Energy: Hydrogen

Lord Grantchester Excerpts

Thursday 17th September 2020 Lords Chamber

[Lord Callanan (Con)]

The noble Baroness is entirely correct. We are planning to publish a heat and buildings strategy in due course, setting out the immediate actions we will take. We are already working with Baxi and Worcester Bosch, the companies she mentioned, on hydrogen-ready boilers. These have been developed under a £25 million pot of funding, which BEIS provided.

[Lord Grantchester (Lab)]

Hydrogen in transport is key to unlocking its wider use across the economy; there are some relatively quick and easy wins. The renewable transport fuel obligation already exists. Have the Government progressed plans to extend the RTFO guidance to include both green and blue hydrogen as vehicle fuels, with legislative changes to encourage the supply chain necessary to deploy hydrogen bus and train fleets?

[Lord Callanan (Con)]

We are closely examining all these matters. The noble Lord makes a good point and these matters will be addressed in the hydrogen strategy, when it is published in due course.

Maritime Industry

Lord Grantchester Excerpts

Thursday 17th September 2020 Lords Chamber

[Lord Callanan (Con)]

The ingenuity with which noble Lords extend these subjects far and wide never ceases to impress me, but the Question is on maritime emissions. The noble Baroness makes an important point about emissions from aircraft, which I am sure is duly noted.

[Lord Grantchester (Lab)]

The Government have repeatedly been asked to plug the gap of the exclusion of international aviation and shipping from the provisions of the Climate Change Act. In July, reports hinted that—at last—it was the Government’s intention to add shipping to its net-zero target but not until 2023. To take the question of the noble Baroness, Lady Boycott, a little further, I ask the Minister to explain the delay—especially after the Committee on Climate Change called for shipping to be formally included in the UK’s climate targets under the carbon budget?

Renewable Energy

Lord Grantchester Excerpts

Tuesday 15th September 2020 Lords Chamber

[Lord Callanan (Con)]

The noble Lord might want to re-ask his question on hydrotherapy to my noble friend Lord Bethell, who is answering the next Question. We acknowledge the valuable contribution of hydropower to the UK energy mix over many decades. Most hydropower capacity was of course installed in Scotland last century, with smaller amounts in Wales and England. Most of these installations are still operating and still successful. They account for almost 2% of total electricity generation.

[Lord Grantchester (Lab)]

This important report challenges the Government to raise their ambitions to meet the climate emergency and stimulate a green recovery. As the Minister said, renewables accounted for a record 47% of generation in the first quarter of 2020. What impediments does he foresee to meeting the recommendation that 65% of UK electricity should be delivered using renewable energy sources by 2030? How can they be overcome?

[Lord Callanan (Con)]

As the noble Lord said, we have a tremendous record in deployment of renewables. Renewable capacity in the UK has gone from less than 9 gigawatts at the start of 2010 to almost 47 gigawatts at the start of 2020. We certainly hope to increase that rapid deployment.

Electricity and Gas (Internal Markets and Network Codes) (Amendment etc.) (EU Exit) Regulations 2020

Lord Grantchester Excerpts

Thursday 10th September 2020 Lords Chamber

[Lord Grantchester (Lab) [V]]

My Lords, I thank the Minister for his introduction to the regulations before the House today and appreciate the amendments needed to the clean energy package in the changed circumstances if no agreement is reached with the EU.

On the face of it, the regulations appear straightforward and essentially technical, correcting deficiencies that would occur should there be no appropriate terms covering this matter between the UK and the EU. However, this is not entirely the situation, as the regulations apply to Great Britain only and not to the United Kingdom. This brings up the situation regarding Northern Ireland. All noble Lords who have spoken have been mystified about the effect on the internal market and the integrated energy market with the EU through interconnectors in general, with implications for Northern Ireland specifically.

I will not bring up the Northern Ireland protocol, which is already subject to continuous controversy, but merely the implications for this statutory instrument. Scotland has its own Parliament and Wales its Assembly. Northern Ireland now also has an operating Executive. Does the exclusion of Northern Ireland from these regulations signify some disagreement about them? Before the Minister replies, I appreciate that Northern Ireland has an integrated energy market with the Republic and is part of the island of Ireland’s energy market. How far are these network code formulations being revoked by these regulations imperative to the grid system and the smooth operation of the internal Great Britain market through interconnectors to the island? As the Minister knows, there are two interconnectors for Britain, one to the north and one between Wales and the Republic. Would operability be maintained with Great Britain should these codes not be revoked?

Will the Northern Ireland Government respond in some way with their own order before the end of the implementation period? I would have thought, from the island-of-Ireland perspective, that the harmonisation of its internal systems from day one would be essential, and that it would wish to implement merely the technical corrections of the regulations, should the future relationship between the EU and the UK not be concluded satisfactorily on the matter. I would be grateful if the Minister set the House at ease that the connection codes are to the relevant extent interoperable, since paragraph 2.6 of the Explanatory Memorandum states:

“The Codes introduce common technical rules aimed at further integrating energy markets across the EU”.


I am presuming that the revocation of obligations on Great Britain institutions and businesses to share information with EU institutions on the connection codes will not in any way lead to future problems in the Northern Ireland energy market. However, what tariff is likely to apply in the event of no deal? What will its effect be on consumer pricing?

It would be helpful if the Minister could clarify the situation and further explain how the island of Ireland, the larger part of which will remain in the EU, will operate in conjunction with the GB internal energy market in the event that negotiations between the UK and the EU are unsuccessful. What is being planned now that this Government propose unilaterally to disregard elements of the withdrawal Act? Quite naturally, there is now heightened anxiety over the situation.

Trade Bill

Lord Grantchester Excerpts

2nd reading & 2nd reading (Hansard) & 2nd reading (Hansard): House of Lords
Tuesday 8th September 2020 Lords Chamber

[Lord Grantchester (Lab)]

My Lords, it could not be a more crucial time as the House begins its long Autumn session and the Government continue to progress of trade matters through your Lordships’ House. Today marks the beginning of another round of talks with the UK’s most important trading partner, the EU, and of this Second Reading, where once again the Government profess this Trade Bill to be one of continuity agreements.

I mention trade matters, but shortly to come the House will undertake the Report stage of the Agriculture Bill, where domestic standards on food will be reflected, with implications that can be assessed in later stages of this Bill. Tomorrow sees the publication of the UK internal market Bill, with provisions as yet unseen and possible state aid provisions. These pieces in the landscape need to be settled within the next five weeks, in which continuity and certainty with the EU must be delivered by this Government, despite their rhetoric of being able to walk away. After all, we have been assured that the Government have an oven-ready deal.

However, this is the Government’s second attempt at a trade deal. As has been repeated throughout this excellent debate, speakers have a strong sense of déjà vu when dealing with this legislation: it has been only some 18 months since the first version of the Bill left this House. Peers on all sides were rightly proud of the progress made on the last Bill on standards, scrutiny, customs arrangements and EU agency collaboration. As the then Minister, the noble Baroness, Lady Fairhead, said,

“no legislation passes the scrutiny of this House without being improved … this is unquestionably true here.”—[Official Report, 6/3/19; col. 615.]

That this Bill is stripped of these improvements is of great concern to the House. It is a backward step. The cry that this is merely a technical continuity Bill to deal with the inherited EU treaties fooled no one then and will not this time either. The same debates from 18 months ago remain the most poignant.

Since that Bill, and until recently, the Government have been operating without a Minister representing the Department for International Trade in this House. It has shown. That reflects the lack of direction from the Government. However, today gives me the first opportunity to welcome the new Minister, the noble Lord, Lord Grimstone, to the House and to his responsibilities on this Bill. I congratulate him on his maiden speech at such an important juncture. His background enables him to help steer the House to reach similarly important improvements. I look forward to these developments in later stages.

I thank my colleague on the Front Bench, my noble friend Lord Stevenson, for confirming Labour’s challenge to the Minister and the Government. Labour welcomes the Bill as providing the legal mechanisms for trade agreements to continue operating after the implementation or transition period. However, it also accepts that many of the previous Bill’s improvements need to be reflected in this Bill. This has been echoed around the Chamber today. Labour recognises the continuity imperative to formalise trading relationships with those third countries that have a trade agreement with the EU, given that the UK is no longer a member of the EU.

But this Bill needs to go further and underline the UK’s approach to how it negotiates and concludes international trade agreements. That there are similarities to the previous Bill is but a starting point for fixing the many moving targets that have developed since, as the Government have responded to the many concerns. The recent announcement of the Board of Trade is but one example.

That the UK is taking back control of trade policy does not mean that this is the executive prerogative of the UK Government alone. Trade policy should be transparent and subject to full parliamentary scrutiny. The Bill fails to address the scrutiny deficit, which it must if continuing consent to trading relationships is to be maintained.

The new Trade Remedies Authority currently lacks stakeholder engagement, independence and accountability. My noble friend Lord Rooker is correct in comparing the TRA with the SFA. There is also no union representation on the TRA, nor in the new TAGs—trade advisory groups—recently introduced to replace the barely formed export trade advisory groups, or ETAGs. A prime aim of this legislation is to bolt down, in statutory form, the structures that cannot be dismissed at a whim by a Conservative Government back-tracking on past agreements. Explicit statutory enshrinement in the Bill of warm-sounding statements is a key objective in dealing with this Bill.

The debate today underlines to the Minister that the key changes to the last Bill are vital and necessary. These amendments will focus on protecting the National Health Service, as well as ensuring that climate change, environmental protection, food standards and human and workers’ rights and equalities are at the heart of future trade agreements, which need to be consistent with international treaties.

The Bill must guarantee opportunities for small and medium-sized enterprises in procurement contracts, as trade will play a vital role in the economic recovery from Covid-19. That this comes at a time when the UK has suffered a record 20% drop in GDP in the second quarter of the year—double that of the average of 10% for major OECD economies—underlines the fragile nature of the UK economy and the need to be inclusive of the needs of all sections and industries throughout all the nations, provinces and regions of the UK, with their representatives in Parliament in meaningful dialogue. I congratulate the right reverend Prelate the Bishop of Blackburn on his maiden speech today, which celebrated Lancashire and the north-west and said that the voice of the north must be adequately heard.

Scrutinising treaties and agreements through the Constitutional Reform and Governance Act 2010 gives Parliament only a minimal role against the position when the UK was a member state with oversight in the European Parliament. Last night, the House gave a strong endorsement to improve structures such as the International Trade Select Committee in the Commons and the International Agreements Committee in your Lordships’ House in a debate answered by the Minister of State for the Foreign, Commonwealth and Development Office. This was reflected repeatedly by speakers today, and issues will be subject to further thought for inclusion in the Bill. I congratulate the Minister on confirming that he and his department will do all they can to facilitate the early promise of the International Agreements Committee. It would be encouraging if he could welcome amendments crystallising these improvements.

The devolved Administrations are excluded from the provisions of the Constitutional Reform and Governance Act 2010, even though they are bound by all trade agreements. This means that no formal adequate consultation with them has to be considered. Importantly, their wishes might not be consistently reflected in the forthcoming, but as yet unseen, trade markets Bill, which is under the direction of the Department for Business, Energy and Industrial Strategy. What interdepartmental mechanisms are the Government setting up to help all these constitutional deliberations to be carried out at all government levels?

Even today, there must be serious concern for the union following the announcements of the UK’s unilateral overriding of agreed treaty provisions in the withdrawal Act and the resignation today of Mr Jones, the head of the Government Legal Department. Can the Minister clarify the current status of the withdrawal Act? The fact that it is not only Labour that believes that Parliament should have the power to debate, amend and approve mandates, negotiations and outcomes needs to be addressed by the Minister. The involvement of the devolved Administrations in this relationship was drawn attention to in the remarks of the noble and learned Lord, Lord Hope.

Another key aspect of today’s debate has been standards. This concerns not only food, environmental protections and animal welfare provisions but the standards reflected in ongoing participation in other areas with EU agencies, which are working closely with their UK counterparts. Indeed, what is the current status of the provisions in the multitude of chapters in the withdrawal Act and its supremacy over UK law?

Although this is a prominent issue, it is not merely a matter of answering serious questions about the Trade and Agriculture Commission. Climate change and equalities approaches should be central to all future trade policy considerations. The appointment of Mr Abbott to the Board of Trade, given his approach to climate change, does not sit comfortably with the need for compatibility with net-zero imperatives. The noble Baroness, Lady Boycott, was right to draw attention to the fact that a sustainability assessment must be included in trade deals.

The House will be keen to examine, through amendments, the Bill’s implications, and such examination should include implications for the provisions of the slavery Act and equalities, as referred to by the noble Lord, Lord Alton. That is not to ignore many of the other issues that have been discussed, such as intellectual property rights, spoken to by the noble Lord, Lord Clement-Jones.

The Bill puts us a long way back from where we were. Also, it has not kept pace with developments since the House last considered these issues. The disappointment that stems from having to play out the same arguments for a second time is increased not only by the present disarray of the Government but by the complete lack of a bold, long-term vision for Britain to secure growth and recovery, protect rights and tackle global challenges through having its own trade policy. The UK is a strong trading nation, and this must be maintained.

Electricity and Gas etc. (Amendment) (EU Exit) Regulations 2020

Lord Grantchester Excerpts

Thursday 3rd September 2020 Grand Committee

[Lord Grantchester (Lab)]

I thank the Minister for his explanation of the regulations. As has been said, they are essentially technical amendments to six EU exit orders that have already gone through both Houses and which were also mainly technical in nature. As has also been said, the regulations do not make any policy changes, whereby the annexes confirm the statements necessary under the 2018 withdrawal Act and that consultations and impact assessments are not required—and that the time when issues over this procedure can be taken up has probably passed as well. As was commented on earlier, the devolved Administrations appear to have given their approval. However, it would be good to get the Minister’s confirmation.

The Explanatory Memorandum provides an excellent appraisal of the background regulations that became known as the third energy package 2009, which, together with the 2019 updates and the directives, became the clean energy package. The EM states that these amending instruments amend primary as well as secondary legislation. Usually, any secondary legislation that amends primary legislation is taken very seriously by your Lordships’ Secondary Legislation Scrutiny Committee. That the committee has made no mention of this is probably because these regulations only amend other regulations, as in the Explanatory Memorandum, and not any primary legislation that was the subject of previous orders that have already been dealt with. Can the Minister confirm this position and state which items of primary legislation are ultimately part of this jigsaw?

It looks like these regulations include crossover with the order scheduled for next week dealing with the internal markets and network codes, yet it is not clear whether the orders mentioned in paragraph 6.2 of the Explanatory Memorandum—S.I. 2019/531, S.I. 2019/532 and S.I. 2019/533—have a relationship with both these regulations and next week’s order other than superficial technicalities. If there is anything material to add to our understanding, it would be most helpful to hear it from the Minister.

I note that the regulations and the order due next week will keep the UK in line with the EU and in close association with the internal energy market, which must be of benefit to both the UK and the EU in maintaining flexibility of supply, reducing costs for the wholesale market and keeping prices for the consumer at a minimum. Can the Minister confirm that this remains a priority for the Government and a key objective of the discussions with the EU to bring a successful outcome to the end of the implementation period? Judging from the intervention of the Northern Ireland Minister, the devolved Administrations wish to see the internal energy markets, including the island of Ireland energy market and the EU and the UK energy markets, aligned.

Contracts for Difference (Electricity Supplier Obligations) (Amendment) (Coronavirus) Regulations 2020

Lord Grantchester Excerpts

Thursday 2nd July 2020 Lords Chamber

[Lord Grantchester (Lab)]

I thank the Minister for his introduction to the regulations, but I admit to being slightly thrown by how I understood them to work through to consumers. Let us hope that there are easy explanations.

As the Minister said, the aim is to limit the negative short-term impact on electricity suppliers of an unexpected increase in costs of the contracts for difference scheme due to the pandemic. The CfD scheme is the main mechanism for supporting new renewable electricity generation projects in the UK and, in outline, the government-owned Low Carbon Contracts Company, or LCCC, manages those generating contracts, collecting payments for generation from electricity suppliers, which pass on those costs to customers in their bills. As the Minister explained, there has been a shortfall in funds required to pay the generators in the second quarter of 2020 following a sharp fall in the demand for electricity ensuring a low wholesale price of electricity, leading to higher payments to generators as they have to be paid the difference between the wholesale price and the strike price agreed necessary to bring forward renewable generation. The Government have brought forward these regulations to assist with the consequences —for example, by extending a one-off loan to the LCCC to enable payments to generators without increasing the financial burden on suppliers and therefore consumers. I understand the time-sensitive nature of the regulations being approved so that they can come into force before the quarter reconciliation date of 9 July. I also understand that they will not impose burdens any more onerous than before or require different behaviours without sufficient time for reorganisations.

Regarding the consultations on the regulations, due to the urgency, I understand that a longer period than the one-month consultation undertaken was not practicable, yet the engagement seems to have been widespread and productive, resulting in the payback period being put back a full 12 months to avoid spikes in consumer prices during winter, and the sensible determination of the split between suppliers in accordance with their share of the market at that time, rather than at the time of the loan, which is to be made to the total cost of the LCCC irrespective of present market shares.

All that is clear and sensible. However, I have one or two anxieties on which it would be useful to have clarity from the Minister. The regulations are made for quarter two, from April to June. These measures may well need to be used again without recourse to more regulations if there are “similar exceptional circumstances”. Will the Minister confirm that the regulations will not be used for circumstances other than those due to the coronavirus pandemic? What similar exceptional circumstances might he envisage in the future? Temporary volatility of prices or seasonal demand fluctuations should be excluded, I would have thought, but would he care to determine any specific margin?

Furthermore, this pandemic may well continue and we are now into July. Will the Minister explain to the House how the effects of the pandemic are continuing to affect the market? What is the size of the loan that the Government are giving to the LCCC and therefore the size of the overhang in the market that will need to be reconciled in 12 months’ time? I believe the Minister mentioned the sum of £121 million in his introduction. We also need to consider the implications of the price cap legislation passed last year under the stewardship of Claire Perry, who appreciated the effects of energy prices on consumers. Has the Minister’s department had discussions with Ofgem regarding how these increased costs will be reflected in its future determination of whether the prices cap will continue into next year or not? It is important to get a general understanding of the expected effects and outcomes at this stage.

Under the Energy Act 2013, which governs this instrument, the Government sought to distance the Treasury from the implications of a support system for renewable generation. It is now back in the spotlight. What are the terms of the loan to the LCCC and how do this Government view this breach? The Minister may well reply that it is a temporary measure, but, as I have just said, it may not be a one-off for only one quarter. It would be helpful to understand the full circumstances of the instrument in that respect. Has the Treasury published any guidelines and made them publicly available?

No understanding of the impact has been undertaken, in the expectation that it will be positive and welcomed, at present. But it may not turn out that way in the long run, when the time comes for the sums to be passed back to consumers. On the assumption that it is only a one-off, one-quarter situation, can the Minister say what added rise in consumer bills due to this pandemic easement will come about in 2021? That the answer will be known now means that suppliers might begin to pass the cost on to consumers well in advance of these provisions, and thereby negate the main object of the loan to the LCCC. Perhaps the Minister can require Ofgem to report on this situation, so that the full fall in wholesale prices is not passed back to consumers, which is extremely worrying for many people.

Electricity Capacity (Amendment etc.) (Coronavirus) Regulations 2020

Lord Grantchester Excerpts

Thursday 2nd July 2020 Lords Chamber

[Lord Grantchester (Lab)]

I thank the Minister for his considered explanation of the instrument before the House. As he explained, it has two purposes: to support market participants during the pandemic by removing or relaxing temporarily certain obligations or deadlines that they are contracted to adhere to during the current delivery year of 1 October 2019 to 30 September 2020; and to make permanent other changes to the capacity market as a consequence of the judgments made by the Court of Justice of the EU in October 2019 over the state aid provisions that the capacity market entailed. These regulations are also under the Energy Act 2013 to provide capacity in the electricity market to meet consumer demand.

On the easements in response to the effects of the pandemic, the measures are sensible, temporary, proportionate and flexible. Once there was full clarity, the consultation did not seem to expose strong disagreements or objections, albeit that it lasted for only one week at the end of April. It is recognised that where capacity market contractors have problems with construction deadlines, supply chain supply issues or financing arrangements there should be leeway and discretion to help them through any present difficulties.

The necessary changes following the Government’s agreements to alterations to the capacity market operations after the EU’s state aid judgments need further critical appraisal. At the time of the EU court’s annulment, there was anxiety that the capacity market was not fit for purpose and did not operate fairly, especially regarding demand-side response—DSR—measures, which had made complaints once the market came into being after the EU initially had passed the state aid provisions. The two changes made to the demand-side response measures are welcome, and arguably the disruption could have been avoided if they had been enacted at the outset. The other three measures are also, in many regards, helpful to DSR, are welcomed and seem to allow for a more flexible, more competitive market through the T-1 capacity auction, reduction on minimum capacity thresholds and interconnectors.

That is as far as the regulations go. Can the Minister set out any further commitments given at the time of the judgments that are not included in these measures? Does that mean that further amendments will be brought forward at a later date, or will they be held up in further negotiations until December and may never come forward? I understand that these commitments are regarding interconnectors and deal with the prequalification of foreign capacity to the system, because they are not in the UK to be able to bid into the capacity market, and are not to do with either the actual size of the interconnection or whether more interconnectors will be built. Could the Minister explain the implications of this and what the current position is?

Could the Minister also explain what changes there might need to be regarding generation emission ceilings on capacity? When traditional technologies such as gas-fired generation bids into the capacity market they must quite rightly comply with legislative plans to limit emissions. There has been a consultation on whether to limit emissions by both kilowatt-hour of electricity and the average per year. Has the Minister’s department come to any conclusions on these matters, especially since, as I understand it, commitments to bring forward changes were made at the time of the court’s judgment?

I am content to approve the regulations, but seek reassurances from the Minister regarding the capacity market’s possible further developments. Perhaps he might finish by clarifying how much further delayed the energy White Paper, which would so helpfully shed light on all these matters, might be?

Committee on Climate Change: Progress Report

Lord Grantchester Excerpts

Wednesday 1st July 2020 Lords Chamber

[Lord Grantchester (Lab) [V]]

A key challenge contained in this excellent report is to decarbonise heat and reduce demand through home efficiency measures. What plans and discussions has the Minister had with his colleagues in the Treasury to ensure that households and businesses installing energy-efficient and low-carbon heating are materially better off, in addition to reducing their emissions?

[Lord Callanan]

The Chancellor will be setting out our financial policies in this area when he makes his Statement but, as I said in an earlier answer, we will be publishing a heat and building strategy in due course, which will address many of these issues. The noble Lord’s point is well made.

Oil: Changes in Global Markets

Lord Grantchester Excerpts

Thursday 21st May 2020 Lords Chamber

[Lord Callanan]

The noble Lord makes an extremely good and valid point. The Foreign Office and the Department for International Development will be closely monitoring the situation. We have a close affinity with people in Nigeria and we will do all that we can to help them; he will be aware of our very large aid budget in that country.

[Lord Grantchester (Lab)]

The one constant in the oil market is increasing volatility and falling demand as the world economy has to move towards zero-carbon systems. Realising this, large oil companies will need to accelerate zero-carbon plans to diversify their portfolios away from oil without causing redundancies. Given the climate challenge, what are Her Majesty’s Government now doing to encourage this?

[Lord Callanan]

The noble Lord is right. Companies across all sectors will be vital in our work to meet our 2050 net-zero targets. We want all business leaders in all sectors to make ambitious emissions reduction plans to help meet the commitments that we have set out under the Paris agreement.