Revised Energy National Policy Statements

Lord Callanan Excerpts

Tuesday 22nd February 2022 Grand Committee

Moved by

[Lord Callanan]

That the Grand Committee takes note of the draft Revised Energy National Policy Statements laid before the House on 11 October 2021.

[The Parliamentary Under-Secretary of State, Department for Business, Energy and Industrial Strategy (Lord Callanan) (Con)]

My Lords, our purpose here today is to consider updated energy national policy statements, which we propose to designate later this year, subject of course to the outcome of a public consultation and parliamentary scrutiny.

NPSs for all types of nationally significant infra- structure should comprise clear guidance on the legal, policy and technical issues that project sponsors need to consider as part of their applications for planning consent under the Planning Act 2008. They enable the Planning Inspectorate to examine the application before any recommendations are sent to the Secretary of State for determination, and underpin the delivery of legally robust and timely planning decisions by the Secretary of State. Importantly, where the need for a type of nationally significant infrastructure is established in an NPS, that need cannot then be questioned on an individual application for development consent.

The NPS framework is complemented by two supporting assessments: the appraisal of sustainability and the habitats regulations assessment. The appraisal of sustainability ensures that the likely national environmental and socioeconomic effects of the national policy statement are identified and evaluated. The habitats regulations assessment identifies and assesses the likely effects of the national policy statement on nature conservation and specially protected sites.

The suite of energy NPSs was first designated in 2011. They set out national energy policy and form the framework for decision-making on applications for development consent for nationally significant energy infrastructure projects. The overarching strategic national policy statement, EN-1, sets out the need case for certain energy infrastructure and general assessment principles. The other five NPSs set out technology-specific assessment principles. The Government published their energy White Paper, Powering Our Net Zero Future, in December 2020. The White Paper presents our vision of how we make the transition to clean energy by 2050, building on the Prime Minister’s 10-point plan.

Of course, since the energy White Paper, the Government have published the Net Zero Strategy. This sets out clear policies and proposals for keeping us on track for our coming carbon budgets and for our vision for a decarbonised economy in 2050. The strategy raises our ambitions to hit our climate targets, as well as delivering our goals to create new jobs and industries as we capitalise on green economic opportunities. The energy NPSs need to reflect this scale of ambition.

The agenda established through the energy White Paper and net-zero strategy mark the start of a decisive shift away from unabated fossil fuels to clean energy technologies. This means renewables, nuclear, CCUS and new technology options such as low-carbon hydrogen. Deploying a range of low-carbon technology options keeps us in line with our objective to ensure that our supply of energy always remains secure, reliable, affordable and consistent with our net-zero target.

The Government decided that it was appropriate to review the existing energy national policy statements to ensure that they reflect the policies set out in the energy White Paper. The review would ensure that we continue to have a planning policy framework which can deliver the investment required to build the infra- structure needed for the transition to a clean energy system.

I should be clear that updating the NPSs is not the only way that we will satisfy our infrastructure needs. Through the national infrastructure strategy, the Government have committed to a major reform programme to refresh how the nationally significant infrastructure project regime operates. This reform programme will make the planning regime more effective and bring government departments together to deliver more certainty in the process and faster outcomes. The Department for Levelling Up, Housing and Communities will be providing further information on how it is taking the NSIP reform programme forward later this year.

The draft revised energy NPSs, which we have consulted on, reflect our policy that a diverse mix of technologies will be required to deliver on our energy objectives. However, where a technology no longer meets our objectives, it is right that this is removed from the mix, and the NPSs are clear that there is no longer any role for new nationally significant coal or oil-fired electricity generation. We believe that the market is best placed to determine the best solutions for very low emissions and reliable supply, at a low cost to consumers. This means that we should use the NPSs not to deliver specific amounts or limit any form of electricity infrastructure, but rather to set out the framework under which they can be consented. This approach facilitates competition and spurs both investment and innovation in technologies which are cheaper and more efficient.

We will need a significant amount of new energy infrastructure. Electricity demand is set to double as we electrify heating and transport. Networks need to adapt for the future electricity system. We will also need oil and gas to support a smooth and orderly transition to a clean energy future and to ensure security of supply. Natural gas will still be needed for heating homes and workplaces, until we are able to deploy low-carbon alternatives, so we need infrastructure to support the importation, storage and transmission of oil and gas. Natural gas infrastructure might also be repurposed in the future for use by other gases required to deliver a net-zero economy, such as low-carbon hydrogen or for transportation of carbon dioxide to storage.

The nuclear power generation NPS, EN-6, was reviewed but not amended as there are no changes material to the limited circumstances in which it will have effect. However, it would not be appropriate to withdraw the NPS at this time given that the information that it contains may be relevant to development consent order applications under examination and the need to maintain a stable nuclear planning and consent regime. The Government went out to consultation with an updated energy NPS last September. The consultation closed in November. The draft energy NPS has been scrutinised by the BEIS Select Committee in another place; its report and recommendations are due to be published shortly, I am told. We will consider the recommendations and responses to the consultation, and publish our response in due course.

National policy statements for energy must be clear about the urgent need for new energy infrastructure, to meet our climate change commitments and continue to ensure a secure and affordable supply of energy. They must also identify the potentially negative impacts of such infrastructure at a local level to enable planning decisions to be taken which weigh up this national need against potential impacts, based on expert evidence and with full stakeholder involvement. The documents that we have consulted on strike the right balance between these factors. I appreciate that there are many views on this, and I look forward to hearing all the contributions to today’s debate. I beg to move.

--- Later in debate ---

[Lord Callanan (Con)]

My Lords, I thank everyone who contributed to this debate. As always, it has been interesting and informative, if not all directly related to the subject under discussion—I am looking at the noble Baroness, Lady Jones; I will come on to that in a minute. I will address many of the points made in turn, but first I will bring the Committee back to the subject under discussion and will talk about the energy national policy statements.

Our world-leading agenda to transform the energy system requires a planning framework for nationally significant infrastructure which can process the pace and scale of planning decisions in line with this transformation. Updated energy NPSs are critical to achieving this. The review will make the policy framework for the provision of energy infrastructure clearer and more up to date.

In the context of the wider reform programme for nationally significant infrastructure, up-to-date energy NPSs will support project sponsors, the Planning Inspectorate and ultimately the Secretary of State in timely consideration and decisions over when and how to provide significant to critical infrastructure.

We believe that the documents we have consulted on and which are being examined by the committee of the other House at the moment strike the right balance between the need for new energy infrastructure and the impact that such infrastructure will have, and they will enable planning decisions to be taken at the required pace.

I thank the noble Lord, Lord Whitty, and many other noble Lords who have used this debate to make some interesting and wide-ranging comments on energy policy. However, I repeat that our purpose today is to consider whether the NPSs are fit for purpose in performing their critical purpose, which is to provide a legal framework for planning decisions on nationally significant energy infrastructure.

I thank my noble friend Lady Neville-Rolfe for her comments on timing and security of supply. Within that, the NPS establishes the need for the infrastructure required to deliver the energy objectives. This includes ensuring that we have a supply that is secure and reliable as well as consistent with our net-zero ambitions.

A number of noble Lords, including my noble friends Lady Neville-Rolfe and Lady McIntosh, the noble Baroness, Lady Sheehan, and the noble Lord, Lord Lennie, asked me about the timetable for future reviews. Of course, there will be change over time, and we will review the documents when appropriate—so I do not want to give an absolute commitment to a specific time; we will do it as required. The exact timing of a review will depend on the specific circumstances that apply in the case of each national policy statement, but it is expected that a public announcement on whether a review is required should be made at least every five years. This reflects the position that was set out in the Government’s published guidance.

I thank the noble Lord, Lord Teverson, for his comments on biodiversity. He will be aware that Schedule 15 to the Environment Act 2021 introduced specific requirements for biodiversity net gain in relation to NSIP development. This schedule is not yet in force, and Defra is currently consulting on exactly how it will be implemented. Of course, the NPS will be amended to bring it in line with the Environment Act before it is designated.

I welcome the comments from my noble friend Lord Moynihan and my noble friend Lady Foster’s support for the energy NPS. I can assure both of them that the NPS recognises the need for continued investment in oil and gas infrastructure during the transition to clean energy. It was recognised also by the climate change committee that we will continue to need oil and gas infrastructure during the transition. I think some of the simplistic exponents sometimes miss the point that this is a long-term transition. Unless we want to unplug people’s boilers or stop them putting petrol in their car tomorrow, there is an ongoing requirement for investment, and it makes more sense to obtain oil and gas from our own reserves than to import it from Russia, Qatar, Saudi Arabia or American shale gas reserves through the medium of LPG.

I say in response to the noble Baroness, Lady Sheehan, that we believe that the draft NPS strikes the right balance between clarity on the need for the types of infrastructure required to deliver on our climate commitments and retaining security of supply and identifying the potentially negative impacts of such infrastructure at local level. This enables planning decisions to be taken which weigh this national need against these potential impacts, based on expert evidence and, of course, on full stakeholder involvement. Of course, there will always be different views on whether we have got this balance right, and we are currently analysing the responses to the public consultation. We will take account of these and any resolutions or recommendations from the parliamentary scrutiny process before issuing our final response.

The draft NPS reflects the work of the offshore transmission network review and the policy is written to support that work. Future changes will depend on the outcome of the OTNR. The urgency and scale of offshore wind farm development—I remind the Committee that there is to be a fourfold increase by 2030—mean that radial routes to shore are in many cases not viable given the environmental and community impacts.

I say to my noble friend Lady McIntosh that we recognise the desire for a settled siting policy for new nuclear and we are seeking to deliver a robust and comprehensive framework. Three years is the rough working estimate to develop, consult and deliver on an NPS. I can assure my noble friend that a new nuclear NPS will be subject to the same requirements of public consultation and parliamentary scrutiny as these energy NPSs. I can also assure her that the NPSs cover climate change adaptation and mitigation—mitigation is covered by part 2 and new section 5.2 of EN-1.

The noble Baroness, Lady Jones—where to start? In her wide-ranging contribution, I lost count of the number of questions that she asked me. I think I got up to about 25 before I lost count. The noble Baroness will, of course, appreciate that in the context of this short debate it is not possible to answer all her points. I am sure that we will have lots of debates and questions on these subjects in future. Of course, I do not think that any of her questions had anything to do with the subject of this debate, which is on the NPS. I am afraid that the noble Baroness knows that we disagree over this. A lot of her solutions sound great, but they are overly simplistic nonsense in most cases.

In many respects, I agree with the noble Baroness. Of course, we want to see more renewables. We have the largest offshore renewable capacity in the world—and we going to increase it fourfold. It has been a British success story; the price of new offshore wind is now at record low levels. It is a good thing, but it is inherently intermittent. During the recent stormy weather, we saw that wind generation for the UK was up to almost 50% of our capacity, which is great, but a few months ago, when we had a weather depression, we saw wind capacity at about 2% to 3% of our national energy needs. We need a diverse mix of supply—so we need nuclear and existing oil and gas infrastructure and supply and, yes, we need renewables as well.

I do not disagree with the noble Baroness. Of course, we want to see energy efficiency schemes, as energy efficiency is by far the best form of generation; the energy that you do not use is required. We are spending £9.2 billion over this Parliament on energy efficiency and insulation schemes. I am proud of our record. Of course, we can have an argument over whether we should be spending even more, but as regards our levels of investment compared to any previous Government, we are spending record sums on environmental schemes. On ECO alone, the contribution that we are making to that is going up to £1 billion a year, starting in March this year, in addition to the £9.2 billion that we are investing through direct government support. The vast majority of that is going to help fuel-poor households and those on lower incomes to benefit from increased investment and increased energy efficiency in their homes, to make their bills smaller and their homes warmer. That is a key point.

I assure the noble Baroness that we will have time to debate all her many questions and points in future, but I hope that she will forgive me if I do not address all those issues now, because it is not a matter for today’s debate.

In response to my noble friend Lord Naseby, of course we need to preserve our most productive farmland as best we can, which is why the draft NPS continues to advise that the effective use of land is prioritised by focusing large-scale solar farms on previously developed and non-agricultural land, provided that it is not of high environmental value. It also suggests that, when a proposal involves greenfield land, poorer-quality land should be used in preference to higher-quality land.

In response to the noble Lord, Lord Oates, the draft energy NPS set out the Government’s policy for delivering nationally significant energy infrastructure and providing a legal framework for planning decisions at the national level. This includes balancing the need for new infrastructure against the impacts of such infrastructure. It will provide guidance on some of the issues that the noble Lord raised, such as the presumption in favour of underground cables in areas of natural beauty, but many of the important issues raised by the noble Lord, such as energy efficiency and housing, are outside the scope of these documents.

[Lord Oates (LD)]

I am grateful for the Minister’s response, but could he address one specific question that I asked about guidance on community mitigation? This is something that the industry is really clear on—that it needs to have guidance, because it is going to have to bring onshore lots of cable and lots of new energy infrastructure. It really needs clarity from government about what it should be doing there. I would be grateful if the Minister could address that point.

[Lord Callanan (Con)]

During the planning process itself, community mitigations will be taken into account, providing the national framework to enable local planning decisions to be taken. Community mitigations of course play an important part in the planning process.

As I said earlier in response to the noble Baroness, Lady Jones, improving the energy efficiency of homes is the most effective way to permanently reduce energy bills by reducing the amount of energy required to heat the home, and it can tackle fuel poverty in the long term. I covered all the schemes that we have, including ECO, home upgrade grants, the local authority delivery scheme, the public sector decarbonisation scheme and the social housing decarbonisation scheme—myriad different schemes, all contributing quietly and in the background to upping the energy performance of the homes that we all live in.

The noble Lord also mentioned the need for clarity in the approach to CCUS and hydrogen. The NPS establishes the need for CCUS and hydrogen infrastructure, but we do not want prematurely to introduce detailed guidance before we know more about the impact of such projects. We will consider whether to develop a technology-specific NPS for CCUS and hydrogen infrastructure as the technology and the project landscape evolves.

The noble Lord, Lord Lennie, asked how many consent decisions have been made under the current regime. The answer is that 65 decisions on energy projects have been made under the existing suite of energy NPSs. We are, of course, expecting a significant increase in the number of applications as the transition to net zero continues. He also asked about onshore wind. It was removed from the NSIP regime in 2016 through amendments to the Planning Act 2008. This means that all planning applications for onshore wind turbines in England are made to the local planning authority, or to the Welsh Government in Wales. As national policy statements are statutory guidance, and as onshore wind is now not included in the 2008 Act, it was no longer appropriate for the national policy statements to provide specific policies in relation to onshore wind.

Finally, to reply to my noble friend Lady Foster’s point about fracking, it is important to realise that Lancashire is not Texas. The UK is a relatively densely populated island compared to most parts of the US. Although we are not in principle against the idea of fracking, it must be done with the consent of local communities and we need to be aware of its environmental impact. Also, as we discussed during Questions in the House a few weeks ago, it is not the short-term answer that many people think it is. Even if we managed to overcome all the environmental objections, and even if we managed to progress the scheme, it would be many years, if not a decade, before we got meaningful quantities of shale gas out of the ground. Even then, the quantities that we would be able to produce in this country would have no meaningful impact on the overall gas price level. We continue to keep these matters under review, but it does not represent the easy solution that we might like to think it would in this circumstance.

[Baroness Neville-Rolfe (Con)]

I am grateful to my noble friend for answering all our points so clearly and fully. I asked a question about coal for heritage railways. He may not be aware of it, but in the debates on the Environment Act we were told that it would be fine because we could get coal from Russia. He may want to take the point away. Perhaps he could update us, because I assume that we will not now be getting coal from Russia. Also, I wanted clarification on an issue to do with planning. I think he said that some kind of planning for renewable infrastructure would take three years, but somebody—maybe it was the noble Lord, Lord Teverson, or the noble Lord, Lord Oates—said that it took one year to build an offshore wind turbine and eight years to get planning. Clearly, we have to speed planning up for necessary infrastructure; that has come through very strongly in the work that I have been doing in the Built Environment Committee. To have an answer on what we can now expect—how long planning applications of different types will take—either today or on another occasion would be very helpful.

[Lord Callanan (Con)]

The whole purpose of these national policy statements is to try to speed up the planning process in the first place by setting a national framework within which the local decisions can be taken. As with all these things, it is a question of getting the balance right. Of course we want to try to speed up the process, but the problem with energy policy is that it takes many years, if not decades, to put the infrastructure in place.

We are announcing, we hope, some progress on new nuclear and passing new legislation in the next few months to enable it but we will not see the fruits of that until the early 2030s. The process for the infrastructure which we see in place now was put in place 10 or 12 years ago. The reason that we have a problem with nuclear now—I am sorry to bring it back to party politics—was because when Labour came into office in 1997, that Government ruled out new nuclear. Tony Blair said in the manifesto “We see no case for new nuclear”. Now, that is a party-political point and I think many Labour Members now think that was a mistake—maybe it was right in the context of the time but it was probably a mistake. Correcting these mistakes takes many decades in order to get the infrastructure in place.

[Lord Lennie (Lab)]

If I may reinforce the point I made, if it takes eight years to get consent for something, that is eight years before the first brick is laid, as it were. If that period can be foreshortened, the fruits of the labour can be brought forward accordingly.

[Lord Callanan (Con)]

We are always open to finding new ways of speeding these things up, but you also have to take into account the concerns of local communities which have to put up with this infrastructure and try to mitigate the effects on them.

I return to the point that my noble friend Lady Neville-Rolfe asked me about heritage coal. I am very well aware of this issue; I am told that my noble friend Lady Bloomfield is a hero in the heritage railway community because she was able to write to them to say that heritage coal would still be available to them to operate their railways. There are many sources of coal apart from Russia. Significant quantities of coal are still produced in Germany and Poland, so I am confident that they will still be able to get the coal to power their excellent machines. I do not think anybody, even the most committed climate zealot, would object to the relatively small quantities that they would use for their heritage equipment.

[Baroness Foster of Oxton (Con)]

I did not raise the issue of fracking necessarily as a short-term measure. With any energy, we know that it takes a long lead-in time to come to some sort of results. One of my key points was the fact that we are already importing 50%; by the end of the decade, that will rise to 70%. Neither am I talking about doing things without the consent of people who live locally. Of course, you must have the appropriate places to do these things. I have raised this issue so that we can start looking at it. It may be feasible in the not-too-distant future. because we just do not know at the moment what is going to happen.

[Lord Callanan (Con)]

My noble friend makes a good point. Supplies of gas from the North Sea are slowly declining. We will still have a need for fossil fuels, gas in particular, but of course the long-term trajectory of gas use will fall as we decarbonise the power supply and heating in homes. We might well not be importing larger quantities; so it would be a larger proportion of the smaller amount that we will require in future. However, we keep all these things under review and if all the environmental objections can be overcome and the difficult engineering processes solved, we are of course open to considering that. I just caution my noble friend that the difficulties are considerable and there are no easy solutions in this.

With that, I think I have dealt with most of the points that were on the subject of the national policy statements. I thank all noble Lords for their contributions.

Motion agreed.