Green Economy

Lord Grantchester Excerpts

Thursday 12th March 2020 Lords Chamber

[Lord Grantchester (Lab)]

My Lords, I thank the noble Baroness, Lady Parminter, for bringing the subject of climate change to your Lordships’ House once more by emphasising the green economy as a new economic model, the only truly sustainable model, necessitating the wholesale transformation of our economy and way of life. I thank all noble Lords who have spoken for their contributions to the debate.

As the noble Baroness, Lady Parminter, stated, the effects of climate change must take centre stage across all aspects and areas of economic activity and permeate all government policies. I am happy to repeat the oft-quoted words of the Government that between 1990 and 2018 the UK reduced emissions by 40% while our GDP increased by 70%. It is certainly possible and vital to grow the economy, improve environmental standards and decarbonise to meet the green targets in international obligations to halt climate change.

The Covid-19 experience reveals the realities of the new global economy of fast communications, supply chains and international movements of people. Faster, decisive action becomes ever more important and must be co-ordinated across the globe. The Government are not being ambitious enough with their net-zero target. The House discussed this on 6 February as part of a debate on a report by UK Fires entitled Absolute Zero, which was brought to our attention by my noble friend Lord Browne of Ladyton, who underlined the potential disasters again today.

Yet it is fair to recognise that the Government have come forward with many recent announcements, such as the green finance strategy, the creation last year of the Green Finance Institute, a review of net zero set up by the Treasury and due to report this autumn, and the creation of a Cabinet committee on climate change. Indeed, the Environment Bill has just been introduced in the other place. While all this is beneficial, without a comprehensive statement of objectives and strategy to connect all these initiatives, it resembles a scattergun approach. Again, I ask the Minister: are the Government any nearer to publishing the now long-overdue energy White Paper to set out, for all these initiatives on key aspects of the economy, the pathway towards achieving net zero in an effective manner?

The Government need to stop the mixed messages they continue to give out when, for example, they finance fossil fuel projects overseas through UK Export Finance with credit guarantees. They need to stop their policy reversals on renewable technologies—as, I am glad to say, they now have with respect to onshore wind and solar, with the announcement that these can now bid into the contracts for difference auctions from 2021. However, these reversals have led to a decline in green jobs—by more than 1,000 since 2014.

The debate has highlighted the huge challenges for all levels of government. The response must start now with the immediate publication of the energy White Paper. The Institute for Public Policy Research has assessed the size of the challenge: the Government need to spend an additional £33 billion per year to tackle the climate emergency, £11 billion of which is needed just to catch up with the previous targets in the fourth and fifth carbon budgets that the Government are not even on track to meet. In her contribution, the noble Baroness, Lady Jones of Moulsecoomb, expressed her disappointment at the lack of government recognition in the Budget yesterday. The noble Baroness, Lady Jenkin, concentrated her remarks on personal responsibility and the actions that individuals can take, especially in the use of plastics—a huge problem, also raised by the noble Baroness, Lady Suttie.

The right reverend Prelate the Bishop of Bristol echoed the theological aspects of our responsibilities and the Church’s investment governance arrangements. My noble friend Lord Giddens moved the debate into reflections on civilisation and, of course, academic research. The noble Lord, Lord Gadhia, drew attention to behavioural transformation through smart meters and the investment environment behind them in green finance.

In the crucial energy sector, the Committee on Climate Change calculated that the UK’s production of low-carbon electricity needs to quadruple for net zero to be possible by 2050. It considers that the increase should be met by a mix of renewables and nuclear generation, with Hinkley Point C due to meet 7% of UK needs. I congratulate the ESB and EDF on all they are doing to invest in UK assets. Can the Minister tell us when the Government will publish their response to the consultation on the regulated asset base model for nuclear power?

Emissions reductions have been slow to come forward in the transport sector. Can the Minister confirm that a transport decarbonisation plan is also due to be published this year alongside the energy White Paper? Difficulties in this area were highlighted by the noble Lord, Lord Howell, in his remarks on battery technology.

If the Government’s plans are to have credibility, they need to address emissions from international shipping and aviation, and include them in the net-zero target. As the UK is chairing COP 26 in November, it would be a wonderful achievement for the Government to include sign-up to these emissions in the 2050 target at the conference.

Confidence in the UK’s handling of this strategically important agenda has been severely shaken. International diplomacy needs time and needs to start now. Following the Oral Question earlier today, have the Government thought how they will seek to mitigate the impact of Covid-19 on the preparatory work and strategy for the conference? Are the COP delivery unit staff properly resourced? Departmental battles will have hindered preparations. Can the Minister update the House on the outcome of the first meeting of the Cabinet Committee on Climate Change?

Another major challenge in the Committee on Climate Change’s report is to decarbonise heat. This gives rise to huge infrastructure challenges to gas, and brings into play the return cycle of carbon capture, usage and storage. The CCC is counting on a significant deployment of CCS technology to meet net zero, and for this to be available from 2030. Speakers today have expressed scepticism about this. Can the Minister give the Government’s view? The noble Lord, Lord Howell, sees CO₂ as a resource. The development and installation of heat pump technology would be helpful. Would the Minister confirm that the heat pump road map and the CCS will be published in the energy White Paper?

The heating of homes and businesses raises the subject of energy efficiency, which many successive Governments have tried to bring forward in successive energy company obligation—ECO—schemes. None of these has been truly successful without further measures to tackle the scourge of fuel poverty. The noble Lord, Lord Marland, remembers the Green Deal affectionately. He rightly reminds us of the long-term nature of the challenge across many Governments. Still today more than 12 million homes fall below grade C in energy performance certificates. National Energy Action argues that energy efficiency should be given the same infra- structure priority as HS2.

I cannot do justice to all the excellent speeches made by all those contributing. I would, however, like to pay regard to the noble Earl, Lord Selborne. I have noticed he is set to retire at the end of March. This may therefore be my last opportunity to thank him. I have taken part in several agricultural debates with him over many years, when he has always emphasised the importance of the role of science and research. Outside this House, he has served on the Agricultural and Food Research Council, chairing the Joint Nature Conservation Committee and the Foundation for Science and Technology, which holds many important seminars on current policy issues. In this House, he has served on many committees, including the Science and Technology Committee. He has served with distinction, and I hope he will continue to contribute outside the House, most notably as chair of the trustees at Kew Gardens.

Imperial College London in conjunction with the Mayor of London is to establish a centre for climate change innovation, driving the development of new technologies, businesses and jobs, which will support a zero-carbon, climate-resilient future. Science is inherently an increasingly international collaboration. So will the Government confirm their full participation in Horizon Europe, the EU research and innovation programme from 2021? Also, will they prioritise access to the European Research Council as an important part of negotiating the future relationship with the EU?

Electricity Capacity (No. 2) Regulations 2019

Lord Grantchester Excerpts

Wednesday 17th July 2019 Lords Chamber

[Lord Grantchester (Lab)]

I thank the Minister for his explanation of the regulations before the House this evening. As he stated, they follow up on the Government’s Electricity Capacity (No. 1) Regulations 2019 passed in April. That brought forward modifications to the capacity market that would operate during the standstill period following the legal challenges to the state aid provisions. These were made on the assumption that the Commission’s and the Government’s positions were indeed correct and lawful.

These regulations continue on that assumption and reintroduce T-3 auctions to take the place of the consequentially delayed T-4 auctions, which will now take place in 2020, after which the outcomes and judgments will be known. In response to questions from your Lordships’ Secondary Legislation Scrutiny Committee’s 53rd report, the Minister’s department replied that the Commission’s investigation is expected to conclude before this winter and that delay into 2020 is very improbable, and that on the judicial review, the UK court hearing is most likely to take place in October. These auctions will not be taking place under any scenario other than a status quo achievement for the Government.

Bearing in mind that the UK’s state aid rules under the authority of the CMA will not diverge from the EU state aid rules in either a deal or a no-deal scenario, the Minister is suddenly in a strong position to declare that nothing has changed. But of course, nothing can be taken with any great certainty. That was the position in the debate on the earlier regulations. The circumstances of the T-3 auction do not differ from that position at all. It is a provisional auction in the sense that whatever is collected or potentially disbursed will be held until the EU study of its processes for defying adherence to state aid is published.

The concerns that were voiced around the House on April’s regulations are still valid as there has been no further consideration of the fact that the court judgment was not merely a matter of process on state aid but included factors relating to demand-side management in the capacity auctions. It is not a foregone conclusion that business will continue as usual. The noble Lord, Lord Stunell, reminded the House of that tonight.

In response to questions regarding the department’s plan B on an adverse judgment, the Government’s reply will be that they will make necessary adjustments. But what is the department’s timing on publishing its five-year review of the capacity market under the Energy Act 2013? Will that be before any judgment, such that the review may need to be withdrawn subsequently? Is the review now ready, after the Minister in the other place stated that the Government’s intention was to publish this summer? As the capacity market is still in the same position as last April, and the UK has an 11% margin in supply, I repeat: what is the rush?

In saying that, I repeat that I appreciate that the continuity and consistency of the capacity market is important to industry, and Labour would not wish to undermine either the security of electricity supplies or industry confidence in the capacity market as an investable mechanism to drive through change, bring about cost savings and value for money.

However, in one respect, the T-3 auction proposed under this order would help clarify the trend in clearance prices. In February 2017, the T-4 auction cleared at £22.50 per kilowatt. In February 2018, the T-4 auction cleared at £8.40 per kilowatt, and the latest auction in December 2018—admittedly the T-1 auction following the court hearings—cleared at a mere 0.4p per kilowatt. Ministers have repeatedly stated that having an 11% margin on supply was an indication that the capacity market was working well. What does the Minister expect the results to be for these forthcoming auctions? Does the latest price indicate that the capacity market is not needed, that there is ample capacity and that payments will be virtually nil for standing by to supply into the market? I echo the remarks of the noble Lord, Lord Teverson, about storage, and other aspects.

Labour does not oppose this order. It is important that the current chaos in the capacity market is resolved as much and as soon as possible. The regulations, although provisional, will stabilise the market, and judicial resolutions to the situation should be forthcoming shortly. Nevertheless, some serious probing is needed with regard to the future direction of policy in the capacity market.

Questions around the future of the capacity market are highlighted by the inclusion of subsidy-free renewable technologies to bid into the capacity market through this order. The capacity market was introduced to enable the energy market to transform from one based on fossil fuels to one based on new low-carbon technologies, while maintaining security of supply.

The Minister may say that it was always anticipated that the capacity market framework would allow the participation of renewable technologies at some point, so he is now confirming that this is that point. Despite any margin of supply, does the Minister expect that the capacity market will be a permanent feature? Can he clarify the difference under paragraph 7.14 of the Explanatory Memorandum whereby some renewables are excluded should they receive support from contracts for difference, the renewables obligation or the feed-in tariffs, whereas other participants receiving other forms of support can have their capacity payments adjusted to reflect other state support payments? Paragraph 7.15 states that regulation 49A of the principal regulations for low-carbon generation support is amended to allow this change.

The Minister in the other place stated on this point that onshore wind, offshore wind and solar technologies will now be able to participate, and the noble Lord the Minister has repeated that. Now that the Government believe that the capacity market is the right mechanism for achieving security of supply at the lowest cost to consumers, can he now give a further update on the position of onshore wind? As it is the cheapest source of low-carbon energy, is it now a hollow achievement for it to be allowed to bid into the capacity market when it is banned from obtaining planning permission? Can the Minister now publicly endorse that onshore wind will be allowed to bid into the CfD framework on an equal basis?

In the report Quantifying Benefits of Onshore Wind to the UK, published yesterday by Vivid Economics—a group that does scenario modelling for the Treasury—it was stated that UK customers could achieve a £50 annual saving to their bills through onshore wind being made available. Will the Minister give his assessment of this report and indicate when onshore wind may participate in the UK’s energy market?

Finally, under paragraph 7.18 of the Explanatory Memorandum, it states that other technical issues have been addressed in this order. They do not seem to be material, but nevertheless I would be grateful if the Minister could write to me with an indication of which have now been improved. With the misgivings stated, I can approve the order before the House tonight.

[Lord Henley]

My Lords, I am grateful to all three noble Lords for their interventions and I will try to deal with as many of the questions as possible. I believe I have a certain amount of time in which to respond. I am not quite clear when the usual channels want to return to other matters but I imagine that, whenever it is, it should be seen as a limit rather than a target. Therefore, I will try to keep my responses as brief as possible, and there are possibly one or two that I hope noble Lords will accept in writing. I am thinking particularly of the last point on the Explanatory Memorandum made by the noble Lord, Lord Grantchester.

I think we are all, to some extent, singing from the same song sheet in that we all have the same clear aim of wanting to head in the direction of getting to zero carbon by 2050, as we made clear in our recent announcement. It might be that others feel that it can be done quicker or in different ways, but we are all trying to do the same thing and to see that we achieve increasing amounts of electricity generation by low-carbon means. As noble Lords will be aware, we have achieved a great deal—consumption is down to something of the order of 5% coming from carbon.

We also believe that the capacity market is the right mechanism for delivering security of supply at the lowest cost to consumers. I will write to the noble Lord, Lord Teverson, who asked for detailed figures on the overall costs of that over the years. The noble Lord, Lord Grantchester, asked whether we could speculate about future auctions in the light of the continuously lower prices achieved at repeated auctions. Obviously, it would be wrong for me to speculate in any way about what price might be obtained—that is not what one does in advance of an auction—but it is encouraging that the price has come down. We still believe that that process is necessary and the right way to deal with these matters.

The noble Lord, Lord Grantchester, also asked about the five-year review. I can tell him that it will be published soon. I cannot give him a precise date at this stage but I will say “soon”, “shortly” or something of that sort. However, it is certainly on its way and I very much hope that we can look at it in more detail in due course.

I turn now to the points raised by the noble Lord, Lord Stunell, particularly about the judgment of the European court and the decisions by the Commission. He said that the judgment was more than just procedural. The court identified elements of the capacity market which should have given the Commission doubts about whether the scheme was compatible with state aid requirements. That meant that the Commission should have conducted an in-depth investigation before deciding whether to approve the scheme. Importantly, however, the court did not rule that the design of the capacity market was incompatible with state aid requirements or direct that changes be made to the mechanism. We have carefully considered the matter. When I say “we”, I mean department officials and my right honourable friend the Minister for Energy. I cannot confess that I have read the detailed paragraphs that the noble Lord referred me to, but we have carefully considered each of the issues raised in the court judgments, and we remain confident that the design of the capacity market is compatible with the state aid requirements, including in the way the system is designed in respect of demand-side response.

Climate Change Act 2008 (2050 Target Amendment) Order 2019

Lord Grantchester Excerpts

Wednesday 26th June 2019 Lords Chamber

Moved by

[Lord Grantchester]

At the end, insert: “and that this House supports the objective of achieving net-zero carbon emissions by 2050, and acknowledges the substantial implications of this Order for the United Kingdom; but regrets that Her Majesty’s Government have (1) given little detail of how the emissions target will be met; (2) made a substantial change in policy without the full and proper scrutiny that such a change deserves; and (3) not introduced regulations under section 30 of the Climate Change Act 2008 to include greenhouse gases from (a) international aviation, or (b) international shipping, as part of the emissions target”.

[Lord Grantchester (Lab)]

My Lords, I thank the Minister for his explanation of the order. I was always fearful that proposing my amendment before the House could give rise to misinterpretation. The amendment has been carefully drafted. As the House well understands, there are only two mechanisms by which the House can signify a response to the Government concerning statutory instruments: either a regret Motion or an annulment Motion. A careful reading of this amendment will confirm that Labour very much supports the order. Indeed, it forms the basis of Labour policy and was called for in the other place as far back as a year ago by our party leader, Jeremy Corbyn, and the shadow Secretary of State for Business, Rebecca Long Bailey.

The amendment does not seek to block the order or frustrate the process. The order will go forward today. It is another step in the right direction, as envisaged by the drafting of the Act in 2008. As scientific knowledge advances and experience is gained, today’s momentous move to a permanent net-zero carbon economy can be put into effect by the order, which substitutes the figure of 100% for 80%. However, the text of the amendment lays bare that the Government are not doing it properly. It reflects the summary conclusion reached by your Lordships’ Secondary Legislation Scrutiny Committee’s 53rd report, paragraph 12 of which states that,

“the Department should have acknowledged”,

in the Explanatory Memorandum this order’s far-reaching impact and summarised,

“the work that is underway to assess the significant costs and wider impacts of the transition, to inform Parliament’s scrutiny”.

The Minister in the other place, Chris Skidmore, did not take account of this in subsequent dialogue with the committee. Paragraph 10.3 of the Explanatory Memorandum to the order states:

“If the instrument makes provision different from that recommended by the Committee, the Secretary of State must publish a statement setting out the reasons for that decision, pursuant to s3(6)”.


It could certainly be concluded that this order does not follow that recommendation and that the Secretary of State has not made adequate statements about that decision.

The most important feature is included under the third point of the amendment: that, once again, the Government have,

“not introduced regulations under section 30 of the Climate Change Act 2008 to include greenhouse gases from … international aviation, or … international shipping—

IAS—

“as part of the emissions target”.

In 2012 the Committee on Climate Change recommended this only for Ed Davey, then Secretary of State for Energy and Climate Change, to reject it and say that it should be covered at international level. In 2015 the Committee on Climate Change again recommended the proposal for inclusion under the fifth carbon budget for the years 2028 to 2032. Once again it was rejected. Now again, in 2019, as part of the “net zero by 2050” target, IAS emissions are excluded.

In its recommendations, the Committee on Climate Change has proposed that emissions from international aviation should be added, based on the UK’s share of the EU Emissions Trading Scheme’s cap of flights departing the UK. In their interpretation of Brexit, the Conservative Government have signalled that they will remain party to the ETS. Can the Minister confirm this and state why this recommendation cannot go forward?

The committee recommended that emissions from international shipping be added based on projections of UK emissions in one of three options: bunker sales, trade share of the UK global trade percentage or activity based essentially by route. I will be happy if the Minister writes to me with a serious response to the recommendation. However, I point out to him the words of the Prime Minister’s office responding to questions on net-zero emissions by 2050:

“This is a whole economy target … and we intend for it to apply to international aviation and shipping”.


Paragraph 10.5 of the Explanatory Memorandum replies that the Government,

“will continue to leave headroom”,

—note the “continue”—for IAS emissions in carbon budgets while reduction strategies are,

“developed within International Maritime Organisation and International Civil Aviation Organisation frameworks”.

However, this is a hollow commitment, as the Government are already failing to abide with the fourth and fifth carbon budgets, which were drawn up within the pathway of reaching 80% carbon emissions reduction at 2 degrees of global warming. Let us state it again: this order is to reach 100% reductions to reach net zero at 1.5 degrees of warming. The latest, updated emissions projections from the department are that we are some 7% over the requirements for the fourth carbon budget and 13% over those for the fifth. What urgent steps are the Minister and the Government taking to get the UK back on track to meet the already-agreed carbon budgets?

The headline recommendations of the Committee on Climate Change report of May 2019 on net zero were clear: in order to deliver,

“a greater than 50% chance of limiting global temperature increase to 1.5°C”,

a net-zero greenhouse gas emissions target for 2050,

“would respond to the latest climate science and fully meet the UK’s obligations under the Paris Agreement”.

It stated:

“A net-zero GHG target is not credible unless policy is ramped up significantly”,


and recommended:

“Delivery must progress with far greater urgency”.


There needs to be widespread collaboration across government with all sectors of the economy to deliver benefits for the environment, the economy, customers and citizens. Net zero will only be possible if the UK meets the challenge of decarbonising transport and heat; 2040 is already too late for the phase-out of petrol and diesel-powered vehicles. Battery technology development is urgently required. There is still no serious plan for decarbonising the UK’s heating systems. Carbon capture usage and storage is yet to get started and afforestation targets are not being delivered.

It is important to recognise that the committee declared the costs as manageable. As the cost of renewables has fallen, the cost equivalent of 1% to 2% of GDP in 2050 is the same as its previous estimates of meeting the 80% reduction. It judged this cost affordable. The committee called for an early review by the Treasury to assess the plan for funding and a distribution of costs for business, households and the taxpayer. Can the Minister give an indication today in regard to the scope of this review, as the Chancellor of the Exchequer has already suggested opposition to the current 1% to 2% of GDP cost? This review should be comprehensive and include taxation, subsidies, incentives and customer costs, as well as the wider potential benefits and costs of inaction and climate events.

The Government also need to unblock the hurdles put before onshore wind’s participation and provide clarity to the nuclear sector. The importance of energy efficiency for homes and businesses needs repurposing, along with carbon-free housebuilding. That there is so much to propose and debate underlines the Government’s lack of policy proposals. The forthcoming energy White Paper gives the Minister the opportunity to answer these challenges and include the Government’s plans, with milestones, to achieve a minimum of net zero by 2050. Indeed, this target may need to be reassessed again. Having set this framework, the Government must introduce a comprehensive strategy of engagement across businesses, customers and the wider public. The Government deliver a wide range of services—through health and education, among others—and are well placed to lead the country’s response to achieving necessary targets. The Minister will remember that the House wished only to secure the achievements of a smart meter roll-out in debating that legislation last year.

It should also be recognised that the foundations are in place to enable the UK to reach net zero by 2050. Successive Governments have attained notable achievements and set up the necessary framework, within which measures can be brought forward at least cost. I refer here to the achievements secured through the capacity market and the contracts for difference framework.

The indicators for success are positive. Fifty per cent of electricity generation now comes from low-carbon sources. The country has just experienced an 18-day period of coal-free generation. I could not wish my amendment to be misunderstood any longer and we are making progress. We will continue to work with government and all stakeholders to meet the climate challenge, and we approve of the order. However, the Government need to recognise the urgency to make progress. Can the Minister assure the House that the energy White Paper will be published with enough time to review it and enable a debate to happen before the Summer Recess? Can he give the House confidence that goes beyond rhetoric that the Government will tackle the issue seriously and that our schoolchildren can now return to their studies with hope?

My amendment is clear. I approve of the order before the House but regret that the Government are not taking their responsibilities seriously. I beg to move.

--- Later in debate ---

[Lord Henley]

My Lords, I have mentioned the Treasury review, which will be available when it comes out in due course, but that question is a matter for the Committee on Climate Change, which is independent. The committee will no doubt—I hope—consider my noble friend’s request and make that information available to him.

The second big topic I want to address in the limited time for which I feel the House will tolerate my speaking is the beginning of the question of how. I have made clear that the energy White Paper will come forward later in the summer. At this point, I have to say that, if noble Lords can be a little patient, there will be more to come before the House and more to hear. There have been accusations that, although we have met the first three carbon budgets, we are not on track to meet the fourth and fifth. We are over 90% of the way to the fourth and fifth carbon budgets, even before many of the policies and proposals in the clean growth strategy have had an opportunity to bite. But we recognise that there is a need to take further action and we are delivering that.

I shall give a few examples. I am thinking about complaints from my noble friend Lord Deben about housebuilding standards and a point made by the noble Lord, Lord Fox. The future homes standard provides that new-build homes will be future-proofed with low-carbon heating and world-leading levels of energy efficiency by 2025. We have published the carbon capture and utilisation action plan. We have announced £60 million for the next contracts for difference auction. But I note the point made by the noble Baroness, Lady Brown, about the offshore wind sector deal, which she has championed. She also very kindly mentioned the fact that I had spent lunchtime—and missed my lunch—addressing that conference, but I still had time to come here and deal with this important business. I am grateful for having had the opportunity to do so. We have also increased support for the transition to zero-emission vehicles to nearly £1.5 billion.

We are doing a lot; there is more to do. The order is about legislating to end our contribution to one of the most serious environmental challenges we face: climate change. We aim to be one of the first countries and one of the first major economies—if not the first G7 country—in the world to legislate for that net zero target. I believe we are doing, and achieving, a great deal. I do not believe that the amendment in the name of the noble Lord, Lord Grantchester, takes us any further. In fact, it is an unhelpful distraction. He said that it was likely to be misinterpreted; I have to say that it was, and is. I hope he will feel able to withdraw it.

[Lord Grantchester]

My Lords, I am grateful for all the contributions to today’s debate. We should not make the order contentious but we should point out where the Government are falling short. The debate should not disguise that this is a momentous occasion, and I am honoured to be able to approve the order today. The Government are right to adopt Labour’s policy by amending Section 1 of the Climate Change Act 2008 to create a more ambitious target. Indeed, it may be the only way to avoid a carbon catastrophe and the horrors that will be realised if the world does not come together to prevent a 1.5-degree temperature rise by 2050.

However, I regret that we are going about this in the wrong way. Net zero emissions by 2050 is an enormous aim, and it needs more than rhetoric to be realised. We need to develop alternative energy sources on a scale never seen before. The Government must urgently commit to a green industrial revolution and a transformation of energy in the UK, harnessing the resources of the state and the private sector to invest in the infrastructure. However, for an issue that will have such enormous ramifications, the Government have not outlined the route ahead. It is only right for Parliament to be given the information to consider such changes in full, and that Parliament must be able to appreciate the necessary implications of all actions.

The Government cannot simply lay this instrument and hope for the best. Challenging times are ahead and the lives of each of us will change. We now need a commitment that the absolute priority is overcoming this existential threat to our planet. Should circumstances change and it becomes apparent that the Government must bring the target forward, we need a guarantee that they will be prepared to do so.

According to the best scientific advice at the moment, the new target of net zero emissions by 2050 is the right path for the UK to avoid the greatest challenge the planet has ever faced. Because of the urgency of the climate challenge, I understand that, in these unusual and exceptional circumstances, no consultation is being undertaken and there is very little information at this stage. However, I wish through this amendment to put the Government on notice that they must come forward with full information on how the UK will fulfil the statutory commitment. I think the House is in unison on this, and I ask it to underline the challenge to the Government by voting for the amendment.

UK Net Zero Emissions Target

Lord Grantchester Excerpts

Wednesday 12th June 2019 Lords Chamber

[Lord Grantchester (Lab)]

My Lords, I thank the Minister for repeating the Statement made earlier in the other place, which we welcome. I am pleased to hear the Government confirm they will be adopting Labour’s policy, announced at our 2018 conference, to target net zero emissions before 2050. I look forward to examining the statutory instrument that legislates for this target, and hope that time is found as soon as is reasonably possible to give it appropriate debate. Can the Minister confirm when it might be timetabled?

This has become a generational issue. Parliament and Government must recognise the growing challenge of climate change. Meeting the target of net zero emissions by 2050 is the only way to avoid a climate catastrophe and the horrors that could be realised if the world does not come together to prevent a 1.5 degree temperature rise. Net zero emissions by 2050 must not be left as an ambitious aim; it must become a real achievement. The Government are not even on track to meet their existing climate targets, so they have a long way to go to engender confidence. We need only look to the comments made by the Committee on Climate Change and official BEIS statistics to see that the UK is far from meeting its fourth and fifth carbon budgets at present. The Government must show immediately that there is a genuine commitment to this new goal.

Will the Minister outline in detail the immediate steps the Government will take to ensure that the public can be confident that these targets will be met? The UK most emphatically needs a green industrial revolution to answer key questions and target causes of emissions today.

First, what policies does the UK need to clean up our gas supply? We need to develop carbon capture and storage and enable industry to use clean sources. Fracking is not an answer to today’s challenge. Secondly, the Government must dismantle the blockages to onshore wind. They need to make sure that the cheapest form of renewable energy is able to contribute, and support new, innovative projects, low emissions and renewables, as the House discussed last week in relation to tidal power. Instead of closing down options, such as feed-in tariff schemes, the Government must enable commercial solar development to flourish.

Thirdly, what is the Government’s policy on nuclear energy? What is the appropriate response on size of schemes between the Hinkley Point development and small modular reactors? We need urgent answers. Fourthly, what are the immediate plans of action for transport? Last month’s electric vehicle registration figures show that new registrations are down almost 5% on last year and the use of buses is in freefall. Is the Department for Transport signed up to this target? Does the department realise that it needs to develop new policies? Can the Minister confirm what steps the Government will now take to increase the uptake of environmentally friendly forms of transport? How will they ensure that clean transport becomes affordable to working families so that they can feel engaged and contributing, not remaining chained to expensive polluting fuels?

There are many issues right across government. Another example of where clarity is needed is on zero emission homes. Home insulation measures have fallen by 98% since 2010. The UK needs to deal with immediate problems, and any policies put forward on offsetting emissions must be developed not to export or bypass our problems but as a route to going further and faster. The UK must look even further into the future towards paying back its carbon debt.

The threat facing the world from climate change is the greatest in human history, and responsibility for addressing it crosses all departments. While I welcome the Government’s Statement and the target of zero net emissions by 2050, it must be realised that every government department should report back to Parliament on how they are contributing to reaching our climate targets.

[Baroness Randerson (LD)]

My Lords, this is obviously a very welcome Statement, and all the more so because it is such a surprise. It has been a real conversion on the road to Damascus by this Government, which as a general rule have not featured environmental issues and climate near the top of their priorities. In fact, the Government have been keen to abandon a number of policies introduced during the coalition Government by Ed Davey when he was Secretary of State for Energy and Climate Change. That has led to a loss of impetus in the renewable energy industries. In practice, 2050 may still be too late, especially if the Government and their successors adopt the tactic of leaving the heavy lifting until last. They cannot simply reach for a few easy plastic straws; they have to tackle the really difficult issues at the start, and there has to be a very steep trajectory of change if this is to have the impact it should.

The noble Lord, Lord Grantchester, referred to transport policy. That will certainly need to be one of the first government policies to be revolutionised as a result of this new approach. Will the Government now rethink their leisurely approach to ending the manufacture of petrol and diesel cars? The date they have set is 2040. The industry is going to get there well before then, but it needs to have the Government supporting and encouraging it as well as pushing it along the way, so 2030 would be a much better date. Will the Government rethink their decision to reduce subsidies for the purchase of electric vehicles and their approach to the abandonment of the electrification of the railways?

Turning to energy, will the Government reconsider their opposition to the Swansea tidal lagoon? It has a huge contribution to make, along with subsequent lagoons around the coast once one is built. As I say, that could make a huge contribution to renewable energy in our country. How can the Government expect to reach this target when fracking is still a UK energy source?

Finally, what steps are the Government taking to encourage other nations to follow suit and to pursue ambitious global targets to mitigate the effects of the climate emergency? The Statement refers to the importance of working with other countries. I would be grateful if the Minister gave some specific examples of the way in which the Government will approach this in future.

Renewable Energy

Lord Grantchester Excerpts

Wednesday 5th June 2019 Lords Chamber

[Lord Grantchester (Lab)]

I thank the noble Lord, Lord Cameron of Dillington, for bringing forward this debate on tidal power as we approach the anniversary of the Government’s disappointing response to the Swansea Bay tidal lagoon proposals that would have developed this new renewable technology. The Government are due to produce their energy White Paper this summer, and this debate has been a good opportunity to remind them of the potential of tidal ranges and to seek their constructive response.

The Statement a year ago repeated the message of the Government’s dismal record on renewable energy. As on previous occasions, the Government left tidal technologies on standstill for two years without dialogue or communication, while other technologies were developing, only to issue the announcement to reject the scheme. At the time, there was widespread criticism of the Government’s interpretation of the scheme. This was a pathfinder project, where value for money needs appreciation beyond a strict cost-benefit analysis of the specific scheme. As the debate has highlighted, there is now a new potential renewable technology to add to the mix of future energy sources, a first and only in class, where the UK has unique features of leadership. It could have enhanced the development of energy storage from the quasi storage feature of many tidal lagoon schemes, as well as having implications for flood management. Tidal lagoon technologies come somewhere between tidal stream and tidal range alternatives, and this location in the Severn Estuary could have been the catalyst for a developing industry, with many leading skills in the area.

What thoughts are there now concerning overlapping benefits for the steelworks nearby at Port Talbot and the wider Welsh economy? How would the planned joint venture with the German thyssenkrupp have looked if this venture had gone ahead? The Welsh Government had been prepared to put funding into the project, with the prospect of creating 2,000 new jobs, providing power to 155,000 properties, which equates to around 11% of Welsh domestic electricity consumption.

Further long-term damage to the investment community may result from the effect of the Government’s handling. Once again, the Government’s disdain for renewables will lead investors to opportunities overseas, towards projects such as the Sihwa Lake tidal power plant in South Korea. Marine renewables could go abroad, taking jobs and investment elsewhere.

With last year’s announcement, are the Government cutting the tidal range sector out of the UK’s energy future? What are the Government’s views on other projects? I was grateful to receive other engineering plans for the Severn Estuary, such as the Abberton-Minehead barrage, and last month, a glimmer of hope appeared with the alternative plans for Dragon Energy Island, mentioned by my noble friend Lord Giddens, featuring a floating island in impounded water off the coast of Swansea, with plans for modular commercial and residential buildings used primarily to generate tidal energy. It may be too soon for the Minister to be aware of the detail of this important proposal. However, the scheme could capitalise on the work and skills already present at Swansea Bay to retrieve the position following the Government’s disappointing decision last year. If the Minister has any assessment yet, it would be helpful if he could come forward with it today.

There are at least other promising signs, such as the tidal project on Merseyside. It was encouraging to see the launch of the next phase of plans to harness the tidal power of the River Mersey and Liverpool Bay earlier this month. The project could ultimately generate one gigawatt of electricity: up to four times the energy of all the wind turbines in Liverpool Bay. This would generate power for up to 1 million homes, equivalent to 500 football stadiums—a good measure of achievement on Merseyside. From designers, architects and technicians to marine contractors and construction workers, the project will create much-needed skilled jobs for the region. In leading the proposals, the city region’s mayor, Steve Rotheram, has demonstrated the exact transformational potential that devolution can produce, and the Government should provide leadership as the scheme makes further progress.

With another scheme still in its infancy, the Government must also show direction for the tidal power gateway across Morecambe Bay. The plan, similar to those already mentioned, but built as part of a road link, could create thousands of new jobs and generate energy for 2 million homes, meeting up to 7% of the north-west’s power requirement. The noble Lord, Lord Cameron, mentioned other examples, and I was interested to learn more from the noble Baroness, Lady Bloomfield.

While issuing those challenges to the Minister, I recognise that, as is the case with any new energy source, there are issues to be faced with tidal power. Any construction of tidal projects must minimise the impact on wildlife and the natural environment. Of particular significance will be the effect on distinct local estuary ecology, with impacts on migrating fish and birds that the creation of a new habitat could not mitigate. My noble friend Lord Berkeley mentioned the dangers of silting.

Of course, attention must be given to the effect on the public purse, which must be used wisely to generate maximum and widespread benefit. In the 2017 Autumn Budget, the Government set a moratorium on new low-carbon subsidies regulated by the discredited levy control framework, with the new control for low-carbon levies. This has raised concern that projects such as this and other new low-carbon energy developments could all be set at a standstill until they can proceed without any government support. Can the Minister clarify what the new control for low-carbon levies will mean for such projects, whether tidal or wave, or even other technologies such as geothermal? Will the new control persist at least until after the already committed expenditure on future CfD auctions has been made? Does the new control set the framework for the Government’s answer to the challenge of today’s debate?

This debate has laid out clear strategic benefits for the UK to develop tidal power. Within the renewables stable of technologies, it has clear advantages of regular, reliable consistency, even with the varying intermittencies as tides rise and fall. Only the Government can lead by providing support to nascent technologies and the necessary funds to fill the gaps. The UK has geographical advantages to exploit this resource, so that tidal power can contribute to and play an important role in the UK’s future energy mix—with the potential for global exports, as the noble Baroness, Lady Maddock, noted.

The Government can address that today and, in the forthcoming energy White Paper, set out clearly their intentions by introducing new policy support mechanisms for wave and tidal stream technologies and embrace the new thinking proposed by the right reverend Prelate the Bishop of Salisbury. The noble Lord, Lord Teverson, set out the challenge of meeting the new IPCC parameters and the decarbonisation targets. Against the background of the challenges to meet the fourth and fifth carbon budgets, accelerating climate change, the challenge to meet zero net carbon emissions by 2050 and diminishing biodiversity, the Government are clearly missing the target.

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

My Lords, I, too, thank the noble Lord, Lord Cameron, for introducing this debate and emphasising that what we in this country should be doing is playing to our strengths. He mentioned that, unlike a lot of other countries, we have an awful lot of tides, just as we have an awful lot of wind, and that we should certainly make use of them. I hope that I will be able to set out what we are doing, what we feel we can support and what the constraints will be in the short time available to me.

I was very pleased that, in the main, everyone—excluding the noble Baroness, Lady Maddock, and the noble Lord, Lord Grantchester—took a relatively positive line on what we were doing. I think that we have a pretty good story to tell in this country. Over the past 30 or 40 years, under a variety of different Governments, we have reduced our emissions. My colleagues and I have said on many occasions that we have reduced them by more than 40% while seeing the economy grow. We want to continue that process.

I make clear in the presence of my noble friend Lord Deben that we will be responding to his committee’s report, with its challenging targets, in due course. My noble friend and other noble Lords would not expect me to presume on my right honourable friend the Secretary of State by responding at this stage. We have been set challenging targets. We will want to make progress towards them. We will want to continue to provide leadership for the world, as mentioned by the noble Lord, Lord Grantchester, the right reverend Prelate and the noble Lord, Lord Giddens, who talked about the failings of Brazil and America to acknowledge that there is any problem at all. Again, I remind the House that we are anxious that we should get the opportunity to host COP26 next year, and support from all sides of the House would create a very positive approach.

Living where we do, we obviously want a diverse electricity system that provides homes and businesses with secure, affordable and clean power. However—we keep coming back to this—we want that power at a cost that is both acceptable and supports continued growth. On many occasions, noble Lords have talked about the fact that costs come down. We have seen that with wind, solar and tidal; I am grateful to the noble Lord, Lord Berkeley, for his comments there.

There is some doubt about whether one will see costs come down in quite the same way for a technology that is not exactly new and, as the noble Lord reminded us, is largely about pumping a lot of concrete and rock into the ground; after all, concrete is not the most carbon-friendly material. One cannot see technology reducing costs there in the same way as it has done for wind and solar. Again, as the noble Lord, Lord Cameron, said, we must play to our strengths; we will do so for wind because we are a very windy spot. To do that, we obviously need to continue to bring down the costs of all forms of low-carbon generation; I am grateful to my noble friend Lady Bloomfield for mentioning how many there are. As the noble Lord, Lord Teverson, said, we have not seen the same cost reduction in areas such as nuclear as we are seeing with solar and wind.

I have some criticism of the noble Baroness, Lady Maddock, for taking a rather negative approach to what the Government are and have been doing. We are investing a great deal of public funds—some £900 million—in innovation, including a further £177 million to reduce further the cost of renewables and up to £100 million in leading-edge carbon capture and storage and industrial innovation. That is to drive down the costs there and, as I said, we have seen remarkable cost reductions over the year. We have seen low-carbon generation rise from 54% in the third quarter of 2017 to a record high of 56% in the third quarter of 2018, due to that increased renewables generation.

It has been a record-breaking year. I will give noble Lords some figures, although I will probably be able to give even better ones in a few weeks’ time. We have gone a whole fortnight without any coal-fired generation, which we aim to get rid of. This is in a country where, some 70 years ago, a Labour politician said:

“This island is made mainly of coal and surrounded by fish”.


Anyway, we are getting rid of the use of coal to generate electricity; as I said, we have just gone another fortnight without using any. Last year, there were nearly 1,800 coal-free hours over 10 weeks in total—so we are making progress.

I will deal with one or two individual issues. Since all noble Lords mentioned Swansea Bay, it is right that I address both that and the programme for six tidal lagoons proposed by Tidal Lagoon Power Ltd. I repeated the Statement made by my right honourable friend in another place on costs. We made it quite clear that the costs of that particular programme did not meet our requirements for value for money. I appreciate that the noble Lord, Lord Giddens, had some queries about that, as did other noble Lords, but we published a summary of our value for money analysis. The figures were clear; even the developer himself conceded that the project required a CFD strike price three times that of onshore wind.

Further, that issue was looked at by both the Welsh Affairs Select Committee and the BEIS Select Committee, which published details of the additional requests from the Swansea Bay developers over and above a 35-year CFD at £92.50 per megawatt hour. It was expensive. That fact was echoed by the National Infrastructure Commission in its national infrastructure assessment, published last July, which stated that,

“tidal lagoon power will remain an expensive technology in the future. The extra benefits which arise from its predictability are not enough to offset its higher capital costs. And it will never be a large-scale solution: an entire fleet of tidal lagoons would only meet up to 10 per cent of current electricity demand in the UK”.

I appreciate that other tidal projects are being looked at. For example, the Mersey and the Solway—in my part of the world—were mentioned. Officials and Ministers in the department have had several meetings with those promoting such things. We will continue to hold meetings and talk to developers. For example, the Solway Firth tidal lagoon project is at much too early a stage of development: to date, the engineering details have not been finalised and the developers have not yet applied for the consents and licences that would be required to develop the site. Obviously, we will continue to look at that project, take an interest and make a decision in due course on whether the project is good.

As the noble Lord, Lord Grantchester, mentioned, it is important to take environmental considerations into account, but there has been no detailed monitoring at this stage. For example, no seabed surveys have been undertaken on the sites; I am thinking in particular of the one in the Solway. So at this stage we must proceed carefully before going further.

Other noble Lords, of which the noble Lord, Lord Cameron, was the first, mentioned the possibility of tidal stream energy. Again, that should be looked at. The Government have provided long-standing and targeted support for the development of both wave and tidal stream energy. Since 2003, we have provided £175 million of innovation funding in the wave and tidal sectors; we have provided almost £80 million of that since 2010.

That has supported many firsts, including the wold’s first megawatt-scale tidal stream turbine, SeaGen, which was deployed in Strangford Lough in 2008. There has been much mention of Orkney, including by the noble Lord, Lord Berkeley, and the noble Baroness, Lady Maddock. I visited Orkney last year and met her colleague, Alistair Carmichael, and saw some projects that are being tried out there, with government money going into them. The world’s first pre-commercial array, the 6 megawatt MeyGen project off Caithness, received £10 million from BEIS innovation funding and is supported under the renewables scheme.

There have been some successful small-scale tidal stream tests over recent years. They are still at an early stage of development but they might be at the point where, as with wind, the price could come down—although I suspect that, for some of the bigger tidal barrages, the prospects are possibly less good. However, it must still be viewed in the context of the falling costs of other forms of low-carbon generation such as offshore wind. At the moment, their costs are five times that of offshore wind. I assure noble Lords that officials, Ministers and my right honourable friend Claire Perry will continue to engage with the sector to better understand its cost-reduction potential.

Finally, I reiterate that we will publish the energy White Paper in the summer, which will build on my right honourable friend’s strategy address in November of last year, setting out four guiding principles for electricity policy and addressing the challenges arising from the radical transformation of the energy system over the coming decades. It will take a long-term view of the energy system, out to 2050, and show just how we can deliver our climate change goals and the aims of the industrial strategy. At that point, or sooner, I hope that my right honourable friend will be able to respond to my noble friend Lord Deben and his climate change committee report.

I appreciate that my time is up. I hope that I have given a partially positive view of what the Government can do. There will be more we can do and further developments in all forms of renewable energy. Tidal may be part of that, and all forms of tidal—whether by barrage or otherwise—will be looked at.

[Lord Grantchester]

I appreciate that the Minister is under tight time constraints, but as the energy White Paper approaches, could he give us a detailed answer on how the control of low-carbon levies will operate?

[Lord Henley]

The noble Lord will have to be patient and wait for the White Paper. No doubt we will respond and he will have an answer in due course.

Reducing Greenhouse Gas Emissions

Lord Grantchester Excerpts

Thursday 2nd May 2019 Lords Chamber

[Lord Grantchester (Lab)]

I am grateful to my noble friend Lord Rooker for introducing this very timely debate and thank all noble Lords for their contributions. I congratulate him on his introduction and his choice of title,

“that this House takes note of Her Majesty’s Government’s legal responsibility”.

Against the background of recent events and demonstrations, it is time to show leadership and reset the parameters, taking legislative action in addition to resetting policy areas. I declare my interest in having five grandchildren.

Parliament is excellent at framing policies, debating issues and defining problems. However, there is a general lack of profile of this activity outside Parliament, such that to the public there seems to be a lack of activity, urgency and will. It is certainly not helped by trivialisation in the media, whereby today’s important report by the Committee on Climate Change is portrayed as merely calling for everyone to wear a sweater and turn down the heating. If only it were that simple. Dialogue with the public has certainly been helped by the Secretary of State for the Environment, Michael Gove, admitting that not enough has been done, in contrast to the self-congratulatory stance recently taken by other members of the Government. By all means we will give credit where it is due—as the noble Lord, Lord Lipsey, admits—but let us get real. The climate emergency movement is to be congratulated on the way it has raised the profile of climate change and underlined its importance. Let us take up the challenge rather than argue about how to police such protests.

First, we need to get our figures right. Rather than self-congratulatory responses, let us look at whether Greta Thunberg is correct and include all forms of emissions, including aviation and shipping. Let us look at the built environment and at democratising responses so that everyone realises not only that they have responsibilities but that they must take individual action. All organisations must also undertake their own audits and put their own interpretations on how they must respond in their actions.

Let us look at the pace of change. The IPCC has given Governments its assessments of the science. The pace of change must quicken to bring about a new, green industrial revolution. In recognising and identifying what this information tells us, it is for Governments to reset legal targets for eliminating all greenhouse gas emissions within a demanding timeframe. Labour is taking the lead on this, and it is interesting that the Committee on Climate Change agrees in principle with the Labour target to achieve net zero emissions before 2050. This requires milestones to be set ahead to build in a pathway to survival and the elimination of threats. In recognition of the right culture that must be embedded throughout government, local authorities, organisations and individuals, these targets must apply across the board. For example, energy efficiency measures must include upgrading all buildings and households to an EPC band C standard by 2030 to undertake the demand-side response in addition to the decarbonisation of supply. The democratisation of response must be inclusive, so that Governments do not cut and curtail needed contributions from feed-in tariff schemes, necessary infrastructure development such as the continued successful rollout of smart meters, and other technological advances.

These targets will then set the parameters against which the Government and Parliament must develop sustainable, stable policies consistent with net zero emissions. The Liberal Democrats are certainly right to point out the policy reversals following the coalition’s end that mean the carbon budgets could well be missed. Yes, assumptions will need to be made, such as that nuclear new build will materialise to de-risk the extension of old, obsolete power stations. Yes, power margin tolerance must be expanded by reducing demand through energy efficiencies. Yes, developments are needed in battery technology and storage to cope with the divergence in responses to weather patterns as regards whether the UK is experiencing a long high-pressure period. Yes, more difficult solutions are needed in transport and heat, so that having eliminated coal—with the exception, at the moment, of China—we now turn with urgency towards eliminating oil and diesel.

Contributions from noble Lords have highlighted other important areas such as sea levels, farming, soils and water, hydrogen, afforestation and rewilding, investment funds, biodiversity and air, international effects, offsets and actions and social justice. All these issues and options for change must be identified, pursued and communicated. The Government, Parliament and public life have the necessary forums and structures to be utilised: the all-party groups, the National Infrastructure Commission, the various committees on climate change, the Environmental Audit Committee and universities’ academic modelling activities, abilities and research, with parallels in the devolved Administrations.

It needs to be recognised that we have not developed all the tools we may need. We need to revisit carbon capture and storage; tidal power still needs to be trialled and the Swansea tidal scheme reassessed; flexibility and its costs will need to be included. Naturally, the costs of these transformations need to be borne in mind. Putting all these costs at the door of consumers and households as a way to avoid action and responsibility needs to be examined—not to overburden consumers but to reassess the balance with taxation. Making consumers pay is regressive. If ever there was a creative accountancy scheme it was the Government’s levy control framework. The costs of delay and deferment of action must be recognised.

Can the Minister map out the Government’s response? Will the Government update the Climate Change Act to incorporate the new targets from the Committee on Climate Change? Will the Government use the forthcoming environment Bill to set out new milestones and necessary action? Will the Government broaden the forthcoming White Paper on energy to set out the wide-response policy developments needed? The Minister today needs to start the answers, and the Government need to use the vehicles to answer pertinent questions such as: why are emission reductions diminishing year on year, falling by only 1.5% last year against 3.2% the year before and higher percentages in earlier years? Can the Minster explain why the UK’s emissions from industrial processes, waste management and even agriculture rose between 2016 and 2017? Can he answer how the Government will meet the fourth and fifth carbon budgets? Can he explain why emissions in the transport sector are higher than they were in 2010; why electric vehicles represented only 2.7% of new car sales in the UK in 2018 against, for example, a high 31% in Norway; and does he take responsibility for the UK’s sluggish transformation of the transport sector?

This debate has highlighted how we need to respond. It is a challenge to examine every aspect of everyday activity, and the Government need to reorganise and recognise the legal responsibilities that cannot be avoided.

Businesses: Technology

Lord Grantchester Excerpts

Wednesday 10th April 2019 Lords Chamber

[Lord Grantchester (Lab)]

My Lords, before asking my question, I congratulate the noble Lord the Government Chief Whip on the achievement of his family business, Taylors Bulbs, in reaching the celebratory milestone of 100 years in business. My best wishes to him and his business for the next 100 years.

The noble Lord, Lord Holmes, is correct to identify and endorse huge commercial opportunities. However, a PwC report in 2017 highlighted that AI and wider automation could result in up to 30% of UK jobs being dispensable. Change can be painful. What steps are the department taking to ensure that all employees benefit from these developing technologies, such as by an improved leisure/work balance, and that AI does not simply lead to mass redundancies?

[Lord Henley]

The noble Lord takes a depressingly pessimistic view of that PwC report. It pointed out that advances in that sector could lead to growth of £230 billion between now and 2030. That is to be welcomed. It also pointed out that jobs would disappear, but I think it went on, as did another report to which I referred the other day, to point to a very large number of new jobs in the sector, which would probably be more highly paid and more highly skilled and which we could provide in this country.

Fuel Poverty

Lord Grantchester Excerpts

Thursday 4th April 2019 Lords Chamber

[Lord Henley]

On that last point, I assure my noble friend that we estimate that the price cap will save consumers something of the order of £1 billion annually on their bills. On his first point about setting the levels of subsidy for renewables, it is important to provide the appropriate subsidy to see that we get the appropriate developments in renewable energy. As my noble friend will be aware, we have seen a dramatic drop in the cost of producing offshore wind, for example; the same is true of solar and we hope those trends will continue.

[Lord Grantchester (Lab)]

One of the key aspects in reducing fuel poverty is giving people the tools to manage themselves, through the infrastructure development of smart meters. On this development curve, can the Minister give the House a measure of success regarding how many households have been drawn out of fuel poverty by their introduction?

[Lord Henley]

My Lords, the noble Lord is right to talk to the importance of smart meters. We hope that by 2020, every household will have been offered a smart meter. Most people are satisfied with them and, if used properly, we expect smart meters to enable consumers to take something of the order of £300 million off their fuel bills.

Electricity Capacity (No. 1) Regulations 2019

Lord Grantchester Excerpts

Wednesday 3rd April 2019 Lords Chamber

[Lord Grantchester (Lab)]

I thank the Minister for his introduction and explanation of the regulations before the House. They are necessarily very technical and controversial as they involve the capacity market, state aid and a judicial review of the actions being taken by the Government.

This instrument was the subject of a lengthy report from Sub-Committee A of your Lordships’ Secondary Legislation Scrutiny Committee. The Government are embarking on a high-risk strategy and the committee’s 20th report concludes with the recommendation that,

“the House may wish to explore further how the Government are proposing to ensure that the Capacity Market can continue to operate in the future”.

The noble Lord, Lord Tope, raised this issue among his concerns.

As the Minister has explained, the situation arises following a case brought by a demand-side response provider, Tempus Energy, to the European Court of Justice that the construction of the capacity market discriminates against its interests. The European Commission has suspended the state aid clearance following the ruling, producing what may possibly be a lengthy standstill position that will impact on delivery year T1 2019-20, which is due to begin on 1 October 2019 and could continue beyond October 2020. Does the Minister agree that a delay of this magnitude beyond 2020 could bring about a complete suspension, or indeed termination, of the capacity market mechanisms with a high degree of certainty that that may result in unwinding the whole scheme, which has been in place since 2014? What is the Government’s risk assessment of that outcome?

I appreciate that the Minister is in severe difficulty as this period brings into play the interplay between the UK’s exit and the complexities around the state aid regimes of the EU and the UK post any implementation period and deal or no-deal scenarios. The Government seem to be making risky assumptions that not only will the ruling be swift but that this is only a procedural issue on the implementation of the state aid approvals. Does the Minister agree that the judicial review case negates those assumptions and that the robustness and fairness of the capacity market is secure?

The noble Lord, Lord Stunell, has raised serious issues in relation to this situation and the way the Government have implemented the scheme. Perhaps I may further underline the contention that the capacity market has not been entirely equal in the Government’s assessment to providers and that the Government appear to be adjusting the mechanisms as they consider their approaches to the first five-year review? Would not a safer and less risky strategy have been to halt all auctions and bring forward the review of the workings and results of the capacity market against the original objective; namely, that the capacity market was set up to bring forward long-term new technological capacity to reform the energy market away from fossil fuels?

As the Minister has explained, the UK has an 11% capacity margin and these T1 auctions are mostly short-term capacity builders. Can he outline how and why a suspension pending these reviews while the ruling is being reconsidered could be interpreted to undermine more longer-term solutions coming on board? I appreciate that the confidence of industry investors is crucial, but what is the rush? This shadow system outlined in the Minister’s remarks at the beginning, on the assumption that the ECJ ruling is merely procedural and confirmatory, appears to have the backing of industry generally. I am grateful for the considerations on the issue from Simon Markall on behalf of Energy UK.

I appreciate that continuity and consistency of the capacity market is important to industry and that competition between technologies could be maintained through policy evolution. Any perceived lack of level playing field in winning CM contracts could be solved while maintaining the working capital and cash-flow stability of the market through these shadow, deferred, contingent mechanisms under the instrument. Labour would not wish to undermine either the security of electricity supplies or the market that relies on this scheme. We understand that, over the longer term, industry confidence in the capacity market as an investable mechanism is an important driver for change, with cost savings and value for money overall. Nevertheless, there are concerns that the transfer from fossil fuels towards renewable and nuclear fuels is not proceeding at pace—as the debate yesterday on the climate emergency revealed.

The capacity market has brought forward essentially only one combined-cycle gas plant of 400 megawatts against recent open-cycle gas plants, which are more polluting. The Government have given contracts to diesel generators—more polluting than coal—when they refused to set a decarbonisation target for 2030. The response that the nuclear industry is in turmoil despite a sector deal agreement underlines the situation. The 2 gigawatts of new interconnectors is slightly beside the point.

I assure the Minister that I appreciate that progress has been made. I welcome the share of electricity from low-carbon sources now reaching 56%. Nevertheless, the issue is not being taken seriously enough or the necessary pace of change being achieved. I ask the Minister to commit to publishing the Government’s five-year review of the electricity market reform this summer and for it to include a full review of the capacity market. Can he assure the House this afternoon that the Government have a full appreciation of all the risks by outlining all the discussions the Government have undertaken with the Commission? With that assurance and the assurances that the Treasury will guarantee all the conditional payment obligations to be underwritten, that his department will continue dialogue with all parties on this review and that this instrument is supported by industry, I am happy to approve it today.

[Lord Henley]

I am grateful to the noble Lord, Lord Grantchester, for his support for this instrument, and I look forward to that support in a few minutes when I conclude my words. At the same time, he called for a halt. Since we are talking about security of supply, I simply cannot go along with him. It is the Government’s view, widely supported by the industry, that the capacity market is the best way to deliver security of electricity supply at the lowest cost to consumers. We will debate this matter tomorrow at Question Time. It is important that we have security of supply and that we have it at the best price. As I said in my opening remarks, our current security of supply positon is robust. I cited the figure that we reckon the margin this winter will be— over 11%, the highest for five years. That shows that the market works.

A number of concerns have been raised and a number of questions put, and I hope I can deal with them. I will first get on to the question of uncertainty and engagement that the noble Lord, Lord Tope, raised, echoed by the noble Lord, Lord Grantchester. It is important to recognise that there is uncertainty. We appreciate that any judgment of the Court of Justice of the European Union creates uncertainty and potential difficulties for the industry.

As I made clear, the Commission is investigating the scheme, and recently confirmed that it is moving on to the next phase. This is an important step as we work to reinstate state aid approval for the capacity market as soon as possible. We are working with the Commission to ensure that we have everything necessary to reconsider the scheme as quickly as possible. I assure the noble Lord, Lord Tope, that we will continue to engage regularly with stakeholders; we will provide them with updates on progress and the re-notification process, and clarity on arrangements during and following the standstill period.

We are confident that the Commission will approve the scheme following its investigation. We hope that that investigation will conclude ahead of October 2019, the start of the 2019-20 delivery year. We consider it very improbable—although it is possible—that the decision will be delayed into 2020. In the unlikely event of a negative state aid decision, or no decision, by October 2020, the instrument will terminate capacity agreements and, as I said in my opening remarks, any entitlement to receive capacity payments. Supplier payments then held by the settlement body will also be returned, which will ensure that supplier payments cannot be held indefinitely.

The noble Lord, Lord Tope, asked about the position after a no-deal Brexit. The Government have made it clear that no deal is exceedingly unlikely. However, while the UK remains a member state or is subject to an implementation period following a negotiated withdrawal, the current state aid regime will apply and the Commission will need to approve the scheme. The Government intend there to be a domestic state aid regime after the UK leaves the EU. The draft State Aid (EU Exit) Regulations 2019 are currently before Parliament. In a no-deal exit, the UK will be subject to a domestic state aid regime, for which the Competition and Markets Authority, rather than the Commission, will be the regulator. This assumes that the draft State Aid (EU Exit) Regulations are agreed by both Houses and made. If, at the time the UK leaves the EU, the Commission has not yet approved the scheme, it will then be a matter for the CMA to investigate and approve that scheme.

The noble Lord, Lord Tope, asked whether the decision of the court itself was purely procedural. This question was echoed by the noble Lords, Lord Stunell and Lord Grantchester. The court gave examples of where the Commission should have had doubts and should have investigated them, but it did not rule that the design was incompatible with state aid requirements. We have carefully considered each issue raised through that court judgment and remain confident that the design of the capacity market is compatible with the state aid requirements. We cannot pre-empt the outcome of the Commission’s investigations, but we are confident that the scheme will be approved by the Commission following investigation, not least because it has approved six other capacity markets since 2014.

The noble Lord, Lord Stunell, asked whether the capacity market did not sufficiently support demand-side response. As I made clear, the purpose of the capacity market is to ensure security of supply, at least cost, for the consumer—something we all desire to achieve. It is technologically neutral and allows all types of capacity, including DSR, to participate without discrimination.

The design of the capacity market provides for features that support demand-side participation, including lower credit cover, participation as price takers and three metering options. The Government are also taking broader action to support DSR, as set out in the smart systems plan. The five-year review of the capacity market, which the noble Lord, Lord Grantchester, asked about, will also explore further ways in which DSR participation can be supported.

The noble Lord, Lord Grantchester, also asked about the judicial review and the case raised by Tempus. We are confident about our position. The Government will robustly defend this challenge and, as I said, we are confident in the steps we are taking to reinstate the capacity market and to operate the scheme to the fullest extent possible during the standstill period within state aid constraints.

Turning to renewable generation and carbon reduction, the noble Lord, Lord Grantchester, implied that we were not serious about switching to low-carbon electricity generation. As he will be aware, we are committed to switching away from coal. We have announced that we will be giving up coal in 2025 and increasing the share of renewables and gas in electricity generation while reducing the cost of renewables. We have seen a dramatic reduction in the cost—I recently cited the figures for offshore wind—and we have invested £92 billion in clean energy since 2010. We have quadrupled our renewable electricity supplies since 2010 and the share of electricity generated from low-carbon sources reached a record high of 56% in the third quarter of 2018, with 33% from renewables. I hope the noble Lord will accept our commitment in that area.

Climate

Lord Grantchester Excerpts

Tuesday 2nd April 2019 Grand Committee

[Lord Grantchester (Lab)]

My Lords, I thank the noble Baroness, Lady Jones of Moulsecoomb, for initiating today’s debate and challenging us to consider the climate emergency movement. It is more usual to apply the term “emergency” to specific events that everyone can recognise, to signal that an exceptional response is required. To apply it to the process of climate change underlines the urgency of the situation, to recognise that more extreme weather patterns are occurring across the world more frequently, and that emergency action is required to avert more catastrophic consequences, both numerically and in intensity.

While it is true that much progress has been achieved, that must not be a reason for self-congratulatory complacency. The climate emergency movement has highlighted the importance of setting a new policy framework across public institutions that recognises the urgency, sets specific tough but fair targets and relevant timeframes to prioritise policy responses and embed them in overarching governance arrangements, and to communicate this both nationally and inter- nationally.

Each organisational level of government must fulfil its responsibilities through relevant ranges of actions to reduce emissions and increase resilience. With more easily achievable low-hanging fruit having been plucked already, it is now imperative to redouble the UK’s national efforts to tackle the most intransigent areas of heating, gas decarbonisation and transport, including shipping. The Government’s official target is still to reduce carbon emissions by 80% below 1990 levels. With the IPCC’s recent report that recognises the tipping point of 1.5 degrees warming above pre-industrial levels, that target is likely to be breached between 2030 and 2050. Labour has recognised that this will require a net-zero emissions target, not a new cost-benefit analysis.

The pace of change must increase as the urgency is not being adequately addressed by this Government. Being science-led, Labour will tackle the structural change by resourcing a national transformational fund that will also address the behavioural change needed across society, encompassing waste, energy efficiency, transport and the environmental security of a circular economy. The scale of the response needed must be addressed at all levels of government, including internationally through international trade deals.

The estimated 1.5% fall in emissions seen in 2018 was the smallest drop recorded over the past six years. What now is the Government’s response to the Committee on Climate Change’s challenge that the Government are no longer on course even to meet the fourth and fifth carbon budgets? Will the Government now bring forward ambitious and credible proposals for reducing emissions for the lagging sector areas of transport and heat, and could they inform us of that today?

The Environmental Audit Committee recently stated that the Government are “coasting on climate change”. Does the Minister recognise that the pace of change must increase across all government departments to eliminate policy contradictions and mixed messages across government, such as those on fracking?

The UK needs a new green industrial revolution. Greta Thunberg and our schoolchildren are right to demand it, and the Government and the investment community need to resource it through environmental governance.