Energy Prices: Energy-intensive Industries

Lord Howell of Guildford Excerpts

Tuesday 6th May 2025 Lords Chamber

[Lord Hunt of Kings Heath (Lab)]

My Lords, I hesitate to answer the noble Baroness by saying “in due course”. Clearly, these matters are being discussed very fully in my department, and we want to reach a conclusion as quickly as possible, but I cannot give her a date.

[Lord Howell of Guildford (Con)]

My Lords, if the Minister is correct in his economic theory about gas and electricity prices—frankly, I am not sure that he is—why is the lower price of oil, which is now getting quite low, not bringing down the price of gas as well?

[Lord Hunt of Kings Heath]

My Lords, it is because of marginal pricing, whereby gas is the most predominant, and it tends to set the price. As my noble friend said, this system has operated for many years, but we are looking at it very carefully.

Energy Grid Resilience

Lord Howell of Guildford Excerpts

Tuesday 6th May 2025 Lords Chamber

[Lord Hunt of Kings Heath (Lab)]

My Lords, I very much take my noble friend’s point; I will certainly take it on board and discuss it with colleagues. In relation to energy security, I have already said that we must maintain a resilient and secure electricity system. It is a key priority for us. We work closely with the National Protective Security Authority. I pay tribute to my noble friend for the contribution that he has made to these discussions. We are providing extensive advice and support to industry on what measures it should take to protect itself, but I take the point about communication with the public and it is something that I will reflect upon.

[Lord Howell of Guildford (Con)]

I want to reinforce the point made by the noble Lord, Lord Wigley. He is right, and the Minister is right, that in the past we did indeed have resilience. In this sort of case, resilience means bringing in a large amount of extra supply at very short notice, such as could be performed at Dinorwig, the pump storage station, which I was told could bring in several gigawatts at two minutes’ notice and, furthermore, that even if it was never used, the entire system would allow other plants to run at a higher margin, with a higher inertia factor, and, therefore, provide even more resilience and effectiveness for the whole system. In this age, as we move into reliance on renewables on a massive scale, are we providing extra support of that kind—rapid resource mobilisation—which will give us the modern and reliable system that we are going to need to compete in the modern world?

[Lord Hunt of Kings Heath (Lab)]

Yes, my Lords, we are. It is a very relevant point. Clearly, we are looking for a balanced energy mix for the future. We see nuclear as being an essential baseload. We will have renewables, but we are looking at hydro storage, as the noble Lord reflected in his own question. The whole point is that we will have a balanced system, but one that is heavily decarbonised. That is exactly the aim of what we seek to do.

Wales: Nuclear Power Generation

Lord Howell of Guildford Excerpts

Tuesday 29th April 2025 Lords Chamber

[Lord Hunt of Kings Heath (Lab)]

My Lords, I take the noble Lord’s point. EN-7, on which we are consulting, gives us a much more flexible policy on siting, but those sites identified in the current planning statement, EN-6, clearly have very favourable attributes, and this is where I think Wylfa has to be considered. His overall welcome support for new nuclear is to be acknowledged and welcomed.

[Lord Howell of Guildford (Con)]

My Lords, some of us have been talking to the main SMR producers this very morning. Their general message is that wait, delay and obstruction are their findings in dealing with the British Government, unfortunately. They are waiting for site sales to be settled, for the GDA and DCO processes to be accelerated, and, obviously, for the government lead that they all need. They say that they could produce earlier, by years, than anything that could come from Sizewell C or other, larger developments. They point to the facts that they could do it without government money and that the order books are rapidly filling up in all other countries. There really is a sense of urgency if our nation is to reach our desirable goals on reliable, affordable energy. Please can the Minister get on with the job?

[Lord Hunt of Kings Heath (Lab)]

My Lords, I agree with the last statement by the noble Lord, but I do not agree with what he said. The Government are very focused on development of new nuclear. He knows that, in relation to small modular reactors, we have a process by Great British Nuclear, which is going through a detailed series of negotiations, with final decisions to be made over the next few weeks. We were bequeathed that process by the Government that the noble Lord supported. His party did not open a single nuclear power station. I can tell him that, as far as SMRs are concerned, I have been to many fora discussing this with companies. They are clearly awaiting the outcome of the GBN process, and we will make progress following that.

Energy Prices

Lord Howell of Guildford Excerpts

Wednesday 26th March 2025 Lords Chamber

[Lord Hunt of Kings Heath (Lab)]

The noble Lord is clearly right that energy efficiency in our homes is necessary if we are going to meet the net zero target by 2050 and hold down the cost for domestic consumers. I cannot give him a date, but I can say that my department is working across Whitehall on the policies we need to enunciate to get going in that area.

[Lord Howell of Guildford (Con)]

My Lords, has the Minister noticed that the chairman of Électricité de France has just been sacked and that, understandably, advice has been given to EDF to spend less money on overseas investments and concentrate on power in France? Can he give us an idea of what effect that has on our one major nuclear development, Hinkley, where, of course, EDF is a major player, and on Sizewell C, where it is a minor but considerable player? Is this not rather dangerous, given that nuclear power, along with renewables, is absolutely necessary to get our costs down in future?

[Lord Hunt of Kings Heath (Lab)]

My Lords, I have noticed the change in leadership at EDF, and we look forward to having discussions in the future with the new person who has been appointed. EDF has made a major investment in Hinkley Point C and, as the noble Lord says, is an important minority shareholder in Sizewell C. We have enjoyed a good relationship with EDF. My right honourable friend the Secretary of State for Energy Security and Net Zero met with his counterpart in the French Government only a few weeks ago, and we maintain close contact with both the French Government and EDF. We will have to see how this unfolds over the next few weeks, but I am confident that we will see progress towards the opening of Hinkley Point C and a final investment decision on Sizewell C.

UK Energy: Grid Decarbonisation

Lord Howell of Guildford Excerpts

Monday 24th March 2025 Lords Chamber

[Lord Hunt of Kings Heath (Lab)]

My Lords, I understand the noble Lord’s concern. He will know that the Great British Energy Bill is being debated in the other place in a day or two’s time. I understand the point that he raises and we will look at that letter with a great deal of consideration. We are committed to tackling the issue of forced labour in supply chains, and legislation and guidance are already in place to help businesses take action against modern slavery.

[Lord Howell of Guildford (Con)]

Could the Minister, who is usually very clear, be a little clearer with us about what is meant by decarbonising the grid by 2030? A number of authorities are saying that that is not what is going to happen at all. A number of gas-generating electricity stations are already being commissioned, and when they are there in 2030, as they will be, they will emit large amounts of carbon dioxide. How is that going to be handled? How is it going to be buried? Have the contracts begun for carbon capture and storage? It does not appear that there is much sign of that.

[Lord Hunt of Kings Heath (Lab)]

My Lords, the noble Lord will recall that we signed contracts in December to launch the first carbon capture, usage and storage project. We expect that, by 2030, clean sources of energy will produce at least 95% of Great Britain’s generation, and gas power generation will be there mainly as a back-up.

Great British Energy Bill

Lord Howell of Guildford Excerpts

3rd reading
Tuesday 25th February 2025 Lords Chamber

[Lord Alton of Liverpool (CB)]

My Lords, I briefly add my remarks to those of the noble Baronesses, Lady McIntosh and Lady Bennett, about the community energy fund. I thank the Minister for responding so positively to my noble friend Lord Vaux by bringing forward this amendment on more general accountability. It is a good step forward, but will he respond on those companies—I gather there are around 150—that would have been eligible for the community energy fund but will not be able to receive funding if the money indeed runs out in May, as is forecast? On that specific point, when the £100 million runs out in May, what will be put in its place?

[Lord Howell of Guildford (Con)]

My Lords, I find the amendment extremely interesting. Perhaps I may just make a general point about the nature of such amendments and provisions outside this Bill. We see here a grey area between what is strictly on the Government’s credit and bill under the PSBR and what is in the private sector. Previous Governments have been caught on this barbed wire for many years as to what lies in the public sector and influences the Government’s credit and what does not. I think we are going to see the model contained in the Minister’s amendment in many other areas as well. Right around the world, Governments have all the demands on them to make utilities work, vast changes to infrastructure and so on, and the private sector has the money. Somehow, the two must be brought together, as we tried to do in the late 1990s with PFI—the private finance initiative—which ran into great difficulties, but there were some lessons to be learned from it.

We have to learn more lessons now, otherwise the finance for these things simply will not be found. This applies particularly in the energy sector, where very large investments are required over many years. The Government cannot do it because they cannot raise the money and the private sector does not want to take such risks. This is very interesting, and I see that the Minister has done his best in plunging into this still very grey area, because we do not really know how to define accountability or what it is we are calling to account.

As to the amendment itself, I had to smile. We have had similar arrangements in the distant past for bodies that are neither public nor private, and this is an attempt to overcome the problems of that in the past.

It is, frankly, not very easy to evaluate the amendment to appoint this independent person to review effectiveness if we are not quite sure what “effectiveness” means. It says, “turn to Section 5(1) on the obligations on the Secretary of State to lay down certain criteria”, which, apparently, he has not done yet, so we do not know what the criteria will be. They will appear in six months’ time. Of course, it is easy to think of various criteria to allow one to say, “An organisation has, unfortunately, lost a lot of money but has still done terribly well, because I have these criteria here which show that it has achieved certain other objectives”. There are criteria that we can think about: externalities, opportunities for broader contributions, geopolitical objectives. All these things not only rest on highly subjective judgments but will be very far in the future. The analogy comes to mind of goalposts on wheels: the goalposts have been moved from time to time and from year to year as to whether effectiveness has been achieved, even though a lot of money may have been lost.

I have to put in a reservation that all these issues are matters of intense debate. All round the planet some of the best minds are wrestling with the effectiveness measurements of certain huge investments of a green nature, which look terrific but, unfortunately, either do not make money or go wrong, but nevertheless contribute to some part of the battle against climate violence and to some limitation on the ever-rising carbon dioxide and methane emissions.

Great British Energy Bill

Lord Howell of Guildford Excerpts

Report stage
Tuesday 11th February 2025 Lords Chamber

[Baroness Boycott (CB)]

My Lords, I will speak to Amendments 13 and 44 in this group. I thank the noble Baroness, Lady Young, and the noble Lord, Lord Randall of Uxbridge, for supporting Amendment 13, which is very straightforward. Very simply, it would exclude biomass from the things that GB Energy can invest in. Amendment 44 is drafted very tightly and makes the assumption that biomass will still be included, but then asks: will the Government report on the perceived carbon neutrality of that biomass, the percentage of power it will provide to the grid and the overall impact of it on achieving our domestic and international climate targets, particularly our nature targets?

I wanted to bring these back today as I did not feel like the Minister’s response in Committee addressed the issue. But it would be entirely remiss of me not to take the opportunity to say well done to the Government on what they have said about the future regime of Drax. I wondered whether the noble Lord, Lord Hamilton, had picked up on this. It came out yesterday and is a big move on behalf of the Government to start to rely much less on Drax and to really try to clamp down on all the things he was talking about, such as importing old wood from Canada and the sense that we just cut up wood in the Pacific and ship it all the way here. The Government have gone a really long way and I am really grateful, because I and a lot of people have banged on about Drax now for a very long time. It is terrifically encouraging to see that the phase-out of this type of power is on the cards as we build up all the others. From my point of view, it does not mean that all biomass is okay; I think it is a very dodgy source of fuel.

I noted, in a report by E3G last month, that the clean power mission could be delivered without extending the lifetime of Drax, so perhaps the Minister can tell us how far they have considered this as an option and what options were considered. I have a few specific questions. Bioenergy is costly and, as I said before, has a great impact on nature and land use, and particularly on what we will have for food production. I know there are lots of things such as miscanthus that you do not have to replant, but you are still using up some really good agricultural land. Is this a good use of the money we are going to invest in GBE?

Can the Minister confirm that Drax will not be allowed to burn wood from primary forests for any of its generation? I am so pleased with the work that has been done, but I would like some confirmation that we can all listen to. On the issue of transparency, can he commit to his department publishing whatever research, analysis or investigation it has done before arriving at the decisions it has today? When I asked a Written Question on this recently, the substantive point was not answered.

As many people who care about this have seen, “Dispatches”, Private Eye, “Panorama” and even an Ofgem investigation have found that all the biomass energy generators in the UK have misreported data. This is endemic—it is continual. Along with several other noble Lords, I wrote to the FCA last week about some of these allegations, which contradict Drax’s annual report. So, while I appreciate the announcement, I would like to know what measures the Government are taking to tackle this issue. The operators—or at least one—cannot be trusted to mark their own homework, and the regulator has thus far failed to be completely on top of it. I know that we are tightening all the regulations, but is the Minister confident that his department will be able to deliver what has been asked for, because what has been asked for is a terrific step forward.

While the Government have let the door open for BECCS in the future, we need to be honest about the fact that we do not know whether it will work at the scale that is needed. It was very interesting to hear the outline of the earlier amendments in this group, with the extreme positivity about what carbon capture and storage will be, and I look forward to hearing more about it. However, at the moment it is taking out very little carbon from the atmosphere and, in all the future carbon budgets, it plays a very big role in us getting to net zero. Many people are anxious about whether this will be deliverable, and on what timescale.

[Lord Howell of Guildford (Con)]

My Lords, the speech of the noble Baroness, Lady Liddell, was music to my ears. This really is the missing prince at the ball—the missing element in the whole strategy of reducing emissions in order to curb the violence of climate change, which, after all, is the main purpose of all our endeavours. It is not a secondary purpose, it is the main purpose, and of course it is failing. Emissions are continuing to rise worldwide and the forecasts are very gloomy that they will rise still further. Our own performance has been good in contrast, as one tiny bit of the jigsaw, but overall the aim of reducing emissions is not succeeding. Carbon capture, usage and storage is an area where vast improvements can be made, with real effort to store emissions, such that we no longer have to watch those gloomy monthly or three-monthly figures detailing rising emissions worldwide again and again.

Furthermore, it is admitted, quietly—I think I have heard NESO and other experts say it openly—that carbon capture and storage is an essential part of the 2030 story. Because we have delayed so much—all parties are to blame—and we have not got on with nuclear, which we have allowed to shrink because we dithered on various other technologies, there has been very little advance on carbon capture and storage, but we know that in order to achieve decarbonised electricity by 2030—I think we are talking about the present electricity output, which is one-fifth of our total energy storage, not the whole of an electrified economy—we will need, in order to prevent outages, further gas-generated power. That is not proclaimed very loudly; CGN plants are being contracted for, designed and built to make it possible for there to be reliable and, we hope, affordable energy in 2030, even though it is substantially decarbonised.

That will require an output of carbon of considerable size, which will have to be captured and stored, otherwise the system will not work. The 2030 target is literally unobtainable, unless we have an elaborate expansion of carbon capture and storage for gas-generated electricity, which is an essential part of the pattern for 2030, as it probably is for 2040 and 2050 as well. Domestically, this is a central issue, yet it is hardly mentioned in this discussion or in the Bill.

That is not all; worldwide, the one contribution that this nation could really make through its brilliant technology is in developing cheaper versions of carbon capture and storage. All over Asia, there are coal-driven electric plants belching carbon and smoke, and more are being built at the moment. China has achieved amazing things in reducing its coal-based electricity from 1,900 gigawatts a year down to about 1,000 gigawatts. As we now produce no electricity from coal, which is rather amazing, that is an infinite number of times the amount that we produce. China is down to 1,000 gigawatts, but that is still a vast addition every year and every day—it is producing much more than we do in a year in emissions of carbon dioxide and methane as well.

To deal with the world’s problem, carbon capture and storage is essential, capturing not only carbon emitted when generated from fossil fuels but carbon direct from the atmosphere. Some major projects are being developed around the world on that scale. All these are essential projects to achieve the main aim, which is to lower emissions. If that is the main aim then Great British Energy should surely have a serious role in it.

We should be using the resources of organisations with money to invest in getting the cost down, to the point where it is possible to put some kind of abatement on those 11,000 chimneys and have some control of the carbon to be captured. Can that be done in the next stages? Of the countries concerned, one is talking mainly about the United States, where it can be done; China, where they are trying to do it; and India, where they are trying hard but not succeeding at all. They need the engineering skills to install carbon capture and storage, once we have developed systems which are cheaper and more economic. There is a whole new programme there to be developed. Is it being developed and invested in? Is this organisation looking at it? We have not had a single word from the Government—not a word—on the idea that this should be a major part of the story.

The noble Baroness, Lady Liddell, is totally right that this should of course be a major part of the story. I fear that, as with so many parts of the endeavour to get to a green transition, we are losing sight of the main purpose, which is reducing emissions. This nation is superbly equipped to contribute on that front, but not necessarily by itself subsidising more and more low-carbon electricity for our own purposes. We should go that way but not push it too fast, because if we do that then we will slow things down.

If we are to contribute to the world’s efforts on this, which are failing and going backwards at the moment, and to make more progress, we must turn to carbon capture and storage. Why is there no mention of it in the Bill? Please can it go in, through this amendment or in other ways that the Government choose, to indicate that we are serious about reducing emissions and not just about the virtuous side of clean energy, which is very nice and very important but not the main aim?

[Lord Berkeley (Lab)]

My Lords, my Amendment 35 is about the renewable liquid heating fuel obligation, which is something we debated in Committee. I thank my noble friend the Minister for spending time with us and understanding the problems of some of the people who operate in this field. I am grateful to the noble Lord, Lord Bruce, for his support.

This issue affects 4 million people in this country, and about 250,000 businesses, who are off the gas grid and therefore generally rely on heating oil, as I do in the countryside—I declare an interest. These are big businesses and they are no more complicated than other similar systems, but it is a question of whether the renewable fuel obligation could be applied, so that it would be easier for people to continue to use fuel oil with this addition, rather than having to spend a lot of money converting to some other means, which I know has been debated at length.

--- Later in debate ---

[Baroness Young of Old Scone (Lab)]

Sorry, Hansard.

There is a huge hole in the carbon budgets, in which we have all colluded by saying, “Well, carbon capture and storage will fill that hole”. But what happens if it is the emperor’s new clothes and it does not work? We have to be very wary and understand what is happening at the moment. The Government are, quite rightly, throwing quite a lot of money at carbon capture and storage to trial it out as quickly as possible to find out whether we here in the UK can make it happen. If we can, great; let us replicate it very fast. If we cannot, we have to find some other solutions.

My final point is in support of the noble Lord, Lord Berkeley—

[Lord Howell of Guildford (Con)]

I thank the noble Baroness for giving way. I do not want it to sound as though CCUS is the answer to everything, but surely the whole concept of carbon sinks, of trying to preserve our forests—which are rapidly disappearing—and of developing new freshwater areas around the world in desert areas, as has been proposed in a very elaborate series of schemes, is doing just that: they are trying to capture carbon directly out of the atmosphere or from projects which are belting out carbon. What is wrong about that? I do not quite see why she is so dismissive.

[Baroness Young of Old Scone (Lab)]

I am probably breaking the rules here—I should address the House rather than the noble Lord—but nature-based solutions, which create biodiversity and other benefits, such as benefits for human health, mental health, water purification and flood control, are excellent schemes if they can be made to work effectively and cost effectively, bearing in mind all the benefits. Carbon capture and storage from industrial processes or, indeed, from air sources—from carbon that is already out there—is the bit that is not yet tested and not yet proven. We need to get ahead and decide whether we can make that work in the UK, which, I hope, is what the Government are trying to do. Perhaps the Minister will confirm that.

On Amendment 35, I share the joys with noble Lord, Lord Berkeley—not in the same house, I may say—of being an off-grid home owner who wants to do their bit for carbon reduction. At the moment, the choice for the average home owner in a rural property of an aged sort, which is highly dependent on oil because they are off the gas grid, is not terrific. You live in trembling fear of the wretched boiler breaking down: in an emergency situation such as that, the choice that then faces you is either just slamming in another oil-fired boiler, or else shelling out 20-odd thousand and waiting in the cold for six months while they work out how to put in an air source heat pump, which will probably not work at all anyway. It is not a choice. We need options for that rather beleaguered population in the country, many of whom live in aged, drafty houses and have very little assets of their own to be able to upgrade or may have a listed building of the sort you cannot upgrade.

Renewable liquid fuel seems to allow a simple transition using existing kit rather than having to capitalise up front for a totally new technology. It could produce—literally from next week, if you wanted it to—carbon reductions of up to 80%. I support the amendment tabled by the noble Lord, Lord Berkeley, and I hope the Government can do that too.

--- Later in debate ---

[Lord Teverson (LD)]

My Lords, I too very much welcome the Government’s amendment. I would also like to congratulate the noble Baroness, Lady Boycott, on her work to get her amendment there, which I think added pressure. The noble Lord, Lord Whitty, has made a very good point. It may be something that will carry on in other Bills as we go through the Session.

I want to talk briefly about the amendment from the noble Lord, Lord Fuller. There is some truth in it, but I think it is an amendment in the wrong Bill. This whole area of land use will come in when the Government finally bring forward their land use legislation. I would point out that onshore wind has a very small footprint in terms of agricultural land. If we had that 20-mile radius, I am thinking of the first field south of London that has, perhaps, a very modest wind farm or a single turbine. It would probably require a consultation with some 5 million people for that one turbine. So, I think it is the wrong place and the wrong amendment for this Bill, and it discriminates against certain parts of renewable energy. There is something in it in relation to land use that does need to be pursued, but perhaps in a Bill to come later in this parliamentary Session.

[Lord Howell of Guildford (Con)]

My Lords, I have glad tidings for the noble Baroness, Lady Boycott, regarding her concerns. There are between 23 million and 27 million homes in this country still using gas for heating, cooking and warmth. Clearly, that has to be tackled. The answer is quite simple, but complicated as well. The answer is that modern electric boilers can replace all those gas boilers, without having to dig and provide new hydrogen pipes and all sorts of other such complications.

The snag is that electricity is so hopelessly expensive. That is the deterrent. Here we are, wishing to transform millions of homes away from gas, and the pipes then will all become redundant. We can put in modern electric boilers, which can do the job just as well, but the cost goes up rapidly. If only we could focus on how to reduce the cost of electricity by building rapidly—which we are not doing—the cheaper, smaller modular reactors and cheaper devices for producing electricity, and even using more hydrogen on the electricity side; that is another story that we have not really discussed. Even on that basis, we are facing the problem that electricity is very expensive. As long as we keep it that way, as long as we play that game in relation to the overall energy cost, we are shooting ourselves busily in both feet.

[Lord Offord of Garvel (Con)]

My Lords, the topic of community energy was raised several times in Committee by noble Lords on all sides of the House, because it is a highly important aspect of energy provision. When in government, we introduced the community energy fund, which provided funding to specifically target the community energy sector. So, I would concur with noble Lords that it is very important that communities are involved, as they are able to raise and solve issues that are unique to their local community.

Great British Energy Bill

Lord Howell of Guildford Excerpts

Report stage
Tuesday 11th February 2025 Lords Chamber

[Lord Cryer (Lab)]

I apologise for intervening. For future reference, moving an amendment on behalf of another Member is permissible, but reading a speech out on behalf of another Member is not, according to the guide.

[Lord Howell of Guildford (Con)]

My Lords, as the noble Viscount, Lord Hanworth, pointed out, it is a bit odd if we think about it. Since we started on this Bill, the Prime Minister has been making some very lively speeches, but going in a different direction. According to the newspapers, he wants to power the energy-hungry data centres needed for artificial intelligence. We all know about those: they are being built and they cannot get enough juice. He expects this own party to back small nuclear reactors in their constituencies. The headline is, “Starmer to Push Past Nimbys and Build Many New Nuclear Plants”. This is all extremely welcome to me. It is the sort of tone we have to adopt 10 times over to meet the challenges and the vast amount of clean electricity that we need. So it is strange that we are here in the meanwhile pursuing an area where nuclear is “verboten”, to use a German term. The noble Viscount, Lord Hanworth, has got a point. I would like a comment from the Minister on whether we are still on the right track or whether we should scrap the whole thing and start with a different policy of him backing the Prime Minister.

[Lord Hunt of Kings Heath (Lab)]

My Lords, in answer to the noble Lord, Lord Howell, who speaks with such authority on energy matters, I have to say that is my view that we are on the right track. I do not see any inconsistency in government policies and actions and I thank noble Lords for their support for my Amendment 21.

Turning to Amendment 26, tabled by the noble Lord, Lord Offord, let me make this clear: the founding statement outlined that supply chains would be a key focus in the work of Great British Energy. It says:

“The sustainability of UK supply chains plays a key role in achieving greater energy security. Great British Energy will help to drive forward greater investment in clean, home-grown energy production and build supply chains in every corner of the UK. Great British Energy will work with industry to accelerate the deployment of key energy projects and support the transition to an affordable, decarbonised power system by 2030 built using domestic manufacturing and supply chains”.


That is an important statement of principle.

I can also reiterate that GBE will help drive the growth of supply chains in the industry by working with my department, the Crown Estate, the National Wealth Fund and other parts of the public sector to deliver a comprehensive package of support for domestic clean energy supply chains in everything from offshore wind to carbon capture and storage.

I turn to the amendment tabled by the noble Viscount, Lord Trenchard, and spoken to so eloquently by my noble friend. On the point about NESO, it was asked to report to the department on what we needed to do to get to clean power by 2030, so it is no accident that its focus would be on renewable energy. But in fact it did not ignore nuclear. In the Clean Power Action Plan which followed from the NESO report, there is an extensive section on nuclear power. On page 80 it says:

“Nuclear will play a key role in achieving Clean Power 2030 … and our long-term net zero objectives”.


Since then, we have published the new policy statement for consultation, which, as we debated earlier, essentially brings in a more flexible siting policy for the future. The Secretary of State has indicated the importance of nuclear energy in providing an essential baseload.

I say to the noble Lord, Lord Howell, that I do not see any conflict. We think it is very important to get Sizewell C over the line, and obviously we are now into SR discussions about the final investment decisions, and we see great potential in relation to small modular reactors. Of course, we are very interested in the developments we have seen in the US of the links between the big tech companies and the developers of advanced nuclear technology. Clearly, I am working with colleagues across government to make sure that the UK can take the potential of this as well. So, I want to assure the House that we see nuclear energy as having a very important role to play in the future.

[Lord Howell of Guildford (Con)]

The Minister has been very clear, but at the moment it just still does not add up. At the moment about 6% of our electricity comes from nuclear—that is what it has shrunk to. We have four and a half years until 2030. Nothing nuclear is being built except Sizewell C, where they are clearing the ground and have already spent £10 billion—miles above what they originally estimated—and apparently the word is going around that it will be ready in the mid-2030s. I suspect that it will be more like 2040. If the private investor is not attracted by it, whereas they are attracted by these SMRs, is there an agenda we have not quite heard about and the SMRs are going to be rushed forward, starting next summer? As in other countries, will they be built in series on the endless sites that are now becoming available—the old Magnox sites, maybe some of the new sites? All sorts of areas are possible and are so far acceptable to the public, although there is a lot of explaining to do. Is that the plan and, if so, can we hear it?

[Lord Hunt of Kings Heath (Lab)]

My Lords, the contribution of nuclear was more than 6%—I think it is about 13% or 14% as of today. Clearly, it will go down, because a number of the current nuclear power stations are due to go offline. However, I must pay tribute to EDF for going through the proper consent process. There have been extensions to a number of existing nuclear power stations and, in a statement it issued I think about three or four weeks ago, it made it clear that it saw further potential for extensions, subject to the regulatory provisions being required.

On Hinkley Point C, the company says that it expects the first unit to go online between 2029 and 2031. With two units, that will be 3.2 gigawatts. Sizewell C will follow. It is a replica of Hinkley Point C: 80% above ground, another 3.2 gigawatts. With the SMR programme, Great British Nuclear is going through a technological appraisal; it is in negotiation with the companies, and this is all subject to the spending review. Clearly, we want to see a long-term projection of new nuclear power stations opening, giving us energy security but also developing a much stronger UK supply chain. Although we will see a dip in the contribution that nuclear power provides, in time, it will start to go up again. I do not think there is a conflict; I think it is just a recognition of what has happened. It is worth making the point to the party opposite that there has been a lot of messing around in terms of decision-making on Hinkley Point C. There was disappointment at what happened at Wylfa. We are now getting this back on track.

Great British Energy Bill

Lord Howell of Guildford Excerpts

Committee stage
Wednesday 22nd January 2025 Grand Committee

[Lord Hamilton of Epsom (Con)]

I should like first to speak to my noble friend Lord Fuller’s Amendment 113, on tidal energy. I ask the Minister what the position is on the Severn because, in theory, the Severn bore has immense capacity to generate electricity, going upstream and downstream. It always strikes me that if we are looking for tidal energy, the Severn bore offers better opportunities than almost anything else. I am told that when people looked at this, they found big problems with flooding land further upstream, which would have led to enormous compensation claims from farmers and so forth. I should be grateful if the Minister filled us in on the Government’s thinking on the Severn, because it strikes me that if we could create tidal energy there, that would be very beneficial to the country as a whole.

Amendments 111 and 112 address environmental considerations. We have seen in the newspapers today that the Government are bringing forth a Bill that will say that in future, environmental considerations will not be taken into account in quite the same way in respect of building projects. Can the Minister update us on the Government’s thinking on that Bill, when it is likely to appear and what it is likely to say? We are all interested in this issue. Will it read directly across to energy projects, as it does for construction projects? We have heard from the Prime Minister about this wonderful tunnel they have been building on the HS2 line to preserve bats, which is costing £100 million. Then, we heard that it was not going to preserve the bats after all, and they were all going to die somehow. We want to be updated on the Government’s thinking on that. We get all these remarks from the Prime Minister, but they are significant in terms of the environmental concerns associated with construction projects. What I really want to know from the Minister is whether this is going to read straight across to energy projects in the same way and make it easier to get other construction projects going, such as housing. I should be grateful if he filled us in on that when he sums up.

[Lord Howell of Guildford (Con)]

My Lords, I declare an interest as an adviser to a company deeply involved in the energy transition, particularly in some of the switching station construction, which, obviously, is the land-based part of the vast increase in electricity from wind pylons that is planned—necessary, in fact, for us to begin to get anywhere near the clean electricity volumes we require for the modern economy.

We all heard President Trump making some ambitious statements yesterday. He was very strong on the fact that vast investment would be required in clean electricity—indeed, electricity of all kinds, in his case—to cope with the great new data systems that he has persuaded private industry to co-operate with the state in building. I think he said it would be $500 billion, or £300 billion; whatever the figure was, it was enormous, and the amount of electricity will be colossal. Running the data centres that will be required, which we are trying to build here as well, can drain entire systems of electricity. The demand is vast. This relatively small area, worth £8.4 billion—he calls it “peanuts”, and it seems nothing compared with these figures—will be part of this, and it will obviously have a very large footprint: a major environmental impact.

My noble friend Lord Hamilton spoke about tidal power and the Thames Barrier. To give a little history—I am sorry, but it is relevant to where we are now—he will remember, because I know he has a crystal-clear memory, that, 40 years ago when he was my Parliamentary Private Secretary in the Department of Energy, the first folder on my desk on day 1 of moving into the job was a gigantic report on the Severn barrage. The conclusion was that it would not work and would have a huge environmental impact on nature and the surroundings, rather on the scale of the idea that has now been floated down at Hinkley—that some kind of marshland development should be promoted, which will also have an enormous impact and is causing a lot of protest. So, this is not a new question. We have been talking about barrages and tidal energy and its capacities, and the undoubted impact it can have in specific areas on a rather small scale, for at least 40 years, and we will no doubt be talking for the next 40 years.

In a specific situation it makes sense but, generally, as part of the huge electricity supply that we are now contemplating, as NESO told us only yesterday, we are now moving towards the base camp, to use its language—to this colossal increase in clean electricity by 2030. Just as we are at that point, we can now see that these small additions help, but they will not be part of the central solution.

My noble friend Lord Fuller raised a number of very interesting questions. He also made a general point which is relevant to this amendment as well as others: where are we on new thinking about public purposes harnessing private money? It is an old and obvious question. It is particularly obvious now, when the modern state has vast amounts invested and huge duties to fulfil. In fact, some of them are too vast for the state to cope with in its present form. It has no money, or, rather, it is underwater in debt, as the entire nation is—indeed, the entire world is—and it is hesitant to raise more by taxation and therefore has to look to the poor old consumer and the taxpayer for anything it can raise.

The private sector has the money. The sovereign wealth funds, pension funds and investment pools around the world have vast amounts of money and are looking for places to invest it, but they cannot find them. Somewhere in between those two—the Government having all the demands and the private sector having all the money—there has to be a reinvention of the co-operation between the state and the private sector, which the ideologists in our various parties will not like at all, but that is where we are going. We had a try with the private finance initiative, which was invented by the Conservative Party and taken up with some enthusiasm by Labour, now in government again, and then it ran into difficulties.

I believe that there used to be a unit in the Cabinet Office looking at this whole new area—I hope it is still there somewhere—of having new kinds of co-operation in the digital age between the Government, or the state, and private sources of money. I would quite like to know from the Minister whether that unit is still operating and, I hope, having some very new ideas, and not just in this area. The same problem arises in a vast range of areas.

As to the impact on the environment, which this amendment so rightly focuses on, something of this kind has got to be included in the Bill. It would be a dishonest Bill if it did not have something addressing these issues. I mentioned the switching stations; I am not quite sure how many new ones we will require between now and 2030. I think that two have just been started. I have a figure of 13 switching stations around the coast of this country. Whether they will be built in time, I very much doubt but, if they are, I would like to know what sort of impact they will have on the environment.

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[Earl Russell (LD)]

I am sorry, but I am just a little confused which amendment the noble Lord is speaking to. This is obviously not Second Reading and we are not making general speeches. Could he help me with which amendment he is speaking to?

[Lord Howell of Guildford (Con)]

I had actually finished but I spoke repeatedly to the environment amendment. I mentioned it six or seven times. I am not sure what the noble Earl’s motive is. I thought that ought to be clear. Is it not clear?

[Lord Hamilton of Epsom (Con)]

Can we just return to the Severn barrage? I agree that, 40 years ago, my noble friend was looking at this and that I was looking over his shoulder at the time. The concerns about putting in a barrage on the Severn were mainly about flooding a whole mass of land further upstream. This was in the days when farmers were expected to grow food. It is rather changed now; we expect our farmers to have immense environmental concerns and, in many cases, the whole grant system is skewed towards people having nature reserves on their farms rather than producing food. Surely, if a lot of this land got flooded that would be incredibly encouraging for people who want to encourage wading birds and all the rest of it. I am sure there would be enormous environmental benefits, rather than a downturn in the prosperity of the land which then got flooded by the barrage.

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[Lord Howell of Guildford (Con)]

My Lords, I have one question, prompted by my noble friend’s proposed amendment, about a major solar-based renewable project that was mentioned in White Papers under the previous Government; I think the former Secretary of State under the Conservative Government called it a project of central significance to the whole transition and net-zero aspiration.

It was in Morocco. They were planning, with financial support—a subsidy—from the Moroccan and British Governments, a colossal solar-based system to transmit electricity under the Bay of Biscay via a special new kind of transmission cord now being developed in Scotland. It would have delivered a final amount of 3.6 gigawatts of electric power into the British system. Going forward, that would remain a considerable contribution to our clean electricity of the future. Is the project still part of the scene under the new Government? If it is, will GB Energy have any role in it, because it is a very important factor in our overall energy needs?

[Lord Petitgas (Con)]

My Lords, I will make a link between Amendments 118, 118A and 130.

On Amendment 130, it will be interesting to see whether we get the results, but my impression is that, in this country, there is not a single net-zero or renewable project that is not subsidised by the Government in some way. In fact, that is one reason why there has been so much private capital: with the electricity price being run off the marginal cost of gas turbines and the marginal cost of renewable energy—particularly from wind farms—being zero, in effect, there is no way not to make money in that business.

This raises a question around the subsidisation of the whole system, including whether GBE should pile in further when it is already subsidised. It also raises the question of whether we need GBE, because we already have private capital in the system. In fact, we probably have more wind energy than anybody else in the G7. We have said this before. There is a lot of private capital coming into this industry.

The real question is less about GBE and more about what level of subsidisation we are prepared to put in. This may explain why we have the highest energy costs in the G7—double those of the US. This morning, my noble friend Lord Howell talked about Stargate and the announcement made by the US. We will find it very difficult to compete—let alone not having the money, our energy costs are double those of the US—if we want to run LLMs and supercomputers.

Great British Energy Bill

Lord Howell of Guildford Excerpts

Committee stage
Monday 13th January 2025 Lords Chamber

The important thing is that we need to recognise that a lot of households will need alternatives to what they have now if we are going to get to net zero. In the drive to achieve the target by 2030, I hope the Minister will recognise that the Government should not concentrate just on the low-hanging fruit but should recognise that there are people in particular parts of the country who really need a solution to their problem within the five-year timescale. I hope the Minister will able to give a positive response to that.

[Lord Howell of Guildford (Con)]

My Lords, I declare an interest, as in the register, in connection with energy-related companies. I will raise two questions on Amendments 59 and 65 in this bunch of amendments before the Minister starts to wind up—if that is what is coming next. I know that Amendment 59 is about household energy bills, but I start by observing that, as far as industrial energy bills are concerned, it is a disgrace—frankly, it was not much better under the previous Government—that, according to government figures, we now have some of the most expensive electricity prices in the entire world. That cannot be right. It obviously undermines our competitive power and economic growth. Obviously, therefore, it is holding back the whole investment in the energy transition and it is a classic case of shooting ourselves in both feet. That is the electricity scene.

As for household energy bills, there is an irony here, because the truth, as I shall try to demonstrate in a few words, is that the best chance of keeping down domestic energy bills, with all the other circumstances, many of which are completely unpredictable, is not through anything that Great British Energy is empowered to do at present, as the Bill stands. It lies in cutting down the colossal costs of having standby facilities in standby production from some combined cycle gas generation, but even more in having some cheaper forms of nuclear development than those we have had in the past—or indeed in the present, because all our current nuclear developments are wildly over cost.

The key lies in getting private money into shorter-term, smaller and more flexible, nuclear modules. That is what we should be doing; it is what many other countries doing, and it will be the way in which to greatly reduce the overall cost of having a reliable energy supply for a modern industrial nation, which includes facilities for 3,000 hours a year when the wind does not blow. Today is probably one of them, as my noble friend Lord Trenchard was arguing. A strong, intermittent standby system has to be there, and we know it is very expensive, by definition, if it is not being used all the time. We cannot sell electricity all the time—on the contrary, in many cases, as we can read in the newspapers today and yesterday, colossal sums of taxpayers’ and consumers’ money have to be paid in order to not produce electricity. There is a fatal difficulty here that we have to resolve.

The point is that, if we want costs to be held down, the way to do it is by making sure that private money can be mobilised, which it can for smaller nuclear reactors, whereas we all know that private money does not wish to touch with a barge pole a so-called replica of the gigantic Hinkley C EPR design, which is a difficult design and bound, although it calls itself a replica, to be miles over cost and cost-forming of the Government at Sizewell C as well. That is a way to ensure that costs and energy bills stay up, and that is the opposite of what we are trying to achieve.

The simple answer to this bit of the excellent Amendment 59, which I totally support, is that, if we can now begin to get a grip on the whole nuclear side and bring GBN together with Great British Energy and work in a serious approach to managing our, at present, wildly costly and unmanageable energy supply, we will begin to get a chance of getting that £300 off bills. Personally, I think it going to be very hard to achieve, but that is the one way it can be done—by getting private money in, because the Government have not got any money and have to go to the consumer, the taxpayer and the borough to get the money. We all know what that is costing, and all of it ends up in charges on taxpayers and working people and their hard-earned earnings.

That has to be answered, if this is going to stand. I hope that the Minister will go to his colleagues in the department, and maybe in the Treasury as well, if he can get any response from them, and point out that this just does not make sense. It does not fulfil the aims that the Government want, the Opposition want and all parties want. As the noble Lord, Lord Alton, and others have said, this is not a bipartisan issue, at least in this House, because we all know on both sides of this House that this does not make sense—and this viewpoint should be passed on to the Secretary of State politely within the department, so he can modify his approach, particularly on the nuclear side, where I worry a great deal that we are on the wrong track. We are heading to the wrong track, while others are racing ahead. That is all I wanted to say on Amendment 59.

Amendment 65 is interesting, because it is really about the level of demand that the National Grid will be able to meet. Many people—again, bipartisan—are worried that the estimates that seem to be in the mind of the department are miles too low. The figure of 200 gigawatts is being pushed around—others say 300 gigawatts. Today, there is something more in the newspapers that should make the Government think again on this one. We are told that we are going to have colossal data centres. Indeed, it says in one newspaper that we will have one of the world’s biggest data centres to move into the age of AI, modern innovation and investment and the kind of society and industrial and consumer pattern that will have in the second half of the present century. That is what we must be doing. Bit data centres are hugely expensive in energy demand; they drink up energy in colossal volumes—and that is on top of the hope or ambition of the Government for decarbonised, clean energy by 2030, or maybe 2035. Maybe it is to be 95%; there are all sorts of modifications coming out all the time. On top of that, I think that this demand will push up any reasonable estimate from 300 gigawatts to 500 or 600 gigawatts. We are moving into a hyper-electric, super-electric age and data centres will add vast amounts of demand to the system.

There are 40 million cars and trucks in this country still running on petrol; they will need to move over to EV as well. The chances of having a National Grid system fully invested to meet that kind of demand on even the 2050 timescale, let alone 2030 or 2035, is very small indeed. Does the Minister accept that, as we move into this all-electric age, there will be considerable increases in demand and that, if there is going to be effective supply for them, we must have the conversation and, what is more, the detailed explanations implied in Amendment 65. GBE should be able to go to the National Grid and say, “Can you link us up?”. The many industrial firms thinking of going over from gas-fired furnaces to electric furnaces should be able to go to the National Grid and say, “Can you link us up?” What answer are they going to get? Are they going to be told, “Come back in 15 years”, or are they going to be told, that it is all right and that we are investing to meet these colossal demands for increased electricity from every kind of energy transition, the related digital underpinning and the necessary data centre operations, which we now know we have to have in order to compete in the 21st century? Is that realised? That is my question on Amendment 65. Many other excellent comments have been made, but those are the two on which I would greatly value an answer from the Minister.

[Lord Cameron of Dillington (CB)]

My Lords, I support the last speaker on Amendment 65. When I saw Amendment 65 in the name of the noble Lord, Lord Offord, on the readiness of the National Grid for this brave new world, I realised that this is probably the key amendment to the Bill in terms of the success of Great British Energy. I am not sure that putting it into the Bill will actually make a ha’porth of difference, but there is no doubt that the issue is going to decide whether GBE is a success or not.

We need to quadruple, if not more, the size of the National Grid network, both to get power to all those new electric cars and heat pumps, et cetera, and to take power from all those new wind farms, solar roofs, et cetera, but with all the objections to the wires and pylons, I cannot see the National Grid delivering the necessary increase in this network any time soon. So, as the amendment states, GBE can really invest only in projects that have a guaranteed connection, however worthy they may be in other aspects. If no connection is likely to be in place by the time of the completion of the project, then GBE should probably save its money.

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[Baroness McIntosh of Pickering (Con)]

My Lords, I wish to speak to Amendment 87 in my name and to take this opportunity to thank my noble friend Lord Trenchard for lending his most welcome support to the amendment and the noble Earl, Lord Russell, for introducing this little group so eloquently and strategically. He is absolutely right to point out that the difference between his amendment and the amendment in my name and that of my noble friend Lord Trenchard is the difference between an Oral Statement which can just be debated and, in our case, the need for a Motion of resolution in each House of Parliament. To put his mind at rest, I cannot believe that that would need to delay the process at all. It could be called in exactly the same amount of time—probably half a day, an Oral Statement possibly taking an hour, or 30 minutes in each House.

The Minister, who I do not think is replying to this group, said in response to the first group that he believes and hopes that Clause 6 will never be used. But the very fact that it is in the Bill means that it is there to be used should the circumstances arise and I believe that the magnitude is such that it is important to debate it and to carry each House with the Government. I cannot believe that that would be a delaying tactic; I think it is absolutely essential. The noble Lord also, in reference to the question of giving directions, equated the situation to that of the National Health Service. It is clear to me that, were such a direction to be given to the National Health Service, that would be debated in each House of Parliament as well, particularly in the circumstances that the noble Earl, Lord Russell, related of a potentially dangerous one-off situation which we understand Clause 6 envisages.

Words were said earlier about Drax and I do not wish to dwell on that, but Drax is a major contributor to the whole of the Yorkshire and Humberside regional economy. I believe that we should go back to growing the fast-growing willow coppice and—a name I can never pronounce—miscanthus, as that would help Drax to have a local source of produce on which to rely. It would also help the farmers at this very difficult time for them.

On the question of directions and consultation raised by the noble Lord, Lord Cameron, and others such as my noble friend Lord Trenchard, it is important for it to be in the Bill that, before giving a direction, the Secretary of State must consult. Clause 6(3)(b) simply says

“such other persons as the Secretary of State considers appropriate”.

Well, it would be helpful, if there were a situation of some danger, for local authorities to be consulted, because they are the first responders in many cases. I am slightly baffled that they have not been mentioned so far. Do the Government intend to consult them? In previous debates it was also raised by the Association of British Insurers that, in these circumstances, potential and actual investors may need to be consulted if such an emergency were to arise. I do not think they have been mentioned so far. Again, is that something the Government have in mind?

I want to sound fairly relaxed about this, but I do believe that the amendment in the names of myself and my noble friend Lord Trenchard is preferable to the wording of the noble Earl’s Amendment 66 and I hope that the Government will respond favourably to our very modest request that a resolution should be debated in each House of Parliament and potentially voted on before the directions are adopted. I hope the Minister will also respond to my queries about who is to be consulted and why there are not more of them listed in the Bill. With those few remarks, I commend my amendment.

[Lord Howell of Guildford (Con)]

My Lords, it must be maddening for the Minister that a Bill specifically designed to exclude investment in the nuclear sector keeps on dragging back to the nuclear sector. This is for the obvious reason that these issues are completely and utterly inseparable. Investment in the energy sector generally has got to take account of all the different aspects, and nuclear is obviously one of them.

The Minister raised the question yet again of Sizewell C being a replica, and obviously he thinks I am being very boring on this, but can I plead with him to go back to his department and point out the obvious fallacies in the whole replica concept? If Sizewell C were to go ahead, it would be being constructed in the late 2020s and the early 2030s, probably for completion and producing kilowatts in the late 2030s or later. That will be approximately 25 years beyond the original design of Hinkley C, which was originally conceived under the Blair/Brown Government in the late 2010s.

Everyone in the civil nuclear sector knows that this is a highly fluid situation in which technology is rapidly developing and is going to create, along with the arrival of new things such as AI, a completely new set of designs, which will mean that by the late 2020s the Hinkley design will be frankly out of date. The idea that something that is 20 years old should be replicated is absurd in any advanced technology, and particularly absurd when it comes to electricity generation and civil nuclear power. If one just thinks about it for a moment, one will realise the replica argument carries absolutely no weight at all. I very much hope that any new nuclear installations—whether 300, 500 or gigawatt size—are definitely not going to be a replica of what has occurred at Hinkley C.

This is a view that is held very widely in France, where they say this design is unbuildable and should never be repeated, and it is the view of many other technicians involved in new nuclear development, which I strongly welcome in all sorts of shapes and sizes, but the idea that we should build a replica 20 years after the last one is frankly absurd. Please would the Minister go back to his department and point this out?

[Lord Roborough (Con)]

My Lords, I rise briefly to support the amendments in this group. It is clear from this and other groups that the mood of the Committee is in favour of fuller accountability to this House of the activities of GB Energy. This is not micromanaging; it is simply accountability and transparency. How the actions that are taken by GB Energy are directed, as is addressed by Amendment 66 in the name of the noble Earl, Lord Russell, and addressed more fully in Amendment 87 in the name of my noble friend Lady McIntosh of Pickering, is an essential part of that.

Financial markets have periods of irrational exuberance where greed triumphs over caution and experience. Most recently, we have seen the ill-fated wave of SPACs: special purpose acquisition companies. They are generally launched with great excitement and fanfare and with very loose objectives and end in disappointment. GB Energy is clearly a serious undertaking and its chances of success will be greatly aided by rigorous discipline and concentration of force. Applying strong parliamentary oversight of its directions can only aid that.

Amendment 86 in the name of the noble Lord, Lord Cameron of Dillington, and Amendment 86A in the name of my noble friend Lord Trenchard, will help in the rigour of those directions. The clause as drafted is simply too vague, as has been pointed out by other noble Lords. There is great and relevant knowledge in the five bodies nominated between these two amendments. It would seem essential for all directions that the Secretary of State should access this knowledge to ensure that these directions are as beneficial as possible.

I ask the Minister: how specific do his Government intend those directions to be? Will they prioritise jobs, bills, net zero or the commerciality of GB Energy itself? Having such directions is vital to ensure that GB Energy does not drift off course and stays aligned with the Government’s will. But the risk of conflicting objectives is confusion and muddle.