Hydrogen Energy

Debate between Lord Callanan and Lord Naseby

Tuesday 14th May 2024 Lords Chamber

[Lord Callanan (Con)]

I would be very interested in speaking to the noble Baroness’s contact in heat batteries; I have also met a number of heat battery manufacturers. For those who have not come across it, it is a great growth industry in the UK and a fantastic technology. There is one particularly good company up in Scotland that I visited recently. I am not sure what extra clarification we could provide that would help her contact. We have said—indeed, I said it in my Answer—that heat pumps, heat networks and electrification will be by far the vast majority of the decarbonisation of home heating in the UK. If hydrogen plays any role at all, it will be only a very tiny one.

[Lord Naseby (Con)]

My noble friend just stated that hydrogen is going to play a very minor role. How is it that, on the continent, hydrogen is playing an increasing role in the domestic markets there? Is he not aware that British Gas has done extensive testing, with varying mixes of hydrogen, and that so far all has gone well with those tests? Why now are His Majesty’s Government kicking hydrogen into the long grass and telling the British consumer that it is basically heat pumps or maybe electrification?

Strategy and Policy Statement for Energy Policy in Great Britain

Debate between Lord Callanan and Lord Naseby

Monday 25th March 2024 Lords Chamber

[Lord Callanan (Con)]

My Lords, I thank all noble Lords who have taken part in this debate. First, I am confident that the strategic priorities and policy outcomes in the SPS clearly establish what the Government are trying to achieve in the sector. I think it got fairly widespread support and it established why this is important, demonstrating how these smaller policy outcomes contribute to the broader strategic priorities so that stakeholders can be reassured of how their role fits into the bigger picture.

I hope that the SPS gives industry a sufficiently high-level understanding of the roles, responsibilities and remit of government and the regulators in helping to deliver these objectives. Particularly in the case of NESO, we have provided enough information on the body’s remit to give confidence on the role that it will play when it is established, while also recognising that its responsibilities will evolve over time. As well as reaffirming our ambitions, this SPS will give encouragement to Ofgem to utilise the full range of its existing powers to ensure that those ambitions are realised and that stability and confidence are restored across the sector.

I move on to the points that were raised in the debate, starting with my noble friend Lady McIntosh. The SPS makes clear the importance of tackling fuel poverty, as was also raised by the noble Lord, Lord Lennie. Ofgem has conducted a call for evidence on the standing charges issue. I know it is a very topical issue; there is a lot of concern. Ofgem received over 40,000 responses to that consultation. It is reviewing those responses. The Government are liaising closely with Ofgem to understand the options going forward. It is an independent regulator, and it would not be right to interfere in the decisions that it will make, but we do understand the concern that has been raised.

The NESO will be funded and regulated by Ofgem through licences and the price control process, as is the case with the electricity and gas system operators today. That is a well-known model, understood widely across the sector. The approach will provide accountability, scrutiny and, of course, value for money, while ensuring that the NESO is able to deliver fully on its objectives.

As part of agreeing future price controls, Ofgem will ensure that NESO is fully resourced to fulfil its objectives and the obligations set out in its licence, including the funding of its statutory duties such as those towards innovation and keeping developments in the energy sector under review. As with other regulated bodies in the sector, the NESO will have the operational freedom it needs to manage and organise itself to effectively deliver its roles and objectives.

I move on to the points raised by my noble friend Lord Naseby. He quoted extensively from the National Audit Office report on home heating. That is of course different from what we are debating today, but he raised some very good points, particularly on the rollout of heat pumps et cetera, on which I agree. My noble friend will be aware that we took a decision not to proceed with the hydrogen village trial last year. That was due chiefly to the lack of available hydrogen, but it also took into account the real concerns that were raised by many members of the public in that area. It is undoubtedly the case that electrification will provide the vast majority of the decarbonisation options in home heating; hydrogen will play a very limited role, if any, in the decarbonisation of heating.

In response to the questions raised by the noble Earl, Lord Russell, and the noble Lord, Lord Lennie, our aim continues to be for the NESO to be operational in 2024, depending on a number of factors including agreeing timelines with various key parties.

On the review of the SPS, I confirm that the Secretary of State can review the strategy and policy statement at any time—for example, following a general election or a significant change in energy policy.

On the questions raised by the noble Earl, Lord Russell, about the rules and responsibilities of NESO, I confirm that we have set out the roles and responsibilities of government, Ofgem and NESO at a high level in the SPS. The Government set the policy direction, while Ofgem is the independent regulator and makes decisions on business and investment plans. NESO will be the whole system planner, the operator of the electricity system, and the expert adviser to the Government and Ofgem as key decision-makers.

We are currently developing a framework agreement, which will set out the relationship between the Government as the shareholder and NESO. We plan to publish this shortly after designation. The specific roles and obligations of NESO will be set out in its licences, on which Ofgem undertook an initial consultation last year. We are due to undertake a statutory consultation this spring. However, as mentioned previously, we expect that NESO’s role and remit will continue to evolve over time as energy policy develops.

On NESO not being able to raise concerns over the achievability of SPS outcomes until it is established, I reassure the noble Lord that Ofgem will also have a responsibility to raise concerns over achievability. We are already in frequent dialogue with the current electricity system operator, on which NESO will be based, where the Government’s ambitions for energy are regularly discussed.

Finally, I move on to the point made by the noble Lord, Lord Lennie, on why now is the right time for the SPS. The Energy Act 2023 introduced new measures and established the independent system operator and planner in the first place as NESO. We thought that now was a good time—to reply to the point about major policy changes—to develop strategic guidance to explain exactly how we believe that Ofgem, government and NESO would work together to meet the Government’s energy priorities going forward.

I hope I have been able to deal with all the points raised by noble Lords.

[Lord Naseby (Con)]

Can my noble friend answer the question about small nuclear reactors? There has been consistent delay after delay. Are we going to get a decision in this calendar year?

[Lord Callanan (Con)]

That is not the subject of this particular policy statement, but my understanding is that Great British Nuclear is currently reviewing the various designs, having instituted a competition to try to pick the best design going forward. I do not know the precise timescale for responding to that, but I will certainly find out and write to the noble Lord.

Civil Nuclear Road Map

Debate between Lord Callanan and Lord Naseby

Monday 15th January 2024 Lords Chamber

[Lord Callanan (Con)]

The noble Baroness makes a very valid point. We are looking forward to the upcoming findings of the nuclear skills taskforce, very ably chaired by Sir Simon Bollom. I am sure he will have some interesting comments and observations for us in taking forward the diverse needs of the workforce.

[Lord Naseby (Con)]

Is my noble friend in a position to tell us when there will be a move forward on the advanced small modular reactors? My understanding of the background is that Rolls-Royce has been ready for the best part of two years, and I understand the same is true for the competitors, which are supposed to be bidding in due course.

[Lord Callanan (Con)]

I am happy to reassure my noble friend. We have given Rolls-Royce £210 million to help in the development of the next phase of small modular reactors. There are a number of competing technologies. Great British Nuclear will be making progress on selecting the most appropriate technology in the months and years to come.

Hydrogen Production Revenue Support (Directions, Eligibility and Counterparty) Regulations 2023

Debate between Lord Callanan and Lord Naseby

Monday 18th December 2023 Grand Committee

[The Parliamentary Under-Secretary of State, Department for Energy Security and Net Zero (Lord Callanan) (Con)]

My Lords, these regulations were laid before the House on 8 November this year. On 26 October, the Energy Act 2023 received Royal Assent. The Act provides a legislative framework for hydrogen, including provisions relating to the hydrogen production business model—a funding model to support the production and use of low-carbon hydrogen in the United Kingdom. Delivering this policy will be essential to kick-start the hydrogen economy and move towards the Government’s ambition to have up to 10 gigawatts of low-carbon hydrogen production capacity by 2030, as set out in the British Energy Security Strategy.

Under the business model, projects will be paid a subsidy for the hydrogen produced through a revenue support contract, similar to the highly successful contracts for difference for low-carbon electricity production. The business model, contracts for hydrogen, will be managed by a hydrogen production counterparty. Initial projects are to be selected through allocation rounds run by the Department for Energy Security and Net Zero. To receive business model support, a project must be an

“eligible low carbon hydrogen producer”.

Where such a project is allocated support, the Secretary of State will issue a direction to the hydrogen production counterparty to offer to contract with that project.

I hope noble Lords noticed that, last week, we announced 11 major new electrolytic hydrogen projects across the UK that will be offered support under the hydrogen production business model. This represents the largest number of commercial-scale green-hydrogen production projects announced at once anywhere in Europe. These new projects, stretching all over the country from the south-west of England and south Wales to the Highlands of Scotland, will invest over £400 million up front over the next three years, in a major boost to the UK’s green economy. In addition, CCUS-enabled hydrogen projects have also been shortlisted through the track 1 phase 2 cluster sequencing process.

I turn now to the detail of the regulations and their important role in all this. Fundamentally, the regulations satisfy the duty in Section 66(4) of the Energy Act 2023 by determining the meaning of “eligible” in relation to a low-carbon hydrogen producer. They tell the world who can be eligible for support.

The regulations set out that only new hydrogen production facilities, or existing hydrogen production facilities adding new production capacity, that can demonstrate that their proposal for the production of hydrogen is capable of complying with the UK low-carbon hydrogen standard, will be considered eligible. This will ensure that eligibility keeps pace with how the Government define low-carbon hydrogen. I recall that a number of amendments tabled during the passage of the Energy Act 2023 sought to ensure that regulations on eligibility made reference to the low-carbon hydrogen standard, so I hope that the Committee will welcome these provisions.

The regulations also set out the process by which the Secretary of State may direct a counterparty to offer to contract with an eligible low-carbon hydrogen producer. This follows a similar approach to contracts for difference, with which industry is very familiar. Similarly, the regulations include requirements for a counterparty to publish the full contracts entered into and establish a public register of key information. As noble Lords would expect, such publication is of course subject to redaction of confidential information and personal data. The regulations also set out various requirements in respect of Secretary of State directions to a counterparty. They include the circumstances in which directions cease to have effect and enable the Secretary of State to revoke a direction before it has been accepted.

Furthermore, the regulations require a counterparty to promptly notify the Secretary of State if it is, or considers it likely to be, unable to carry out its functions. Your Lordships may think such a provision sounds familiar, and indeed it is; it is very similar to the approach taken by the Nuclear Regulated Asset Base Model (Revenue Collection) Regulations 2023, which I am sure the Committee is following very closely.

The department has considered the content of these regulations extremely carefully. We carried out a full public consultation earlier this year, seeking views on the principles enshrined in the regulations and satisfying the statutory requirement to consult, as set out in the Energy Act 2023. We received 28 responses from various organisations and members of the public. We carefully considered all of them, although I am pleased that the majority supported our proposals. Accordingly, in our government response, which we published on 30 October, we set out plans to proceed largely as proposed, albeit with some amendments made in response to the feedback that we received.

This secondary legislation represents an essential step for implementing the hydrogen production business model to ensure that we can support the deployment of low-carbon hydrogen projects to achieve those 2030 ambitions, to improve our energy security and to help achieve net zero. I therefore commend these draft regulations to the Committee.

[Lord Naseby (Con)]

My Lords, I very much welcome this statutory instrument and congratulate His Majesty’s Government on bringing it forward so speedily. I just wonder whether my noble friend has any idea of how many potential clients there are in the United Kingdom. That would be interesting in itself.

Regulation 2(4), on page 2, defining an

“eligible low carbon hydrogen producer”,

is very sensible and has thankfully been included. Of course, because of the publicity for the domestic trial in the north-east of England, hydrogen is getting a bit of an unfortunate image. I am not sure whether any incentive can be produced to help the local communities—which I would say are getting difficult, but let us say they are being very careful—to do those trials. If there is not, there is not, but this is a negative reaction and not one I welcome.

Finally, it is usual for most statutory instruments, certainly the ones on which I comment, to have a sunset clause for review. I do not see one, unless I have missed it, but that would have helped.

Limiting Global Temperature Increase

Debate between Lord Callanan and Lord Naseby

Wednesday 13th December 2023 Lords Chamber

[Lord Callanan (Con)]

There was a whole series of questions in the noble Lord’s statement. This was an international agreement, involving almost 200 countries. Is it perfect? Is it everything we would have wanted? No, but it is certainly a great achievement by our extremely hard-working negotiating team. I do not agree with the noble Lord on the second part of his question about licensing and increased production in the North Sea. Even if they come on stream, the output in the North Sea will still continue to decline and we are still committed to phasing out oil and gas production.

[Lord Naseby (Con)]

Will my noble friend reflect that it is not just carte blanche? There will be situations where an oil company finds a new field, perhaps like the one 200 miles north of the Falklands, where the quality of the oil is far better than the oil that we produce in the North Sea, and it would make economic sense to substitute one for the other in the future. Then at some stage, that field will be reduced. It is not absolutely static, is it? We now want a situation where the industry decreases but at the same time improves the product.

[Lord Callanan (Con)]

My noble friend is right, in that different circumstances will apply to many countries, but we are very clear about the trajectory that we are on. We need to bear in mind that this is a transition. It cannot happen overnight, but we are clear on the direction in which we are travelling.

Hydrogen Heating

Debate between Lord Callanan and Lord Naseby

Monday 11th December 2023 Lords Chamber

[Lord Callanan (Con)]

I agree with the noble Lord that energy efficiency and insulation are extremely important. That is why we are spending £6.5 billion over this Parliament on insulation, energy efficiency and clean heat measures; but, of course, there is always a lot more to do and we will have more to say on that shortly.

[Lord Naseby (Con)]

Is it not extraordinary that Germany appears to have decided that all its heating for domestic should be in a hydrogen/gas mix, and there are apparently at least four or five other European countries far ahead of us? How is it that the national infrastructure plan can ignore the work that appears to be being done on hydrogen on the ground in this country, with factories being built at the moment for the use of transport and all the extensive work being carried out in trials?

[Lord Callanan (Con)]

I do not think my noble friend is correct about attitudes in Germany. The latest information I have is that 10 homes in Germany—no more than that—are subject to the trial. The issue of blending hydrogen into the gas network is of course a separate issue, and that too is something on which we will have more to say shortly.

Climate Financing

Debate between Lord Callanan and Lord Naseby

Tuesday 17th October 2023 Lords Chamber

[Lord Callanan (Con)]

We are proud of our record on helping the global south to relieve its debts. We have one of the largest programmes of international aid alongside our programmes on international climate finance. Of course, there is always much to be done, but we can be very proud of the record that this country maintains.

[Lord Naseby (Con)]

My noble friend rightly mentions developing countries. He will well know that the emphasis that he gives is much appreciated. Within that, is he aware of the parlous state of the small islands and the worry that they have about their future? Is he prepared to make a commitment today that they in particular will continue to be a priority for His Majesty’s Government?

[Lord Callanan (Con)]

Of course I can give that commitment to my noble friend.

Offshore Wind

Debate between Lord Callanan and Lord Naseby

Monday 11th September 2023 Lords Chamber

[Lord Callanan (Con)]

Again, there is no complacency. I understand that there are many projects wanting the go-ahead, but we must be careful in making sure that the consumer gets a fair deal. Lots were consented to last year; I am sure that lots will be consented to in the future. The noble Lord talks about onshore wind. I am pleased to tell him that 24 onshore wind projects were consented to and were successful in this round, totalling 888 megawatts.

[Lord Naseby (Con)]

Is my noble friend aware that a number of us have taken an interest in this market, recognising the enormous steps that His Majesty’s Government have taken on the development of offshore wind? At a time when it is stated that we are facing a possible bill of £65 billion to replace the internal grid to all our homes in the United Kingdom, is it not more appropriate that the resources we do have should be used for research such as that into the mix of hydrogen with LPG to see whether it can be used in the existing pipelines available to every house in the country?

[Lord Callanan (Con)]

The noble Lord asks a lot of different questions within what he said. I think his figure of £65 billion refers to the cost of upgrading property to EPC level C, which is a long-term aim. His separate question on hydrogen for heating is indeed a controversial subject. We will make a decision on whether to go ahead with a hydrogen village trial by the end of the year. Similarly, another issue facing us is whether to allow blending of hydrogen into the gas network; you can blend up to about 25% with the current network. Again, that is an issue where, frankly, there are a lot of pros and cons on both sides of the argument. We will make a decision on that by the end of the year as well.

Heat and Buildings Strategy: Gas Boilers

Debate between Lord Callanan and Lord Naseby

Tuesday 28th February 2023 Lords Chamber

[Lord Callanan (Con)]

The noble Lord is right to an extent. At the moment, hydrogen heating for homes is an unproven technology, which is why we need to carry out trials and research to ascertain whether it is a viable technology. In the meantime, we know that heat pumps and electrification work and are operable technologies, which is why we support them.

[Lord Naseby (Con)]

My Lords, I remind my noble friend the Minister that there are millions and millions of terraced houses throughout the United Kingdom. It is absolutely impossible for them to have heat pumps. Against that situation, would it not be much more sensible to ask the gas industry to produce, in the interim, new boilers that are less difficult in relation to zero carbon? In addition, the point that was just made about hydrogen seems equally relevant to me.

[Lord Callanan (Con)]

I am afraid that I do not agree with my noble friend. It is perfectly possible for heat pumps to be used in terraced properties. The thing about the UK is that there is a multiplicity of different property types and flavours; not all solutions will be appropriate for all properties, so we need to look at a number of options. We also need to continue to improve the efficiency and effectiveness of gas boilers. In whatever scenario, there will still be millions of gas boilers fitted in existing properties in the next few years; there is more that we can do to improve existing efficiencies.

Electric Vehicle Battery Production

Debate between Lord Callanan and Lord Naseby

Monday 23rd January 2023 Lords Chamber

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

No, is the short answer to the noble Lord’s question. Of course, before we make any government money available, we do the appropriate due diligence. As a result of this work, the funding was designed so that agreed milestones had to be achieved for the company to draw down substantial amounts of taxpayers’ funds. In the event, it was not able to meet those milestones, so the money was not handed over. I am sure the Opposition would like us to be careful with public money. If the alternative had happened and we had handed over the funds and the company had still gone into administration, I am sure the noble Lord would have been on his feet demanding an inquiry into why we had been so careless with public funds.

[Lord Naseby (Con)]

My Lords, given that, as I am sure my noble friend agrees, gigafactories are a vital part of our industrial infrastructure going forward, is there not a case for publicly stating that they must be home grown and for calling together successful UK companies such as Rolls-Royce and BP, and entrepreneurs such as Sir James Dyson, to try to find a structure that will take this forward? Unless something like that happens, is it not a fact that it will result in imports from China?

[Lord Callanan (Con)]

The Government stand willing to talk to any manufacturers that want to establish such facilities. There have already been a number of excellent investments in the UK, supported by the automotive transformation fund. The site in Cambois that was going to be developed by Britishvolt remains available. Subject to the decisions of the administrators and the local authority, we very much hope that a project can be taken forward there.

Energy Security

Debate between Lord Callanan and Lord Naseby

Monday 5th December 2022 Lords Chamber

[Lord Callanan (Con)]

I disagree fundamentally with the noble Baroness. Sizewell C is an important investment. It is still at the planning stage at the moment. We will secure the funding for it and we will bring it on stream as quickly as we possibly can.

[Lord Naseby (Con)]

My Lords, I welcome my noble friend to the Front Bench again. This was a very important Statement, and I can think of no better man to handle this very challenging area faced by His Majesty’s Government. On the nuclear issue, can he reassure me that the small modular reactor programme from Rolls-Royce will not be side-lined? It seems to me a very exciting project—one that, to date, has gone well with the company, as I understand it, and with those who are working closely with it.

Secondly, as he knows, I have a genuine interest—it is nothing to declare—in what is termed in the Statement “nascent hydrogen”. I personally believe that we will see, quite possibly, a similar revolution to that which we saw when we moved from coal gas to North Sea oil. In this instance, it will be a mixture of gas from the North Sea and hydrogen. If that were to happen, that would be a major step for every household in the United Kingdom. Can I be reassured that that will not be forgotten, and that hydrogen is vitally important, not just for normal usage but for the air industry, in which I also have an interest, as my noble friend knows?

Finally, just on renewables, I did a little bit of research on offshore winds in the current situation. At this point in time, things are not going well. The primary problem appears to be that National Grid is unable to give a guarantee to connect to the main transmissions until 2030. Quite frankly, that is totally unacceptable for an industry that has done well, in which we have major investments. Somebody needs to shake it up somehow so that those on the offshore and the future investments know that they can speedily get connection to the grid.

[Lord Callanan (Con)]

I thank my noble friend for his questions. I also thank him for welcoming me back to the Front Bench, although I was not aware that I had ever left it. Nevertheless, I am sure that his concern is well thought, and I thank him for that.

On SMRs, we are indeed continuing to support Rolls Royce; the figure is about £200 million-worth of support to accelerate the design of SMRs, because they will have a key role to play. My noble friend also asked me about hydrogen. We have a very advanced hydrogen strategy and will shortly be rolling out a business model. I can tell him that hydrogen for heating is not yet an established technology in its scalability. We have the ability to blend about 20% hydrogen into the current gas main, and in the Energy Bill, which we will shortly be considering, we are taking powers to conduct village-scale trials of hydrogen to check its feasibility for heating. I think it is more likely that the use of hydrogen will be in the sectors that are hard to decarbonise, such as steel or cement, or for really big, heavy, long-distance transport, such as locomotives or heavy goods vehicles.

My noble friend also makes a good point about the grid connections. As we seek to move the electricity system generally away from big nodes to a much more diversified system, clearly that requires an awful lot of new connections to be made. That is generally by pylons, but these can be extremely unpopular in various parts of the country. Nevertheless, that is something that we need to proceed with, but we need to try to do it in collaboration with local communities. Every offshore wind farm needs to be connected to shore and into the national grid to parts of the country that use the power. So there is a massive reconfiguring of the grid going on, with massive amounts of investment to bring that about. It is a project that will take many years to bring to fruition.

Government Departments: Communication with Industry and Commerce

Debate between Lord Callanan and Lord Naseby

Monday 14th November 2022 Lords Chamber

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

My Lords, departments meet regularly to ensure that government communications with business are clear and consistent. BEIS’s primary way of engaging with business is through dedicated sector teams that provide expert engagement with sectors, mainly large companies and trade and professional bodies. Treasury Ministers and officials meet regularly with representatives from financial services firms, including those based in the City of London, on a range of matters from regulatory reform to the broader state of the UK economy.

[Lord Naseby (Con)]

Is my noble friend aware that that Answer and the depth of it will be enormously welcome to the CBI, the City, the chambers of commerce, and in particular some of our huge and expanding companies, because they have not felt part of decision-taking in our country in recent years? Bearing in mind that we need to get our growth rate up as we move forward, will he please ensure that the statement he has made today is implemented on the ground so that when I next contact the various bodies I have mentioned in a year’s time, they will say thank you to the Government for making sure that communication is now back on track?

[Lord Callanan (Con)]

I assure my noble friend that communication is very much on track. The first meeting that the new Business Secretary had following his appointment was with the “big five” business representative organisations, which collectively represent around 750,000 businesses.

Small Modular Nuclear Reactors

Debate between Lord Callanan and Lord Naseby

Tuesday 28th June 2022 Lords Chamber

[Lord Callanan (Con)]

We have not made a decision on the relevant business case model—it could be either the RAB or the CfD model—but we will consult on this shortly.

[Lord Naseby (Con)]

My Lords, my noble friend knows as well as anyone that we have suffered an energy crisis and continue to have one. Against that background and the vacillation over the North Sea, which is not my noble friend’s fault, does he not think that, given Rolls-Royce’s history and what it did during the war—twice as quickly as anyone forecast—it is a major company that can really get a grip on this, if Her Majesty’s Government push the button for it to do so?

[Lord Callanan (Con)]

I agree with my noble friend’s point: Rolls-Royce is indeed an excellent company, which is why we are funding it to do this work.

Russian Oil and Gas Imports

Debate between Lord Callanan and Lord Naseby

Monday 7th March 2022 Lords Chamber

[Lord Callanan (Con)]

I do not think the noble Baroness is quoting a very good example. The Germans have made a singular mess of much of their policies by phasing out nuclear power, which has resulted in the burning of much more coal. I am not sure that that is an example of what the noble Baroness wants us to follow. We have an excellent plan in this country. We have a much bigger renewable sector than Germany, which puts far too much reliance on gas from Russia and now may well be paying the consequences.

[Lord Naseby]

Going back to Ukraine, is it not a fact that Russian gas is coming to this country by ship, in LNG tankers? In that case, why do we as a country not refuse entry to any of those tankers from this day forward?

North Sea Oil and Gas

Debate between Lord Callanan and Lord Naseby

Thursday 10th February 2022 Lords Chamber

[Lord Callanan (Con)]

Yes, I realise that it is counterintuitive but supplies are required in different parts of the country. We are importing and exporting. The corollary to the noble Lord’s question would be to say that we seal the borders, disconnect all our interconnection pipelines and import no further LNG—and we would not have enough supplies to satisfy our domestic demand in such circumstances. We import and we export, but the point remains that we are a net importer of both oil and gas supplies.

[Lord Naseby (Con)]

Bearing in mind that the four Governments previous to this one have ignored the role of nuclear—that appears to be the situation—can my noble friend assure this House that we will now see what useful role nuclear can play in giving us, in a sense, a defensive supply?

[Lord Callanan (Con)]

Indeed, my noble friend makes a very good point. The House will shortly have the opportunity to consider the Nuclear Financing Bill, which has its Second Reading on 21 February, I believe.

Green Gas Support Scheme Regulations 2021

Debate between Lord Callanan and Lord Naseby

Tuesday 9th November 2021 Grand Committee

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

My Lords, since this draft SI was laid before the House on 9 September, a minor correction has been made to the Explanatory Note to highlight that the scheme is intended to end in March 2041.

The UK is the first major economy in the world to set a legally binding target to achieve net zero greenhouse gas emissions by 2050. Between 1990 and 2019, our emissions have decreased by 44%, which is the fastest reduction in the G7, and we are continuing to advance sustainability through the Government’s Ten Point Plan for a Green Industrial Revolution, the net-zero strategy and, most relevant to this policy, the heat and buildings strategy.

Currently, the heating of our homes, businesses and industry is responsible for 21% of the UK’s greenhouse gas emissions. The decarbonisation of heat is recognised as one of the biggest challenges in meeting our climate targets, requiring virtually all heat and buildings to be decarbonised. Increasing the proportion of green gas in the grid is a practical, established and cost-effective way of reducing carbon emissions and contributing to the UK’s net-zero target, lowering carbon emissions from both domestic and industrial gas boiler use.

The green gas support scheme is a Great Britain-wide tariff-based scheme supporting new biomethane plants injecting biomethane produced by anaerobic digestion into the mains gas grid. It is expected to contribute 3.7 million tonnes of CO equivalent of carbon savings over carbon budgets 4 and 5, and 8.2 million tonnes of CO equivalent of carbon savings over its total lifetime. This is equivalent to taking approximately 3.6 million cars off the road for a year. The green gas support scheme is expected to help support high quality jobs in the renewable energy sector at a time when economic recovery is, of course, so important. It is anticipated that, when taking into account both direct and indirect jobs, the green gas support scheme could support up to 1,600 jobs per year during the construction phase of plants and up to 1,000 jobs once plants are fully operational.

Our analysis suggests that over two-thirds of existing biomethane plants are in fact located in rural areas, with 80% of all GB plants located in areas with a lower than average gross value added. We expect plants supported by the scheme to follow similar trends and therefore contribute to the Government’s levelling-up agenda. The Government believe that it is appropriate for gas consumers to pay towards decarbonising the gas grid, and therefore we have taken the decision to fund the green gas support scheme through a levy. The levy will be the sole funding source for the green gas support scheme and will be applied to all licensed fuel gas suppliers.

Of course, the Government acknowledge the impact of rising gas prices on consumer energy bills, and we are implementing stringent budget control measures to ensure that the costs of the levy are as low as possible and cannot rise unexpectedly. The cost to an annual gas bill will be relatively low, starting at around £2.50 per year, and it will peak at around £4.70 per year in 2028 for an average gas bill, assuming that we make a transition to a volumetric levy.

During peak years of production, biomethane plants incentivised by the green gas support scheme will produce enough green gas to heat around 200,000 homes, which would otherwise have been heated by natural gas.

While we are launching with a per-meter point levy that provides a high certainty of costs to both suppliers and consumers, the Government recognise the benefits of a volumetric levy that aligns costs more closely to gas consumption. We have committed to transition to a volumetric levy as soon as possible, subject to overcoming the feasibility issues, which include the impact on energy-intensive industries and other important UK businesses.

In conclusion, the scheme established by this statutory instrument will support ongoing investment in the biomethane industry and enable the development of new production plants for the injection of biomethane into the gas grid. In supporting this investment in new anaerobic digestion capacity, we expect to support more jobs, growth and innovation in the biomethane industry, while delivering important carbon savings, which are a vital part of meeting our overall net zero targets. I therefore commend these draft regulations to the House.

[Lord Naseby (Con)]

My Lords, I have come to learn rather than to criticise or analyse in much depth. I was on the Select Committee on energy in the other place and I have tried to keep up to date with developments. I congratulate my noble friend on the fact that, according to his statement, we are the first in the world to go down this track.

My questions are really exploratory. I looked particularly at page 70 of the extensive documentation. First, I have a question about energy crops. It seems that if we are starting in a new area, the bringing together of waste collection is quite a challenge, whereas energy crops by definition are probably on a 12-month cycle. Therefore, the 50% limitation that is mentioned here, while probably the right strategy in the medium term, seems a bit of wishful thinking, certainly in the initial stages. You have to have energy crops to get the thing going.

Secondly, what is the estimated time required to set up any of these plants? Are we talking about a year, 18 months or two years? That is fairly key.

Thirdly, there is the question of the intermix of the gas provided by this route alongside gas from the North Sea. As far as I can see—I have not done an in-depth analysis—there is no reference to this. Is there complete compatibility or does there need to be treatment one way or the other to ensure compatibility in the mix of gases going into the grid?

There is another area that concerns me. Like so many others, I was previously in local government. How will we ensure that local government waste collections collect food waste and other waste suitable to feed these new plants? I do not know the proportions, but at this point in time we in central Bedfordshire are separating only recyclable and non-recyclable waste. I do not know what is happening in the rest of the country, and an update on that would be very helpful.

I thank my noble friend for taking this forward; it is crucially important. I will do my very best to help him on the journey forward.

Retail Sector: Unemployment

Debate between Lord Callanan and Lord Naseby

Wednesday 27th January 2021 Lords Chamber

[Lord Callanan (Con)]

I am delighted to hear that the noble Lord is speaking up for Colne and for many other high streets, because they play a critical role in our smaller towns. We have brought forward £81.5 million from the £3.6 billion towns fund to kick-start local investment projects of the exact kind that he refers to. Of course, we have to accept that we cannot protect every job during this crisis, but we will help people to get through it and help them get back into work at the end of it.

[Lord Naseby (Con) [V]]

My Lords, I declare an interest as a trustee of the parliamentary pension fund. What action will Her Majesty’s Government take to ensure that the pensions of thousands of redundant employers, who mainly will be female and will have given years of service, will be protected and that these employees will be told exactly what is happening with regard to their pensions?

[Lord Callanan (Con)]

My noble friend makes a very good point. I appreciate that these will be concerning times for members of these pension schemes, but there are measures in place for these situations. We will ensure that we do everything we can to provide support for those who potentially will be impacted. The Pensions Regulator is working closely with both the company and the scheme to ensure that all prior commitments entered into are fulfilled.

Covid-19: Vaccine Trials

Debate between Lord Callanan and Lord Naseby

Wednesday 13th January 2021 Lords Chamber

[Lord Callanan (Con)]

I pay tribute to the work the noble Baroness has done on this important subject. It is vital to point out that the vaccines have been deployed only as they have been proven to be safe and effective by our independent medicines regulator. Everyone from all communities can be absolutely confident that no corners have been cut. The Government are sponsoring content on social media channels and on a range of news media outlets to get this message out to provide information and advice to communities, in many different languages. I can tell the noble Baroness that, in the Oxford trial, 830 BAME participants took part out of a total of 9,531, which is just under 9%. That data is from September 2020.

[Lord Naseby (Con) [V]]

Is it not the case, though, that the key point is the sample profile, not just the raw numbers? In the case of Covid-19, the research looked at efficacy in adults across all ethnic groups, with some skewing for the older age groups. Against that, will the Minister confirm that the regulator would have been party to signing off the research in the first place?

[Lord Callanan (Con)]

The audio was a little unclear and I did not quite catch all of that question, but I can certainly confirm that the regulator is of course aware of all the information supplied on the research and the trials, and on the participants in the scheme, and signed it off for use by all communities.

Green Homes Grant Scheme

Debate between Lord Callanan and Lord Naseby

Wednesday 6th January 2021 Lords Chamber

[Lord Callanan (Con)]

More than 1,300 companies are registered with TrustMark so far, of which 765 are registered with the scheme, including many businesses that operate nationally with substantial capacity to carry out work across the country, but the noble Lord makes a good point. We are well aware that we need to get more contractors and installers signed up to the scheme. We are actively working with TrustMark and the certification bodies to do that, but we need to ensure that the essential quality standards are met.

[Lord Naseby (Con) [V]]

My Lords, is my noble friend aware that he has made an excellent start with the Green Homes Grant scheme? I spoke to former constituents. However, just one element causes a problem: the need for an urgent review of the smart meter installation programme, particularly for those who want to take up this green project and have an old smart meter, which means they cannot switch suppliers. Will my noble friend look at this small handicap to those taking part?

[Lord Callanan (Con)]

I thank my noble friend for his question. The smart meter scheme is not part of the Green Homes Grant scheme. It is a separate scheme, for which I also have responsibility, but I would be happy to talk to him separately about the issues he raises.

United Kingdom Internal Market Bill

Debate between Lord Callanan and Lord Naseby

Report stage & Report stage (Hansard): House of Lords & Report: 1st sitting & Report: 1st sitting: House of Lords
Wednesday 18th November 2020 Lords Chamber

[Lord Naseby (Con)]

My Lords, I respect the views of the noble Baroness who has just spoken, but I have to say that there is little in what she said that I agree with. Amendments 21, 48 and 49 are quite different from Amendments 10 and 11. They go, in my judgment, way beyond what is necessary for a successful free trade market. Really they amount to micromanaging, and on the whole Her Majesty’s Government in any form, whether it be devolved or central, certainly are not terribly good at managing commercial activities. So I suggest that those amendments are unacceptable.

Amendment 11 is one that I warm to because the environment is absolutely crucial. In that context we include climate change, which we know is affecting every nation in the world, so that is a very serious area. Whether this amendment is the right one or not is almost for the Government to decide. I care deeply about the environment. I am privileged to live outside London. I shall drive home tonight, 50 miles to Bedfordshire, and it is a very nice environment there. It is essentially a horticultural one, which brings me to the point that horticulture is changing, not least because we are looking to achieve a fair degree of import substitution. All sorts of new challenges arise from that. We virtually gave up in the glasshouse world, losing out to Holland. There is all sorts of experimentation going on—growing vegetables just in water and so on—but this is not the time to go into that.

I do worry that there are products at the margin, where there is always somebody lobbying against them. Smoking has been mentioned. I have never smoked, but I accept the current situation in which people have the right to smoke if they wish to, and there are clear frameworks in which they can follow that. Pesticides are important in the horticultural world because they affect yields; again, that is a controversial area. So I will listen to my noble friend, particularly on Amendment 11, about which I have a reasonably open mind. I know that the environment is absolutely crucial, but I do not want to see areas of our society and our market squeezed out because of some heavy lobbying from one particular group who do not like the particular industry involved.

[Lord Callanan (Con)]

My Lords, Amendments 10, 11 and 41 would expand the list of legitimate aims used to justify where statutory requirements in one part of the UK can indirectly discriminate against goods or services from another part of the UK. So I will start by saying that the Bill provides an updated, coherent market structure which will help to avoid future complexities and prevent costs being passed on to customers through an increase in prices or a decrease in choices. An expansive list of legitimate aims would increase the potential discrimination faced by businesses or service providers, eroding the benefits of the internal market and creating damaging costs and internal barriers to trade.

The current list in the Bill is targeted to allow nations to meet their respective goals while avoiding unnecessary damage to the internal market—a point that was well made by my noble friend Lady Neville-Rolfe. For example, the Bill already includes the protection of public, plant and animal health, and in some cases, of course, this will align with the protection of the environment. However—I cannot stress this enough—the Government have repeatedly committed to maintaining our world-leading standards across a number of different areas, whether that is in consumer protection, the environment, social and labour standards or public, animal and plant health. The Bill does not undermine the great strides that we have taken in these areas, and we will continue to be at the forefront of improving and protecting our high standards.

Under this Bill, the devolved Administrations will retain the right to legislate in devolved policy areas. Legislative innovation remains a central feature and, indeed, a strength of our union. The Government are committed to ensuring that this power of innovation does not lead to any worry about a possible lowering of standards, by both working with the devolved Administrations via the common frameworks programme and by continuing to uphold our own commitment to the highest possible standards. It is important to remember that the market access principles do not prevent the UK Government or the devolved Administrations adopting divergent rules for goods or services.

Corporate Insolvency and Governance Act 2020

Debate between Lord Callanan and Lord Naseby

Wednesday 29th July 2020 Lords Chamber

[Lord Callanan]

The noble Lord makes a very good point. I can certainly reassure him that the courts have taken all practical measures within the resources available to accommodate a likely increase in the workload before them. Specialist seminars have taken place to ensure that judges are up to speed with the changes and the processes that have been introduced by the Act. Resources include the numbers of, and the deployment of salary to, fee-paid judges and courtrooms, where required.

[Lord Naseby (Con)]

As someone who was in financial services, I wonder about awareness of the scheme. Is there not a case for putting forward a couple of arbitrary case histories on an anonymous basis—we do not have one yet, but perhaps a framework case could be drawn up initially?

[Lord Callanan]

I understand the point my noble friend makes, but I think that the provisions are fairly well known and understood in the insolvency profession. There is a wide circle of people who know all about them and who specialise in this area, but I am happy to consider my noble friend’s suggestion.

Covid-19: High Street Retailers

Debate between Lord Callanan and Lord Naseby

Thursday 2nd July 2020 Lords Chamber

[Lord Callanan]

The noble Baroness raises an important point. We announced a review of the business rates system, which is ongoing, and I am sure we will have more to say on that shortly.

[Lord Naseby (Con) [V]]

Retail is facing a complete revolution with the move to online, added to which there is a fear factor among consumers against spending at the moment. Should we not, first, ditch the “Stay at Home” message and get everybody back to work? To take one example, why cannot the beauty sector go back to work? It has 200,000 female employees, and what honestly is the difference between them and hairdressers? Indeed, while we are about it, why not allow physiotherapists to open, too? Does not the Minister think that it is time to trust all retailers, so that they can make the decision to open safely, within the boundaries that we have set?

[Lord Callanan]

My noble friend is right to highlight these issues. I can only tell him that we have studied the health advice very carefully: we are following the scientific advice from Public Health England and others. It is our wish to get every sector reopened as soon as possible, but he will understand that we need to do that as safely as possible.

Oil: Changes in Global Markets

Debate between Lord Callanan and Lord Naseby

Thursday 21st May 2020 Lords Chamber

[Lord Naseby (Con)]

How will we help the Arab world to adjust, particularly our friends in Saudi Arabia and Qatar? Alongside that, as far as the UK is concerned, does Covid-19, on top of these changes, mean that domestically we will have to reappraise the rate at which we can implement climate change policies?

[Lord Callanan]

Our 2050 targets are now legally binding. We are committed to them and do not believe that there is any need to review them. We believe that we can continue with those targets and prioritise economic recovery at the same time; we do not believe that they are mutually exclusive.