Contracts for Difference Scheme

Jim Shannon Excerpts

Thursday 19th October 2023 Westminster Hall

[Jim Shannon (Strangford) (DUP)]

I beg to move,

That this House has considered the Contracts for Difference scheme.

This matter is of some interest to myself as an advocate of renewable energy projects, such as the enormous tidal stream potential of Strangford lough in my constituency. I had had a request in for some time to discuss this topic, and I will be referring to the impact upon Northern Ireland, but I know that others will refer to the impact upon Scotland, England and so on. I thank all right hon. and hon. Members in advance for their participation in this debate. I understand that some of those who wished to be here are unfortunately unable to due to Storm Babet in north-east Scotland, so our numbers may be reduced.

I took part in yesterday’s debate on using our ports for green energy, which seems like it is going to be the future. The Minister was here for that debate yesterday, and it is very pleasant to see him back in this place again today; we look forward to his answers. On the surface, this is an energy issue, but it goes much wider than that. It is also about the Northern Ireland economy, and I know the Minister is, like me, increasingly committed to ensuring that Northern Ireland plays its part in the economy of this great nation of the United Kingdom of Great Britain and Northern Ireland. This is about building a Northern Ireland supply chain into the process. It is about Northern Ireland’s desire to contribute to the Government’s net zero targets and to reach the target together. It is about Northern Ireland’s desire to be an integral part of the United Kingdom of Great Britain and Northern Ireland, to provide support for low carbon delivery for all in this great nation of four nations as one.

Without access to the contracts for difference scheme, Northern Ireland has almost been made a no-go area for renewables, and that does not serve the interests of either our Government here or the people of Northern Ireland. In fact, 82% of renewable developers unfortunately do not currently see Northern Ireland as an attractive place to invest. We need to improve that, and my contribution in this debate will be to suggest ways in which that can happen.

In a previous answer to a parliamentary question of mine, the Minister stated that in order to address the contracts for difference question, the issues regarding the Northern Ireland Assembly must be dealt with. However, I suggest to the Minister that things have happened since the decisions of the Assembly and the review that the Assembly did in 2019-20, and I will return to that shortly. It is in no one’s interest to insist that one cannot move ahead without the other, because there are ways of moving forward.

I respectfully remind Members that other legislation has been imposed on Northern Ireland in the absence of an Assembly, so there must be some balance here. I will give three quick examples only to illustrate the issues of where the UK Government have the power to step in. First, the abortion legislation—the most liberal in Europe—was inflicted on us without thought. Secondly, the Northern Ireland legacy Bill was imposed against the wishes of all political parties from Northern Ireland in the Chamber, and yet victims are now left with no avenue for recourse. Thirdly, and most recently, before the summer recess an incomplete and incredibly inflammatory RSE curriculum change was brought in by direct rule.

Those examples show that such things are possible. They are just examples and I will not get into the details, because I know you would not want me to, Dame Angela. I urge the Government to do the same in relation to this matter to show that it is not just on morality issues that legislation is passed without an Assembly, but in fact things that are useful, such as this request from me and others, for Northern Ireland.

The UK Government first introduced the contracts for difference scheme in 2014, following the passage of the Energy Bill in 2013. The scheme ensures that renewable energy projects receive a guaranteed price from the Government for the electricity they will generate, giving companies certainty and the confidence to invest their private capital in the UK. I know the Minister has always said that the Government are committed to that, so that issue is not in doubt today.

Contracts are awarded to developers through a series of competitive auctions, where the lowest price bids are successful, ensuring value for money for consumers, as they should. Since its introduction, the scheme has been instrumental in providing a route to market for numerous renewable energy projects and has allowed the United Kingdom to become a global leader in technology, such as tidal stream and offshore wind, both fixed and floating.

Last year, the Government announced that the scheme would be transitioned into annualised auctions. The first round to take place since the transition was allocation round 5. Others will speak to that and have their own opinions, but allocation round 5 produced a disappointing set of results, as the total gigawatt output was far less than the previous round—mostly because there was no update for either fixed or floating offshore wind. Despite that, for nearly a decade the scheme has provided a route to market for numerous renewable energy projects across Britain, creating green job opportunities, reducing emissions and enhancing energy security. All those are important and we welcome them as giant steps forward.

The change to annualised auctions presents a timely opportunity for parliamentarians in this debate in Westminster Hall to come together to debate reforms that will ensure continued success for all renewable technology across all the nations and regions of the entire United Kingdom, including—indeed, especially—Northern Ireland.

When the Energy Bill was passed in 2013, it was designed to allow Northern Ireland to join the GB CfD scheme at a future time, should the United Kingdom Government and the Northern Ireland Executive believe that was in the best interests of the United Kingdom. I will outline the case and where we are.

Energy policy is devolved to Northern Ireland and, under normal circumstances, should be the responsibility of the Northern Ireland Executive and the Department for the Economy. There has been a desire to design and deliver a Northern Ireland-only CfD, but the ambition is as yet unrealised and has no realistic prospect of happening any time soon. That is where we are and that is the reality, but there is a way forward, which I will put forward.

Will the Minister advise what discussions he has had with the permanent secretary for the Department for the Economy, if any, in the last few years, in relation to CfD? The reasons given to justify Northern Ireland’s exclusion from the Great Britain CfD were primarily around systems difficulties with the Northern Ireland shared grid and energy market with the Republic. The justification looked reasonable enough when the UK Government arbitrarily excluded onshore wind from allocation rounds 2 and 3. However, in developing its energy strategy, “The Path to Net Zero Energy”, the Department for the Economy carried out a consultation from December 2019 to March 2020. That has an impact on what I am requesting and the reasons why we have brought those requests forward. The consultation asked respondents:

“Do you agree that we should explore with BEIS the possibility of extending the contracts for difference scheme to Northern Ireland?”

That is important, as I have highlighted. The consultation found that a massive 92% of respondents answered “yes” to that question.

“The Path to Net Zero Energy”, published in December 2021, confirmed that the Northern Ireland Executive are exploring whether the contracts for difference scheme should be extended to Northern Ireland. Why? Because things have changed. Since that time—from 2013-14 and then from 2019-20, or whenever the consultation process took place—opinion has changed, as has the realisation of where the future lies better. I am a great believer, as you and others know, Ms Bardell, that the United Kingdom of Great Britain and Northern Ireland is always better together. We can do things better together. We can deliver things and think things better together by exchanging views. I know the Minister, like me, is committed to the Union and the importance of that.

The UK Government should step up to follow through with the plans in motion that allow for Northern Ireland to be included in the GB scheme. In the consultation process an overwhelming 92% of respondents said that they want that change, that integration, that participation and partnership together. This would mean that future allocation rounds have greater success for renewable energy projects across the whole of the United Kingdom—not just mainland GB alone, but elsewhere. That is so important.

One reason why Northern Ireland did not join the scheme was due to the exclusion of onshore wind. However, that argument has moved on. Onshore wind returned to the scheme in AR4 in 2021 and has been hugely successful in Scotland in both rounds. The inclusion criteria have changed from what it was in 2013-14 when the Northern Ireland Executive looked at it, and the consultation process has moved that along to another stage. A different approach is needed—not the 2013-14 one, but the one that comes off the back of the consultation process in 2019-20.

In this year’s allocation round 5, onshore wind made great gains, adding more than double the number of successful projects compared to the previous year. Again, that is an indication that the change in the United Kingdom is real, and we in Northern Ireland want to be part of that change. In allocation round 5, 24 projects were successful and they will go on to create some 40% of the total capacity in the round. If Northern Ireland had been included in the scheme, onshore wind would have had even greater success and would have benefited the whole of the United Kingdom to reach those targets of renewable and green energy that we all want to be part of. It is a technology that Northern Ireland has in abundance. We can add to the net zero targets in a culmination that the Minister always talks about in the Chamber.

Another winner of allocation round 5 was tidal stream energy, partly thanks to the Government’s ring-fenced budget for tidal stream that helped to return a record 11 tidal projects with a total capacity of over 500 MW. The scheme and the support provided through contracts for difference would also benefit tidal stream projects in Northern Ireland. For example, Strangford lough in my constituency of Strangford has obvious potential for a tidal stream, which is why there was a trial there with the 2008 SeaGen project. It was an incredibly successful pilot scheme, but it never seemed to get off the ground.

I want to put on the record my thanks to the Minister for his response to my request to visit. He was well received and I hope he enjoyed his time in my constituency, down in Portaferry with all the scientists at the Queen’s University research station. They think we could be part of this great, great scheme for the whole of the United Kingdom. Every one of us who had the opportunity to see the Minister present that day recognised his interest in the subject matter, and those that we met that day are keen to see the project—SeaGen as it was then —commissioned.

The trial was commissioned by Marine Current Turbines with an investment of £12 million. The project involved the installation of two 600 kW turbines producing 150 kW of electricity to the grid in July 2008. SeaGen generated electricity at its maximum capacity for the first time in December 2008. I remember that scheme very well; I was a member of the Assembly back then. I was also a member of Ards borough council. We were incredibly excited. Those of us who had a vision for net zero and green energy recognised, even back in those days, that this is where we want to be and need to be. It is more of an issue today because we are all looking at it as time has marched on.

The scheme has produced 5 GWh of tidal power since its commissioning. That is equivalent to the annual power consumption of 1,500 households. That is exciting because we had the evidential base and could see that producing the energy for every house in Portaferry and maybe every house in Strangford—just as examples. Including Northern Ireland in the contracts for difference scheme can ensure more projects like this one go beyond a trial to help strengthen the UK’s energy security and meet net zero targets.

That brings me to my final point. It is important that we recognise that, as it stands, Northern Ireland is being disadvantaged. The unavailability of contracts for difference is deterring British investment in Northern Ireland. As one who believes honestly and proudly in the strength of the Union of the United Kingdom of Great Britain and Northern Ireland, it is clear to me and I am sure to other Unionists, as it is hopefully clear to the Minister and everyone else, that extending the remit of the CfD scheme will significantly support the United Kingdom to meet its net zero commitments. Crucially, it will enable Northern Ireland to play an increased role in reducing UK carbon emissions, if all the regions are working together. I want Northern Ireland to be a part of that and, if I can accumulate and sum up in one sentence what I hope to achieve, I hope the Minister will agree that that is worthy of consideration.

I believe that the alternative of providing Northern Ireland with access to the GB CfD scheme is the best available option for us in Northern Ireland to allow for greater levels of private investment and faster delivery of renewable energy. The 2019-20 consultation, along with the recommendation and the final figures from 2021, saw 92% of businesses saying the same thing. Northern Ireland’s inability to participate in CfD is placing it at a competitive disadvantage to mainland GB. I know of at least two companies that are keen and willing to consider tidal energy possibilities and potential in Strangford lough. The change in the CfD scheme will be the difference for that success, which I want us all together to have within this great nation.

In the light of our shared commitment to strengthening our Union, I ask and request that the Government investigate providing Northern Ireland with access to join the contracts for difference scheme. The reform we are asking for would benefit everyone—especially us in Northern Ireland—when it comes to meeting net zero targets across this great United Kingdom, and would ensure that Northern Ireland’s generators are provided with access to the GB scheme to ensure greater levels of private investment and to increase Northern Ireland’s capacity to deliver renewables. We want to be part of that, and I know the Government want us to be part of it too. I am putting forward a solution for how we can deliver that together for everyone, to help the United Kingdom of Great Britain and Northern Ireland secure its pathway to net zero.

I know the Minister, right hon. and hon. Members are all committed to the Union—except for maybe one person! We are committed to delivering on the CfD scheme. We all see the benefits of that. Northern Ireland industry and her people are in grave need of support and help, and this inclusion in the United Kingdom can make change happen and will make a real difference to industry. The Minister’s hands are not tied. The precedent has been set. He must do the right thing and level the playing field to ensure that Northern Ireland can be part of that team of the four regions together, delivering net zero by making sure that Northern Ireland is part of the CfD scheme.

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[Graham Stuart]

I will make a little more progress, if I may.

The CfD scheme is a major UK success story. It has secured more than 30 GW of capacity, including 20 GW of offshore wind, since 2014. It has driven down the price of offshore wind by about 70% in that time, helping to grow the industry and its supply chain both in the UK and globally, although as the hon. Member for Manchester, Withington says, I have previously publicly expressed the desire to do more. We are coming forward with non-price factors as a way of encouraging more of the supply chain to be in the UK. But have no doubt: this has been a phenomenal success for us, for British jobs, for British consumers and for the world. We have the four largest offshore wind farms in the world, with more than 14 GW already in operation and a further 77 GW in the pipeline. It is a pleasure for me that of course the largest offshore wind farm in the whole world is Hornsea 2, named after a small town in my constituency. The UK is a world leader in floating offshore wind, with one of the largest amounts of operational capacity anywhere in the world, at 80 MW to date.

The hon. Member for Strangford says that the results of allocation round 5, which concluded in September, were disappointing because the total capacity secured was less. As I have said, I do not accept the characterisation of that round, because it has in fact realised the highest amount, on an annualised basis, of any of the rounds we have ever run. It resulted, in fact, in more projects—95—than we have ever seen successfully done, even though it covered just a one-year window. The round delivered a combined total of 3.7 GW, which is enough to power the equivalent of 2 million homes. As I have said, there was more than double the number of onshore wind projects. We also secured—I have touched on this already—another good result for solar, and four times as many tidal stream projects as AR4 did.

I pay tribute to the right hon. Member for Orkney and Shetland (Mr Carmichael) for his doughty support for the sector. I did not realise that his involvement had stretched to 20 years, but when I visited his constituency he was there to characteristically champion the industry. For the first time in our CfD, we had success with geothermal. This vital new renewable capacity was procured in a competitive auction set against, as I say, a backdrop of highly challenging macroeconomic conditions.

[Jim Shannon]

I thank the Minister for that clear achievement. I remind him that the key technology for Northern Ireland is onshore wind. There have been some advances, and I attended a meeting in Bangor, in the neighbouring constituency of North Down, where an offshore wind turbine was put forward as a possibility for the future. We cannot be part of that process unless the Minister’s Department can reconsider the fact that there is an absence of a functioning Northern Ireland Executive. Northern Ireland’s renewables projects are being uniquely disadvantaged. There is an opportunity to go forward—I am ever mindful of time, Dame Angela; please bear with me one second—and in 2013-2014 a decision was made. That was changed by the consultation process in 2019-2021. The recommendation was endorsed by 93% of the respondents. I gently ask the Minister that with that unique and changing position, there is a chance now and we should be looking at how we can better move forward together.

[Graham Stuart]

I thank the hon. Gentleman for that intervention. I will return to the issues relating to Northern Ireland, if I may. I entirely forgive the hon. Member for Coatbridge, Chryston and Bellshill, who is always a very genial Member, and anyone who has such a high opinion of the hon. Member for Strangford as he does is always welcome in this Chamber as far as I am concerned. This is not what the hon. Member for Coatbridge, Chryston and Bellshill does as a day job, so perhaps that explains the nature of his speech.

Let me dispense once again with the suggestion that consumers are £2 billion a year worse off because we did not secure any offshore wind in AR5. That figure is entirely wrong and misleading, because it does not take account of future wholesale energy prices. Projects that were unsuccessful in AR5, or chose not to bid, can participate in AR6 in 2024, which is just five months away. Having annual rounds means that there will be minimal delay to deployment at minimal or no additional cost to consumers.

The hon. Member for Coatbridge, Chryston and Bellshill highlighted the broader point that the UK, alone among major economies, has halved its emissions since 1990. It can be argued that it is alone among major economies on its path to reach net zero. It is important to note that if we are to stay on track to net zero, which is one of the reasons why the hon. Member for Strangford is so passionate, and he knows this, we need Wales, Northern Ireland and Scotland alongside England to make the appropriate changes. The hon. Member for Coatbridge, Chryston and Bellshill may or may not be aware, given that this is not his day job, that Scotland is behind the curve on performance. It is high on ambition, low on delivery relative to England, and he might want to bear that in mind and have slightly more—

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[Graham Stuart]

Whoever comes into this Chamber, I would always take your advice, Dame Angela, but of course the hon. Member represents his party, and when he make allegations against the Government that are unfounded, and when his own Government are failing to deliver on their ambitions and are, in fact, behind the trend for England, it is only right and proper in the spirit of honesty and transparency that that is properly exposed. I know the hon. Member for Coatbridge, Chryston and Bellshill, who himself is not normally a shy person in the Chamber or otherwise, is someone who can easily take it, so I am pleased about that.

I will take no lessons either from Labour, which had only 5.4 GW of wind power when it left government in 2010. The Government have more than five times that amount, at more than 28 GW of wind power, and the four largest operational offshore wind farms in the world. It may be difficult for some to hear, but we know that Labour’s record on renewables is truly dismal. When Labour was in power, as recently as 2010, renewables made up less than 7% of our electricity mix; in the first quarter of this year, we had reached nearly 48%. Lessons will not be taken from His Majesty’s Opposition, let alone the Scottish Government, on this front.

The absence of offshore and floating offshore wind from AR5 was, as I have said, regrettable. These are challenging times for the offshore wind sector, with increasing global demand putting pressure on supply chains at the same time as increasing costs and core materials, resulting in price uncertainty both here and abroad. As both the Secretary of State and I have repeated on many occasions, our ambition for 50 GW of offshore wind, including up to 5 GW of floating by 2030, remains. I indicate to Members to look at the 77 GW of pipeline that we can see ahead. We are listening to the sectors and, as I have said, the annual auctions mean that we can respond quickly and incorporate learnings into the next round. We will publish the core parameters, including the administrative strike prices and pot structure, for allocation round 6 in the middle of next month.

I will turn to the main focus of the debate for the hon. Member for Strangford: the GB CfD scheme being extended to Northern Ireland. When the CfD scheme was being developed around 10 years ago, it was originally intended that it should extend to Northern Ireland as well as GB. For various reasons, which I will not go into here, that did not happen. In December 2021, the Northern Ireland Executive published their energy strategy, the “Path to Net Zero Energy”, in which they set out the intention to implement a support scheme to bring forward investment in renewable electricity generation in Northern Ireland. The strategy indicated that the Northern Ireland Executive were, at that time, exploring with the UK Government the possibility of extending the GB CfD scheme to Northern Ireland, with a view to the inclusion of projects from Northern Ireland in the 2023 allocation round. If that was not possible, the strategy said that the Executive would seek to put in place an alternative support mechanism for investors.

In January 2022, the Northern Ireland Executive published the first of their two action plans, outlining progress towards implementing their net zero strategy. In it, the Executive said that they would consult on proposals for a renewable electricity support scheme for Northern Ireland. In February this year, the Executive made good on that commitment and published a consultation inviting views on design considerations for a renewable electricity support scheme for Northern Ireland. The consultation closed in April, and the Northern Ireland Executive are currently undertaking follow-up work on the scheme’s design, informed by the consultation responses they received.

I understand that officials in the Northern Ireland Department for the Economy aim to publish the design of the scheme this year, as committed to in its 2023 energy strategy action plan. The consultation clearly sets out the direction of travel: Northern Ireland wants to have its own bespoke support scheme for renewables. In June 2022, Northern Irish and UK Government Ministers agreed that the significant challenges of integrating Northern Ireland into the CfD scheme meant that Northern Ireland would be better off pursuing its own scheme. That objective had cross-party endorsement in the Northern Ireland Executive before they dissolved last year.

I believe that the hon. Member for Strangford and I agree that a bespoke support scheme for renewables is the preferred means of securing investment in renewables for Northern Ireland. However, he has argued that the Northern Ireland support scheme cannot be implemented while the Northern Ireland Executive are suspended. If I am putting words in his mouth that he does not agree with, he will intervene on me. He believes that allowing Northern Irish projects access to the GB CfD scheme is the best available option for delivering investment and faster deployment of renewables in Northern Ireland. He knows that I do not agree with him on this.

I do not believe that integrating Northern Ireland into the GB CfD scheme is viable. There are several significant challenges to integration, including systemic and technical barriers incorporating the characteristics of the single electricity market into the GB CfD model, as well as the reforms being considered in the GB review of electricity market arrangements. Furthermore, integration would require complex changes to the CfD payment mechanism, secondary legislation and industry codes, and would likely take several years to complete. Integration therefore would not lead to faster delivery of renewable energy in Northern Ireland, which I know the hon. Member for Strangford so fervently hopes for.

[Jim Shannon]

The Minister is summing up very well his opinion and my opinion. What we do not have is an agreement on how we take this forward. I know the Minister recognises that Northern Ireland is disadvantaged at the moment. What I was trying to seek was a method and a way forward. For that to happen, perhaps further discussions are needed with the Department of Enterprise, Trade and Investment to get its opinion. I feel that there is a consensus of opinion among those who wish to see that investment coming through. Perhaps what I am really asking is for the Minister to explore those possibilities as a potential way forward.

[Graham Stuart]

The hon. Gentleman always makes an extremely plausible and effective advocate for the ideas that he espouses. I—and the Government, I am sure—will remain open to discussions with those in Northern Ireland and with the hon. Gentleman to find solutions. We talked about some of the challenges of staying on the overall net zero pathway. Of the four Administrations, Northern Ireland is potentially the most off track, so there is a real need to find solutions and we always stand ready to work constructively to find the best way forward.

I continue to believe, however, that the development of a bespoke support scheme offers the best and quickest way for Northern Ireland to secure the investment in renewable electricity generation that it needs to achieve its net zero goals. I have not said it explicitly but, of course, energy is devolved, so we are looking to the institutions in Northern Ireland, on behalf of the people of Northern Ireland, to take this on. That is what we would profoundly like to see. I commend the work done by the hon. Gentleman and the Department for the Economy so far, and I encourage us all to support their efforts.

I will try—I hope reasonably briefly, with your permission, Dame Angela—to respond to a few of the other points that have been made. My hon. Friend the Member for Waveney chided me in return, to ensure that we do not rest on our laurels and that we respond appropriately to IRA and perhaps EU initiatives in the space. He talked about creating incentives, picking up on the supply chain development issues that many Members have touched on, and ensuring that seabed auctions are a good place to do that. As he knows, I set out the work that the Crown Estate is already doing to put conditions on at that stage, in addition to changes to the CfDs.

I take on board my hon. Friend’s points about the administrative strike price, and ensuring that we get it in the right place in order to balance keeping costs down for consumers with getting the generation that we want and need. We will set out the pot details in just a few weeks, so I will leave commenting on his appeal for a ringfenced pot for offshore wind. On his request for the pot to reflect the pipeline, that is the mechanism we use for the CfD. That is one of the reasons for setting out the core criteria in November and providing more details in March—precisely so that we can match the budget and the other elements that make up the CfD with a realistic assessment of the pipeline in place. His Majesty’s Treasury and the Chancellor will have heard my hon. Friend’s points on the issues that, sadly or otherwise, sit with the Treasury rather than my Department.

From the right hon. Member for Orkney and Shetland, I heard, as ever, his espousal and support for tidal, and he talked about setting a target for that. The Government remain open and we will continue to consider that, but we have not yet made a decision on whether it would be the right thing to do. It is about doing the right intervention at the right time, based on the stage of development of a particular technology. However, like him, I am proud of the fact that we have been able to see it come on, and see some of the developments in his constituency. The hope to see those operationalised and scaled up here in the UK, with a big and strong domestic supply chain, is one that gives real optimism for the future.

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[Jim Shannon]

I thank all right hon. and hon. Members who took part in the debate. I suspect there was a bit of blue on blue between the Minister and the hon. Member for Waveney (Peter Aldous), but it was done in a nice fashion and not aggressively—that is the hon. Member’s nature. I thank him for his knowledge and interest in this issue. I knew that he would bring a massive amount of knowledge to the debate, and I thank him for sharing it. He wants to see clear pipelines and better investment, which I think we all do. A key theme is better investment, and I thank him for his contribution.

Whenever the right hon. Member for Orkney and Shetland (Mr Carmichael) makes a contribution to a debate or asks a question in the main Chamber, we all sit up and take note, because he has a great deal of knowledge about marine renewables. He wants to see marine power ringfenced, and he is right to do so.

The hon. Member for Coatbridge, Chryston and Bellshill (Steven Bonnar) may have stepped in as a replacement spokesperson for the SNP, but he made a valuable contribution. I am reminded of Bruce Forsyth’s catchphrase, “You’re my favourite,” because the hon. Member is perhaps my favourite among his party. We are good friends. We do not support the same football team—he and I know that—but there are lots of things that we can enjoy together. He referred to investment, which is so key to this issue.

The job of the Opposition is to challenge, and the shadow Minister, the hon. Member for Manchester, Withington (Jeff Smith), did that. He tried to be positive, but he also engaged with the relevant issues. He wants to make sure that the investment, jobs, skills and opportunities are delivered by 2030, if not before.

I will outline the issue again. The Minister summarised where we are, but let us look at the consultation process. The figure of 92%, which I mentioned, refers to the proportion of businesses that say they need investment now. We do not have a working Assembly—that is a fact of life—but 92% of businesses in Northern Ireland want investment, and we need to see that happen. For me, it is quite simple: I want to see us contribute to the net zero target set by the central Government. I want to see jobs and opportunities coming through. Some 50% of global capacity is in tidal stream, and we can do our part to deliver that in Northern Ireland. It is only fair that Northern Ireland is provided with the same route to market as the rest of the United Kingdom.

I think the Minister and I will have lots of correspondence on this matter, but it does not mean that we are not friends. We need to chart a way forward so that we can ensure that Northern Ireland is a positive part of the solution that we all want to find. Again, I thank all right hon. and hon. Members for their contributions, and I thank you, Dame Angela, for your patience with us all. We may get a wee bit animated at times, but you kindly bring us into line in a nice way so that we are not offended. For that, we thank you.

[Dame Angela Eagle (in the Chair)]

Thank you. In the interests of the debate, I have been very lax, because we have had lots of time.

Question put and agreed to.

Resolved,

That this House has considered the Contracts for Difference scheme.

Green Energy: Ports

Jim Shannon Excerpts

Wednesday 18th October 2023 Westminster Hall

[Jim Shannon (Strangford) (DUP)]

I thank the right hon. Member for Preseli Pembrokeshire (Stephen Crabb) for bringing the issue to Westminster Hall today. He has done so before. I have been here to support him in the past, and I do so again today with the same motive: I have always believed in net zero and green energy. Some people in my party perhaps may not have the same enthusiasm for it, but that is not the point; the point is that our party is committed to it, and we want Northern Ireland to contribute to net zero goals.

Hon. Members will be aware, from their constituencies, of the expansion of green ports across the UK. I for one want to ensure that Northern Ireland and my constituency of Strangford take part in this expansion, so it is good to participate in the debate. We all want to play a part in helping our society to turn greener. Northern Ireland has five ports, four of which are public trust ports; they are in Belfast, Londonderry, Warrenpoint and Coleraine. The fifth is Larne, which is privately owned by P&O. Northern Ireland also has three fishing ports: Ardglass, Kilkeel and Portavogie, which lies on the Ards peninsula in my constituency of Strangford. While the right hon. Gentleman may not have had the Minister visit his constituency, I am pleased to say that he has visited Portaferry. He has been to Scotland and Northern Ireland, so I am sure he will eventually get to Wales.

The seaports are managed by the Northern Ireland Fishery Harbour Authority. I have worked closely with local fishermen in my constituency for years. Fishing is such an important industry for Northern Ireland, and across the United Kingdom of Great Britain and Northern Ireland. There is certainly scope to ensure that our local ports and harbours have the opportunity to become greener and more environmentally friendly. I welcome that and encourage everyone to support that, but the incentives need to be there to make that happen. The International Maritime Organisation has set the target of halving 2008 emissions by 2050—quite a big goal, but if we put our mind to it we can achieve it.

The strategy to reduce emissions is to increase electrification of ports and port handling processes, and to adopt future fuels such as liquified natural gas, hydrogen or ammonia. Globally, we need to come together as one to decarbonise shipping and ports, thus ensuring our target for net maritime CO₂ reduction is met. Everyone here knows where I stand: I am a great believer in this great United Kingdom of Great Britain and Northern Ireland. With respect to my hon. Friend the Member for Dunfermline and West Fife (Douglas Chapman), we are always better together. We can do this better together, and I do not see any reason why it cannot happen.

Shell is developing a hydrogen hub through the port of Rotterdam and the Hollandse Kust wind farm, which aims to start production in 2023, so there are examples in other parts of Europe that we could replicate. The wind farm is expected to produce some 60,000 kg of hydrogen daily, which will fuel 2,300 hydrogen-powered goods vehicles per day. That is a scheme that could really work. I know the Minister has always been keen to tell us what the United Kingdom is doing, and we will hear some of that later on. Closer to home, the port of Aberdeen in Scotland has also taken action.

There is a great necessity for a solid and flexible energy system that complements local production of green energy with the import of renewable molecules. If port and harbour masters are to consider the benefits of a green future, Government incentives must be there. I ask the Minister whether the incentives to make that happen can be put in place.

We are a maritime nation. The United Kingdom’s ports can be the basis for a new, low-carbon economic model and can help to address the long-standing regional imbalances that have come to characterise the British economy. This United Kingdom of Great Britain and Northern Ireland should pave the way, and the devolved Administrations should not be left behind. Associated British Ports is committed to investing in green energy infrastructure, and the services needed to deliver a clean energy transition and create lasting prosperity for our coastal communities. We need greater integration between this place and the Department for the Economy back home in Northern Ireland, through the Minister’s participation and encouragement. I encourage the Minister to ensure that we in Northern Ireland become part of this project.

Net Zero by 2050

Jim Shannon Excerpts

Monday 16th October 2023 Commons Chamber

[Claire Coutinho]

The point of our proposals is to make sure that people have choice, that we can bring people with us and that people can live their lives in the way they want to. We can enable them through decarbonising the power grid and giving them alternative options, so we can make sure that we can get to our net zero targets in a way that is practical and achievable for families.

[Jim Shannon (Strangford) (DUP)]

At the Democratic Unionist party conference on Saturday past, the Ulster Farmers Union, of which I declare I am a member, had a leaflet on achieving net zero. Can the Secretary of State outline how we will meet our international obligations in terms of net zero with this rollback and how firms and farmers that have already invested in green policies and procedures will be able to compete with those who can go full steam ahead with older practices and no incentives whatsoever to change?

[Claire Coutinho]

We are not rolling back from our targets at all; I agree with the Climate Change Committee’s assessment that there is no material difference between the projections in June and the recent assessments it made post the announcements. I welcome a lot of the work that many of our farmers are doing to pursue environmental goals. I have talked to many in my constituency who are doing quite phenomenal things at a local level. They will be supported by our agriculture policy, the landmark Agriculture Act 2020 and the Environment Act 2021 that we have brought forward in recent years.

Oral Answers to Questions

Jim Shannon Excerpts

Tuesday 19th September 2023 Commons Chamber

[Andrew Bowie]

My hon. Friend knows that this issue is a top priority for the Government and for me. A range of tools can be used to tackle forced labour in global supply chains. The Government continue to keep our policy responses under close review, and we are working closely with our partners, including at the United Nations, to hold China to account for its egregious human rights violations in Xinjiang. We have already taken robust action, introduced new guidance on the risks of doing business in Xinjiang, enhanced export controls and introduced financial penalties under the Modern Slavery Act 2015.

[Jim Shannon (Strangford) (DUP)]

I thank the Minister for that answer. As chair of the all-party parliamentary group for international freedom of religion or belief, I commend the hon. Member for Rutland and Melton (Alicia Kearns) on raising this matter. For me, freedom of religious belief in China is paramount and should be a priority for the Government—I think it is. To make it happen, we need clear legislation in this place and real power from this Government, and we need to be assured that no company that uses forced labour in China can have its products sold in this country. Again, I seek confirmation from the Minister that that serious strong will is there.

[Andrew Bowie]

I concur very much with the hon. Gentleman’s view on this matter. The Government are determined to ensure that our energy system is not dependent on forced labour. As I said, we are continuing to work with international partners to do what we can to hold China to account for its egregious human rights violations, and to work with the solar industry to see what we can do to weed out forced labour and ensure that it is not part of that supply chain moving forward.

Energy Supply Market: Small Businesses

Jim Shannon Excerpts

Wednesday 13th September 2023 Westminster Hall

[Jim Shannon (Strangford) (DUP)]

I thank the hon. Member for Aberconwy (Robin Millar) for setting the scene so well. He has done so with knowledge and expertise, as have other Members who have participated. I look forward to the shadow Minister’s contributions and particularly to the Minister’s.

Across the United Kingdom, we have all witnessed a dramatic increase in energy prices, both domestically and for our local businesses. I have been contacted regularly—I suspect it is the same for you, Ms Fovargue—by numerous local business owners about their energy bills. The increases in what they are expected to pay are financially destructive. There is much more to be done on the issue as we approach the cold winter months ahead.

I have been contacted by Colin Neill of Hospitality Ulster and Glyn Roberts of Retail NI, who are spokespeople for the food and drink sector. Just last Friday night, I had the opportunity to attend an event. It was one of those idyllic occasions—we did not get many of those this summer, or not in Northern Ireland anyway. It was a promotion by the Ards and North Down Borough Council, which employs an officer to promote local food and drink and eating out in venues across the whole council area and in my constituency of Strangford.

It was a lovely sunny night in Orlock, just off Groomsport. We were able to sit out in the fields with all the tables set out. It was almost regal, to tell the truth; it was beautiful. Unfortunately I could not stay for the meal, which was a terrible pity because Stephen Alexander—the farmer who organised the event with his wife and family, in conjunction with the council—had beef from Dexter cattle on the menu and there is nothing quite as tasty, but I had forgotten that I had another event to go to later on. My point is that my council is committed to promoting food and drink and the hospitality sector in my area. That can only happen in a way that produces jobs and an economic boost if there is support.

It is right to put on record our thanks to the Minister and the Government for what they have done so far, but when the hon. Member for Aberconwy was setting the scene, he indicated that we need to take a significant and specific look at how we can do it better. I hope to work alongside the council to promote tourism, economic benefits through jobs and gains in people’s wage packets, but we need that help. The spike in energy prices since the start of the war in Ukraine has hit hospitality particularly hard. The hospitality industry saw large falls in turnover because of the restrictions, and consumer spending has fallen. UKHospitality estimates that the average energy price paid by hospitality businesses doubled between 2022 and 2023.

I will give two examples, to give hon. Members an idea of some of the causes. The hon. Member for Torbay (Kevin Foster) referred to an increase of some 560%. A new Japanese restaurant started in my constituency about a year and a half ago. Its electricity bills went up to £7,000 per month—£84,000 a year, which is impossible to cope with. The electricity bills of a restaurant in the town of Holywood, which is in the constituency of the hon. Member for North Down (Stephen Farry), went up to some £10,000. Those are examples of how it is just not possible to sustain these energy prices.

As well as the increases in energy prices, there have been inflationary pressures on key cost lines, particularly food, drink and labour costs. Food and drink inputs have risen by some 22%, and wages are 11% higher than last year. Many businesses in the hospitality sector have engaged closely with the Government and have made policymakers aware of the issues they face, including the refusal to quote to hospitality businesses, inflexibility in negotiations and increased prices for hospitality businesses, with risk premiums added.

Ofgem has published its review into the energy supply market and has identified a series of recommendations, including encouraging suppliers to work with hospitality businesses to resolve any outstanding issues, to deliver wider access to the energy ombudsman in order to address the imbalance of power between energy suppliers and businesses, and, most importantly, to offer greater transparency to customers.

With all those things in mind, I want the hospitality sector in Strangford and across the United Kingdom of Great Britain and Northern Ireland to do better. We need Government help to make that happen. The Government have previously stepped in, and we need some input from them, because energy suppliers do not always understand the real issues in the hospitality sector.

The hospitality industry and our high streets are only as strong as we enable them to be. So many businesses have suffered financially from the impacts of the Ukraine war and the pandemic, neither of which is the Government’s fault. As we approach this winter, we must ensure fairness and greater communication between our local businesses and the energy providers. If we want to see our society succeed, to promote jobs and to put wage packets in people’s pockets, which we do, we need help. I look to the Minister for that help.

Offshore Wind: Public Ownership

Jim Shannon Excerpts

Tuesday 12th September 2023 Westminster Hall

[Kenny MacAskill (East Lothian) (Alba)]

I beg to move,

That this House has considered the level of public ownership in the offshore wind sector.

It is a pleasure to serve under your chairmanship, Mr Dowd. When a natural bounty is discovered, it is only right that a nation and its people should benefit from it, not simply corporations and investors. The fruits of land and sea should benefit all, not just the few. Scotland has been fortunate, blessed first with North sea oil and now renewable energy, in particular offshore wind, a further natural resource offering great opportunities and at such an extent that it should be transformative. A recent Prime Minister even used the phrase, the “Saudi Arabia of wind”.

Other nations have shown what can and should be done. Scotland discovered oil at the same time as Norway, but now Scots can look only with envy, not just at the standard of living of their Nordic counterparts but at the Norwegian oil fund. Now valued at $1.4 trillion, it is suggested that it owns, on average, 1.5% of every listed company in the world. The British National Oil Corporation was sold off, while Equinor, owned by the Norwegian state, goes from strength to strength. Funds that should have seen Scotland bloom were instead used by Thatcher to smash organised labour and by New Labour to wage illegal wars. That must not happen with offshore wind. The people of Scotland must benefit, not just multinationals.

Norway has shown what should be done with oil and gas. Denmark is showing what can be done with offshore wind by taking a 20% stake in every new offshore wind development—this is not North Korea, but a European democracy. It has not seen investors flee. This also shows that public ownership does not have to be just a state energy company operating sites, desirable as that is, but can include actions such as this, which ensure that people and their nation gain from their natural resources—benefits for the many, not exploitation by the few.

[Jim Shannon (Strangford) (DUP)]

I thank the hon. Gentleman for securing the debate. The private sector will invest some £60.8 billion across the UK over the next five years in developing and operating offshore wind projects. Does the hon. Member agree—from the way he is talking, I think he does—that whether investment is public or private, all devolved nations of the United Kingdom of Great Britain and Northern Ireland must benefit from any potential funding and that that would ensure a boost in jobs and increased sustainability for the renewable energy sector?

[Kenny MacAskill]

Of course; this should benefit our people. As I said, it is not just down to state energy companies, desirable though that is. This has to be done through the private sector, but as Denmark and Norway have shown, the state can take a share and state companies can be involved. That should be happening here, but the UK Government remain wedded to a privatisation route that has created a dysfunctional energy sector that we are all now paying for.

A Scottish energy company was promised by the Scottish National party and then shamefully abandoned. It must be delivered. Publicly owned and state companies are operating in the UK and the Scottish offshore wind sector. The absurdity is that they are neither Scottish nor from the UK. They are foreign state firms operating in Scottish and UK waters, delivering profits not for Governments in Edinburgh or London, but furth of these shores and with the wealth benefiting lands far from here.

Let me narrate the situation at the Neart na Gaoithe offshore wind farm. Despite the Gaelic name, it is located in the firth of Forth, between my constituency and that of my hon. Friend the Member for Kirkcaldy and Cowdenbeath (Neale Hanvey). Pillars and turbines are now visible, and the energy is coming ashore at Innerwick, just along from where I reside in Dunbar. That is all good, we might think, but who owns it? It is operated by two state-owned companies. One is EDF Energy, the French state-owned energy company that also happens to own Torness nuclear power station just along the road and adjacent to where the energy comes ashore. State ownership is not opposed, it seems, so long as it is someone else’s.

The other organisation is the Electricity Supply Board, or ESB, which is the majority publicly owned energy company of the Republic of Ireland. The Irish consul general in Edinburgh tells me that ESB’s investment in the firth of Forth is that state company’s largest ever investment outwith Ireland. We have the perversity that the wealth and profits that are generated will not come to Edinburgh or London and will not benefit Scottish or UK citizens. Instead, they will flow to Paris and Dublin, and the citizens of Ireland and France will reap the benefit that nature bestowed upon us.

Of course, big energy multinationals are also involved: SSE, Scottish Power, which in fact is owned by Iberdrola from Spain, and BP, among many others. However, state-owned firms from other lands are also there and many of them are significantly bigger than the Irish Electricity Supply Board—I do not intend to denigrate ESB—which has done well to provide for Ireland’s people. It is a lesson that Scotland must learn. As in so many other aspects, our Irish cousins, although blessed with less, have delivered so much more.

Neart na Gaoithe is not alone in this charade, where a Government opposed to state-owned energy companies allows foreign state-owned energy companies to profit and perhaps even plunder with abandon. It is a dereliction of duty and the price is paid not just in the loss of profits, but in the scandalously high prices paid by struggling families who are trying to power their homes. Many of them live in places where they can see the turbines off their shores or where they are in the lea of those turbines that operate on the land—energy-rich Scotland, fuel-poor Scots, indeed.

It is not only France and Ireland that receive a warm welcome, despite the Government’s political antipathy towards a nationalised energy sector. Research by the House of Commons Library has disclosed that in UK offshore waters, the state-controlled Danish company Ørsted and the Norwegian state operator Equinor own the largest shares of UK offshore wind, at 20.4% and 9.2% respectively. UK public entities own 0.03%.

Offshore Wind Contracts

Jim Shannon Excerpts

Tuesday 12th September 2023 Commons Chamber

[Graham Stuart]

I thank the hon. Gentleman for his constructive and effective question. He is absolutely right to highlight the challenges of making sure that we have the right transmission and connection infrastructure to facilitate offshore wind. We have to do that in a way that minimises negative impacts on communities, that rewards them for hosting it, and that looks at new technologies and innovations, just as we do in other areas, in order to facilitate that effective connection with minimal negative impact on communities that host.

[Jim Shannon (Strangford) (DUP)]

In light of the disappointing results of the CfD AR5 auction and given that I am always trying to be constructive in my contributions in this House, will Government revisit the exclusion of Northern Ireland renewable projects from the scheme, especially in light of the significant increase in onshore wind and tidal stream projects supported by the AR5? Northern Ireland is perfectly positioned for onshore wind and tidal stream to make a major contribution to energy security and net zero from AR6 and beyond. Will the Minister commit to enable Northern Ireland to be part of AR6?

[Graham Stuart]

I suggest that it is the hon. Gentleman and his colleagues who need to commit to facilitating that in Northern Ireland. Energy is devolved and it is up to them to get the devolved Assembly up and running. If they get devolved government going in Northern Ireland, they will unleash these opportunities. It is not for this Department, which is not responsible for energy in Northern Ireland.

Planning and Solar Farms

Jim Shannon Excerpts

Wednesday 19th July 2023 Westminster Hall

[Sir Edward Leigh]

In that brief period of the Government of my right hon. Friend the Member for South West Norfolk (Elizabeth Truss), the then Secretary of State, my right hon. Friend the Member for North East Hampshire (Mr Jayawardena), tried to change the definition to include 3b land. A huge mountain of well-funded lobbying money was put in immediately to frustrate the whole process. Make no mistake: this is not about the countryside and it is not about producing green energy in the right controlled way. It is about money. Some people are going to get very rich indeed.

Solar power has a vital part to play, but solar panels belong in moderate amounts—perhaps—on poor agricultural land, atop buildings and on brownfield sites, not on good farmland. Put them on top of large logistics centres at the side of motorways. Sit them on top of factories and industrial buildings. Put them on schools and houses, by all means, but good land needs to be kept in agricultural use.

[Jim Shannon (Strangford) (DUP)]

I commend the hon. Member for Sleaford and North Hykeham (Dr Johnson) for securing the debate and the right hon. Gentleman for his contribution. In Northern Ireland, there are examples of solar farms being integrated into small farms where sheep are able to graze. There are a couple of examples of that in my constituency. Solar farms have been agreed to in places where there is industrial land with which it has not been possible to do anything. That land might have been corroded by lead mines or something like that. Those are the best places for solar farms. Productive land should be kept for farming, as the Ulster Farmers’ Union wants.

[Sir Edward Leigh]

Industry always responds to subsidies. I cannot understand why the Government do not create a new subsidy regime whereby if someone builds a massive warehouse, it is in their benefit to put a solar panel on top of it. That is something the Government could do. Let us keep solar panels off good agricultural land, and let us have them in proportion. I hope the Minister will respond positively to this important debate.

Energy Infrastructure

Jim Shannon Excerpts

Wednesday 5th July 2023 Commons Chamber

[Stephen Crabb (Preseli Pembrokeshire) (Con)]

It is a privilege to open this afternoon’s debate on energy infrastructure at the start of this estimates day. It is an important and timely topic for us to consider, and I am grateful to the Backbench Business Committee for selecting it. I am also grateful to the colleagues from both sides of the House, and from different parts of the United Kingdom, who are here this afternoon to participate.

Energy is the lifeblood of the global economy. The need for heat, light, and power is as old as humankind. In the intensely complicated, fast-moving and interconnected world we now live in, efficient infrastructure supplying reliable and secure sources of affordable energy is the critical means by which we sustain our living standards and basic security. For previous generations of policymakers, thinking about the affordability and reliability of our energy system was perhaps challenging enough, but in an age now when we better understand the far-reaching impacts of hydrocarbons on the atmosphere and our planet, and when threats to global energy supplies can cause sudden and devastating spikes in prices, the task of not just renewing but transforming our national energy infrastructure is monumentally important and difficult. It should be at the very forefront of debate in this place.

The twin challenges of energy security and net zero have come together in a potent way in recent years, and I welcome the way in which this Government have moved quickly to respond to the changing landscape. The energy security strategy paper, published in April 2022, highlighted the commitment to produce far more domestic energy. More recently, the Government’s blueprint for the future of our energy mix, “Powering up Britain”, published in April, clearly sets out how we plan to diversify, decarbonise and domesticate energy production by investing in renewables and nuclear.

Over the last two years, the Welsh Affairs Committee has undertaken several inquiries into different aspects of energy policy and infrastructure, as they relate to Wales. One might ask why the Welsh Affairs Committee is taking such an interest in energy, but it is simply because of the immense importance of energy to Wales and the Welsh economy. Wales is not only a consumer of energy, but a primary producer and a gateway for energy imports and exports. Furthermore, we recognise the potential economic opportunities that could accrue to Wales from future developments in renewable energy and nuclear energy.

Having completed an initial wide-ranging inquiry into renewable energy in July 2021, our Committee pursued three subjects in greater detail: grid capacity in Wales; nuclear energy in Wales; and floating offshore wind. In doing so, we were acutely conscious of the fact that none of that was particularly niche or specific to Wales. Indeed, much of the evidence we heard on all of those subjects has direct read-across to other regions and nations of the United Kingdom. In the time I have available, I would like to touch briefly on the key outputs of the three inquiries and highlight some ongoing challenges.

[Jim Shannon (Strangford) (DUP)]

I commend the right hon. Gentleman for bringing this debate forward. As Chair of the Welsh Affairs Committee, he is talking about Wales, but he also mentioned that all of the United Kingdom should benefit in this area. Will that be from the three options that he put forward or will it be from tidal energy, which we could do more on in Northern Ireland? Does he feel that when it comes to bringing forward a strategy for this House today, it is about what happens not only in Wales or England, but in Scotland and Northern Ireland? It is about what happens collectively, because we should all benefit. Therefore, a strategy has to come from this place, but it must be driven out to all the regions of the United Kingdom of Great Britain and Northern Ireland collectively.

[Stephen Crabb]

As ever, the hon. Gentleman is correct: we are one United Kingdom. Of course, on energy on the island of Ireland there are interconnections with the Republic, but with the changing nature of our energy system, the economic opportunities for investment, job creation and industrial renewal are enormous for all parts of the UK—for Northern Ireland, Wales, England and Scotland.

I wish to touch briefly on the key outputs of the three inquiries I mentioned. First, on grid capacity, we are talking about the network of power lines, pylons and interconnectors that transport electricity generated to areas of demand. That is a critical piece in the energy infrastructure puzzle, not just in Wales, but for all parts of the UK. The issue should keep Ministers awake at night, because it was clear from our inquiry that the entire way in which grid enhancements and new connections are delivered is not fit for purpose, given the imperatives of UK energy policy.

I recognise the steps that have been taken by the Government and the National Grid Electricity System Operator. With the appointment of Nick Winser as the UK’s first electricity networks commissioner, the Government are taking steps to address the challenges. However, if we think about the increase in the speed of delivery and consenting that is required if we are to see the renewal of our national grid in the way we need in the years ahead, we see that we need a much more significant step change in the pace of activity.

Road Fuel Prices

Jim Shannon Excerpts

Monday 3rd July 2023 Commons Chamber

[Jim Shannon (Strangford) (DUP)]

This is a very welcome announcement, especially in respect of the information on fuel-price competition that will allow drivers to look for fuel at petrol stations that are closer and have better prices, thereby enabling them to save money. On any potential fuel fund offers, there is an older generation—I am probably one of them—who perhaps do not use apps and therefore do not understand how they work; what steps will the Minister take to ensure that they have access to information on fuel funding that is accessible for them and easily understood so that they, too, can take advantage of what is on offer?

[Graham Stuart]

I thank the hon. Gentleman for his question. I would not want to finish without mentioning that, as of Monday 26 June, unleaded petrol is 143.43p per litre, and that has reduced, on average, by 47.5p from June last year, and diesel is 145.6p per litre, and that has reduced by 53.3p per litre on the previous year. I will write to the hon. Gentleman to make sure that I can properly inform him in answer to his question.