Great British Energy Bill

Lord Hamilton of Epsom Excerpts

Committee stage
Monday 13th January 2025 Lords Chamber

There is also other legislation, such as the Proceeds of Crime Act. Recently, a brave Uighur woman called Rahima Mahmut, who has spoken at meetings here in your Lordships’ House, gave evidence about the case that the Uighur community won in the Court of Appeal in the UK. They were able to demonstrate that goods they had identified had been made by slave labour. At what risk are we placing companies that will be trading, because we have turned a blind eye to the realities of what is happening on the ground? I hope that, when the Minister responds to these amendments, he will be able to answer that. Certainly, from my point of view, if these amendments come forward again at Report, I will readily support them.

[Lord Hamilton of Epsom (Con)]

My Lords, it is always a great pleasure to follow the noble Lord, Lord Alton. We have to admire his doggedness in bringing up the question of slave labour in China. As we are totally dependent on so many different exports from China to this country, it is something that we have to bear in mind all the time. I wish him the best with his endeavours, although I do not hold out an awful lot of hope, as the problem is that China produces everything so much cheaper than anywhere else.

I support my noble friend Lord Petitgas in his amendment. He has outlined the real problem of investing billions—let us face it, it is billions—of pounds of taxpayers’ money in energy projects. The problem is that the only ones that will become available for the taxpayer, and for the Minister to make his decisions upon, will be projects rejected by the private sector.

The fact is that the people who invest in renewable energy are not the people who particularly believe in renewable energy; they believe in making money. The whole technique when putting up a wind farm or a wind turbine is that you test the amount of wind, look at the feed-in tariff from the consumer, do your cash-flow adjustments from there, borrow the money and put up the turbine.

My Amendment 85A is to do with the whole question of emissions, about which I am very worried. My amendment says that there should be an annual report,

“which must include information on carbon emissions resulting from each of”

Great British Energy’s

“investments in renewable energy technology”.

We have reached the point where we have to look much more closely at the whole question of renewable energy. People think that, if you put up a wind turbine and the wind blows, that is all free, and that you do not create any carbon emissions in putting up a wind turbine. I am afraid that is not true: you do. You create a tremendous carbon footprint when you create the steel. I gather we cannot make it in this country any more, so we have to import it, and there is an increase in carbon emissions when bringing it in. At the end of the day, a serious carbon imprint is involved in putting up a wind turbine. The great advantage of a wind turbine is that, once you have got it up, from thereon in the chances of creating a carbon imprint are rather less.

The same applies to solar panels. As we have discussed, solar panels are highly likely to be manufactured in China, and they have to be transported here. The Chinese are creating massive carbon emissions with their industry, which we basically exported to them. When we talk about carbon emissions, we are talking about global emissions; we are not talking about individual emissions here.

My real problem is with growing crops and trees which then get burned. Because these are a renewable resource, this is then taken as a renewable source of energy. I have a slight problem with that. Take the very extreme example of oilseed rape, which is grown in this country. When you come to think of it, you create a carbon imprint when the tractor tills the field and sows the crop. I am not an expert in the growing of oilseed rape, but I suspect it needs spraying and fertilising and so forth. All of this adds to the carbon impact. The seeds that come off oilseed rape are then compressed to produce a form of vegetable oil, which is then refined. All of this has a carbon footprint. Eventually, it is burned. I gather that it is proposed to be used for aircraft as a substitute for aviation fuel. When you burn aviation fuel, you are creating a carbon imprint.

This does not affect national Governments quite so much because the whole business of the carbon imprint of aviation is not counted against the targets for a particular country. The problem of CO₂, as we know, is a global problem. If we want to clean up the planet generally, we cannot ignore aviation.

Many of us also have quite serious worries about Drax power station. For a long time, it was importing the offcuts of North America’s timber industry to burn at the power station. There is obviously a serious carbon imprint involved in cutting down trees, stripping the unwanted bits off them and loading that on to ships, which bring it over the Atlantic to this country. Have we really taken into account the CO₂ emissions this whole process at Drax power station creates? It is rumoured that Drax has moved on to saying that it can take all this bark and stuff and turn it into aviation fuel. That will have the same problems as using oilseed rape. There is a massive carbon imprint all the way through.

We are trying to talk about reducing the carbon imprint, and it strikes me that with some forms of renewables we are increasing the carbon imprint unnecessarily. Surely what we should be doing is looking at hydrogen and seeing if we can get that down to a more manageable cost. That could be used in its compressed form in aircraft, heavy vehicles and so forth. The great advantage of hydrogen is that, when it is burned, it produces no carbon. I worry that, although we think we are doing something to help the planet, we are not. If we take that extreme example and go on looking for aviation fuel from oilseed rape in perpetuity, then, in the name of some renewable crop, we will be having very large carbon emissions right the way through the process, in perpetuity.

We have to look at the whole question of renewable energy and what form it takes. We need an audit which tells us how much carbon imprint is being made by producing fuel in this way, whichever fuel it is, so that we can make a more objective judgment about whether this is helping the climate and helping to meet CO₂ and net-zero targets, or doing the precise opposite.

[Lord Bruce of Bennachie (LD)]

My Lords, I rise briefly to speak to Amendment 60, and also to Amendment 74, tabled by the noble Lord, Lord Berkeley. Amendment 60 relates to the Government’s projection of 650,000 jobs. This is to be achieved over five years, when we achieve net zero. It is a very ambitious target. I hope it can be achieved, but there are questions related to where those jobs will come from, whether we have the skills and whether jobs will be lost in the process as well.

I make no secret of the fact that I live in the north-east of Scotland and I represented the constituency of Gordon for 32 years. I have monitored the oil and gas industry from its very early days in the North Sea right through to the present, and the massive contribution it has made to the UK economy throughout that time—not just in terms of money but in terms of technology, the balance of payments and skills. I accept that the Government have said that we will continue to operate our North Sea oil and gas fields and that we will continue to have oil and gas in the mix, to and through net zero.

My basic concern on jobs is that we do not expand jobs in renewables at the expense of the naturally declining jobs in oil and gas: that we do not accelerate that process, especially as we do not quite know how fast we can achieve this creation of jobs. We do know right now that we have at least 200,000 people employed directly in the oil and gas industry, and many more in the supply chain, which, of course, is also part of the supply chain for the renewables sector. Not all of the skills are directly transferable, but many of them are. Provided that the transition is orderly, just and sensible, it will be possible for the decline in the oil and gas industry to be orderly while we expand the renewables sector and hopefully deliver the jobs that the Government are looking for.

I was surprised that, when I suggested that we were going to have oil and gas in the mix to and through net zero—which all projections from all sources say we will—there were people who thought we should just shut down our oil and gas now. There are people who say that. When I asked, “Why would you do that?”, I was told, “Well, you can set an example to the world. Yes, we will need oil and gas, but plenty of other people produce it, so we will just import it”. So we close down our own industry and then import it from other people—further away, with a higher carbon footprint and less efficient—so undermining UK technology and expertise. So my plea is: let us have the jobs, but not at the expense of existing jobs. Let us have an orderly transition that maximises them both.

I was at an awards ceremony for the industry in Aberdeen last month, and what impressed me was the wonderful array of bright, young people engaged in the sector who were very committed to the transition to net zero. But they were equally aware that oil and gas were part of the transition and that many of the supply-chain companies were now investing in technology relevant to the industry, including subsea connections, cabling and electronics. A lot of the things that have been developed in the North Sea are transferable to oil and gas, and that is a welcome factor; but let us not accelerate the loss of jobs while we build the new ones up. That is the simple point that I wish to make.

Turning to the amendment of the noble Lord, Lord Berkeley, I am in the same situation as him, so I declare an interest. I live in a village in Aberdeenshire where we do not have gas. In the dying days of the nationalised British Gas, I was involved in a fairly high-profile argument with the then chair of British Gas, Sir Denis Rooke, making the point that he and his company, in the run-up to privatisation, were not interested in extending the gas network. I had some success: I sort of shamed him into it and managed to get some substantial extensions in the dying days of British Gas in my own constituency. I was also right that, once British Gas was privatised, there was no more extension of the gas network beyond what already existed. Those were the days when everybody wanted gas, and gas was the option.

For many parts of the country, however, gas is not an option and the main alternative is oil. The House of Commons produced an interesting report at the end of last year, which I had a look at. I point out to the noble Lord, Lord Berkeley, that it says that the number of households off the gas grid is 4.5 million—a higher figure than his. I do not know which is right, but it is quite a lot.

It then did an analysis of the proportion of households that use oil for central heating. In England and Wales, it was 3.5% in total; in Scotland, it was 5.1%; and, in Northern Ireland, it was 49.5%. I suggest that that is an issue. The other point—and, again, I thank the House of Commons Library for this—is that it gave a constituency analysis. The overall figure does not quite focus on some of the communities that are much more dependent—ones that I know well—so I picked out three constituencies to give the House an example. The highest was Caithness and Sutherland, where 31% of households have oil central heating. The second-highest was my former constituency of Gordon and Buchan, at 26%, while the neighbouring constituency of West Aberdeenshire and Kincardine was 22%.

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[The Minister of State, Department for Energy Security and Net Zero (Lord Hunt of Kings Heath) (Lab)]

My Lords, I am very grateful to the noble Earl, Lord Russell, because it seems to me that we have “enjoyed” what essentially has been a rerun of previous debates, with Second Reading-type speeches, when the key concern, as the noble Baroness, Lady Noakes, suggests, is Clause 6 and the power of direction.

So I do want to come back to the intent of Clause 6. First, we want GBE to be operationally independent. A founding principle of GBE is that it should be independent as far as possible in executing its functions. The Bill is focused on making the minimum necessary provisions to establish the company. At Second Reading, some noble Lords opposite accused the Government of drafting the Bill in a way that meant we would use Clause 6 to micromanage GBE. We have always maintained, as the noble Baroness, Lady Noakes, rightly pointed out, that this is a backstop provision, yet now noble Lords opposite seek to micromanage both the Government and GBE by these various amendments, most of the issues in which we have already debated.

Secondly, we have set up GBE as a company for long-term success and as an enduring institution. Some of the amendments, which include short-term targets, would be wholly inappropriate in legislation. Indeed, it would be more appropriate for the Secretary of State to set priorities via the statement of strategic priorities in Clause 5, of course within the framework of Clause 3.

My third point is the intended use of the power in Clause 6. Let me make it absolutely clear, as I have done in the past, that the power to give directions to GBE is intended only for urgent or unforeseen circumstances. These amendments would widen the intention unnecessarily. The noble Baroness, Lady Noakes, is right about the relationship between government and such organisations. She and I have both had experience in relation to the NHS; it is a slightly different set-up, but we are talking about the relationship between a government department, the Secretary of State and public bodies. She will know that there the Secretary of State has always had a power of direction, but I think it has had to be used only a handful of times. The reason of course is that chief execs of NHS bodies understand that the Secretary of State is able to set the overall direction of the National Health Service without having to call on what is essentially a backstop power.

My fourth point on a number of the amendments is that the existing reporting requirements are set out in the Bill, which makes provision for GBE to produce and publish an annual report and accounts. They will undergo external audit; they will contain information on the activity of the company over the year; and they will also include reporting in line with the recommendations of the Task Force on Climate-Related Financial Disclosures. GBE may also make information available through reporting, such as when projects or investments are announced. We think that that is sufficient accountability.

On some points raised by noble Lords on Amendment 59, we believe that in an unstable world, the only way to guarantee our energy security and protect bill payers permanently is to speed up the transition from fossil fuels to home-grown clean energy. This is consistent with advice from the Climate Change Committee and it is why we have set an ambitious target to reach clean power by 2030, which the independent NESO considers achievable. We believe that the key role of BGE is focused on driving forward deployment.

I say to the noble Viscount, Lord Trenchard, and the noble Lord, Lord Howell, that I agree with them on the importance of nuclear power. But I say to the noble Lord, Lord Howell, that this is the second time he has tried to divert the Government from supporting Sizewell C. I say to him that this is a massive development and we are moving to final investment decisions over the next few months. It will produce 3.2 gigawatts, it is a replica of Hinkley Point C, 80% above ground, and we have the regulated asset-based approach which will bring in private sector expertise and disciplines. So, in agreeing with him on the importance of small modular reactors and advanced nuclear reactors, we should not underestimate the potential of Sizewell C—and indeed Hinkley Point C when it comes on line, I hope at the end of this decade.

Of course I take the points that data centres will need a lot of electricity, that grid capacity issues are vital and that we need more investment in the grid. I also take the point made by the noble Lord, Lord Berkeley of Knighton, about the beauty, or not, of pylons. I of course accept the point he makes, but we are going to have to have more pylons. None the less, they will have to go through vigorous planning and meet environmental protection requirements.

On jobs and Amendment 60, GBE aims to revitalise the UK’s industrial areas and we think that, by situating its headquarters in Aberdeenshire—which I am sure the noble Lord, Lord Bruce, will welcome—it will be able to leverage the skilled workforce available there and throughout Scotland. More broadly, we have set up the Office for Clean Energy Jobs to promote clean energy employment and focus on skills development and training in the core energy and net-zero sectors.

Amendments 61 and 76 concern supply chains, which are of course very important indeed. GBE’s founding statement has already made it clear that my department expects the company to prioritise the development of supply chains and to report to government on progress. To come to the noble Lord, Lord Alton, of course we have debated these matters over the years and I absolutely understand where he is coming from. But it will be for GBE as an operationally independent company to determine the projects and technologies it chooses to invest in, in accordance with its objectives. It will be expected to respect human rights under the Human Rights Act 1998 and it will be subject to the provisions on forced labour and supply chains, both under the Modern Slavery Act 2015 and the Procurement Act 2023.

We recently set out our Clean Power 2030 Action Plan, which requires significant deployment of solar electricity—noble Lords are right on that. Developing sustainable, diverse and resilient solar supply chains, free from forced labour, is important for the Government. As the noble Lord, Lord Alton, knows, we also have the Solar Taskforce, which will be looking at these matters.

On Amendment 63 on the cost of fulfilling the company’s strategic objectives, I can assure the noble Lord, Lord Petitgas, that the Secretary of State will set ambitious but achievable objectives for Great British Energy that can be achieved through the funding envelope. GBE will be backed, as noble Lords will know, by a capitalisation of £8.3 billion over this Parliament, and its objective is to crowd in additional private sector investment. However, it will be subject to HM Treasury’s value-for-money guidelines and, like existing publicly financed institutions, its investments will be subject to safeguards and risk assessments.

On Amendments 69, 70 and 85A, on the impact on carbon emissions of GBE’s investments, the company is committed to advancing the deployment of clean energy to aid the Government’s goal of decarbonising our electricity system by 2030. The amendments would require a report to be produced for every investment made by Great British Energy, which seems neither proportionate nor effective. On importing energy into the UK, we acknowledge that reliance on imported fossil fuels presents economic and security risks, as evidenced by the situation following the Russian invasion of Ukraine. The best response is to increase domestic power generation through renewable energy sources and nuclear power, while simultaneously transitioning to more sustainable methods for heating homes, fuelling vehicles and powering industry. These can substantially mitigate our exposure to volatile international markets and energy price fluctuations. We see GBE as being at the heart of those efforts.

[Lord Hamilton of Epsom (Con)]

Does the Minister accept, however, that converting oilseed rape into aviation fuel does not produce clean energy?

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[Viscount Trenchard (Con)]

My Lords, I congratulate my noble friend on his clear and well-argued introduction of his amendments in this group, to most of which I have added my name. As he said, the taxpayer must be able to see what the Secretary of State is doing with £8.3 billion of his money. State-owned companies do not have a great track record in realising a strong, positive return on their invested assets.

Unless GBE does that, it is likely to have a negative, rather than a positive, effect on wholesale electricity prices. Amendment 62 will ensure transparency on that. GBE intends to invest in and de-risk projects involving new clean energy technologies. It is clearly necessary to have full transparency as to the rate of return on each of the investments that GBE achieves. The amendment would require GBE to consider every single investment it makes in terms of the impact that it will have on electricity prices in the future. Does the Minister not agree that this would be a good discipline for GBE? Amendment 64 would ensure that we have such transparency on the whole portfolio of GBE’s investments across the board.

Amendment 71 contains a requirement for a cost-benefit analysis of the price of electricity generated by each of its investments compared with that of electricity generated by gas. We certainly need to know that. Many of us think that we are already saddling the consumer and industry with unnecessarily expensive electricity. The grid is always bound to draw electricity from renewable sources when they are available, in priority to gas. This means that gas power stations are constantly being fired up and down, and are seldom operated at full capacity. This distorts the price of gas, which in turn distorts the price of electricity because gas power stations produce much cheaper electricity when operated consistently at or near full capacity than they do under the current modus operandi. The price of gas used in the cost-benefit analysis required by this amendment ought to be the price achievable from constant operation rather than the distorted price resulting from prioritisation of renewable sources.

I also refer briefly to Amendment 75. It is clear that the main purpose of GBE’s collaboration with the Crown Estate is to build a large number of offshore wind farms in coastal waters. This amendment will require GBE to consider carefully the environmental impact of its activities on marine life and inshore fisheries, among others.

The Government have made much of their determination to cut energy bills. Their refusal to accept Amendment 71 and other amendments would show that they are less than certain that their plans will result in lower energy prices. I look forward to hearing the Minister’s response.

[Lord Hamilton of Epsom (Con)]

My Lords, I was speaking to the noble Lord, Lord Mandelson, the other day. This was when he was chasing around after the chancellorship of Oxford University. I said to him that I thought he would serve his country much better in Washington than in Oxford. I congratulate him on becoming our ambassador in Washington. I think he will do a very good job.

I mention the noble Lord, Lord Mandelson, because a quote attributed to him is that, “When politicians try to pick winners, the losers invariably find the politicians”. People should recognise that the track record of politicians in trying to pick winners is absolutely abysmal. Invariably, political considerations and jobs come into it; profitability is the last thing that is ever considered.

Therefore, it is essential that we support these amendments. They are asking for some degree of accountability for Great British Energy, which will have billions of taxpayers’ money. If we are not very careful, it will go to all the projects that have been rejected by the private sector as not being viable and will invariably lose money. That should be of great concern to us all because it discredits government and wastes taxpayers’ money.

[Lord Teverson (LD)]

My Lords, can I make a comment on that? I am a trustee of the green share in the Green Investment Bank, which was privatised by the Tories after it was set up by the coalition Government. It was a very profitable operation, although it was fully publicly owned. The issue was that it was almost too conservative in terms of making money under Treasury rules, so it did not make as much of a difference—it did make a difference—as it should have done. One of the risks is that GB Energy could be too conservative because the Treasury is too close to it and will not let it do the innovation that needs to happen for decarbonisation to take place by 2030.

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[Lord Bellingham (Con)]

My Lords, I support my noble friend Lord Fuller, who put forward a very convincing argument, supported by my noble friend Lord Roborough.

I will make three very brief points. First, surely one of the key lessons of the Ukraine crisis concerns food security. That means taking very seriously our attitude to grade 1 agricultural land. I do not agree with the noble Baroness that this is not the right mechanism for trying to entrench the value of that land. This is a narrow amendment that seeks to put the responsibility on Great British Energy, which is, after all, being created by statute. I can think of no better way of trying to curtail the use of this land in ways that undermine food security.

Secondly, I hope the Minister will find time to comment on the point that my noble friend made on tenant farmers. If a landowner, large or small, decides to embark on a solar project, that is something that he has the right to apply for: it is his land and, arguably, farmers are being encouraged to diversify. If there is a tenant on that land—for example, a family who might well have an expectation to go on farming that land for at least one more generation, maybe for 40 or 50 years—under the 1948 Act, the farmer in question cannot be kicked out if the landowner wants the land for farming. However, if the land will be allocated for other uses and permission is given for a solar array on that land, the tenant has no choice but to vacate his farming operation.

Of course, there will be issues with compensation, but we are talking about a situation that could be incredibly damaging and unfair to a group of farmers in this country. It is a large group of farmers, who are already under a lot of pressure because of other government policies. I urge the Minister to look specifically at that point. If he cannot respond to it today, could he ensure that he writes to Ministers in other departments to clarify it?

Finally, the Government have been quite cavalier in appreciating and valuing local opinion. I will give an example from Norfolk. I declare my interest as a landowner in Norfolk, although what I will discuss is nowhere near where I live. There is a group of solar array applications east of Swaffham on the A47. I think there are five sites—my noble friend Lord Fuller will correct me if I am wrong—amounting to 6,000 acres and straddling about four villages east of Swaffham. There is a huge amount of local opposition. Does the Minister think it right that these people should be ignored? Would it not be far better if the applications went through a local planning process? Indeed, there would be an appeal—but, if so, the local residents would obviously have the chance to put their point of view. Currently, there is a feeling that, in the interests of trying to get these key infrastructure projects through, local people are being ignored and cast to one side.

With those few remarks, I support my noble friends Lord Fuller and Lord Roborough, and wish them well with their amendments.

[Lord Hamilton of Epsom (Con)]

My Lords, first, I assure the noble Baroness, Lady Young, that I will not speak for 12 and a half minutes.

As I have established, I know a little about agriculture but not an awful lot. Something that occurred to me was that if you want to put up a massive solar plant covering a large area of agricultural land, you want low, sloping, south-facing land. That strikes me as precisely the same as the thing you want to grow crops on, so there is a direct conflict here between food production and solar panels. I point that out to the Committee because this is a vexed problem to which there is no easy solution.

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[Lord Teverson (LD)]

I understand the issue of public expenditure, travel and all that, but the noble Earl specifically names a culprit in his amendment. That is what the Committee looks at and what it tries to get into Bills, so the amendment specifically aims at that organisation rather than the broader canvas.

[Lord Hamilton of Epsom (Con)]

My Lords, I support these amendments. I have certain reservations about my noble friend Lady Bloomfield’s Amendment 78, because it assumes these investments will make money. I have a bit of a problem with that. The real difficulty, as we have discussed, is that all the low-hanging fruit when it comes to investment in renewable energy has already been picked by the private sector. It does this quite simply by calculating a return on guaranteed income. Therefore, what worries me is that Great British Energy will be left picking up the bits that other people do not want to touch. The chances of it making money are probably quite small. Of course, it will have to count off the losses against the profits, so you need to have something at the end of the day. I know that the noble Lord, Lord Teverson, has achieved something little short of miraculous by investing other people’s money and actually making money, but that is an exception rather than the rule. The chances of Great British Energy squandering billions of pounds of taxpayers’ money are rather higher than it making any profits for anybody.

Clearly, accountability is very important when it comes to these sorts of sums. We should do everything we can to ensure that taxpayers’ money is looked after in the best way possible. Everybody should have great reservations about believing—to come back to the point I made earlier—that politicians are able to pick winners. The record on this has been absolutely abysmal. The chances of more money being lost than made are, I am afraid, very great indeed.

[Baroness Bloomfield of Hinton Waldrist (Con)]

My Lords, I urge the Minister to give serious consideration to the amendments in this group. They are designed not only to strengthen the accountability and transparency of Great British Energy but to ensure that the promises made to the British public, particularly on national security and economic prudence, are fully delivered. During the last election, the party opposite made numerous promises to the British people, including a commitment that Great British Energy would first and foremost protect and benefit the British people. At the same time, we must remember that this is not just about creating another energy company but about establishing a cornerstone of national resilience—an entity that must operate with the highest standards of responsibility, transparency and accountability to the taxpayers who are entrusting it with significant public funds.

My noble friends’ amendments reflect three core principles: fiscal restraint, operational transparency and the safeguarding of national interests. As we consider these amendments, whether on reinvesting profits into the company, ensuring strict investment criteria or introducing greater scrutiny of foreign involvement, I urge us to draw from the examples set by the erstwhile UK Infrastructure Bank. When the bank was established, it was supported by clear frameworks for accountability, transparency and rigorous oversight, ensuring that taxpayer money was spent efficiently and aligned with national priorities. Let us learn from this experience and ensure that Great British Energy, in its critical role in our national energy strategy, is similarly held to account.

We must remember that the future of energy is not just about ensuring supply but about safeguarding our economy, our security and the well-being of future generations. By taking these steps, we will ensure that Great British Energy not only is accountable to the public but operates with the highest standards of governance, efficiency and integrity. The amendments before us are crucial to delivering that vision and I commend them to your Lordships, but at this stage I beg leave to withdraw my amendment.

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[Viscount Trenchard (Con)]

My Lords, although I have already spoken extensively about the need for GBE to pay much more attention to nuclear power, I am glad that we now have a separate nuclear group of amendments. My Amendment 85B requires GBE to consult with GBN prior to investing in nuclear energy projects. A reader of the Bill and of the Explanatory Notes would probably take the view that it is not the Government’s intention that GBE should have any involvement with nuclear power. The word “nuclear” does not occur in the Bill and occurs only once in the Explanatory Notes, which inform the reader that the Secretary of State’s powers to give directions to GBE are consistent with the powers the Government have to direct comparable institutions such as GBN. Does the Minister agree that it is a bit of a stretch to argue that GBE and GBN are comparable institutions?

We have been told that GBE will be capitalised with £8.2 billion for the purposes of making investments in green energy. As I pointed out at Second Reading, a look at GBN’s accounts shows that it had only £342 million on its balance sheet at 31 March 2023. How can these two bodies be regarded as comparable?

On 17 December, the Minister told the Committee that

“we also need nuclear as an essential baseload for our energy generation, and gas as the flexible energy generation which you can turn on and off”.—[Official Report, 17/12/24; col. 177.]

I will make two observations on the Minister’s statement. First, to use gas power stations only as a balancing item for renewable energy is a very expensive way of using them, because they are constantly being fired up or down. Gas’s role in electricity pricing also distorts the price upwards, in a manner most damaging to the consumer’s interests.

I will not comment on CCUS, except to say that if only the Government would consider a funding commitment for nuclear of even one-tenth of that which they have made for CCUS—£21.7 billion—it would make an enormous difference to the prospects of British nuclear energy projects becoming viable and attracting funding from the private sector.

I was happy to hear the Minister confirm that we need nuclear as an essential baseload for our energy generation, but he has not convinced me that he recognises the urgent need to prioritise new nuclear projects now. He also said:

“Great British Energy and Great British Nuclear are already talking very closely together, and he can be assured that this will continue”.—[Official Report, 17/12/24; col. 209.]


This may be true, but the Government’s intention seems to be for GBE to concentrate initially on its clean energy superpower mission. The statement after the first energy mission board did not even mention nuclear at all. The Minister said at the Peers’ drop-in session before Second Reading that he did not expect GBE to invest in nuclear projects in its early years, and, as I mentioned in an earlier debate, he did not answer the noble Baroness, Lady Winterton, clearly when she asked him whether GBE might invest in an SMR project in South Yorkshire.

It is hard to escape the impression that, besides the two gigawatt projects at Hinkley Point C and Sizewell C, the Government see other nuclear as something that comes later—first SMRs and then later, AMRs—ignoring the important fact that some AMR technologies are more advanced than some SMR technologies. Can the Minister tell the Committee why GBN is prioritising SMRs over AMRs, which is surely an illogical approach, as some AMR technologies are more advanced than SMR technologies? Those that are ready now for commercialisation are being artificially held back.

I blame the Government for continuing the approach of the last Government in failing to recognise the potential of supporting a much quicker move to market for some AMR technologies, which are being sidelined by the limited scope and budget, and the slow pace, of the Government’s AMR research, development and demonstration programme, whose aims are merely to demonstrate high-temperature gas reactor technology by the early 2030s, in time for potential commercial AMRs to support net zero by 2050.

My Amendment 85B would ensure that GBE recognises that nuclear projects must form a part of its early investments. Amendment 85C would require GBE to monitor the impact of its nuclear investments on its ability to attract investment from the private sector in nuclear energy projects. I believe the latter could be substantial. Why does the Minister think that two important gigawatt projects initiated by Japanese companies—Toshiba’s NuGen project and Hitachi’s Horizon project—failed? Does the Minister not recognise how much better our energy security would be if either or both those projects had proceeded to successful deployment?

I have also tabled Amendment 118C, which adds a reporting requirement for GBE to undertake a review of the impact of this Act on the competitiveness of the UK nuclear industry compared to other countries. If GBE working with GBN acts as a catalyst in the adoption of new nuclear energy projects, their competitiveness will progressively increase compared with other countries. In September 2024, the International Atomic Energy Agency revised upwards its annual projections for the expansion of nuclear power for a fourth successive year. World nuclear capacity is now projected to increase by 2.5 times the current capacity by 2050, in the IAEA’s high-case scenario, including a significant contribution from small modular reactors.

The website Global Petrol Prices shows some interesting statistics. The price of electricity for businesses in the fourth quarter of 2024 in the UK was 51.7 cents per kilowatt hour, double that in Germany, where it was 23.5 cents per kilowatt hour, and three times that in France, where it was 17.4 cents per kilowatt hour. RTE, the electricity transmission network of France, showed that last Saturday nuclear accounted for 73% of French electricity generation, hydroelectric power for 12%, solar power for 7%, and wind power a mere 3%. It is very clear that the enormous cost of electricity for British businesses is now massively reducing their competitiveness compared with their French competitors. The more nuclear power we have, the more competitive it will become, and as the cost of electricity falls, the more competitive our businesses will become.

Does the Minister not agree that the economic growth that we all need so urgently can only be achieved by a radical adjustment to our energy policy? We need rapidly to commission more nuclear capacity—large, medium and small. I am not sure that all these amendments are perfect, but if he does not like my amendments as drafted, can he come back with some better ones to ensure that GBE, working with GBN, will ensure that much greater support will be given to nuclear projects so that nuclear can play its proper part—a much larger part—in our energy sector in the decades ahead? I beg to move.

[Lord Hamilton of Epsom (Con)]

My Lords, it seems quite extraordinary that no reference is made in this Bill to nuclear because, let us face it, if you want to have clean energy generation, nuclear is the only thing that is available at the moment. My noble friend Lord Trenchard must be right when he says that we should be much more seriously considering both small modular reactors and large ones for our energy supply in future, because that is going to be the only way we really get clean energy. I find it quite extraordinary that this has all been parked somewhere separately when it all should be integrated. We should certainly be looking at the potential for nuclear, because that is where the future lies.

[Lord Offord of Garvel (Con)]

My Lords, I express my gratitude to my noble friend Lord Trenchard for tabling the amendments that we are discussing in this group. All three amendments address a matter that many in this House have questioned—that being GB Energy’s role and involvement in the production of nuclear energy and its relationship with Great British Nuclear. Amendment 85B requires GB Energy to consult with GB Nuclear before it invests in nuclear energy. Amendment 85C requires GB Energy to report on the impact of its investments in nuclear energy and private investments in the UK nuclear industry. Amendment 118C ensures that the Secretary of State reports on the impact of the Bill on the competitiveness of the UK nuclear industry.

Nuclear energy will be critical to achieve the Government’s net-zero targets. However, historically, those on Government Benches have dismissed nuclear’s role in the energy mix. Let me draw on the Government’s own nuclear record. Since the 1970s no new nuclear power stations have been built under a Labour Government. Instead, all nuclear power stations still in operation were commissioned under Conservative Governments. Labour’s longest-serving shadow Energy Minister, Alan Whitehead, even said that we do not need nuclear. I disagree, and I am sure many in this House do too and I call on the Minister to update Labour’s thinking on this matter.

If the Government, via GB Energy, recognise the importance of nuclear, it is only right that they consult with GB Nuclear before investing in nuclear technology. Can the Minister confirm exactly what relationship is envisaged between GB Energy and GB Nuclear? Have the Government already consulted with GB Nuclear on the functions of GB Energy, and if so, will they continue to do so? We urgently need the development of new nuclear sites, as energy generated from nuclear technologies is both reliable and low carbon. Therefore, it is essential that GB Energy and GB Nuclear have a more formal collaboration. Industry bodies such as the Nuclear Industry Association have called for greater clarity on the interaction and relationship between the two organisations.

--- Later in debate ---

This would then allow hydrogen turbines to produce power in the event of another Dunkelflaute at times of shortage. This would prevent the situation we had last week, when the potential generation and imported amounts of powers were only just able to keep up with demand. Unfortunately, when we are short of wind and solar, so very often are our friends on the continent. It is essential that blackouts are avoided at all costs and in this manner, it might be possible to do so. Would the Minister confirm that this hydrogen storage and generation is something very much under consideration in the current plans?

[Lord Hamilton of Epsom (Con)]

My Lords, I am very keen that my noble friend Lord Ashcombe should reintroduce the whole prospect of hydrogen, because I thought that it was rather rubbished by my noble friend Lord Roborough, who said that it was all going to be much too expensive. I think that the future lies in hydrogen, and I hope that it will be developed much more cheaply, so that it can be available for so many different uses, not only in power stations but also in aircraft, heavy vehicles and so forth. As I understood it, it was being developed and the price was coming down, but maybe I am completely wrong on that. I would be very grateful to hear from the Minister what the position of liquid hydrogen is: whether it is still prohibitively expensive and not likely to be a solution to our problems or whether the future lies in liquid hydrogen.

[Lord Offord of Garvel (Con)]

My Lords, as we have heard throughout the debate on this Bill, as well as in the other debates in this House on the future of our energy, we know that renewable energy by its nature will always be unreliable. It is, by its nature, intermittent. Many of us have expressed concern that this undeniable fact will result in shortages. As has been mentioned by my noble friend Lord Murray, last year Europe in fact experienced several episodes of Dunkelflaute. On the other hand, as has been highlighted by my noble friend Lord Ashcombe, what happens to energy supply in periods of persistent sunshine and wind?

Unfortunately, we find ourselves in a position in which the national grid is unable to cope with excess renewable energy supply. Grid capacity is a particular challenge for the offshore wind sector, because those sites are necessarily located far from sources of demand. Currently, the national grid pays renewable energy generators billions to reduce supply when there is more renewable electricity than the grid can manage. This problem will only be compounded by the Government’s ambition to build renewables faster than we can develop and connect them to the grid.

With that in mind, we should address the fact that the timeframe for obtaining grid connections for a new energy project can reach 10 years. Not only this, but a project without a grid connection today may not come online until well after the Government’s target of grid decarbonisation by 2030. There is no doubt that the renewable energy projects that will supposedly be supported by the establishment of Great British Energy will face the same connectivity difficulties.

As my noble friend Lord Ashcombe highlighted, over £1 billion was coughed up by bill payers last year to pay renewable energy generators to curtail excess supply, including £20 million in one day alone. This will only worsen under the Government’s agenda, and it will be consumers who will bear the cost via their energy bills. If renewable generation is scaled up so rapidly without the grid capacity to transmit it to the areas of high demand, those curtailment payments will only increase. We know that excessive curtailment fees are already being paid to wind farm operators who are generating more power than can be used. This is paid to get operators to switch off their wind farms and avoid overloading the grid. How ridiculous is that? We expect these curtailment costs only to rise under the new Government’s regime, and by 2030 it is possible that there will be a staggering £20 billion a year in subsidies and in maintaining back-up grid capacity. That equates to roughly £700 per household each year.

I turn to the amendments in this group in the name of my noble friend Lord Murray of Blidworth, which I support in their entirety. Amendment 85E requires Great British Energy to

“report annually on the impact of each investment it makes on the levels of curtailed renewable energy in the UK”.

Amendment 85D requires Great British Energy to

“invest in additional energy storage infrastructure to store excess renewable energy”,

and thereby minimise the cost of curtailing excess supply. In tabling these amendments, my noble friend has addressed many of the issues that I have discussed.

It is essential that the establishment of Great British Energy does not cost the taxpayer more than the already allocated £8.3 billion, and that it assesses the impact of its investments on the cost of wasting excess supply and prioritises the means of storing renewable energy. I hope that the Minister will agree.