Queen’s Speech

Lord Grantchester Excerpts

Monday 16th May 2022 Lords Chamber

[Lord Grantchester (Lab)]

I shall concentrate my remarks today on the energy sector and the Government’s plan as outlined in the energy security Bill, with elements necessary through the UK Infrastructure Bank Bill.

Over the past two centuries, we have grown and prospered across three major energy transitions: the emergence of coal in the mid-1800s, powering the Industrial Revolution; the discovery of oil at the end of that century, changing everything about modern society; and the emergence of natural gas, which powered the emergence of Asia as the economic power it is today. Each energy transition fuelled economic growth as the population rose from 1 billion in 1800 to nearly 8 billion today. We have seen major shocks to the energy system through the 1970s, the Gulf wars of the 1990s and the distress we see today in the aftermath of the Ukraine war and overreliance on a single source for the supply of gas and, to a lesser extent, oil—from Russia.

The current energy transition will need a multitude of alternative energy sources that have already been developed—the secure baseload made up of nuclear and fossil fuels with the continuation of elements of carbon abatement—and the rapid development of new technologies to accelerate hydrogen as the primary energy source. We must grasp the opportunity now to explore both green hydrogen and blue hydrogen, given the abundance of feedstocks we have available here in the UK. Hydrogen has the potential to make huge inroads into replacing fossil fuel dependency.

The energy security Bill does not recognise an overall energy strategy to take the country through the complexities of the necessary mix of energy sources. Rather, it continues with the scattergun approach of the 10-point plan. It continues with loading costs on to the consumer without recognising past failures. The uniqueness of this fourth energy transition is that we need to explore all sources of energy, and that should include reviewing previously rejected options, such as onshore wind and, perhaps the most neglected, tidal power. The Hendry review is now some time ago and, as we know, costs and attitudes will have changed. Although nuclear has been embraced as low-carbon baseload for energy, tidal power has the potential to bring baseload through the renewables constancy of tides. Perhaps the cost of this development needs to be assessed against the cost of nuclear as baseload, not just against costs of other sources of renewable power, now already much reduced in cost.

New targets need to be matched with speed to provide the necessary infrastructure. Although the Government can be commended for the recognition that 50 gigawatts of offshore wind, increased from 40 gigawatts, will be required, so must attention be focused on grid connections and the necessary infrastructure. Do the Government have a ready reckoner of the billions of pounds that this delivery will entail? Distribution network management issues and costs need support.

How will the challenges of empowering local communities through the UK Infrastructure Bank Bill enable the transformation of the grid through Ofgem with local democratic systems of planning? The announcement today by Ofgem that it will review the price cap on a quarterly basis does not really go to the heart of consumer problems. Although a cash-flow issue, it better enhances utility companies than it does consumers. I have previously asked the Minister whether the Government are satisfied with the operation of supplier of last resort, which has added billions of pounds to consumer bills following the collapse of more than 30 utility companies. Will the Government be conducting a more fundamental review of Ofgem? Will it necessarily challenge the structure of consumer pricing of a daily standing charge together with a unit price? Many consumers have identified that, although they can reduce their consumption on the unit charge, they cannot reduce their bills dramatically while the standing charge keeps increasing. The fundamental alignment of present-day issues and their solutions needs to feed through to the strategic goals of transforming the energy sector, including demand reduction from energy efficiency of the built environment through the nationally significant infrastructure plan.