Great British Energy Bill

Lord Cameron of Dillington Excerpts

Committee stage
Tuesday 3rd December 2024 Lords Chamber

[Baroness Noakes (Con)]

My Lords, I support what both my noble friend Lord Offord of Garvel and the noble Lord, Lord Vaux, have said about the confusing overlap between what is now the National Fund Wealth and Great British Energy. I am one of those sad people who look at annual reports and accounts, and I was anxiously waiting for the UK Infrastructure Bank’s reports and accounts, which finally dropped last Monday. Through that, I discovered that it had legally changed its name to the National Wealth Fund two or three weeks ago, although no announcement seems to have been made about that at the time.

I agree that Amendment 1 is a very neat way of tucking Great British Energy into a more satisfactory set of governance and oversight arrangements, which we wrestled with when the UK Infrastructure Bank was set up. But my main reason for speaking today is in connection with Amendment 3 in the name of my noble friend Lord Offord of Garvel and Amendments 4, 6 and 7 in the name of the noble Lord, Lord Vaux.

I do not support these amendments, because I think the concept of minority stakes in government-controlled companies is a complete nonsense. Over the whole history of nationalised industries and publicly owned corporations and companies, there are relatively few examples of entities in which minorities held equity stakes. The exceptions are normally accidents of history—such as in the case of RBS/NatWest—rather than acts of conscious design.

I cannot think of a single good reason to encourage the Government to seek private capital in Great British Energy, as opposed to seeking to leverage private capital alongside public investment in projects that need public involvement to help to de-risk them. Equity is always more expensive than debt, and minority holdings in illiquid shares are even more expensive. The Government do not need to pay that premium. They can borrow money, to the extent that GBE needs it, by issuing government debt. That will be much cheaper than raising equity for GBE, even after the post-Budget bond yield increases.

Equity costs more to raise than debt because it carries more risk than debt. It is the first bit of the capital stack to be wiped out in liquidation—at least, that is what happens in the private sector. But does anybody believe that minority holders would be wiped out if the state decided to liquidate an insolvent Great British Energy? The Secretary of State has so many powers over Great British Energy that in practical terms the Government will find it very difficult, if not impossible, to escape underwriting all the liabilities of Great British Energy, and that includes its minority holdings. If the Government did try to wipe out the minority holdings in a liquidation, I predict a decade or more of shareholder litigation.

Having minority holdings can also engage a lot of unnecessary legal problems around protections for minorities that are built into our company law to prevent minorities being treated unfairly. It can raise issues about dividends, which are not normally part of the regime for state-owned enterprises since retained earnings, if there are any—and history tells us that there are not usually any—are generally kept within the public corporation. I am not a fan of state-owned activity, but we should accept it for what it is, which is taxpayer or debt-funded activity, and not try to mimic the real world where equity investors genuinely do take on risk.

[Lord Cameron of Dillington (CB)]

My Lords, I added my name to my noble friend Lord Vaux’s Amendments 4, 6 and 7. This was largely because when the Bill went through its stages in the other place, the Government made frequent references to the fact that an essential quality of Great British Energy was that it would be flexible, vibrant, resilient and fleet of foot. These are all good qualities to allow this new company to take advantage of opportunities in the marketplace, maybe even sudden ones when, say, an international investor is looking to throw its weight behind a tidal initiative or a new hydrogen production plant but is looking for a commitment from the UK Government in the form of some investment from GBE.

What happens in these circumstances if the Treasury reduces its annual funding for GBE in future or if GBE’s annual budget has already been spent and there is a danger of this vital project going overseas unless GBE invests? Will the opportunity just get missed or, as my thinking goes, should GBE be truly flexible, vibrant, resilient and fleet of foot and be able to go out into the financial marketplace and draw in sufficient funds to promote and thus enable this one-off opportunity?

I recognise that, to be effective, GBE must be part of government and yet not part of government. That is why the figure of 75% government ownership is crucial; 24% of outside investment would not prevent the Government remaining in total control and, more importantly, being seen to be in total control, but it could also mean that the private sector could help contribute to the success of GBE.

Your Lordships may ask why the private sector cannot just invest in the proposed investment itself. The answer is that by investing in the parent company, GBE, the private sector would be hedging its bets by spreading its risk across the renewable sector generally rather than just putting its money into, say, a hydrogen project or whatever. Furthermore, allowing GBE to attract some outside investment would be a good way of taking some of the risk away from the Treasury.

There may of course be other ways of doing this, such as issuing class A shares with a different standing from ordinary shares, but I do not believe they would ever be as attractive as the solution in our Amendments 4, 6 and 7.

The noble Lord, Lord Vaux, and I are keen to see GBE succeed, but we think it needs the greater flexibility of being able to attract some investment from outside government.

--- Later in debate ---

[Baroness Grender (LD)]

My Lords, I rise to speak in favour of Amendment 18, not Amendment 28— to be clear. I regret that I was unable to be here for Second Reading.

This amendment inserts two additional objects for GBE. The first is to implement

“an emergency home insulation programme with targeted support for people on low incomes”.

The second is to have as a clear object

“the expansion and development of renewable energy and technology”.

I also support many of the amendments in this group, particularly those in the name of my noble friend Lord Russell. Most of my comments will address his Amendments 16 and 17, which, alongside the spirit of my own amendment, seek to promote an eco-friendly and affordable way to heat homes.

On these Benches we would argue that these amendments are essential if the welcome aims of the Bill are to be fulfilled; namely, to reduce dependence on fossil fuels, drive down costs for individual households and ensure long-term security of supply. Failure to give these two issues due prominence, especially when it comes to insulation, would be like running a hot bath with the plug missing. My amendment focuses on getting GBE to support and innovate on behalf of its customers, because GBE, like any other part of our society or any other organisation, should be working towards and contributing to net zero.

The UK has one of the worst records in western Europe when it comes to losing heat from homes—three times faster than neighbouring countries—resulting in exorbitant costs, poor health and a level of wastage which is breathtaking. The greatest impact of our older, damper, leakier housing stock is on those who can least afford it; and it particularly impacts on people who live in the private rented sector. While residents might be able to access help with insulation from their local authorities at present, that is not what this amendment attempts to achieve. It is about the rollout of a proper emergency home insulation programme—yes, for this winter but, above all, as a long-term measure to improve living conditions and drive down costs. I ask that the Minister particularly addresses our aim for an emergency scheme. The benefit is obvious and has been laid out by the Climate Change Committee in the past. Demand for energy can reduce if we deal urgently with the energy which is lost and seeping out of homes that are not insulated and are leaking heat.

The potential savings are significant. The New Economics Foundation estimates that £2 billion alone could be saved for the NHS from reducing cold and damp in current housing. In addition, home energy efficiency is highly necessary to get us to the net-zero target. Regrettably, according to the previous Conservative Government’s own Climate Change Committee, while the UK over recent years should have installed nearly 3 million individual measures in energy efficiency, the last Government achieved just under 16% of that target. This was such a wasted opportunity to help those who need it most, in the leakiest of homes.

The worst part of this historical record is the abandonment of targets for energy efficiency and insulation in 2015, allowing houses to be built without energy-efficiency measures at all. We urge this new Government to make this record of lost opportunities a thing of the past, and to adopt an emergency programme of insulation through the scheme proposed to support those on low incomes. While we are of course aware that the Government’s warm homes plan is due next year, if this Bill is intended to champion the consumer alongside the objective of energy efficiency, which is one of the best ways to help them, it should be included within this legislation, particularly given how far these programmes have, tragically, lagged behind and how much progress and catch-up now need to be made.

I ask that the Minister responds in the context of the warnings from Age UK and Disability Rights UK about the urgent and imminent impact of the changes to the winter fuel allowances. This is something that could be reduced as an impact, crisis and concern right now, if countless vulnerable pensioners were lifted out of fuel poverty with the emergency programme we have described.

Leading the way in previous years, my noble friend Lady Pinnock introduced an amazing scheme that I urge the Minister to look at called the Kirklees Warm Zone scheme—noble Lords may have heard her reference it once or twice in the past—that offers over 170,000 households support with an insulation programme, regardless of the tenure of the property. It was an award-winning programme over a three-year period, and the largest domestic insulation scheme in the UK. It is estimated that approximately 55,000 tonnes of CO₂ were saved in that period, and it helped to dramatically reduce fuel poverty and won many awards for sustainability.

In October, Wokingham Borough Council launched a new home decarbonisation advice service aimed at supporting residents who want to make their homes more energy efficient and reduce their energy bills. Eastleigh, as part of a much wider consortium of local authorities, secured home upgrade grants to help vulnerable households. I have given the Minister those three local government examples where there is such a strong appetite for the emergency action that we are trying to bake into this legislation.

The second part of the amendment would also reinvigorate an ambition that has fallen away in recent years for the UK; namely, to be a global leader in development and expansion of renewable energy, which many noble Lords have talked about in this group. This is an ambition, sadly, that the Conservative Government dropped like a wet, cold potato when they ditched—according to the Sun, not me—the “green crap”. This new ambition today should be baked into primary legislation. We should immediately remove the last Government’s restrictions on new solar and wind power. When it comes to renewables, we should be innovating and proudly leading. From insulation and heat pumps to wind, wave and solar, the UK is uniquely able to lead in this, in part because of the geography.

We are ambitious for what this Bill can achieve and, as a result, what the UK can achieve. We believe that investing in renewable power now will ensure that 90% of the UK’s electricity is generated from renewables by 2030. Innovation that is referred to in this amendment would include things such as a rooftop solar revolution, with strong incentives and a guaranteed fair price for electricity sold back into the grid, for instance.

Finally, this part of the amendment is connected to jobs that can be created in this area. I think everyone would agree that one of the best examples of that over a few years now is Hull, where the new blade factory with a recent contract worth £1 billion is yet another example of how growth in jobs can be generated through great innovation in this area. That is why the amendment refers to expansion and development: it is with these schemes in mind.

Our ambition as a nation must be to be a leader in this, and it should have no limits. I hope noble Lords and the Minister will support this amendment, its intentions and the spirit of the other amendments as the Bill progresses through Committee.

[Lord Cameron of Dillington (CB)]

My Lords, I do not believe that the Bill should be too specific on the investment targets of GBE. As I said in an earlier group, I believe that GBE should remain flexible and fleet of foot, adapting itself over the years to the development of science and changes in the marketplace.

Nevertheless, there is no harm in us discussing where we think some of the current opportunities lie. In that context, and in the context of the amendments in this group, I will touch on both heat pumps and tidal energy. Unfortunately, it was not clear from reading the script that the amendments from the noble Lord, Lord Naseby, referred to hydrogen. Had I known this, I would definitely have been supporting his amendments, because I am very keen on hydrogen. It has a crucial part to play in our energy infrastructure, as a storage of intermittent power—as the noble Lord himself mentioned—as well as in the making of steel and in transport. Hydrogen fuel cell cars have a range of more than 1,000 miles. Hydrogen is a really important part of our infrastructure. As I said at Second Reading, I hope that GBE will support the hydrogen industry.

I turn now to heat pumps. Heating and hot water make up around 40% of the UK’s energy consumption and nearly one-third of our greenhouse gas emissions. I see a role for GBE not so much in individual domestic heat pumps but in community heat pumps—particularly where, to coin a phrase, we can use the heat under our feet. Many major population centres in the UK are above, or adjacent to, hot, sedimentary aquifers at, say, 500 to 2,000 metres depth, with temperatures ranging from 25 to 60 degrees and higher. These, combined with an at-scale community heat pump, have huge potential to produce heat for hundreds of thousands of homes, factories, hospitals and greenhouses. In Holland, they hope to meet 23% of their heat demand by 2050 using geothermal heat.

We have geothermal resources in the UK; we have the heat beneath our feet. We also have the drilling skills left over from oil and gas explorations to use in this nascent industry. The industry is poised to deliver growth, renewable heat and employment. It just needs a small amount of government focus and pump priming.

I turn to tidal energy and the amendment tabled by the noble Lord, Lord Alton. I strongly believe that it is imperative for the UK to play to its strengths in the whole energy field. One of its real strengths is its range of tides. While in Gibraltar, for instance, the tidal range is only about one metre, in the Solway Firth it can be eight metres or, in the Bristol Channel, 15 metres- plus. We also have tidal races around our shores and between our islands which flow at great speed and with considerable power.

Of course, tidal power is classed as intermittent, but it is guaranteed and predictable. We know now how much power we can produce from a given site between the hours of 6 pm and 7 pm on today’s date in 2124 because, if we build, say, a tidal lagoon now, we know it will still be producing electricity almost for free in more than 100 years’ time.

We have tidal races in our firths and between our islands but, to me, the most compelling solution for harnessing our tidal power are large, offshore tidal lagoons. Any site with a depth of between five and 10 metres, and a tidal range in excess of five metres, can produce guaranteed power. They are better than a barrage across a bay because you can have turbines all round, not just on one side. This means they are almost half the price per output of power. They can be any shape, with curves in any direction that can follow the required underwater contours to produce maximum return on investment. There are about 20 ideal sites around the UK coastline.

I come from southern England, as compared to the noble Lord, Lord Alton, and the other side of the channel from the noble Lord, Lord Wigley. If noble Lords look up, they might be able to imagine a wall of water the height of this Chamber and several miles long. This is the sort of power that the Severn Estuary can produce four times a day. One lagoon in Bridgwater Bay alone—right next door to Hinkley Point, with its connections to the grid—could produce 1,900 megawatts. These lagoons do not have to be shut down for repairs. If a turbine—one of 20 or 30—needs servicing, it is lifted out for maintenance, while the rest just keep on turning.

As opposed to a barrage across an estuary, these lagoons do not upset shipping traffic in any serious way, because they sit at the side of shipping channels in the shallow waters. Furthermore, their environmental effect makes only peripheral difference to the course of the tide, migratory fish, wading birds and so on. They have the support of most environmental NGOs. There are numerous sites for these lagoons, from the north to the south of the UK. There is a seven-hour tidal difference between Bristol and Solway. If the tides are used on both flood and ebb, this gives an almost consistent baseload of power for England—and that is before we tap into some of the Scottish tidal ranges. Tidal lagoons as a whole could provide three times the capacity of Hinkley Point. We must play to our strengths. Tidal power is our natural advantage and I believe it would be well worth the focus of GBE.

Great British Energy Bill

Lord Cameron of Dillington Excerpts

2nd reading
Monday 18th November 2024 Lords Chamber

[Lord Cameron of Dillington (CB)]

My Lords, I am a supporter of Great British Energy, its purpose and the proposed flexible approach inherent in the Bill. We need to quickly adopt the new generating technologies we have available to us. Apart from the drive to net zero, the main reason for my support is based on the issue of energy security. Having long maintained that the food security of our nation is the most important role that any Government have to play, I now think that energy security must come a pretty close second. Our cherished peaceful security from wars, and even worldwide pandemics, seems more precarious now than for most of the past 80 years; thus our ability to import electricity, or the fuel to generate it, must also be more precarious. But, if we invest wisely and we can harness the sources of power we are blessed with—wind, sun and tide—we can creep nearer to that energy security; and investing wisely is precisely what we all hope GBE will do.

One of the features I like about the proposals is that GBE will be taking equity in the businesses it chooses to support, and not just giving loans or grants. In other words, it can enjoy the upside of a successful business, as opposed to shouldering only the downside risks that loans or grants allow. I was pleased to hear that the Government have an expectation that, at some time in the future, GBE will, hopefully, contribute to its own funding. I was also pleased to hear that the Government expect that some of its investments will fail. Frankly, if it invests only in guaranteed successes, it will not be doing its job. So, although it sounds odd, I hope that some of its investments will fail—but not too many.

However, hopefully, GBE’s ownership by government will give the private sector the confidence it needs to invest in this exciting energy transitional arena. I am advised that, for a successful transition of our electricity landscape, we need to attract some £400 billion-worth of capital into power generation in the next 10 years. In that context, £1.6 billion per annum does not sound like very much. However, hopefully—I fear there is a lot of hope here, including from me—GBE’s investments, if well used and specifically targeted to reduce risk to private capital, should pull in some of the outside investment that is so badly needed.

But GBE’s role will need to be not only to use money in a wise and, I would hope, “magnetic” way—magnetic in that it will attract other investments. It must also be an enabler. GBE needs to become a real driver of projects, using all the powers at its disposal to try to help clear away some of the barriers to the production and use of renewable energy. As we all know, one of the biggest barriers lies in our planning system and our judicial review system, which can cause excessive delays, and thus costs, in so many of our infrastructure projects. I am sure all noble Lords will have read about the Lower Thames Crossing, where, before a single spade has been put in the ground, apparently more money has already been spent on planning and reviews than Norway has spent on completing the longest road tunnel in the world.

On this subject, it has always interested me that in France, where they pay over the odds for land compulsorily taken by the state, property owners often fall over themselves to offer their land for a state-run project. Of course, these owners do not object at planning inquiries, nor do they instigate judicial reviews. Maybe there is a lesson there for our Treasury—maybe it saves money in the end.

When it comes to energy projects, GBE must ensure there is generous community involvement. In Denmark, the local community gets 20% of the profits of a local wind farm. We need to do something similar here, and then, hopefully, our communities will be falling over themselves to have a magnificent wind farm on their doorstep—and I do think our modern wind turbines are magnificent.

I will leave others to speak about community energy companies themselves, which need all the support we can give them. However, in terms of speedy delivery of projects, the difficulty arises when dealing with National Grid infrastructure, such as pylons—“the plumbing”, as it was referred to in the debate last Thursday. This infrastructure needs to grow to at least four times its current size to deliver power to everywhere it is needed and receive power from all the generating sources that are going to come along. Some projects are currently being told they will be delayed by 10 years or more for the want of a connection; we really cannot afford such delays.

The problem is that no project could possibly afford to financially involve every community along the whole route of its delivery line. So, what is to be done? First, the National Grid has to work with generators to pull together various projects, particularly North Sea projects, to minimise the number of power lines needed from source to delivery point. Then, I fear, a calculation has to be made by GBE and the National Grid as to the extra costs of burying cables in certain places—these costs are slowly coming down—versus the costs of planning delays and judicial reviews caused by objectors to such essential schemes. But I am afraid that I see this issue remaining the biggest fly in the ointment of our desired speedy energy transition.

I turn briefly to the details of the Bill. With all the talk of flexibility and this new GBE being agile and fleet of foot, it surprised me that it should be specifically forbidden by law from going to the open market to raise some of its own money when needed. Clause 1(4) says it can only

“be wholly owned by the Crown”.

That is a mistake, and we should amend it in Committee. A minimum of 80% Crown investment would suffice to keep it essentially a Crown entity but with some financial flexibility. A small amount of private sector money, when needed, would not go amiss.

I bristled at the total power being given to current and future Secretaries of State. Again and again, the efficiency and success of GBE appears to depend on guidance and control by the Secretary of State. Nowadays, as has been made clear by other speakers, very few Secretaries of State will have the relevant business or entrepreneurial experience and skills that might help them to take good decisions.

Having said that, I am not sure what the right solution is. GBE has to be a company independent of and yet part of government to effectively exert the power it needs, but to involve Parliament in any detailed decision-making role would clearly not be efficient. Parliament seems incapable of moving forward on the restoration of its own infrastructure, so it definitely should not be let loose on the national electricity infrastructure.

Thus I fear that having the Secretary of State report directly to Parliament after having widely consulted, as envisaged in the Bill, is probably the best answer to protecting taxpayers’ money. But—and this is a big but—we definitely need to firm up the consultation and reporting. For a start, Clause 6(3)(b), leaving the Secretary of State to decide who he consults with and how he responds to that consultation, is an unnecessary surrender on the part of the taxpayer. Then, for the only reporting to Parliament in Clause 7 to be what I would describe as the minimal information required by Companies House is totally inadequate. The Secretary of State must present to Parliament his own detailed annual report as to how GBE is progressing with its mandate—both the how and the why. I also like the idea of an independent review being carried out every few years, similar to Section 9 of the UK Infrastructure Bank Act 2023; it is the idea of the noble Lord, Lord Vaux, not mine.

I have just two further points to end with. First, the question of whether SMRs fit under the remit of GB Energy or of GB Nuclear needs to be resolved very quickly, as others have said. These generating units will be vital to our electricity supplies over future decades and we need to get their rollout under way as soon as possible.

Secondly, I have great faith in the future of hydrogen. Apart from gradually helping to heat our homes, hydrogen can be used, free of CO₂ emissions, in the production of steel, the production of which currently creates 8% of the world’s CO₂. More importantly, hydrogen will be critical for the decarbonisation of our road transport system. In the UK, road transport currently contributes some 26% of our greenhouse gas emissions. Noble Lords should know that a hydrogen fuel cell battery can give a car a range of over 1,000 miles. Because of this characteristic, such batteries are really the only serious contender to providing a zero-carbon fuel for our HGV fleet.

I have this theory that our current electric cars, with their low mileage range, heavy weight and high use of rare earth metals, will disappear from the marketplace in coming decades, in the same way as fax machines and video recorders—both miracles of their time—have now both completely disappeared. I believe that hydrogen fuel cell cars have a much brighter long-term future, if we can get the hydrogen.

That brings me to the point of mentioning hydrogen in the context of the Bill. For a start, GBE needs to look favourably on any hydrogen projects that come before it, but I also believe that all wind farms, on land or offshore, and solar parks above a certain output should be obliged by law to have a direct connection to a hydrogen production plant. That way, whenever their power is not needed by the grid—in the middle of the night, say, for wind farms—they can be creating green hydrogen to decarbonise our transport system or as a long-term generating fuel, as the noble Viscount, Lord Stansgate, mentioned. The point is that no more should millions or even billions of pounds be paid to wind farms for not producing electricity. In times of excess production, or when the grid cannot accept their power, they should all be producing green hydrogen as a form of power storage.

As noble Lords will have gathered, I support this Bill. I look forward to working with the Government to improve it in Committee.

Heat Pumps

Lord Cameron of Dillington Excerpts

Wednesday 6th March 2024 Lords Chamber

[Lord Callanan (Con)]

I thank my noble friend for that question; I did see that article and I completely agree with her that it was very good investigative journalism. I am supportive of a sensible debate on competing technologies, but planting misleading and false stories about heat pumps to negatively affect public support for the technologies is, frankly, a disgrace, and the big boiler manufacturers that fund the EUA should be ashamed of themselves.

[Lord Cameron of Dillington (CB)]

My Lords, the Minister will be aware that if heat pumps became universally used as a primary source of heat in rural Britain, the electricity supply to many villages and market towns would crash. That is before they start using electric cars en masse. What are the Government going to do to ensure that the national grid will be able to provide an adequate supply of power across all of Britain?

[Lord Callanan (Con)]

The noble Lord is right; we will require a massive upgrading of the national grid. That is proceeding and we have plans in place for it. Ofgem has authorised tens of billions of pounds-worth of expenditure to upgrade the grid. This is a transition; we gradually need to move away from gas supplies and gas boilers, and on to electrification of heat and electric vehicles. It will happen over time, but it is happening.

Geothermal Heat and Power

Lord Cameron of Dillington Excerpts

Thursday 6th July 2023 Grand Committee

Asked by

[Lord Cameron of Dillington]

To ask His Majesty’s Government what assessment they have made of the geothermal potential for heat and power in Great Britain; and what plans they have, if any, to make use of it.

[The Deputy Chairman of Committees (Baroness Henig) (Lab)]

My Lords, Members will notice that the clock is not working, but I am sure they will seek to respect the time limits.

[Lord Cameron of Dillington (CB)]

My Lords, first, I thank everyone, including the Minister, for taking part in this important debate. Apparently, I am not allowed to say anything at the end, so I thank noble Lords now.

The importance of what we have to say is evidenced by the fact that heating and hot water make up around 40% of the UK’s energy consumption and nearly one-third of our greenhouse gas emissions. That is quite a large proportion, so this area needs a lot of focus. However, so far, compared to our continental neighbours—who, like us, are blessed with geothermal potential—we have done little to harness the power lying waiting for us: the heat beneath our feet.

In Holland, they hope to meet 23% of their heat demand by 2050 using geothermal heat. I realise that we cannot hope to match that because of our more dispersed population and our dispersed geothermal resources—population centres and geothermal resources do not always occur in the same place—but, with the right policies, there is considerable potential, which I will come to in a moment.

Meanwhile, the deep aquifer under Paris is supplying geothermal heat to around 250,000 homes, while in Munich and its surrounding communities some 130,000 houses now have geothermal heating. France currently has 74 geothermal plants and aims to increase that by 40% by 2030. The Netherlands has 21 plants and major increases planned, and Germany has 190 plants. But in England, only a few buildings are currently heated geothermally, although a few schemes are currently being developed around the country. Given the heat resources beneath our feet, it is a pretty poor record so far.

The UK has good potential in terms of enhanced geothermal systems—that is, 5 kilometres down, or more. A mere 2% of this potential could cover the current UK energy demand for over 1,000 years. We have two pilot schemes in Cornwall: one near Eden and one near Redruth. This heat is very expensive and difficult to tap into—right now, a lot of drill bits are wearing themselves out on our Cornish granite—but both these projects should eventually provide large amounts of meaningful heat, not only for direct use in homes, businesses, biospheres and hospitals, but, I hope, with temperatures capable of driving a turbine to produce electricity. We shall see.

While some of our very deep rocks have potential, the greatest potential for heat lies in much shallower aquifers. The geothermal gradient in the UK averages—I stress that word—27 degrees per kilometre, so temperatures at 1,000 metres, 3,000 metres and 5,000 metres underground are usually 40, 90 and 150 degrees centigrade respectively.

Even a small amount of heat combined with a heat pump is worth harnessing. For instance, our family home in Scotland is heated with a water-based heat pump using an aquifer only some 20 metres down. It was cheaper to install than a flat surface loop in the field, and the aquifer water temperature is 9 degrees centigrade, compared to the normal flat ground loop temperature of 5 degrees centigrade, which therefore minimally reduces the cost of our hot water.

More to the point, many major population centres in the UK live above, or are adjacent to, hot sedimentary aquifers at, say, 500 to 2,000 metres’ depth, with temperatures usually in the range of 25 to 60 degrees centigrade. These, combined with an at-scale community heat pump, have huge potential to produce heat for hundreds of thousands of homes, plus factories, hospitals, greenhouses and so on.

A recent report by Dr Mullan MP identified the enormous benefits available from such heat sources and made the point that these resources are, luckily, predominately available in areas suffering from a lack of economic resilience—in other words, areas which would qualify for levelling up and where these geothermal projects would, therefore, do the most good. But at the moment we are doing little or nothing to tap into these resources: the heat beneath our feet.

Cutting to the chase, we need, first, a proper, detailed subsurface survey of all our geopotential. This geothermal atlas should identify all the opportunities in detail, and it then needs promoting so that businessmen, builders and local authorities are aware of the local potential. The recent fuel crisis must surely give properties with cheap heat potential an advantage in the marketplace, and the marketplace needs to be informed of that potential advantage.

Secondly, the Government must then set themselves targets for the development of geothermal wells—so many per year to be developed. That is what they have done in Holland. Then the Government must promote these opportunities and put in place a firm long-term plan of support. This sustained support is very important and could include some form of initial grants, subsidies—perhaps in the form of FiTs or CfDs—or investment assistance. For some reason, energy projects do not qualify for EIS relief, which seems to make a mockery of the Government’s ambitions to make the UK a green and renewable energy investment hothouse.

Drilling is the most expensive bit, and in that context, with the expertise available from our now hopefully fading oil and gas industries, we should have an advantage. France, the Netherlands and Germany have all used national risk insurance schemes to attract private capital. For instance, for every £1 paid by the French Government, £42 has been leveraged from private investors. The Mullan report indicated that our potential investors are not attracted by this route, and it is not for me to tell the Government and the industry how to achieve their target number of geothermal wells. Setting a target and delivering it are the important bits, along with some sort of stable but long-term support or derisking measures.

Thirdly, the UK must deregulate. It is absurd, for instance, that in England and Wales you still need both an abstraction licence and a discharge licence to take water out of an aquifer and put it straight back in again. In Scotland, under general binding rules, abstractions and discharges in an open loop system do not need any licence or permit, provided that the water is discharged back into the same geological formation from whence it came. Furthermore, the planning system in a heat network zone should encourage and facilitate the harnessing of our geothermal resources, rather than cause delays.

Fourthly, in order to build the supply chain, the Government should zone areas which have geothermal resources, and then put in place in those heat network zones effective legislation compulsorily to reduce the long-term carbon output from all new buildings and, where possible, older ones as well. This legislation should look to promote communal heating systems—I really do not know why we have so few such systems in this country—or it could promote the use of geothermally heated water with so-called shoebox heat pumps. I always prefer to encourage rather than compel people to do the right thing, but in the Netherlands, which is virtually one large geothermal zone, they have already prevented all new-build houses connecting to the gas grid. There must be a lesson there. In this country, we are too hooked on the gas grid.

Fifthly and finally, the UK Government must involve local communities and get people and planners involved in heat network zoning. This should be part of a drive to grow the demand and the supply chain. Tapping into geothermal heat should become part of national thinking in the architectural, planning and construction worlds. We have geothermal resources in the UK: we have the heat beneath our feet. We also have the drilling skills left over from our oil and gas exploration. The UK geothermal industry is poised to deliver growth, renewable heat and employment; it just needs a small amount of government focus and pump priming.