Net Zero

Lord Grantchester Excerpts

Thursday 26th January 2023 Lords Chamber

[Lord Grantchester (Lab)]

Chris Skidmore’s Mission Zero review is a very good sense check, an appreciation of the delivery of the measures that are needed and that are being undertaken in the UK at the moment, as the Government continue to undertake the huge challenge needed to cut back carbon emissions that are leading to the quickening of climate change. His voice adds encouragement to what Labour and many other concerned participants have been expressing for some time. Net zero, decarbonisation and clean energy growth will happen only if they deliver economic and other benefits throughout communities and modern life.

For this to happen requires consistency and clarity in purpose and policies, and certainty for businesses and local authorities that the constant switch on and switch off of measures must not persist. Continuity in the length of funding commitments must be assured. The crippling of the solar industry that happened in 2015 under the Cameron Conservative Government must never happen again. The most important message is that a stability of approach requires long-term planning and a constant regulatory environment for our ambitions to have any chance of delivery. These important guardrails on page 40 must be heeded.

The second important message that this review underlines also chimes with Labour’s message. It is that delay creates new consequences, costs are increased more than previously anticipated, and inaction or doing little and more slowly is more costly than any disruption to the status quo, because the status quo is already adding to the problem.

The Government have been slow in their decision-making, leading to delay in crucial areas, slow in encouraging future investment from industry, slow in their recognition of their mixed messages, and slow in their recognition of the importance of behaviour change needed, as shown in your Lordships’ Environment and Climate Change Committee report.

The UK’s comparative advantage of offshore wind and green finance is being eroded, especially through skills shortages and inconsistent policy commitment towards infrastructure. The UK could have an extra 2% of growth in GDP through new jobs and reduction of fossil fuel imports. The UK is suffering from an antiquated approach of grid connections to the nearest point on the onshore network, when the need is to transport electricity around Great Britain. The Minister will know that the holistic network design requires concerted investment of some £60 billion over the next five to 10 years. Is he able to update the House on the Government’s plans to achieve this today? Labour has committed to some £28 billion a year for 10 years to get the UK nearer to net zero.

The Climate Change Committee and the Government need to review the fourth and fifth carbon budgets, in view of the increased pace needed for the net-zero commitment by 2050, and the announcement of the UK’s nationally determined contributions in Glasgow. The Climate Change Committee has already reported to Parliament that the Government are not on track to deliver on all their commitments.

To update on where the UK now stands, the review also calls, under objective 16, for a land use strategy. The House has been well served by the specialist inquiries committee’s recently published report Making the Most Out of England’s Land, drawing attention to the importance of the multifunctionality of land, and a modern planning approach across all government departments. Can the Minister commit the Government —with BEIS and Defra in mind—to producing this strategy this summer, alongside a refreshed net zero strategy, as necessitated by the courts during spring this year?

Energy Prices Bill

Lord Grantchester Excerpts

2nd reading
Wednesday 19th October 2022 Lords Chamber

[Lord Grantchester (Lab)]

This Bill comes very late in the present predicament. A poor track record of government action and wrong priorities has brought about a vulnerability to energy shocks, going back to the short-sightedness of the Cameron Government in curtailing wind and solar renewables in 2015.

I welcome the comprehensive nature of the Bill, providing support across domestic users, businesses and charities—all types of users and circumstance facing unprecedented price challenges—but, in doing so, the Bill gives vast new powers to the Secretary of State to intervene in the market. While this is emergency legislation, it is regrettable that your Lordships’ Secondary Legislation Scrutiny Committee has yet to be able to report, while the Delegated Powers Committee could concentrate on only three significant delegations of power, which seem to have been ignored from earlier reports on the delegation of functions.

That there are sunset clauses, to which other speakers have drawn attention, is less than comforting; it highlights the seriousness of the review the Government must undertake and be accountable on before introducing the next stage of measures to follow in April 2023.

As I am in the gap, I will limit my remarks to one or two issues also highlighted throughout the debate. I thank the Minister for the meeting he conducted yesterday on the Bill. In his reply, can he say something about the Government’s outlook regarding the continuation of the tariff cap legislation, pending the sunset of the tariff cap Act of 2018? The Energy Bill has now been paused for the passage of this Bill. In so far as this Bill picks up these provisions, the calls for reform of many of the tariff cap provisions and the operation of Ofgem have become issues of concern. Can the Minister outline how the emergency nature of the present situation will give way to more orderly regulation of the market? At the moment, there is no competition and no switching between suppliers as energy contracts expire, as quotes from new suppliers have ceased.

The second feature I will highlight is the discrepancy in treatment between sources of power. The upstream measures for oil and gas companies that allow the off-setting of the energy profits levy for investment are in contrast to downstream measures on renewables and their surrogate levy—reinvestment there is vital and necessary, but they have not been given equal treatment. This gives a perverse incentive to continue with fossil fuels and carbon-emitting sources of energy.

As the Bill gives powers to the Secretary of State to vary contracts retrospectively on both earlier contracts under the renewables obligation and later contracts varying the contracts for difference into cost-plus, can the Minister explain why the Government have not introduced clauses giving incentives on an even-handed basis? Why do they not review the MER—maximising economic recovery—provisions? They should prioritise the development of renewables, which is where growth will come from for the long-term future of the UK.

The supply chain of renewables and energy-efficiency measures, also vital under ECO4, cannot simply be turned on again after the way it was treated—being shut off during previous government interventions. The climate emergency and net-zero imperatives remain the long-term energy challenge.

Electricity and Gas (Energy Company Obligation) Order 2022

Lord Grantchester Excerpts

Tuesday 12th July 2022 Grand Committee

[Lord Whitty (Lab)]

My Lords, the noble Baroness, Lady McIntosh, has anticipated me, which is completely understandable since I am a vice-president of the same organisation, but I would like to put this in a slightly broader context.

The other day, when we were having an exchange at Questions, the Minister admonished me for apparently disparaging the ECO scheme. My point is not that the scheme is not desirable. It is a means of delivery that has proved its worth in certain respects. Certainly, the energy companies have now developed systems that identify where they could intervene with their own customers. However, inevitably, by relying entirely on the ECO scheme to deliver energy efficiency provisions, people get missed out. I have always argued that putting the responsibility on the companies as the main means of delivery means that there will always be gaps, because the companies will prioritise in relation to their own consumers. What we really need, have needed for some time and, in the current circumstances, need even more is a scheme that helps absolutely everybody who is fuel poor or likely to be made fuel poor, of which there are now more because of the current energy crisis.

Energy efficiency measures meet a lot of the Government’s and the country’s objectives of saving energy, moving away from fossil fuels, working towards net-zero targets, and off-setting the energy dimension of the cost of living crisis. We therefore need to strengthen them. I assure the Minister that I approve of the direction in which these regulations move, because they broaden the way you can bring people in. They increase the schemes and the comprehensiveness by looking at multi-measures in a way that past interventions frequently have not. This means that schemes can be addressed that do not rely on mini-interventions but look at the total fabric of the house and the systems by which it is currently heated. The detailed measures on the upgrading of the ratings are also important, and the broadening of the people who can refer into the scheme, particularly via the health service dimension, is also much to be welcomed.

As the noble Baroness said, there are some gaps. The biggest, which is not a gap but an inadequacy, is the failure to set a really strong target for solid wall insulation. The danger is that we do not have the companies and contractors to do that, because the regulations do not imply sufficient jobs and there is not the training for installers that is needed to deliver the aspirations. In terms of where we are on home energy efficiency, that is probably the biggest single inadequacy of delivery so far and it needs to be addressed.

I echo the noble Baroness’s point about advice, because a lot of the fuel poor, or those who are increasingly in danger of becoming fuel poor, do not have adequate advice in this area. The kind of advice they need overlaps with the advice needed by people in the hitherto so-called “able to pay” category. The failure of the successive schemes to deliver effective support for the “able to pay” sector really underlines the need to upgrade the whole of the advice in this area. The information is still inadequate and difficult to access for both the fuel poor and those who perhaps can still make a contribution themselves, and in some cases pay for the whole lot themselves.

In general, I think this order is in the right direction for the delivery of the ECO scheme but needs to be put into a broader context. That broader context becomes more difficult, because in the next few years we are about to decide what the main form of home heating in this country will be. Individual householders and landlords have to face decisions on insultation, whatever the form of heating. It is not yet clear whether we will still have something approaching the gas network or whether gas will be replaced by a hydrogen blend or by hydrogen. The number of properties is not clear. Many properties do not qualify or are not appropriate for heat pumps in their present form. There will be some difficult decisions on how they address that. Most households would prefer to know what the totality of their movement is, whether they are fuel poor or in the “able to pay” sector. They would like to know that they can perhaps insulate up front and then change to a different form of heating, or at least that they will not have to change everything in their house twice and that, whether they go under the ECO or a scheme where they pay themselves, they will not then have to adapt all their appliances and network again in two, three, four or five years because we have changed the form of heating.

We need a more strategic approach to this, but I assure the Minister that, as far as it goes, I am in favour of what he is proposing to us today.

[Lord Grantchester (Lab)]

I thank the Minister for introducing this order and for writing to draw my attention to it, especially to how it is lowering consumer bills. The ECO scheme has been among the favourites for Conservative Governments to target. It is certainly to be encouraged that they focus on energy efficiency measures to upgrade homes and on targeted support, thus reducing heating costs for low-income and vulnerable households and those at risk of fuel poverty across Great Britain, but not Northern Ireland.

Although it is true that the number of homes with a band C EPC increased to 46% in 2021, it cannot be claimed that that was all due to the ECO scheme. Nevertheless, it is part of a flurry of measures, this one supporting 450,000 homes to be able to save on average £290 a year.

In his letter, the Minister wrote that savings in the least energy-efficient homes could average £600 this winter, which would be wonderful. Can he explain this figure? How many households would be in this number, and how many would reach that magical threshold of band C? Would this alarm many households, in that they might now become liable to higher bands of council tax?

One of the intricacies of ECO3 was that households switching from larger to smaller suppliers to save on their bills could take themselves to companies below the threshold and thus be outwith the obligation for improvement measures. Many of these customers have now found themselves with bankrupt companies. Under SoLR, on which I have questioned the Minister previously, they will have been redistributed to larger suppliers within the obligation. Can the Minister explain the effect of ECO4 on this? Will the threshold be a cliff edge or a reducing threshold while maintaining worthwhile energy efficiency measures?

One of the consequences of reducing thresholds was that energy companies found it cheaper to pay a resulting fine than to offer ECO schemes. Could any increased penalty be liable to push a vulnerable company into bankruptcy and all the consequences of SoLR? With the scheme continuing with household contributions, will energy companies target only those who can make a contribution and ignore those with the lowest incomes?

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.

Energy Storage Capacity

Lord Grantchester Excerpts

Tuesday 5th April 2022 Lords Chamber

[Lord Grantchester (Lab)]

In a climate emergency it makes little sense to increase fossil fuel storage capacity. What steps are the Government taking to speed up battery storage as a vital first step to store renewable power?

[Lord Callanan (Con)]

We have some fossil fuel storage capacity, particularly for gas, and we have 90 days’ worth of oil storage capacity because of our IEA commitments. All these technologies are important, but we do not need to increase our gas storage capacity; we have tremendous security of supply from our suppliers in the North Sea, from Norway, from interconnectors with the continent, and from LNG storage. We are well supplied there, but we need to increase our battery storage as well as our pump storage, and we will.

Energy Prices

Lord Grantchester Excerpts

Wednesday 12th January 2022 Lords Chamber

[Lord Callanan (Con)]

Of course, we want to keep all these things under review but, as my noble friend is well aware, net zero is a legally binding commitment, legislated for by Parliament—and, of course, it is the duty of government to carry out the wishes of Parliament. If a future Parliament or Government wish to reconsider that, I am sure that the Government at the time would want to take full cognisance of that.

[Lord Grantchester (Lab)]

My Lords, we all wish to protect vulnerable households, and there are many support schemes targeting approximately 3 million households. The expected increase in the price cap in April is around £600 per household to a total of £1,865 a year. While the Government continue to dither, Labour has announced costed, detailed plans to reduce the size of the exposure and extend help to more households to limit increases to just £5 a year for the most vulnerable. What target do the Government have in mind to reduce the size of the exposure in the forthcoming price cap rise, to be announced on 7 February?

[Lord Callanan (Con)]

Before I answer the noble Lord’s question, I understand that this is his last outing as a member of the Opposition Front Bench. From my point of view, it has been a pleasure sitting opposite him and dealing with his questions and points. I am sure that he will have a lot to contribute to the House from the Back Benches in future, and I certainly wish him well.

Of course, the price cap is a matter for the independent regulator—Ofgem—and we will find out in a couple of weeks’ time what it will be. The Government have already announced £500 million for local authorities to support vulnerable householders across the country with essentials, including utility bills. As I said in response to earlier questions, we are looking at what else we can do.

Net-zero Test for New Policies

Lord Grantchester Excerpts

Tuesday 11th January 2022 Lords Chamber

[Lord Callanan (Con)]

The noble Baroness and I have also debated this topic at length before. The point she needs to recognise is that, during the transition, there is still a requirement for oil and gas products in the United Kingdom. Liberal Democrats might not like that but it is a fact—unless you are going to stop people driving their cars and turn their gas boilers off tomorrow, and I do not see that being produced on a focus leaflet any time soon. We need to transition to net zero. During a transition period, therefore, the choice is: do we use oil and gas products we generate, creating jobs and paying taxes from UK assets, or do we get them from Russia or Saudi Arabia? I know what I would prefer.

[Lord Grantchester (Lab)]

My Lords, of the gaps identified by this letter still needing to be filled in the urgency of the climate challenge in the Glasgow climate pact, perhaps the one identified on adaptation and resilience has received least attention. Little progress is being made. What increases in adaptation policy ambition have the Government determined are needed from the reports of the adaptation sub-committee of the Climate Change Committee?

[Lord Callanan (Con)]

I have not seen the particular report that the noble Lord refers to but I shall certainly have a look at it, take it back to the department and write to him on that subject.

Energy Costs

Lord Grantchester Excerpts

Thursday 6th January 2022 Lords Chamber

[Lord Grantchester (Lab)]

I thank the noble Baroness, Lady McIntosh, for introducing this topical debate on rising energy costs and their effect on the cost-of-living crisis being felt across communities while the Government dither. The Government have conducted three rounds of industry talks and are yet to come forward with robust plans. They are still considering a range of options to protect consumers from the full impact. I thank all noble Lords for their many contributions, admirably expressed from around the House, which have laid bare the cause and effect of the recent spike in energy gas market prices—the highest seen in October 2021 being surpassed in December, now nine times higher than prices a year ago.

The UK imports approximately 50% of its gas, making it especially sensitive to price rises. Some 85% of homes use gas central heating. In addition, gas is used to generate around 30% of the UK’s electricity, with knock-on effects on electricity prices. The Government have set the conditions for this crisis and need to respond.

At this stage, I also draw attention to the impact on rural households, so often ignored but nevertheless still important. They tend to be off-grid and vulnerable to spikes in diesel prices for their heating, as well as transport costs. I also thank my noble friend Lord Hendy for his remarks on the effects on low-income households, and my noble friend Lord Sikka for his remarks on the old in our society.

Labour has called for an immediate cut in VAT on fuel bills, from 5% to 0%, for the winter six months of this year. This can happen immediately to reduce the burden and disruption in the market from the October rise in the price cap to £1,277 for the so-called “reference customer” and from the bankruptcies experienced by utility companies. This would also benefit rural households.

The scrapping of VAT on fuel for homes would bring benefits of £2.4 billion to consumers this winter and would be absorbed by the excess of forecast VAT receipts that the Government have received from inflation and increases in supply chain, materials and transport costs experienced throughout the economy. In addition to this immediate benefit, the Government can deliberate on medium-term measures to be introduced once the new price cap is announced on 7 February. This is forecast to see it rise by 40% to a new high of over £2,000 in annual household bills.

As the Minister will appreciate, it was Labour that called for the consumer price cap that the May Government introduced under the Domestic Gas and Electricity (Tariff Cap) Act 2018. At this time, Labour argued that the full five-year period, which I recollect from the legislation, would be needed for an effective market to be created. With the disruption from collapsing utility companies, can the Minister foresee that not only will the full duration to 2023 be required but extension may also be necessary?

Energy companies have requested a loan scheme to smooth out the volatility. Ofgem is considering changes to the price-cap mechanisms. Can the Minister repeat the confidence, which he expressed in answer to a previous question, that the Government are happy with the operation of the tariff cap and the application of the supplier of last resort process? Administrators have access to £1.7 billion in government loans for Bulb customers. UK households will already be paying an extra £80 in their energy bills from these recent collapses, according to Ofgem. That is why, in the medium-term, Labour is also considering measures to help pensioners and low-income families from targeted changes to the warm home discount and ECO schemes. The noble Baroness, Lady Boycott, is correct to direct attention to the wider effects on families and to speak against scrapping green levies.

In the longer term, Labour plans to upgrade the UK’s 30 million homes through its climate investment pledge of an additional £28 billion in green investment each year of this decade. This is the decisive decade for the climate emergency, and Labour plans immediate energy efficiencies to upgrade 19 million homes to reach energy efficiency—EPC band C. This is the size of the cost-of-living crisis that the Government need to have answers for.

Drax Wood Pellets

Lord Grantchester Excerpts

Monday 13th December 2021 Lords Chamber

[Lord Callanan (Con)]

Indeed it would, and we already source some small quantities from the UK, but the noble Baroness needs to look at the size of the forests in southern USA, which are, I think I am right in saying, about the size of the landmass of western Europe. Great and sustainable though North Yorkshire wood is, I suspect we would struggle to meet the quantity required.

[Lord Grantchester (Lab)]

Drax claims that burning wood pellets is carbon-neutral because trees absorb as much carbon dioxide when they grow as they emit when they are burned. Is the Minister able to justify that claim from a thorough analysis that includes all supply-chain emissions and with effective CCUS? Would that also have to include hydrogen production?

Net-zero Emissions

Lord Grantchester Excerpts

Tuesday 7th December 2021 Lords Chamber

[Lord Grantchester (Lab)]

Decarbonising heat is still a massive challenge, which, as has been mentioned, can be made less so through energy efficiency measures. Given that there are 19 million homes below EPC band C standard, and given the collapse of the green homes grants scheme, can the Minister clarify how many of these homes will be helped by the energy efficiency announcements in this strategy, and by what date?

[Lord Callanan (Con)]

The noble Lord is correct that energy efficiency is extremely important. It is very much a “no regrets” approach; we should always take a fabric-first approach to upgrading properties. As I mentioned, we have a substantial series of financial commitments: the social housing decarbonisation fund, the home upgrade grant, the boiler upgrade scheme, et cetera, to contribute towards the cost of these. The other things we need to look at, of course, are the green finance offers, which will enable people to upgrade their homes in a cost-effective manner.