Net Zero Strategy and Heat and Buildings Strategy

Debate between Lord Grantchester and Lord Oates

Wednesday 20th October 2021 Lords Chamber

[Lord Grantchester (Lab)]

I thank the Minister for bringing yesterday’s Statement on the net-zero strategy and the heat and buildings strategy to your Lordships’ House. As he knows, the clock is ticking, and it is less than two weeks to go before COP 26 in Glasgow. I congratulate the Government on getting these two vital documents out—two coming along together at once—to fulfil long outstanding commitments to show the spread of attention needed across the economy. These are two vital aspects to the challenge to decarbonise all areas of our national life, our homes and buildings, and to how the Treasury values net zero in its command of the nation’s finances.

COP 26 is making the Government face up to the size of the challenge, and we support them in the focus that that brings on climate change action. We want the conference to be successful. It comes at a very opportune time in world affairs, and it comes now. Can the Minister update the House on the amount of commitments that the Government have secured to their goal of raising £100 billion annually for climate investments internationally?

There are many aspects of the Statement that are rightly welcomed—that the Government recognise that they must take action now, and that these two major initiatives represent vital change in the economy and environment. People are thinking that the Conservative Government are taking Britain back to the 1970s, with energy shortages and high prices. At this last moment before COP 26, there is a growing sense that the Government are finding the climate emergency too big to ignore and yet too hard to grasp. As the Minister is presenting both documents, can he confirm that the Treasury is now fully committed to helping industry and the public through this present crisis? There is a sense that the funding commitments nowhere near match the size of the challenge. There has been almost a decade since David Cameron shredded vital confidence on action when he slashed the renewable energy incentives that so many wished to participate in to do their bit.

Emissions from buildings are higher today than they were in 2015. There are 19 million homes rated below EPC band C that desperately need insulation and upgrading. However, having said that, I welcome the element on the incentivisation for heat pumps, especially recognising those off the grid, most notably in rural areas. It does rather leave consumers at the mercy of electricity prices, and the Statement makes mention of a further £950 million for a home upgrade grant scheme to decarbonise low-income homes off the gas grid. Can the Minister expand on this and say how many households this will benefit?

I wonder whether the support for heat pumps is actually a step back in support. To the majority on the grid, heat pumps are generally seven times the cost of conventional gas boilers. The £5,000 grant appears less than the help that is currently provided through the RHI. Granted that the RHI is being scrapped in April, and that it pays back over a longer timeframe, is the Minister convinced that the Government are doing enough to defray the huge up-front costs for consumers? The Government say that they would like to see conventional gas boilers no longer included in new house builds from 2035. Can the Minister show more commitment? Why cannot the Government bring in a ban on all new conventional boilers being available after at least 2035? This would parallel the challenges and ban on the production of new petrol and diesel cars from 2030.

The hydrogen sector would certainly welcome the commitment towards hydrogen-ready boilers, that all quotes for any replacement or new boiler must include one for hydrogen-ready boilers. While they are still more expensive than conventional boilers, they certainly do not carry the huge price disadvantage of heat pumps. The Statement does not add any additional funding to the £240 million in the hydrogen strategy, which will not be made available until 2023. How do the Government plan to kick-start green hydrogen production at home when, to date, all orders for green hydrogen technology have been made overseas?

Hydrogen would certainly benefit the transport sector in the long term as well. In the meantime, I welcome the promotion of electric vehicles. Can the Minister outline the Government’s plan to help make electric cars more affordable for all consumers? I also welcome the emphasis on investments across the regions, most notably the HyNet cluster in the north-west, and stress to the Minister the need to engage effectively with metro mayors and local authorities, who are all eager to promote the net-zero agenda.

The Government used to insist that they were technology-neutral in their policies. They then moved to the scattergun approach of the Prime Minister’s Ten Point Plan without setting out a comprehensive plan across the economy. As they now fill in the gaps left, are the Government moving in this Statement from a scattergun policy towards picking winners and losers? This Statement, welcome as it is, resembles a pick ’n’ mix of support—so much has been omitted. I will leave it to other speakers to raise those many areas. However, the Government must go over to the touchline and check the monitor of reality. The Statement says that the Government will “gradually” move away from fossil fuels. “Gradually” is too slow. Action is needed now, and the Government must immediately cease the contradiction of providing support for fossil fuels both in the UK and overseas. The Government have said—the Statement repeats it—that the conference needs to be “a turning point for humanity.” What has been taking the Government so long? The earth is on the edge across the globe, and the Government must act as if they really believe it.

[Lord Oates (LD)]

My Lords, I welcome the opportunity to respond to the Statement on these important and extensive documents, and I hope that the Government will provide time at an early opportunity when the House can have a full debate on the full detail that is included in the hundreds of pages that have been published.

I know that in the past when I have responded to publications, the Minister has sometimes been offended that I have not been as effusive in my praise as he thought was merited. As I know him to be a sensitive soul, I will try to start off as positively as I can. There is merit in the fact that, after so long, we actually have the documents at last. There is merit in the fact that the Government remain committed to our climate change goals, and we should give thanks that climate has not become the political dividing line that it has in other countries. I also welcome the decision to introduce a zero-emissions vehicle mandate and a new target for greening all electricity generation. However, I am afraid that, after that, I am running out of things to credit the Minister and the Government with.

The Treasury tells us in the Net Zero Review:

“The transition has implications for current and future taxpayers”—


but it does not tell us what they are. It provides no indication of how the black hole arising from declining fuel duty revenues will be replaced. It says only that

“the government may need to consider changes to existing taxes and new sources of revenue”.

Likewise, in addressing the crucial issue of carbon leakage, which is critical to the viability of our industries as we decarbonise, the Treasury blandly tells us:

“Further work is required”


and that

“a case for conducting a formal call for evidence may emerge.”

There is nothing in the document about using the financial regulatory system to curb the financing of new and dangerous fossil fuel exploration and exploitation, and there is nothing about net-zero requirements on all planning decisions. The complacency is breath-taking. The Treasury clearly thinks that the climate emergency is a distant threat rather than the clear and present danger that looms before all of us.

The heat and buildings strategy is even more devastatingly unambitious. The Government propose a grant scheme that they estimate will deliver 90,000 heat pumps per year, and they convert what was assumed to be a mandate to end new conventional boiler installations into an aspiration. Every year, something in the order of 1.2 million new gas boilers are installed. The Government’s target for heat pumps will reduce that number to just over 1.1 million new gas boilers installed every year. Bearing in mind that they have a lifespan of about 15 to 20 years, it is immediately apparent that we will be building in a long legacy of fossil fuel heating year after year. If that was not bad enough, 90,000 units will not provide the scale to drive down costs and incentivise installers to retrain in heat pump installation, so the Government’s hopes of falling prices driving demand will remain a fantasy.

However, worse than all that, there is no credible plan to upgrade the energy efficiency of our existing homes, which should be the very first priority. If we are going to upgrade the millions of homes the Government say we need to, we have to rapidly scale up our capacity so that we have the skills base to deliver at least 1 million home upgrades a year. We are nowhere near that yet and there is no plan here to achieve that. Installing heat pumps in homes that are leaking energy makes no sense at all, but the Government offer no route to tackling these problems.

What about the money? I would ask what happened to the £9.2 billion promised for energy efficiency in the Conservative Party manifesto, had it not become abundantly clear by now that a promise in that document now seems the best indicator of what will not happen rather than what will. However, it is clear that, after the green homes grant scheme ended, we are now being given a promise of less money over a longer period of time, and it seems to achieve less than we were promised.

So, while I welcome the continuing ambitions of the Government, I remind the Minister that, some months back, he acknowledged in response to questions that the Government needed not only ambitious 2050 targets but a credible short-term action plan to get there. Regrettably, this is not it.

Energy White Paper

Debate between Lord Grantchester and Lord Oates

Wednesday 16th December 2020 Lords Chamber

[Lord Grantchester (Lab)]

My Lords, for those watching on catch-up TV, this is the Government’s White Paper introduced in the Commons on Monday. I start by congratulating the Minister on bringing forward this energy White Paper in 2020. His department has indeed done well, after all this time, to fulfil frustrated expectations, and we recognise its importance.

As Emma Pinchbeck of Energy UK says:

“Today’s White Paper is a hugely significant step in the transformation of our energy system”.


The White Paper sets out a historic suite of rhetoric, hyperbole and slogans, but it does have many of the good intentions needed to take on the climate challenge and look to the horizon of energy objectives by building positive, realistic steps, being bold and aggressive, and providing platforms for future development to fill the gaps in our abilities at the moment. But it needs to deliver good solutions in a fair and honest way, sensitive to the needs of everyone across all our communities. In this regard, is the Minister satisfied that the White Paper pays enough regard to the rural aspects of energy and is sufficiently rural-proofed where infrastructure and access to power are limited?

We can be pleased with much that is included here as a necessary first next step. It fills some of the holes in the scattergun 10-point environment plan, and points towards the many more strategies needed in 2020 but which can now come forward only in 2021.

We welcome the support needed to help vulnerable and fuel-poor households over the next six years and the plans for a simpler method of switching energy suppliers through smarter applications. The biggest challenge is to get the buy-in and behavioural change needed so that people do not feel disadvantaged and neglected. When will the Government publish their fuel poverty strategy?

The key elements of the future energy mix set out here are that of at least 30% wind and a doubling of nuclear, with further investments in new technology developments and decarbonisation. Much will depend on the integration of technologies—for example, carbon capture and storage alongside hydrogen power development—but the £1 billion promise of a cluster of carbon capture and storage solutions merely replaces the error-strewn cutbacks of previous Conservative Governments. It is good that the Government learn from their mistakes, even if they may learn slowly.

Much comment has been generated by announcements concerning the nuclear sector. The announcements last week, followed by the White Paper details, will go a long way towards helping relations with the French in the Government’s present negotiations, especially concerning EDF and Sizewell C in Suffolk. This will secure a dependable baseload of energy for London and the south-east. However, the Government have yet to state their preferred funding model, with further delays before progress can be made. With the lack of appetite to pay for another nuclear plant, is the Minister concerned that the pace of change needed points rather more to the development of small modular reactors through the demonstrator advanced modular reactor—AMR—to unlock the potential £300 million private sector match funding? SMRs have the advantage of being factory reproduced, being positioned adjacent to cities of 400,000 to 500,000 and leading to many more UK-based jobs. The agility of rolling out seven of them would match one Sizewell C, with far less disruption to coastal communities. They would also be far less vulnerable to attack or cyberintervention.

The energy White Paper is clearly deficient in the creation of jobs and the retraining and reskilling that would be required. The widespread view is that the £160 million investment in ports is merely a drop in the ocean compared with the scale of the need. Has the Minister’s department a proper plan to develop the new skills required for those in fossil fuel industries? Will the department work with trade unions and colleges to develop this plan with the Department for Education?

This integration and companion development of technologies also points to a far more ambitious plan for wind, CCS and hydrogen to work alongside each other. The ambition must be to meet the challenges of heating the nation’s homes and buildings with hydrogen gas. Years ago, the Government abandoned the zero-carbon home standard due in 2016 and still there is no date or plan for new homes to be zero-carbon. Today, 80% of the buildings that will still be standing in 2050 have already been built. Yet the Government have still to come forward with comprehensive retrofit plans for insulation and heat conversions. Does the Minister commit to working with local authorities to develop a comprehensive street-by-street plan to be published next year?

It is disappointing that the White Paper continues to ignore tidal power, after the very useful Hendry review, and the jobs it would create. The White Paper continues also to underplay the clear need for energy storage development, long regarded as a solution for intermittent renewable generation. Yet again, it continues to ignore the call for the inclusion of international aviation and shipping in the targets, as recommended by the Committee on Climate Change.

With a clear need for a zero-carbon power sector by 2035, and for carbon pricing, there is still a lack of clarity to the plans needing to be implemented in merely a few weeks’ time in the new UK emissions trading scheme, due to start in January.

The Government need to recognise the need for a series of right decisions to be taken more quickly. Monday’s Question on the advice of the Committee on Climate Change highlighted how, already, the Government’s nationally determined contribution is out of date. With the delays in publication, this White Paper should now meet the fourth and fifth carbon budgets, but the pace of change needed is accelerating. The remorseless warming of the climate continued into 2020—this year—regardless of the world economy suffering the shock and falls in economic activity following the pandemic. Regrettably, the White Paper is nowhere near the requirement set by the Climate on Climate Change to meet the sixth carbon budget. I finish by asking again: what plans do the Government have to fill in the gap between this White Paper and the sixth carbon budget? Those plans will be needed for COP 26.

[Lord Oates (LD) [V]]

My Lords, I welcome the ambition and vision set out in the White Paper; however, as the Minister will be aware, ambition and vision are necessary but not sufficient conditions for success. What we need now is attention to detail and practical, credible implementation plans. Sadly, the White Paper lacks them.

First, while it rightly emphasises the need to secure a fair deal for consumers, the White Paper fails to set out credible means of doing so. Can the Minister tell us why the paper envisages the cost of decarbonising our energy system continuing to be piled on to electricity bills? It should be borne fairly across the economy, because placing the transition costs on bills is both highly regressive and counterproductive if we want, as the paper rightly suggests, to shift from gas use to electricity. Will the Government correct this omission and act to reduce electricity bills by shifting this burden?

Secondly, the White Paper places an emphasis on expanding offshore wind generation. I welcome that, but there is no reference in the Statement to onshore wind generation, one of the cheapest forms of generation available, and it is referred to only fleetingly in the paper. Can the Minister explain this?

Thirdly, nuclear continues as a government obsession, even though it is now ruinously expensive compared with non-carbon sources of energy. The physical engineering requirements for nuclear have always been extremely challenging, but the financial engineering required is now impossible. And yet we continue, despite the fact that, over 60 years since the UK’s civil nuclear programme began, we still have no means of safe, long-term storage of high-level nuclear waste—waste that is deadly for longer than any human civilisation has ever survived. How can the Minister justify such an economically and morally illiterate policy?

Fourthly, the White Paper envisages 5 gigawatts of hydrogen capacity by 2030. Can the Minister clarify whether this is green or blue hydrogen CCUS and tell us who will assume long-term liability for CO₂ storage under the Government’s plans for carbon capture and storage? Does not this liability issue further underline why our focus should be on green hydrogen? Does the Minister recognise that we need to invest heavily now in contracts for difference to further drive down the rapidly reducing costs of green hydrogen in the way that was done previously on wind generation?

Fifthly, the Government have relied in their Statement on the ability of home energy efficiency upgrades to reduce domestic energy bills. The Liberal Democrats agree that energy efficiency measures are critical to tackling emissions and reducing bills, but this is another area where government action falls short of its rhetoric. The Government told us that the Green Homes Grant would deliver 600,000 home energy efficiency upgrades by the original end date in March next year. It is likely to be a fraction of that. Can the Minister tell us the actual numbers that will be delivered by that date?

My noble friend Lord Stunell, a former DCLG Minister with huge experience in this area, could have told the Government that this would be the case. In fact, he did tell the Government—repeatedly. Does the Minister not recognise that there is no hope of upgrading the 28 million homes that need it unless we have a long-term investment programme that provides industry with the confidence to invest in the recruitment and skills training required?

Finally, will he agree to consult my noble friends Lord Stunell and Lord Foster of Bath, who, as former Ministers, both have extensive experience in this area and could help the Government prevent mistakes like this reoccurring in the future?