Wales: Nuclear Power Generation

Earl Russell Excerpts

Tuesday 29th April 2025 Lords Chamber

[Lord Hunt of Kings Heath (Lab)]

My Lords, that is a very good point indeed. Of course, one has to face up to the fact that the Scottish Government are not in favour of new nuclear development, despite the rich heritage there, and despite how much of Scotland’s electricity at the moment comes from nuclear development. But certainly, the noble Earl is absolutely right to say that, in these kinds of discussions, the role of nuclear is very important, not just for what it provides but for the growth it can bring to our economy, very highly skilled jobs and a lot of infrastructure investment as well. So the case for nuclear is very strong indeed.

[Earl Russell (LD)]

My Lords, the Welsh Government are clear that the development of Wylfa has the potential to be the single largest investment project in Wales. I welcome the response the Minister has given, saying that work will be done on this in due course, but could he be clearer on what “in due course” means? Can I push him further? Will serious consideration be given to using these sites for either long-duration energy storage or for data centres if the Government decide that they are not fit for future nuclear?

[Lord Hunt of Kings Heath (Lab)]

My Lords, I am very wary of getting into detailed speculation about the future of Wylfa. Clearly, it has great potential. I am not prepared to define “in due course”, but I can say to the noble Earl that we recognise the urgency of the situation in giving certainty to the market about our level of nuclear ambition going forward over the next 10, 20 or 30 years. On the issue of AI data centres and the links to AMRs, we very much recognise the potential there; we are discussing that with developers, and we are also looking at our regulatory system to ensure that it is fit for purpose in relation to that kind of development.

Ecodesign for Energy-Related Products and Energy Information (Amendment) (Northern Ireland) Regulations 2025

Earl Russell Excerpts

Wednesday 26th March 2025 Lords Chamber

I plead with the Government. They have to consult. They have to treat people with respect. I take your Lordships’ minds back to what I said earlier: I do not think the Minister is that type of person. I watched him when he was in opposition and I have corresponded with him on issues. I have always found him to be a person who listens and tries to see if there is a way through. I urge the Government: please listen to what we are saying. Please do not treat the people of Northern Ireland as second-class citizens or as if some are now surplus to requirements, and as if the only voice that you have to listen to in Northern Ireland is that of militant republicanism and nationalism. I could say a whole lot more, but I will stop there.

[Earl Russell (LD)]

My Lords, I thank the noble Lord, Lord Hunt, for introducing this SI. I will concentrate most of my remarks on the details of the SI before us rather than the amendment in the name of the noble Baroness, Lady Hoey.

Before I do that, I turn to the reasons for the regret amendment. Once again, the strength of feeling on these matters is clear to see, as shown by the speakers on various sides of the House. We on these Benches supported the Windsor Framework as a means of moving on from the stalemate following Brexit, but it is far from perfect and there clearly remain real and legitimate concerns about the lack of parliamentary oversight on these matters and the impact that Brexit itself and the Windsor Framework are having on businesses in Northern Ireland.

It is strange that the Government chose not to consult Northern Ireland on this SI. Given its political sensitivity, it would surely always be better to have consulted. I note that there is no legal duty to hold the consultation as the instrument does not make any substantial changes, but I view consultation with Northern Irish authorities as a different class of consultation and more a matter of common courtesy.

I note that the full impact assessment has not been produced. The Explanatory Memorandum says that the changes brought in

“are expected to have no significant direct or no significant indirect, impact on business, charities or voluntary bodies”.

As part of the reset in our relationship with the EU, I hope the Government will review the oversight mechanisms for how they consult the relevant sectors in Northern Ireland. I would welcome a response from the Minister on this point.

I turn to the tabling of the amendment. I must say, although it is absolutely the noble Baroness’s right to table her amendment, that it is hard to see, in my mind at least, that this SI justifies it. Everything that she may wish to say in the main Chamber could have been spoken just as clearly in the Prince’s Chamber at a more convenient time for everyone involved.

The SI itself will ensure that the latest EU rules on product-specific ecodesign and energy labelling automatically apply to Northern Ireland and can be enforced there, as required by the Windsor Framework. The new rules are updating previous Northern Ireland regulations from 2010 and 2011. The new regulations seek to ensure that household and some office items, such as tumble dryers, have a standby mode, and that for other items, such as mobile phones or tablet computers, consumers can acquire some spare parts.

The Government rightly argue that these regulations will bring benefits to Northern Ireland’s residents as they will save money on reduced electricity usage and be able to repair mobile devices if they break, saving the need to buy again from new. If the Department for Energy and Net Zero thinks that these regulations are good for energy efficiency for the people of Northern Ireland, while I welcome the fact that the Minister wants to bring the regulations to the whole of the UK, why can that not happen until March 2026? Is it possible to bring that forward? Clearly, if we could align these regulations across the whole of the UK and get these benefits for everybody, to my mind at least, that would be a good thing. There are staggered start dates for the regulations coming into force to replicate the staggered nature of the EU regulations themselves. The first will come in on 9 May 2025.

This statutory instrument has not been drawn to the special attention of the Houses by the Joint Committee on Statutory Instruments. However, the SI was noted as an instrument of interest by the Secondary Legislation Scrutiny Committee. It points out that

“while manufacturers from Great Britain (GB) selling into NI or the EU will have to meet the EU’s new product standards, the Department says that “the majority” of the products covered by this instrument will also still be compliant with GB standards”.

The committee also notes that the impact of enacting this SI is that, further forward,

“the legislation always automatically reflects the most up to date EU rules on product-specific ecodesign and energy labelling, removing the need for further secondary legislation to implement updates in UK law when the EU rules are replaced in a way that affects NI”.

The committee recommends that

“it would be helpful to also publicise future changes through a Parliamentary Statement to both Houses”.

Will the Minister respond to this suggestion? In his opening remarks, I think he talked about memorandums of understanding; if could he just clarify that point for me, it would be appreciated.

I note the Minister’s points about being on a journey on these matters. In general, we welcome these measures for ecodesign and would like to see them implemented across the UK.

[Baroness Bloomfield of Hinton Waldrist (Con)]

My Lords, I too thank the Minister for introducing this SI, which seeks to update the existing ecodesign and energy labelling regulations for Northern Ireland in line with the Windsor Framework. These amendments ensure that Northern Ireland continues to adhere to EU rules on energy-related products, reflecting the requirements of the framework. While the Government’s intention behind this statutory instrument is understood, there are several aspects that warrant closer scrutiny and further clarification. I note the concerns of the noble Baroness, Lady Hoey, about the ramifications of these regulations on small businesses and consumers, as reiterated by other noble Lords in the House.

Before examining the impact and provisions of the current measures, we should consider the history behind them. The previous Conservative Government had a long-standing commitment to improving environmental standards while ensuring that businesses and consumers were given the tools necessary to thrive in an energy-efficient economy. When the ecodesign and energy labelling regulations 2021 were first introduced in this House, they focused on reducing carbon emissions through ensuring that products in the market met higher energy-efficiency standards. These regulations set minimum standards for products that consume energy, helping to lower energy bills for consumers and reduce the environmental impact across the economy.

In practice, products placed on the Northern Ireland market will remain subject to the EU energy-efficiency and labelling standards. These updates are designed to ensure that Northern Ireland’s product offerings continue to meet the high environmental and energy-efficiency standards set by the EU. These amendments to the ecodesign regulations seek to enhance energy efficiency by imposing stricter performance requirements on a wide variety of products, including household appliances, lighting products and electronics. Can the Minister provide further details on the specific impact these regulations will have on businesses, particularly small and medium-sized enterprises in Northern Ireland? How do the Government intend to ensure that businesses are not burdened by excessive compliance costs or administrative hurdles when adapting to these new requirements?

Heathrow Airport Closure: Resilience and Security

Earl Russell Excerpts

Wednesday 26th March 2025 Lords Chamber

[Lord Hunt of Kings Heath (Lab)]

My Lords, that is a bit of a stretch from the Question, but I congratulate the noble Lord on his method. We of course look at the issue of Chinese ownership and involvement in the energy sector. We take security risks very seriously. Equally, we take a consistent and long-term strategic approach to managing the UK’s relations with China. On the development of a UK supply chain, I agree with him. It is worth making the point that, even with solar, much of the value of work in installing it is held in the UK, and other parts of the energy sector are too. We are very keen to see the growth of a UK supply chain generally.

[Earl Russell (LD)]

My Lords, when the substation caught fire, the Heathrow authorities decided that they needed to reconfigure all their internal electricity network, thereby turning off and back on again all the critical safety and computer systems, despite the fact that two other substations remained available to Heathrow. Does the Minister agree that it is important that both the inquiries that have been announced seek to understand why the Heathrow authorities felt that they were unable to transfer from one substation to another without restarting their computer systems?

[Lord Hunt of Kings Heath (Lab)]

My Lords, my understanding is that, in Heathrow’s view, the supply was insufficient to ensure safe and secure operation. Therefore, it proceeded to reconfigure its internal electricity network to enable the resumption of full operations, utilising the other two external supply points. This required hundreds of systems to be safely powered down and then safely powered up, with extensive testing. The Kelly review will analyse all the relevant material concerning the robustness and execution of Heathrow’s crisis management plans and the airport’s response. The review that my right honourable friend the Secretary of State has commissioned from Ofgem will be looking at the issues of energy, the power outage and what lessons we have learned. We will have discussions with Heathrow to make sure that the terms of reference give us a comprehensive picture.

Energy Prices

Earl Russell Excerpts

Wednesday 26th March 2025 Lords Chamber

[Lord Hunt of Kings Heath (Lab)]

My Lords, I am very grateful to my noble friend for his support. The issue of prices is of course serious for both business and domestic customers. That is why we have the warm home discount and the support given to businesses that use energy intensively. Clearly, this is a continuing issue that will be solved only if we can wean ourselves off the international gas markets, which we are going to do by moving towards clean power. I just say to my noble friend that Ofgem does in fact cap the profits of energy suppliers in the retail market; they are capped at 2.4%.

[Earl Russell (LD)]

My Lords, we have some of the most expensive electricity prices in Europe, just at the point when our citizens need to turn away from fossil fuels to run their cars and heat their homes. I know that the Government are looking at electricity market reform, particularly zonal pricing. Will the Government work on a cross-party basis to develop those plans? When do they feel they will be in a position to bring forward legislation?

[Lord Hunt of Kings Heath (Lab)]

My Lords, I cannot give a definitive date for future legislation, as the noble Earl will understand, but he is right about market reform. We are considering fundamental changes, including zonal pricing. I understand that the previous Government looked at marginal pricing when they started their work but decided not to make any changes. On input, I would be very glad to meet with the noble Earl to discuss his proposals.

Scotland: New Nuclear Power Generation

Earl Russell Excerpts

Tuesday 18th March 2025 Lords Chamber

[Lord Hunt of Kings Heath (Lab)]

My Lords, the department rejoices in the approach of the Welsh Government, and indeed of the noble Lord. I well understand the potential for new nuclear developments in Wales and think it is a tragedy that the proposals in Wylfa did not go ahead. The noble Lord knows that, in the siting policy currently in play, Wylfa is listed as a site of great potential. The new siting policy is more flexible, but, undoubtedly, Wylfa in particular still has great potential.

[Earl Russell (LD)]

My Lords, last year, Scotland met 113% of its national power needs from renewable sources alone. This is set to radically increase, providing much-needed clean power to the rest of the UK. I welcome the expansion of the £150 warm home discount to more homes in Scotland. Does the Minister agree that the SNP Government must take urgent action on energy efficiency? Their decision to scrap their own green heating plans for heat pumps in new homes will leave Scottish citizens poorer and colder.

[Lord Hunt of Kings Heath (Lab)]

My Lords, the noble Earl is not going to draw me into commenting on what the Scottish Government have done on these matters. However, it is worth making the point that, in 2023, 19.3% of electricity generated in Scotland came from nuclear. That indicates that, in clean power, nuclear has a huge amount to offer Scotland, Wales and England.

Licensed Oil and Gas Fields: Emissions

Earl Russell Excerpts

Tuesday 11th March 2025 Lords Chamber

[Lord Hunt of Kings Heath (Lab)]

My Lords, I believe that the noble Baroness is right that venting and flaring are not covered in the EIA consultation, which is about scope 3, and I think they would come into scope 1. We are, of course, concerned about this and are considering the matter. My understanding is that the upstream oil and gas sector overall makes up to 3% of total net territorial greenhouse gas emissions. Of course, we are committed to meeting carbon budgets 4, 5 and 6, and we have just received advice from the Climate Change Committee in relation to carbon budget 7—all those things come into the mix as well—but I certainly take seriously the point that the noble Baroness raises.

[Earl Russell (LD)]

My Lords, given the Supreme Court decision and the new rules on oil and gas production being consulted on, what other measures and assessments of extra resources are the Government considering or undertaking to ensure that continued progress is made towards a just transition in the North Sea?

[Lord Hunt of Kings Heath (Lab)]

My Lords, the noble Earl is right. We issued a consultation paper last week in relation to the North Sea and the transition that takes place. There is a decline that has carried on for many years in North Sea production. On the other hand, the workers in the North Sea are very skilled, and there is no question that, as the number of workers in the oil and gas fields reduces, so there is a big demand to increase the workforce in offshore oil and gas. The consultation, our policy of a just transition and the jobs hubs that we have established are very much geared towards ensuring that we make use of very skilled people and find new employment for them.

Warm Home Discount

Earl Russell Excerpts

Monday 3rd March 2025 Lords Chamber

[Lord Offord of Garvel (Con)]

My Lords, the Government have announced an expansion of the warm homes discount: a change that will see more low-income households receive a £150 payment to help them heat their homes. However, this payment is likely to be inconsequential for many households when compared with the increase in the energy price cap. The change to the warm homes discount is only a temporary fix. Ultimately, energy bills for both the British consumer and British businesses are far too high—something I am sure noble Lords on all Benches will agree on.

The Government must look to prioritise cheap energy if they are to protect the most vulnerable households. Instead, they have chosen an approach driven by ideology and it will be the British people who pay the price. The rush to ramp up renewables to meet their own unilateral target of clean power by 2030 will only push up prices and further increase energy bills. The network costs on people’s bills will be increased as the Government race to build twice as much grid in the next five years as has been built in the past decade.

Additionally, the OBR has said that environmental levies will increase from £12 billion to £14 billion by 2030, driven considerably by the hidden costs of renewables. This too will end up on consumers’ energy bills. Indeed, a close look at consumer energy bills demonstrates that half the bills are now accounted for by subsidies and network charges.

So, despite the general election pledge to cut bills by £300, it is plainly clear that the Government have chosen to put a political dividing line before any approach that will reduce the cost of energy. It is their decision to shut down the North Sea. This is an industry that generates billions in tax revenue, supports 200,000 British workers and produces home-grown energy. But the Government have opted instead for a tunnel-vision approach on renewables that relies on coal-power technology imported from China. This will not decrease energy bills by £300, as was promised.

I remind the House that the Prime Minister said:

“I stand by everything in our manifesto and one of the things I made clear in the election campaign is I wouldn’t make a single promise or commitment that I didn’t think we could deliver in government”.


So can the Minister confirm how much energy bills will rise by before households see the promised £300? Will he confirm whether the Government intend to produce a full-system cost analysis of the impact of the clean power target of 2030 and the impact it will have on consumer energy bills? Finally, will he tell the House how much the Government expect levies to increase by over the next five years?

[Earl Russell (LD)]

My Lords, I welcome this Statement—in particular, the clear commitment to provide a one-off payment for next winter. These payments will help with continued rising household energy costs, as the energy price cap has risen again by 6.4%. Until we break our dependence on gas for 30% to 40% of our electricity generation and 85% of our home heating, we will remain at the mercy of the volatile international markets.

Indeed, households are set to pay over £800 more per year for their energy compared with the winter of 2020-21—a 77% increase. The UK has spent £140 billion on the international gas market since the war in Ukraine started, for no long-term energy security or reduction in the energy bills being paid. That is 10 times the total GB Energy budget to date.

We have 6 million households living in fuel poverty today, and most of them have been for some time. We have some of the worst-insulated homes in Europe and some of the highest energy bills. High energy bills are a continued legacy issue and are, in part, a direct result of the last Government’s failure to do more to transition to renewable energy earlier. Progress is being made on the transition and we welcome this.

The Climate Change Committee is absolutely clear and unequivocal. Politicians who oppose action on net zero will make their constituents poorer by driving up their energy bills. Although we welcome these measures, we ask the Minister to go further and introduce this much-needed help now, to provide help for those who need it now, and not to make people wait until next winter.

We also call on the Government to scrap the energy price hike for the nearly 10 million pensioners who lost their winter fuel payment and to provide more help to other vulnerable groups, particularly those with disabilities. The estimated cost is about £130 million. We also call on the Government to ensure that all energy companies sign up to a single social tariff as soon as possible, to provide a long-term, stable mechanism for helping to reduce fuel poverty.

We need to do more to smooth the energy price costs as we drive over the energy transition speed bump in the road ahead. We have constantly called for an emergency 10-year home insulation programme. Domestic home heating is still 77% gas powered. We need a huge and urgent increase in the number of heat pumps installed.

Finally, I want to ask about long-term reforms and for some clarity on the direction of travel on measures to reduce our energy bills, and in particular about electricity market reform, which feels like an idea whose time has come. Does the Minister agree? When can we expect progress?

Our electricity prices are linked to the global fossil fuel market. Natural gas prices thus set the UK market electricity price. Will this Government look at the option for decoupling electricity market structures so that we have one rate for gas and one for electricity? Is it not time to stop the artificial inflation of the price of our home-generated renewable electricity, so that the savings can be passed on to our bill payers?

Will the Government publish reports on these matters? Will they also look at reforming contracts for difference?

I am disappointed that we do not have consensus on climate change, but my hope is that we could have consensus on electricity market reform as a measure to save bill payers money.

[The Minister of State, Department for Energy Security and Net Zero (Lord Hunt of Kings Heath) (Lab)]

My Lords, I thank noble Lords for their comments on the Statement on the warm home discount. The noble Lord, Lord Offord, is right, of course, that this comes as there is an increase in the energy price cap. In a sense, we are repeating the debates we have had over the last few months.

The noble Lord, Lord Offord, talked about the Government having an ideology. But it is not an ideology; it is about the stark facts of climate change, the impact it will have on us and the lessons we learn from the Russian invasion of Ukraine and the impact that has had on our energy security.

We believe that the way to proceed is to move to home-grown clean energy as soon as possible. It is interesting to see the change in stance of the Opposition. After all, it was the noble Lord’s party that took through legislation enshrining net zero by 2050. There is the work of the noble Lord, Lord Deben, who chaired the Climate Change Committee for some 10 years with great distinction, the work the then Government did on COP 26 in Glasgow, and the growth in the green economy over the past few years. It is a pity that we seem to have lost that consensus.

The noble Lord will know that Governments never speculate on future energy prices, but we have said that we are determined to cut bills as far and as fast as we can and that a figure of up to £300 by 2030 remains our objective. On levies, of course, policy costs associated with bills are expected to increase over time and clearly, the last Government used levies extensively, but as low-carbon capacity expands—renewables, CCUS, nuclear-hydrogen—those costs will drive reductions in electricity wholesale prices. It is worth reflecting on the advice we have just received from the Committee on Climate Change on the seventh carbon budget, because that makes a similar point: although there are some initial clear up-front investment costs, in time the benefits of having cheap renewable energy will come to the fore in terms of the costs that have to be borne by the consumer and by businesses.

I very much agree with the noble Earl, Lord Russell, on the net zero policies that need to be taken forward. He is absolutely right about the challenge we face with our housing stock, and the requirement to do everything we can to help transform it. He will know that we have the Warm Homes Plan. We have already kick-started delivery of it with an initial £3.4 billion over the next three years towards heat decarbonisation and household energy efficiency. We published a consultation in February this year on improving the energy performance of privately rented homes, and we have announced a raft of policies to support heat pump uptake. However, there is a long way to go, and it represents a major challenge.

On a social tariff, we are working closely with other government departments to unlock data that will enable us to target support more effectively to those who need help with their energy bills. My honourable friend the Minister for Energy Consumers is leading a working group with Energy UK and other stakeholders to see how we can take further sustained action on improving the affordability and accessibility of energy.

On energy market reform, the noble Earl’s point is well taken. We are launching a comprehensive review of the energy regulator Ofgem. We want to establish Ofgem as a strong consumer champion, driving up standards for households and business consumers, both now and as energy use evolves with smart and green technology. That should not be taken as criticism of Ofgem; it is more that we see future potential to develop Ofgem’s role.

On reform of the market more generally, we are considering two key reform options to enhance the efficiency of the electricity market by strengthening locational price signals better to match supply and demand—either a reformed national pricing model, or zonal pricing. This work is being undertaken. I take the noble Earl’s point about the relationship between electricity and gas, and we are looking at that issue too. On the overall position of price to business/price to consumers, in the long run, we must charge on with our aim to get clean power as quickly as we possibly can. That is the way to get long-term stability.

Climate Change

Earl Russell Excerpts

Monday 3rd March 2025 Lords Chamber

[Lord Hunt of Kings Heath (Lab)]

There clearly is, my Lords, because the way to get away from the volatility of the international gas market, which has had such an impact on energy prices in this country, is to move towards homegrown energy security. That is what we are designing to do with clean power. NESO has confirmed that this is the best way for us to invest our resources in energy. In relation to the global situation, global investment in renewables in 2024 reached $2 trillion, as against $1 trillion in fossil fuels. We have to combat and react to climate change, and the only way we can do this is to decarbonise as soon as we possibly can. I am proud that the UK is a global leader.

[Earl Russell (LD)]

My Lords, in light of Trump’s denial of climate change, it is vital that the UK continues to provide international leadership and, in particular, support for international climate science at this time. What work are the Government undertaking to support international climate science, and particularly American scientists?

[Lord Hunt of Kings Heath (Lab)]

My Lords, from what I have already said, the UK is a global leader. We are working with many other countries. In relation to climate science, obviously I understand the point the noble Earl is raising. Clearly, we need to ensure that the integrity and power of climate science continue. These are matters that we will be considering over the next few months. We need to set out policies in relation to delivery of the fourth, fifth and sixth carbon budgets, and we have to respond to the advice from the Climate Change Committee in relation to the seventh carbon budget. Clearly, the whole context in which we do this is having very good climate science.

Great British Energy Bill

Earl Russell Excerpts

3rd reading
Tuesday 25th February 2025 Lords Chamber

It would be nice to have that broad set of criteria as soon as possible and for it to be shared with Parliament. To be asked to pass this amendment before we know what on earth the judgments will be, what they will be based on, or who the polymath will be who can somehow convincingly second-guess the market is asking quite a lot of us. I can see how the amendment adds something to the accountability side, but that something is very vague. I hope that there will be more efforts by the Government before long to give us a clearer idea of what “effectiveness” is, how it will be judged, how much the market will be overridden by views in five years’ time, and whether, in fact, it is going to work at all.

[Earl Russell (LD)]

My Lords, I will speak first to the amendment in the name of the noble Lord, Lord Hunt, which is supported by the noble Lord, Lord Vaux. These Benches are pleased to see that continued progress has been made and that this government amendment has been brought forward. There has been a unanimous voice across the House that there needed to be more reviews in the Bill and that it was important to have this amendment, so we are pleased to have it in place.

I echo what was said on the Government’s amendment to the amendment and the addition of proposed new subsection (4)(a), which requires a copy of the review to be sent to the devolved Ministers 14 days before it comes to Parliament. My assumption is that that is there so that the devolved authorities have a chance to comment on the review and that those comments have a chance to come before Parliament, but it would be useful if the Minister could confirm why that new subsection has been added and what the Government’s thinking is on it.

We welcome the review, but it is happening over a five-year timeframe, with the first review completed at the important date of 2030. If the Government recognise the need for the review, why not have it on a more regular basis? A three-year or four-year timeframe would be more useful for this proposed new subsection to have the effect that the Government intend it to have.

I turn beyond the amendment to what I want to say at the end of Third Reading. These Benches have been consistently supportive of the Government and their objectives in this Bill. We believe that, done well, GB Energy will help to secure our energy independence and reduce our reliance on volatile international gas markets, which have proved so costly for UK bill payers and our economic prosperity.

The previous Conservative Government spent some £40 billion subsidising bill payers, and that money provided no long-term benefit to our overall energy security. Just this week, the Energy and Climate Intelligence Unit published a report on the anniversary of the invasion of Ukraine, stating that £140 billion has been spent by the UK on the international gas markets since 2021—the equivalent of £1,300 per person. Again, this has brought no long-term benefits.

We have the third-best wind resources in the world, so it is great to see that these are finally being properly developed to bring us long-term energy security and to reduce costs for our energy bill payers. The CBI reported this week that the green economy contributed £80 billion in gross value added to the UK economy last year and grew at a rate of 10%—three times faster than the rest of the UK economy.

Having said all that, I always felt that the Bill was a little bit too short and lacked the content that it needed; that has caused us some challenges when scrutinising it. We welcome all the amendments that have been passed; we believe they add value and that the Bill leaves this place in a stronger position than when it arrived. I am particularly grateful to the Minister and his Bill team for including community energy in the Bill. This is a really important amendment, and it will benefit our communities and help with the energy transition. Community energy has been supported by MPs and noble Lords on all sides, so this is a win for everybody. I am grateful to Power for People, which has provided support to all of us on these matters, and we will continue to press the Government, as others have already mentioned, on the future of the community energy fund.

We also welcome the other amendments that were tabled: the amendment on strategic priorities; and the amendment that the noble Baroness, Lady Hayman, negotiated with the Minister on sustainable development.

Finally, if noble Lords will excuse me, I want to say something about the words that we use as parliamentarians and how we talk to each other on the issues of climate change. I deeply regret the end of the political consensus on climate change. My personal feeling as a relatively new Peer in this House is that while bits of our debates on this Bill were excellent, there were too many moments when points were repeated, purely party-political points were made that did not improve or challenge the Bill, filibustering took place, or we had numerous votes that took place very late at night.

The public support action on climate change. Polling consistently shows 70% support. The public also want to see reductions in their energy bills; they do not much care, frankly, how that happens, but it requires all of us to make progress. These matters are challenging enough to address with a sense of consensus, and they are made even more difficult when political hostility is added to the mix. My final point is that we must all work better together so that we can all achieve more.

[Lord Offord of Garvel (Con)]

My Lords, in concluding for His Majesty’s loyal Opposition, I thank noble Lords from across the House for their tenacity in scrutinising the Bill, and in particular the noble Lords, Lord Alton of Liverpool and Lord Vaux of Harrowden, for their amendments. On my own Benches, I note the contributions of many noble friends, who have done sterling work to temper what is a misguided piece of legislation which will not deliver cheaper energy for UK households or businesses.

GB Energy is flawed because it exposes the conflict at the heart of this Government between the Chancellor’s stated priority of economic growth on the one hand and, on the other, the accelerated pursuit of net zero at any cost that the Energy Secretary has made his ideological obsession. While this scrap rages at the centre of Whitehall, there is only one loser: the public, who, it has been confirmed today, will be loaded up with the price of net zero to the tune of another £111 per household this year. That is directly because of this Government’s policies and a far cry from the promise in the Labour manifesto of a reduction in energy bills by £300 per year per household—a manifesto pledge which this Government have refused to include in this legislation.

As the Bill has progressed through your Lordships’ House and the other place, the chasm between rhetoric and reality has indeed been exposed. I believe that in a decade we will look back and ask why we invented this cardboard cut-out company. But despite our deep scepticism, it would be churlish not to wish GB Energy a positive start, so I offer some start-up advice. With its £8 billion of borrowed money, the first order of business should be a feasibility study of all the energy sources available to us in the UK. If it does so, it will discover the following. The dash for renewables at any price is a folly. In doing so, we are loading excessive costs on to our energy bills, to the point now where our industrial energy in the UK is five times more expensive than in the US and seven times more expensive than in China. All the while, we are offshoring jobs from the UK to China, turning UK revenue into Chinese profits. This is impoverishing our nation.

The Government are denying the facts. We are an energy-rich country, and our hydrocarbon industry is the envy of the world in terms of compliance and sustainability. Surely it is irresponsible to refuse to even explore the opportunities that onshore gas could bring, while of course undertaking an assessment of risk. The fact that this Government’s policy continues to tilt towards shutting down offshore oil and gas is surely an affront to the hundreds of thousands of skilled workers in Aberdeen and the north of Scotland. They surely deserve better than this.

Meanwhile, both parties agree that nuclear is efficient and clean, but it should be accelerated. We should cut the red tape by unleashing our homegrown engineers while being unafraid to learn from those, such as the Koreans, who have been able to roll out nuclear energy more quickly and at a lower cost.

If GB Energy does this feasibility study, it will realise the facts and then it should pivot net zero accordingly to ensure that our transition to a cleaner energy system is both fair and affordable to UK households and industry. For the sake of the country, we can only hope that it does so.

Finally, I believe it is important to state unequivocally that my own party must reflect on the last 14 years of government energy policy. The verdict of the electorate in July was clear and resounding. As many noble Lords are aware, an error does not become a mistake until one refuses to correct it, and I would encourage the current Government to heed these wise words.

Biomass Generation

Earl Russell Excerpts

Wednesday 12th February 2025 Lords Chamber

[Lord Offord of Garvel (Con)]

My Lords, I begin by welcoming a more limited role for Drax in our energy power system. However, we must acknowledge that because of the Government’s ideological energy policy—which prioritises naturally unreliable renewable technologies —more biomass subsidies are required. This would not be the case if the Government focused their attention on flexible and reliable baseload power. We must look for a more pragmatic approach: one which prioritises cheap, stable and reliable energy. It goes without saying that Drax’s biomass plant is not clean nor is it cheap. In fact, according to non-profit think tank Ember, burning wood at Drax produces a staggering four times the emissions of our last coal power plant. It is the UK’s biggest polluter, producing double the emissions of our largest gas station, operated by RWE at Pembroke.

As a result, the Government have to make difficult decisions which result in high levels of subsidy, burdening the taxpayer further. Will the Minister confirm what estimates have been made as to how much CO₂ will be released by burning trees at Drax for another four years, and how that compares to using gas to generate the same power?

Ultimately, we must consider the cost of the new agreement. At £160 per megawatt hour in today’s money, the new deal for Drax is 15% higher than its existing agreement of £138 per megawatt hour. Indeed, Baringa’s analysis has shown that bill payers will continue to pay over £450 million a year in subsidies to burn trees. Will the Minister confirm that the Government intend to carry out an independent analysis of how much the increased strike price will cost the British taxpayer? Will he give his word that Drax will not be allowed to burn wood from primary forests during its generation? Finally, while we welcome the new sustainability criteria, will he explain what steps will be taken to make this enforceable in practice?

[Earl Russell (LD)]

I thank the Government for their Statement on short-term support for large-scale biomass generation as part of the UK’s energy generation mix. The Government inherited from the Conservatives a system where large-scale state subsidies are provided for the burning of biomass. This form of energy generation currently plays an important role in our energy system, providing some 5% of our national energy needs. These subsidies are worth some £2 million a day. Over time, Drax has received billions of pounds in government subsidies and from bill payers because wood pellets are classed as a source of renewable energy. Lucrative government subsidies are due to come to an end in 2027, hence the Statement before us today. The new agreement reached with Drax will run from 2027 to 2031 and will see the power station used only as a back-up to cheaper renewable sources of power such as wind and solar.

We can have lots of arguments about the sustainability calculations used to justify Drax. I listened with interest to the noble Lord, Lord Krebs, speaking on the Great British Energy Bill on Report last night, and I am not a scientist and do not have the exact answers. What I will say is that shipping wood across the Atlantic has a carbon footprint. Repeated incidence of old-growth forest being felled and burned undermines credibility and must stop.

Finally, the very fact that the Government are looking at carbon capture and storage to prolong the life of Drax is telling. Labour’s new plan will allow for four more years of unabated wood burning, which produces 18% more CO₂ than burning coal, according to the IPCC data. It takes nearly 100 years for this carbon to be pulled back from the atmosphere. Climate change driven by CO₂ emissions is clearly the greatest threat to humanity’s survival. Even a 100-year, long-term carbon-neutral Drax is hardly beneficial to anything we need to achieve to effect any real change in the race for humanity’s survival.

The Liberal Democrats see biomass as a fundamentally inefficient method of producing electricity, and we strongly believe that it should not qualify as a form of renewable energy. The Government’s plan to continue to subsidise the Drax power plant causes environmental harm and is not beneficial compared to investment in renewable energy. It does not provide good value for money for our bill payers. We are concerned that, although this plan would cut the amount of wood Drax is burning by 50%, the price is still lucrative—indeed, I see in the news that Drax’s share price has risen by 11% this week.

We are deeply concerned about the destruction of primary forests. The new agreement states that the wood must be 100% sustainably sourced. How will the Government verify that this is the case, when it has not been in the past? Further, I ask the Minister to publish the 2022 KPMG report into Drax’s record on claiming subsidies on a false basis. Are the Government prepared to publish that report?

The new proposals will see a halving in the use of Drax and a saving on subsidies of £147 million. Will those savings be redirected into other renewable projects? Under this proposal, Drax can step in to increase energy generation and provide flexibility where it is needed. Is this not just an energy marriage of convenience? Will the Government consider reclassifying Drax as being not a renewable source? It is time to stop calling it such; if the Government need that power generation for flexibility, clearer labels should be given.

The Liberal Democrats are clear that we would ensure that 90% of the UK’s electricity is generated from renewables by 2030—and that would not include biomass. When will the statutory instrument be published? I am pleased that the Government have halved the subsidies for Drax, but I hope that further progress is possible.

Finally, I wish to challenge the Minister. This Government should agree to ask NESO to write an independent report, to be produced relatively quickly, examining: the impacts of ending all subsidies to Drax; how those funds could be replaced and used for alternative renewables technologies; and what the resulting impact would be on our energy security and journey to net zero.

[The Minister of State, Department for Energy Security and Net Zero (Lord Hunt of Kings Heath) (Lab)]

I am grateful to the noble Lord and the noble Earl for their comments. I understand, of course, that this is a sensitive area and that there are concerns, as noble Lords across the House have expressed. Equally, we have taken advice from the National Energy System Operator. It has advised us that Drax will play an important role in delivering security of supply between 2027 and 2031. It is true that we could seek to replace Drax, but that would probably be with new gas-fired power stations. We believe that there would be significant risks in relying on that approach, and that what has been taken is a pragmatic decision.

I noted what the noble Lord, Lord Offord, said. I would point out, though, that it was the then Secretary of State for DESNZ who, under the Conservative Government, put their name on the planning approval for Drax’s plans for BECCS at the Selby site. The decision letter stated that the project would

“support the transition to Net Zero by 2050”.

I will respond to some of the points that noble Lords have made. The important thing is that the agreement reached ensures that Drax plays a much more limited role in the system, providing low-carbon dispatchable power only when that is really needed. Drax currently runs around two-thirds of the time; that means it provides power, even when other renewable sources are abundant. Under the new arrangement, Drax is being supported to operate only at a maximum load factor of just 27%, operating less than half as often as it currently does. This will be guaranteed by the design of the dispatchable contract for difference that has been agreed. What that means is that when renewable power is abundant, Drax will not generate and consumers will benefit from cheaper wind and solar instead.

On cost, the new deal halves the subsidies for Drax compared with existing support. That is the equivalent of a saving of nearly £6 per household per year. Our analysis shows that this will save consumers £170 million in subsidy in each year of the agreement, compared with the alternative of procuring gas in the capacity market.

Your Lordships’ House has expressed a lot of concern about the obviously important questions on the measurement of sustainability over the past few months. I too was interested in the analysis by the noble Lord, Lord Krebs—this was some time last night—as the chair of the challenge group that exists at Drax. We will increase the proportion of woody biomass that must come from sustainable sources from 70% to 100%. We will significantly cut the allowable supply chain emissions to a level in line with the stricter regulations currently operating in the rest of Europe, as some noble Lords here have asked for, and exclude material sourced from primary forest and old-growth forest from receiving support payments. There are substantial penalties if these criteria are not met.

I know that there is concern about the regulatory system, but Ofgem has shown that it is prepared to act, and has acted. We will continue to make sure that our independent regulator has the support it needs to do what is necessary. We should have some faith in Ofgem’s ability to monitor and police this.

On the future of Drax, this new arrangement takes us from 2027 to 2031. We have not made any decisions post 2031, but we want to have proper options. We are setting up an independent review to consider how options for greenhouse gas removal, including large-scale power BECCS and DACS, can assist the UK in meeting our net-zero targets.

On the KPMG reports, Ofgem considered those as part of its detailed investigation into Drax. These are internal reports that the company commissioned and I cannot make a commitment on that, but I will take it away to see what I can do.

Overall, it seems to me that this is a—what is the word?—pragmatic response to a challenging question. The fact is that Drax makes an important contribution to our generating capacity. Equally, noble Lords will know that the Government have taken note of their concern about the general issue of sustainability by increasing the requirements. This is a four-year agreement and, clearly, we will come back to this important issue in the next few years.