we get, when they have spent £100 billion trying to help people, is obviously nonsense.
There is a third bad argument, and again we heard it today, which is that somehow this Bill strengthens our energy security. Again, it is important to have a few facts in this debate. Here are the facts: the UK’s North sea gas production is set to fall with new licences by 95% by 2050, or without new licences by 97%. That is the equivalent of four days of our current gas demand. All this absolute codswallop about the Bill guaranteeing our energy security and somehow guaranteeing 200,000 jobs is risible nonsense.
Here is the thing. We have had a real revelation in this debate—the Government have admitted the truth—which is that the vast majority of oil is not used in this country; it is exported elsewhere, and 70% of our remaining reserves are oil, not gas. The idea that this makes any difference to our energy security is nonsense—these are private companies selling on the private market—and the Government have absolutely no response.
The fourth bad argument is that the Bill will somehow protect jobs. That is wrong. We owe it to oil and gas communities to protect them in the transition, but given the Conservatives’ record in constituencies such as mine, we will not take lectures from them on just transitions. We should admit a truth: the fossil fuel market is not just deeply unstable for consumers, as we have seen over the last two years, but deeply unstable for workers. It is a total illusion that new licences will somehow guarantee jobs for North sea workers. In the last 10 years, the number of people working in oil and gas has more than halved. The International Energy Agency predicts a peak in fossil fuel demand by 2030. That is why its head said:
“New large-scale fossil fuel projects not only carry major climate risks, but also business and financial risks for the companies and their investors.”
That applies to workers, too.
The right way to have a managed transition in the North sea is to carry on using existing fields—a Labour Government will do that—and to have a plan for North sea workers by driving forward with jobs in the industries of the future: offshore wind, carbon capture and hydrogen. But that is not what the Government have done. We had a graphic example of that last week. The world’s largest floating wind prototype sits off Peterhead—that is a good thing—but it needed maintenance, so where did the maintenance happen? Not in Scotland, and not anywhere in the UK; it has been towed back to Norway. That is the scale of their industrial policy failure; we know it very well.
The Government have not generated the jobs that British workers deserve, and their fossil fuel policy and net zero roll-back has sent a terrible message to investors around the world. This is what Amanda Blanc, the chief executive officer of Aviva and the head of its UK transition plan taskforce, says about oil and gas and the Government’s position:
“This puts at clear risk the jobs, growth and the additional investment the UK requires to become more climate-ready.”
It is Britain losing the global race in clean energy jobs that will destroy the future of oil and gas communities. The Government have no proper plan for those workers; Labour does have a proper plan.
Energy National Policy Statements
Claire Coutinho Excerpts(8 months, 2 weeks ago)
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The Secretary of State for Energy Security and Net Zero (Claire Coutinho)
I laid five energy national policy statements for parliamentary approval on 22 November 2023. I am therefore pleased to inform Parliament that I am today designating them as national policy statements under the provisions of section 5(1) of the Planning Act 2008, and laying copies before Parliament as required by section 5(9)(b) of the same Act. The statements are made under the Planning Act 2008, which applies to England and Wales.
This designation is an important landmark and marks significant progress in two vital areas of this country: new updated national policy statements support a stronger, fairer and more efficient planning system for significant national energy infrastructure; and they support our efforts to build an energy system that will meet our net zero objectives, and provide the country with greater energy security, helping the UK maintain energy supplies at affordable prices.
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Road Fuels Consultation and Impact Assessment
Claire Coutinho Excerpts(8 months, 2 weeks ago)
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The Secretary of State for Energy Security and Net Zero (Claire Coutinho)
I would like to update the House on the Government’s road fuels consultation and impact assessment that will be published today and closes on 12 March 2024. The Government are committed to reducing bills for families, including to ensure drivers get a fair deal at the pump. The proposals in the consultation will help with this by facilitating a competitive road fuels retail market, increasing price transparency and protecting consumer interests.
The UK is a nation of drivers. There are 41.2 million vehicles on the road in the UK today. For many people, vehicles are a critical part of everyday life, connecting countless communities and businesses up and down the country—whether that is getting to work or taking children to school, or for those living in rural areas.
The Government have already taken action to support drivers. At spring Budget 2023, the Government announced their continued support for households and businesses by maintaining the rates of fuel duty at the levels set on 23 March 2022 for an additional 12 months, by extending the temporary 5p fuel duty cut and cancelling the planned inflation increase for 2023-24. That represents an overall saving for drivers of around £10 billion over the two years from the 5p cut being introduced, and around £200 for the average car driver. From 2011-2022, the average driver made a cumulative saving of £1,900 from the freezing of fuel duty rates, compared with what would have been paid under the pre-2010 escalator.
When fuel prices are high the impacts are felt by everyone. That is why the Government were very concerned with the findings of the Competition and Markets Authority’s road fuel market study published in July 2023. The CMA found that competition between fuel retailers at a national level had weakened since 2019, due to a decision by the historic price leaders to take a less aggressive approach to pricing by significantly increasing their internal margins for fuel. This was coupled with other retailers maintaining largely passive pricing policies rather than trying to win market share.
As a result, consumers were paying generally higher prices than would otherwise have been the case. Among the four largest supermarkets, the higher margins resulted in a combined additional cost of £900 million for consumers in 2022 alone.
The study also found that long-standing patterns of variation in pricing between different local areas remain across the UK, meaning that consumers in some areas can pay significantly more for fuel than those in others. Drivers are also paying significantly more to fill up at a motorway service station than they would elsewhere. In 2022, motorway retailers were on average charging around 20p per litre more for petrol and 15p per litre more for diesel than retailers elsewhere.
We are determined to ensure that consumers get a fair deal at the pump. It is crucial that we strengthen competition so that the market works for consumers. The Government have acted swiftly to address this and committed to introduce a statutory open data scheme and an ongoing road fuels price monitoring function. These measures will empower consumers to find the best price for fuel, igniting competition among fuel retailers for their business.
The open data scheme will increase price transparency for consumers, allowing them to compare prices more easily. It will grow our digital economy, creating opportunities for third-party app and website developers to use the data in innovative ways. This will end the need to drive around to find cheaper fuel, instead enabling live price data to be displayed on in-car displays, apps and price comparison sites.
The monitoring function will provide the Government with an assessment of competition in the market, acting as a deterrent against individual businesses taking actions that may weaken competition and holding industry to account. The Government recently announced that the CMA will undertake the monitoring function and amended the Digital Markets, Competition and Consumers Bill to provide the CMA with the necessary information-gathering powers.
We want to hear from everyone to ensure that the two recommendations work effectively to facilitate a competitive market, deliver on price transparency and protect consumer interests. We will closely assess all the responses, which will inform the design of the open data scheme and some aspects of the monitoring function that are not covered in the amended Digital Markets, Competition and Consumers Bill. The measures will improve competition for the benefit of consumers and get a better deal for drivers across the United Kingdom.
I am placing copies of the consultation and the impact assessment in the Libraries of the House.
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Energy Efficiency and Clean Heat Capital Funding
Claire Coutinho Excerpts(9 months, 2 weeks ago)
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The Secretary of State for Energy Security and Net Zero (Claire Coutinho)
In the 2022 autumn statement, the Chancellor announced that new Government funding worth £6 billion will be made available from 2025 to 2028 to support households, businesses and the public sector drive improvements in energy efficiency and clean heating to bring down bills and emissions.
I can today announce to the House how this money is being allocated between the following schemes.
Nearly £2.5 billion of this funding will be allocated to mass market support for the electrification of heat and energy efficiency. This includes the boiler upgrade scheme (BUS), a new £400 million energy efficiency grant, and a new local authority led retrofit scheme.
Breakdown of the £6,050 million—schemes and total amount allocated for period 2025-28
Universal heat pump insulation support: boiler upgrade scheme—£1,545 million
Heat pump innovation accelerator competition—£15 million
Universal support with measure to help reduce energy bills and make more homes heat pump ready: energy efficiency grant—£400 million
Local Authority led support for low-income households to retrofit homes: local authority retrofit scheme—£500 million
Support installing low-carbon heating and energy efficiency in social housing—which requires match funding from social housing landlords: social housing decarbonisation fund (SHDF)—£1,255 million
Heat network infrastructure: green heat network fund (GHNF); heat network efficiency scheme (HNES)—£530 million
Support public sector organisations (e.g. schools, hospitals) with the capital cost of installing low-carbon heating by covering the difference between a replacement fossil fuel system and a low-carbon alternative: public sector decarbonisation scheme (PSDS)—£1,170 million
Industrial energy transformation fund (IETF)—£225 million
Support to drive industrial energy efficiency and decarbonisation (detail to be announced later subject to further policy development)—£410 million
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Hydrogen Industry
Claire Coutinho Excerpts(9 months, 3 weeks ago)
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The Secretary of State for Energy Security and Net Zero (Claire Coutinho)
In pursuit of our hydrogen ambitions, today I am announcing the 11 electrolytic (or “green”) hydrogen projects that have been successful in the first hydrogen allocation round (HAR1). This announcement has been made alongside the launch of the second hydrogen allocation round (HAR2) and a number of important new policy updates across hydrogen production, transport, storage and use. Together, these announcements set out the steps that the Government are taking to deliver a world-leading hydrogen economy and support high-quality jobs and investment across the UK.
The announcement of the 11 successful HAR1 projects marks the UK as a global leader in hydrogen, representing the largest number of commercial scale electrolytic production projects announced at once anywhere in Europe. We are committing over £2 billion of support to these projects through 15-year contracts, in addition to £91 million in up-front capital co-funding, unlocking substantial investment from industry:
£413 million of private capital will be invested by the projects up front between 2024 and 2026;
Over 700 jobs will be created during construction; and
We anticipate millions to be spent by offtakers, which are those businesses committing to convert their operations to using hydrogen, and buying the hydrogen produced. These include major employers and household names in consumer goods, and businesses such as distilleries and heavy transport hauliers.
HAR1 was the first of our planned annual electrolytic allocation rounds for the hydrogen production business model. The successful projects, which will all be operational by 2026, located across 11 sites in England, Scotland and Wales, represent 125 MW of hydrogen production capacity.
Low-carbon hydrogen will be crucial for ensuring energy security and achieving net zero. In the process it could help to transform our industrial heartlands, unlocking over 12,000 jobs and up to £11 billion in private investment by 2030 across the UK. It will be needed to decarbonise vital UK industrial sectors and heavy transport, as well as supporting resilience and security for our power system.
In addition to announcing the winners of HAR1, I am delighted to have launched the second hydrogen allocation round—HAR2—today, through which we will aim to award contracts of up to 875 MW, subject to affordability and value for money. Together HAR1 and HAR2 aim to deliver our ambition of having up to 1 GW of new electrolytic hydrogen production capacity being in operation or construction by 2025.
Today we have also published a hydrogen production delivery road map, which sets out how we expect the UK hydrogen production landscape to evolve to 2035. This road map contains further details on our proposal for annual hydrogen allocation rounds from 2025 to 2030 and sets out our ambitions to allocate up to 1.5 GW across HARs 3 and 4, subject to affordability and value for money. This clarity on future allocation rounds is what industry has been calling for and will help to bring forward long-term investment into low-carbon hydrogen production projects in the UK.
Hydrogen transport and storage infrastructure will be essential to the development of the UK hydrogen economy, providing the link between production and demand. As such, today the Government have also published a hydrogen transport and storage networks pathway, which sets out the next steps in our vision for the strategic development of UK hydrogen transport and storage infrastructure. Alongside this, I am setting out our intentions for the first allocation rounds of the hydrogen transport and storage business models, including for these rounds to open in 2024 and to allocate support for up to two storage projects at scale and associated regional pipeline infrastructure. This is a major step forward in the delivery of the critical hydrogen infrastructure we will need and builds on the legislative powers created in the Energy Act 2023.
I am also announcing that following consultation, and based on current evidence, the Government see potential strategic and economic value in supporting the blending of up to 20% hydrogen by volume into the GB gas distribution networks, in certain circumstances. Blending has the potential to stimulate an early hydrogen market through de-risking hydrogen production projects and reducing costs at a project level, as an offtaker of last resort, and at a system level.
The “Powering Up Britain: Energy Security Plan” announced our intention to consult in 2023 on the need and potential design options for market intervention to support hydrogen to power. I can today announce that this consultation has been published and is open for responses. The consultation outlines our minded-to position on intervention design of a potential hydrogen-to-power business model, and proposals to enable hydrogen-to-power plants to compete in the capacity market as soon as practical.
The proposed hydrogen village trial in Redcar cannot go ahead as designed, as the main source of hydrogen supply will not be available. As such, the Government are not in a position to provide support for the trial. The Government still plan to take a decision in 2026 on whether, and if so how, hydrogen will contribute to heating decarbonisation. We will assess evidence from the neighbourhood trial in Fife, as well as similar schemes across Europe, to take this decision.
Since publication of the UK hydrogen strategy in August 2021, the Government have published regular updates to the market to deliver clarity on the direction of hydrogen policy across the value chain, so that the Government, industry and investors can work together most effectively to build a world-leading hydrogen economy. Our hydrogen strategy delivery update sets out Government policy and funding progress so far and updates the UK hydrogen economy road map for the next decade to provide a detailed timeline on the steps that the Government are taking to deliver its vision.
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