Great British Energy Bill

Lord Howell of Guildford Excerpts

Committee stage
Tuesday 17th December 2024 Lords Chamber

[Earl Russell (LD)]

My Lords, I will speak to my Amendment 54 in this group and signal our support for Amendments 51, 53, 57 and 58. I thank the noble Lord, Lord Vaux, for his excellent introduction to this group of amendments and for setting out everything so ably.

Jumping to the end, it appears to me that the settled will of the Committee is that something should be done on this issue; I suggest one way to achieve that would be for the Government to bring forward their own amendment before Report. It might be that further collective discussions happen between now and Report. Everyone has a slightly different way of doing this, and I do not think that anyone has the answer—it is something that needs more work. However, the settled opinion of the Committee seems to be that there needs to be some check on this part of the Bill.

I said previously that the Bill is a little too short for its own good. I understand the Minister’s concerns about having lists and the problems with them, and why he does not want them. We are in favour of the Bill and we do not want to stand in its way. This is a manifesto commitment that the Government are delivering. However, as it stands, it has numerous issues. No timescales are provided for when it must be done. Although there is a condition to lay this before Parliament, as has been said, there is no parliamentary process to scrutinise, question, amend, approve or reject the strategic priorities. There is a condition to consult the devolved Governments, but, if they all unanimously said that they had the same problem with the strategic objectives, there is no way for Parliament to know that that happened, and there is also no way for them to reject or change the strategic priorities. It feels a bit unusual to be in this potion, because we are being asked to scrutinise and approve the Bill but we do not have the strategic priorities in front of us.

I welcome the constructive engagement that the Minister and his Bill team have had with us to date. He has been clear with us that these strategic priorities are being written and prepared. I recognise the need for urgency and that they are a new Government, but, ultimately, we are being asked to approve something when we do not know what it is. Indeed, the organisation itself has not written the strategic priorities, so the organisation does not know exactly what they are yet. That is a difficult position to be in.

However, there are ways forward through all of this. This quandary needs to be resolved through collective compromise and a meeting of minds. At a minimum, there need to be some guard-rails. Some general principles need to be laid out, including what will be in the priorities and a general sense of the outputs that GB Energy will be responsible for. That can be done—we can find a way to do that collectively. It should be done on Report.

Between now and Report, I would welcome the chance to have a conversation in which we can talk about this collectively. I do not want to delay Report—that is not the answer to this—but the Minister could put forward a draft publication for us. There could be draft heads of terms on what the current thinking is for GB Energy and the Ministers about what will and will not be included, as well as what has already been excluded. The Minister could give verbal assurances to this House from the Dispatch Box on some of these matters.

Finally, this amendment is my hard backstop, because it requires a resolution in both Houses. I will keep it in reserve. To be clear, in the final group of amendments, I have Amendment 122, which requires that the strategic priorities are “laid before Parliament”. I also have Amendment 123, which requires that they are laid and approved by Parliament, and Amendment 124, which is maybe more of a compromise on these issues. It would mean that the Bill cannot come into force

“unless a document setting out the thematic headings of the statement of strategic priorities have been laid before Parliament”.

Maybe somewhere around there is where we might be able to coalesce. In any case, this is an issue that needs further work and constructive compromise. My sense is that there are some concerns about these matters on all sides of the Committee. In the first debate on the Bill, the noble and learned Lord, Lord Falconer, mentioned that this needs to be in the Bill—I welcome that statement. I look forward to working with the Minister to find a solution.

[Lord Howell of Guildford (Con)]

My Lords, I was going to stand aside from this debate early in the process because of the mountain of expertise that is building up on all sides of this Committee against many aspects of the Bill. It is not our job to turn it down in this House, but it is our job to try to improve and rescue some of the bits that may be particularly dangerous and damaging, of which there are several that we will no doubt come to. I was going to stay silent, but my noble friend Lord Effingham’s splendid speech touched on so many of the fundamental problems that are so obvious in this exercise—setting up this kind of body with this kind of money.

We have of course been here before. We went over this again and again in the 1960s, with the Industrial Reorganisation Corporation, when almost exactly the same arguments were used. Many of us on all sides—it was not partisan—questioned whether that bright idea of Harold Wilson and a Mr Cant, one of its designers, would work. I hope now that we leave our mark of doubt and scepticism about whether this whole approach works.

The IRC failed because the belief prevalent among economists at the time was that if you built big and created such things as British Leyland, size would deliver. Unfortunately, size did not deliver and there was a mood and a realisation—this was long before the digital revolution—that size might have diseconomies, as was then proved with projects such as British Leyland, a disaster from which Japanese inward investment 10 or 20 years later saved us. That was the third reason why I was not going to say very much at this stage.

I apologise for being a few minutes late for the Minister’s excellent speech on the last set of amendments, but there was a gap, something which he did not mention. My noble friend Lord Hamilton intervened about Sizewell. The Minister then produced the standard line on Sizewell, but he did not mention money. Yet money is the whole issue in organising our resources for the energy transition to come, which will be fearfully expensive, particularly if we have to leave unused a very large chunk of intermittent supporting energy—nuclear and other sorts—for the 3,000 hours every year when the wind does not blow. Until we get to the hydrogen stage, which we are a decade or so off, I suspect, that will leave a big gap to fill with otherwise idle machinery—which is very expensive indeed if it is not earning or producing. None of that has been touched on yet. The more that I listen to this, the more I see that we are heading into a nightmare of expenditure problems and dilemmas.

The noble Lord, Lord Vaux, with his ruthless clarity, hinted that this is the way things are going. The only saving grace from here is to have a system of accountability, a strategy and a clear and honest recognition of the colossal dilemmas ahead and the timescale, particularly for nuclear. Perhaps we will not discuss nuclear very much, although there are related amendments, but the issues of not only cost but timescale have been totally ignored.

There is chatter around, although even the Government estimate that Sizewell C will cost about £20 billion, as opposed to whatever Hinkley C is now running at. My bet would be that it is much nearer to £20 billion than £30 billion, but never mind about that. The question is: who has the money? The Government have not got it. Governments all across the world, and certainly our Government, are underwater on debt, understandably reluctant to tax more and not really able to borrow more. It will have to be done with the private sector, but the private sector will not touch something like Sizewell C, which is a dodgy EPR design that has not worked well anywhere in the world so far.

The timescale for Sizewell C is probably the mid to late 2030s. The alternatives of the new technologies in nuclear—I am sorry to bring this into a non-nuclear discussion—are massive. Rolls-Royce is talking about being able to deliver clean green electricity by 2030 or 2031. No one, even a super-optimist, believes that Sizewell C can touch our electricity supply before 2037 or 2038; I bet it will turn out to be 2040 or later still. These things have not been touched on yet, so goodness knows how we will deal with them as we come to all the amendments lying ahead. The one saving grace is that we would have a chance for both Houses and those who are informed about these things to point out at every point some of the further dangers and damages into which this entire structure will slump.

That is what one has to add at this stage. I am afraid that the Minister will not be pleased to hear that ahead lies a vast pile of questions and doubts about this project and the philosophy behind it—a philosophy of setting up large, semi-state-owned or state-owned organisations to push through things that apparently cannot be produced by the private sector alone. The philosophy simply does not work in the digital age. It did not work with the IRC before the digital age, it will not work in the digital age, and it will not work in the AI age. The nature of the economy is quite different from even 20 or 30 years ago. These are the problems which now have to be addressed, and they certainly will not be addressed by this.

I am afraid that we are heading for a lot more amendments on the detail of everything I have said. In the meantime, both the amendments that have been debated are excellent and should be accepted by the Government as part of the vital need for Parliament to have a regular, continuous, accountable and effective say, maybe with a special Select Committee. We invented Select Committees in the 1960s and they worked very well for departments. The Select Committees here are excellent and produce superb reports. Maybe this is an area where we need to beef up our own penetrating techniques on Select Committees and reports, to ensure that there are no more blunders ahead. I would bet $100 or more, if I was a betting man, which I am not, that there are plenty of blunders coming along, written into the Bill as it stands.

--- Later in debate ---

[Lord Howell of Guildford (Con)]

My Lords, I support my noble friend Lord Trenchard’s amendment to Amendment 56. He knows a great deal about the oncoming revolution in civil nuclear power, which does not seem to have quite arrived in the Government’s thinking. They are still contemplating building backward-looking, out-of-date technology structures. That will all emerge as we debate it.

I also ought to declare my interests. The noble Lord, Lord Ravensdale, rightly reminded me that that is what I should have done. I do indeed have registered connections with energy-related companies.

I am left almost bereft of words of surprise and dumbfounded that my noble friend’s amendment is not assumed to be vital to the entire structure and operation of this project. I am talking particularly about including Great British Nuclear in the Bill. The National Wealth Fund will also be in the game, as it will look at sites and at projects, but Great British Nuclear and Great British Energy need not only to talk to each other. It is always nice to talk and so on, but they are treading on exactly the same immensely complicated ground, on which the most intimate integration and co-operation will be required.

I refer first to transmission and the whole question of redesigning our transmission grid over the next five years, if we can do it. As a matter fact, I do not think it can be done, but if it could, it will need to get electricity, first, from the North Sea to the switching stations, most of which have not even been started—one or two have—and then to the markets where electricity is consumed. That raises a whole lot of questions about transmission that we will discuss later. Secondly, it will need to get electricity from new nuclear sites, which I hope will be covered—I think they will in other countries—by smaller nuclear reactors, advanced boiling water reactors and others, all in the 250 megawatt to 400 megawatt range.

The process of siting these reactors is already going on. More than one government agency, including GBN, is putting around consultation documents to see what we mean by siting. Is it just that we will use disused sites—the old Magnox sites? Can we reuse them? I suppose we cannot if we persist with Sizewell C, but if we had the wisdom to postpone it, that site could be covered with eight or 10 SMRs. To get a sensible balance by 2050, let alone 2030, we will need about 500 SMRs of various designs across the country, sited mostly, I imagine, on disused or current nuclear sites but maybe on other sites as well. These are possibilities on which the public have had no say at all so far. I think their initial reaction will not be very well informed, because they have been told nothing about it. There is a whole operation of siting SMRs, combined cycle gas turbines and other energy installations. Heads have to be put together very closely so they do not end up in a glorious muddle on where things should be sited, who gets there first and that sort of thing.

Then, of course, there is the whole issue of how much electricity we will need. It is underneath our discussions now, but we know there is a hopeful view, which I think is still the Department for Energy Security and Net Zero’s view, that we have to aim for a couple of hundred gigawatts of cleaner electricity. We have now about 33 to 40 gigawatts of clean electricity—half our electric sector, which is 20% of our total energy care, so that is about one-ninth of what we need even to satisfy present demand. But there are stories in the papers—there is one this morning—indicating that demand is already surging far ahead of any predictions any of the governmental experts have made. This is a sign of something to come. In particular, if oil and gas are forbidden by 2030, so you cannot get oil or gas for your home and you cannot get petrol, the demand for electricity to replace all that will be absolutely enormous. Even if nothing very dramatic happens in the way of overall demand for power, it will be enormous.

Meeting this demand will require the closest possible co-operation between organisations such as GBN and GBE. The noble Lord, Lord Vaux, said that it was implied, perhaps wrongly, that he is against the Bill. I am not against it for the simple reason that we cannot be. Our constitution in this Chamber does not allow us to knock down the whole purpose of a Bill. All we can do is desperately try to improve something that we know will obviously be a nonsense in the end. The aim of 200 gigawatts always struck me as way below what will be needed; I think it will be more like 300 or 400 gigawatts of electricity in the all-electric age. There are 40 million vehicles in this country, vans and cars. Will they all be electric? If they are, that will use a lot of electricity, even if some of it can be fed back into the system.

But these issues sit above what we are dealing with now, which is how bodies we set up can possibly be kept apart when they deal with the same ground and the same issues—transmission and siting. I find it quite incredible. Perhaps I am being premature and the Minister will stand up and say that this obviously got left out of the Bill and must be put in it now so that those bodies should at least talk. Of course, they should do more than that; they should co-operate.

I support my noble friend Lord Trenchard, who has rightly spotted a great gap in the logic of this organised project. We should put this one right, which we can do, and recommend to our friends in the other place on the basis of the very considerable expertise that exists in this Chamber that this would at least repair one dislocation in this unhappy legislation.

[Lord Hamilton of Epsom (Con)]

My Lords, if I am brutally honest, I do not really like this Bill at all. It is a vehicle for a nationalised industry that should not even be set up by a Labour Government who want to gamble with other people’s money with no parliamentary scrutiny. Therefore, and on that basis, I really should support the amendment, because if they have to consult all these quangos and unelected bodies, which have made life such a nightmare for people for so long, they will never get anything done anyway, but that is just too cynical even for me. I have found that the Climate Change Committee represents a dwindling number of people in this country and basically keeps the Reform party in business.

As for the environmental committee, that is the one that, of course, the Government are going to ignore when they introduce their housing target of 1.5 million, because that has basically been blocking the number of planning permissions. Once again, I have a vested interest here: my family has land in Surrey that they are hoping to develop, so we are very keen on the recent Statement from the Deputy Prime Minister.

These quangos have not done anybody any good at all. The Government would be absolutely right if they resisted this amendment, because we have been run by these people for much too long and it is time that the country was run for the interests of the people.

Great British Energy Bill

Lord Howell of Guildford Excerpts

Committee stage
Tuesday 3rd December 2024 Lords Chamber

[Lord Howell of Guildford (Con)]

My Lords, I approach this amendment, and many others that are coming, broadly with sympathy and understanding about the enormous complexities of what we are dealing with. Obviously, I also wish to see us succeed, in the sense that a nation with a bad, interrupted or poor energy supply will be a nation drained of blood. It will be an absolute catastrophe if we do not somehow get all this right; whether in five, 10, 15 or 28 years remains to be seen, but right we must get it, because the dangers are overwhelming.

I also declare my interests in the register as connected to energy-related firms. Also, at one stage in the not very distant past, I attempted to do the same two jobs as the Minister is trying to do now, which is, first, in his department, to begin to piece together in very precarious and dangerous world conditions all the necessary equipment and organisations for energy policy success and, secondly, to explain it all to the House of Lords. That is a double job, which I am sure he will try to do with all his abilities, but this is very tough going in a very dangerous area.

We now come also to a third vast task that lies behind these amendments in particular, which is: do we need entirely new relations, far away from the old polarities of left and right in politics, between the state, with all its overload and difficulties in the digital age, and the role of the markets and the private corporations in achieving the energy transition that we somehow have to achieve? That question hangs in the air. One can see these questions about the relationship between GBE and other bodies and whether it should collaborate and have minority stakes, and so on, as the shower of questions that come out of that task. I hope that somewhere, in government and indeed in the politics of all parties, that is being worked on. We have to develop a whole new generation of co-operation, particularly in the energy field and in infrastructure, to replace the difficulties and problems that we and Labour ran into with PFI 10 or 15 years ago, which was a good idea but it did not work, and unless we understand why it did not work, we will not get it right this time.

The amendments in the name of the noble Lord, Lord Vaux, are of course probing but are very interesting. I beg the Labour Government of today, who want a national reset, a renaissance and all that, not to fall for the old socialist Adam, which is that you can solve problems by creating more and more institutions, bodies and bureaucracies. That is not the way—we have to be cleverer than that. That is the old socialisation pattern, which always goes too far and never works.

So I am in considerable sympathy with these amendments and I hope that, when the Minister answers, he will show some sympathy for the importance of flexibility and the importance in the energy field of not making too many rigid definitions and delineations. The trouble, as we will find as we debate, is that everything is connected to everything else. We are trying to rule out nuclear in debates on later amendments, but in fact you cannot—nuclear is intimately connected with all other public investment decisions. We are trying to work out about the National Wealth Fund, which is very interesting. It is having a show here in Parliament tomorrow and I am looking forward to hearing its views in detail on its relationship with GBE.

We had the famous letter from the Minister, describing some of the connections and linkages that he wants to see developing, telling us how all these things are going to be linked together. He lists straight off six or seven organisations that have to work together: the National Wealth Fund, Great British Nuclear, the Crown Estate, the National Energy System Operator, the Climate Change Committee—and of course there are dozens of others beyond those. There is the office of energy resilience; there are regional co-operation planning organisations—dozens of them. I can hardly read my writing, but there is a list that practically goes off the page of organisations that think they are in the business of investing in either the supply chains or the actual projects related to energy transition.

This is the biggest thing since—in fact, it is far bigger than—the Industrial Revolution. It is the most enormous project ever undertaken in the modern world and certainly in this nation. There is a huge amount of co-ordination and tidying up to do before we have even started. Yet, in examining this one further new organisation, far from tidying up, we are tidying down—we are untidying—the pattern of the future. So these are very important amendments and I look forward very much to some clear answers on how we can go forward towards a greater effectiveness and focus in this whole area, rather than scattering assignments, arrangements and responsibilities in every direction, always with great complications and always at great cost.

[Lord Hamilton of Epsom (Con)]

My Lords, I support my noble friend Lord Offord in his amendment but, funnily enough, not for the same reasons that he does. He says that Great British Energy should become a subsidiary of the National Wealth Fund. I am very worried—I do not know whether anybody else is—about the enormous powers that Great British Energy will give to the Secretary of State. It strikes me that we are right back to Ministers choosing winners, when on the whole the role of government in choosing winners has been pretty abysmal.

I am old enough—I am reluctant to admit how old I am in case somebody suggests I should retire—to remember Ted Heath, who started out as being the “Selsdon Man”, supposed to believe in free trade and free enterprise, and then bailed out Upper Clyde Shipbuilders. I do not think he did that because he thought he was choosing a winner—I think he knew he was choosing a loser—but he was, of course, faced by critical political embarrassment at the fact that this shipbuilding company was going bust, and he had the thought that he would use taxpayers’ money to try to bail it out.

I have been reading that the fund will be have £8.5 billion of taxpayers’ money put into it and it will be sitting there and there will be the temptation for Government Ministers to say, “Oh well, we’ll bail out this or that company, or we’ll take a punt on the fact that we do not have a battery maker” and perhaps the reason for that is that the market will not support that; or, with electric cars, for instance, we are having great difficulty making enough of them. So we will see taxpayers’ money being put into ventures which the private sector would never support. But it will be done for good political reasons. No doubt, rather like DeLorean, we will find that the enterprise will be pitched in some part of the country where there is high unemployment and not enough activity and the Government might think that they will be able to buy themselves a few votes in those areas or whatever. But, for all the wrong commercial reasons, we will end up using taxpayers’ money on ventures that will never succeed and would have been picked up by the private sector if they were profitable.

This is what worries me about energy generally. We rather fancy that people who put up wind turbines are really concerned with renewable energy. I have to tell your Lordships that they are not; they are financiers. What they do, long before they put up any wind turbine, is put up an experimental one to find out how much wind is blowing over a long period, and then they work the feed-in tariffs and, by the time they have done all that, they then have a cash flow on which they can then borrow money and put up the wind turbines. So it is a financial venture which is basically controlled by government in terms of all the criteria that matter and I do not really see that venture capital using taxpayers’ money has any great role to play in this. So I support my noble friend’s amendment and hope that he puts it to a vote.

--- Later in debate ---

I am no expert in constitutional law, but my understanding is that Crown status carries with it some exemptions from planning law and immunity from some prosecutions. I am not arguing for Great British Energy to have Crown status, because I think it should have as few freedoms as possible, but I seek in this short debate to find out the practical effect of not having Crown status, given that two of the closest partners that appear critical to the early success of Great British Energy have, or may well have, Crown status.

[Lord Howell of Guildford (Con)]

My Lords, I support my noble friend Lady Noakes. We cannot let this clause float by with a nod of the head, because it omits vital developments—as our debates have done—in the whole pattern of energy supply and energy-environmental compatibility across the planet. They are developing fast in other countries but get no mention here, confirming that this piece of legislation, while sounding fine and fitting into the jigsaw of the past, is already out of date and being bypassed by major developments in the global politics of energy and the environment.

I will give the Committee two examples. The first is zonality. The thinking in many circles, certainly in America and increasingly here, is that energy security, which we discussed in relation to the amendment from the noble Lord, Lord Frost, will have to be considered in zonal rather than national terms; in other words, national, centralised organisations, even National Grid, do not fit into the pattern of a future that will deliver security, clean energy and affordability. If one applies a zonal lens to this scene—I listened to senior officials from the National Energy System Operator talking strongly about this the other night—many of the arguments we are having around Clause 1 fall to bits.

Secondly, US corporations, big corporations in other countries and some in this country are beginning to recognise that grid thinking and the centralised patterns of energy delivery compatible with net zero and our other objectives are never going to happen. We will have increased climate violence and it is too late to prevent the growth in carbon emissions which is going on now and continuing faster than ever. Methane, which is 80 times as lethal as carbon dioxide, is also growing very fast, according to the latest figures. Despite all our efforts, climate violence is coming and many feel that it is here already. Big corporations in America and some here are losing faith in the capacity of our system—a transformed, completely renovated grid system of transmission of power and a necessary pattern of generation which is reliable and does not stop when the wind stops—to supply their needs.

Such corporations are investing, or planning to invest, and finding out from National Grid that they have to wait 15 years to get any electricity, to adjust from gas to electricity, or whatever it is, and, in doing so, realising that they are on a futile course unless they can get their own assured, dedicated source of electricity. That is why we are reading in the papers about ideas for converting old coal stations to mini-nuclear power stations, and other technologies. All these things are racing ahead but none is mentioned in Clause 2. It is, in fact, if we are frank with ourselves, a completely unrelated and irrelevant clause.

Therefore, one’s inclination is to shrug one’s shoulders. I hope that when we come back to these things in detail at a later stage, we will have a rather more focused image of what is really happening in the world of energy supply, carbon dioxide and methane growth, climate violence, or anything else of which there is not much of a sign in this clause.

[Lord Offord of Garvel (Con)]

My Lords, I rise to speak in favour of my noble friend Lady Noakes’s stand part notice. This clause deals with the Crown status—or more accurately, the lack of Crown status—of Great British Energy, and it is imperative that we probe the Government’s reasoning and consider the implications of this approach.

Clause 2 states clearly:

“Great British Energy is not to be regarded as a servant or agent of the Crown or as enjoying any status, immunity or privilege of the Crown”.


Additionally, it specifies that the property of Great British Energy

“is not to be regarded as property of, or property held on behalf of, the Crown”.

Let us pause and consider what this means. Great British Energy is envisaged as a significant player in the energy sector, with the Government making it central to our net-zero ambitions and national energy security. It may well handle substantial public funds, represent the UK’s interests domestically and internationally, and carry out critical projects on behalf of the Government. Yet the Government have deliberately chosen to sever this body from the legal, financial and symbolic framework provided by Crown status.

I pose the question: why? Why has this decision been taken, and what are the potential consequences? There are three areas of concern I wish to highlight; the first is accountability and oversight. Without Crown status, Great British Energy sits outside the constitutional framework that traditionally governs Crown bodies. Will this weaken Parliament’s ability to scrutinise its actions? Will the Comptroller and Auditor-General have clear access to audit its books? In an age of heightened public interest in corporate governance and transparency, these questions should be considered.

Secondly, on legal implications, by denying Crown status, Great British Energy forfeits the legal immunities and privileges that might ordinarily protect a public body in its dealings. Does this leave it more vulnerable to litigation? Could it become ensnared in disputes that detract from its primary mission?

Thirdly, this is a public body intended to work for the public good. Denying it Crown status might send a message—rightly or wrongly—that it is not fully embedded within the public sector, raising questions about its mission and accountability to the public interest. I do not suggest that Crown status is a necessity in all circumstances. Indeed, there may be good reasons for taking this route, such as granting Great British Energy greater operational flexibility or shielding the Government from certain liabilities—but these reasons have not been clearly articulated by the Government, and they deserve to be.

As we face unprecedented challenges in energy policy, the creation of Great British Energy is a momentous step. Its structure and status must instil public confidence, ensure robust accountability, and align seamlessly with the broader aims of our national strategy. Clause 2, as it stands, leaves too many unanswered questions.

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On nuclear power, I say to the noble Earl, Lord Russell, that the Budget provided additional funding for Sizewell C for the next financial year, and we are engaged in the final investment decision over the next few months. We have the SMR programme—money has been allocated to Great British Nuclear—and then potentially AMRs ahead. Clearly, that is an identified spending stream for the future. It would be unnecessarily constraining to say that GBE could not go into the nuclear field at all, but I take the point he raised about CCUS and nuclear energy. I would not want to preclude GBE from going there if it thought that was a wise thing to do.

[Lord Howell of Guildford (Con)]

My Lords, I am sorry to interrupt again—the Minister has been very patient—but can we be very clear on what he just said? Is he saying that GBE can involve itself and will be involved one way or another in part of the nuclear sector or not? This is very important: we need about 500 SMRs or AMRs to have the slightest hope of getting anywhere near net zero. At the moment we are plodding along, not very fast at all, and it requires all hands to the helm. So far, I understand that GBE is supposed to stand quite clear of nuclear. That does not make sense, because it is all one ball of wax, frankly. We have to get nuclear right, and only then will we get any hope of net zero.

[Lord Hunt of Kings Heath (Lab)]

Yes, I want to be absolutely clear: nuclear clearly falls within the definition of clean power, so it would be within the competence of Great British Energy to invest and do the other things in the Bill in relation to nuclear. However, we have Great British Nuclear, which I believe will continue. We are still finalising discussions, but GBN is focusing at the moment on small modular reactors. The department is involved in major funding of the nuclear developments, but GBE could also invest in nuclear energy. I hope that is clear.

I turn to oil and gas. Amendment 25 from the noble Earl, Lord Russell—and the noble Lord, Lord Bruce, who was not able to be present—would require Great British Energy to consider oil and gas supply chains and a reduction in and decarbonisation of oil and gas production. I say to the noble Earl that I understand the need for a just transition and acknowledge the skills of people working in oil and gas in the North Sea.

The Bill is focused on making the minimum necessary provisions to enable the establishment of this operationally independent company. Clause 3 provides the framework for Great British Energy’s functions and limits the areas where it can act, but it does not say how Great British Energy should deliver its functions or objectives. One of the worries about the noble Earl’s amendment is that it would widen the intention of this clause, perhaps unnecessarily. I say to him that, as we invest in the UK’s energy potential, we want to rebuild supply chains at home, of course. In relation to oil and gas, we want to help the transition and use the skilled workers in the most effective way possible. Oil and gas production in the North Sea will be with us for decades to come, so we want to manage the North Sea in a way that ensures continued support for that sector but enables some of the workers there to transition to other sectors, particularly in energy where they have such expertise.

Amendments 30 and 33 in the name of the noble Baroness, Lady Boycott, wish the Government to confirm or state that biomass is not included in the definition of clean energy in the Bill. Although I understand that many noble Lords share her viewpoint, as was clear from the Oral Question we had a few weeks ago, the Government believe that biomass plays a role in balancing the energy grid when intermittent renewables are not available. It is well evidenced that sustainably sourced biomass can provide a low-carbon and renewable energy source. That view is supported by both the Inter- governmental Panel on Climate Change and the Climate Change Committee.

Biomass sourced in line with strict sustainability criteria can be used as a low-carbon source of energy. Woody biomass that is sustainably sourced from well-managed forests is a renewable, low-carbon source of energy, as carbon dioxide emissions released during combustion are absorbed continuously by new forest growth.

The noble Baroness mentioned the Ofgem investigation, which she will know was about incorrect data being provided. It would be fair to say that Ofgem did not find the process at fault; it was the data provided. She asked me what visits officials in my department had made to the US. Officials have been in contact with US regulators but I would be happy to provide her with more details on what we have been doing.

The noble Baroness also mentioned BECCS, as it is known, or bioenergy with carbon capture and storage. Again, the Committee on Climate Change and the International Energy Agency recognise that BECCS can play a significant role in supporting net-zero targets through the delivery of negative carbon emissions with the co-benefit of producing low-carbon energy.

The noble Lord, Lord Alton, spoke eloquently and passionately to Amendment 91 on tidal barrages. I listened to the noble Lord, Lord Cameron, too, who suggested that tidal barrage and, in particular, lagoons play to the UK’s strength. The noble Lord, Lord Wigley, also spoke. The National Energy System Operator—NESO—is leading a network innovation allowance project aimed at establishing a holistic knowledge base on the potential development and impacts of tidal barrage in Great Britain within the context of grid operability. That is a very important development that I hope picks up the point that noble Lords have raised—the situation may have changed over the past 10 or 20 years.

I look forward to discussing the Mersey barrage with the noble Lord, Lord Alton. When I did this job at the Department of Energy and Climate Change from 2008 to 2010, I chaired a forum that we established on the Severn estuary potential, so I would certainly be interested in taking discussions forward on the Mersey barrage.

I hope that I have reassured most noble Lords that the energy technologies they wish to see supported can be covered in the Bill, but Great British Energy must be allowed to make its own decisions within the context of the objectives and strategic priorities the Secretary of State will set.

Great British Nuclear: Modular Reactors

Lord Howell of Guildford Excerpts

Monday 2nd December 2024 Lords Chamber

[Baroness Bennett of Manor Castle (GP)]

My Lords—

[Lord Howell of Guildford (Con)]

My Lords—

[Lord Kennedy of Southwark (Lab Co-op)]

We will hear from the noble Baroness first, then the noble Lord.

--- Later in debate ---

[Lord Hunt of Kings Heath (Lab)]

My Lords, security is one of the key considerations not just on SMRs but on AMRs.

[Lord Howell of Guildford (Con)]

My Lords, there is a puzzle here. If the world acknowledges that SMRs and like designs can be built far more quickly than the larger-gigawatt traditional nuclear power stations, and if investors can be attracted to finance those SMRs—whereas the giants such as Sizewell, the so-called replica, will cost billions that will eventually fall on consumers and taxpayers—why are we not giving far more priority to ordering and developing SMRs and smaller reactors, as many other countries are doing? Many producers are finding that their order books are becoming full.

[Lord Hunt of Kings Heath (Lab)]

My Lords, I think the noble Lord paints too bleak a position. The UK is very well placed in relation to SMRs, and the programme that GBN is taking forward is being watched with great interest by a number of countries. In relation to investment, as the chair of GBN, Simon Bowen, told the energy Select Committee last week, of course there are issues to do with risk, timing and potential delays with first-in-class designs. But as we gain momentum and produce more modular reactors, the efficiency of the programme will get better and better. That is why we have to give support at this stage, and why we see huge potential.

COP 29

Lord Howell of Guildford Excerpts

Thursday 28th November 2024 Lords Chamber

[Lord Hunt of Kings Heath (Lab)]

My Lords, on the issue of tidal potential, my noble friend may be interested to know that the noble Lord, Lord Alton, has tabled a related amendment for consideration in Committee on the Great British Energy Bill, and I look forward to discussing it. Of course, I recognise the potential, and we will be very happy to discuss that with the mayor and other local bodies—that is without commitment, I have to say.

On electric vehicles, obviously there has been a lot of discussion recently of the decisions of commercial manufacturers. We are committed to the manifesto commitment to phase out new cars powered solely by internal combustion engines by 2030. We realise that there are many challenges for industry at the moment. Ministers in the relevant departments are engaging with key industry figures, and obviously, we want to work very closely in partnership with industry to tackle some of the challenges that have been raised.

[Lord Howell of Guildford (Con)]

My Lords, the Minister made it clear that a number of targets appear to be floating around, as my noble friend touched on when he opened the discussion. Is the 2030 target anything to do with net zero, or is that just an ambition for cleaner energy? I have heard that target described as “base camp”, which means we have not started climbing even when we get there. Would he agree with that description? It is rather different from some of the descriptions the Government have offered in the past.

[Lord Hunt of Kings Heath (Lab)]

My Lords, it is always interesting to have the noble Lord’s perspective, given his long-standing interest in energy. He enjoyed being Energy Secretary, and it is good that we have a department focused very much on energy issues. I think the target is consistent: 2030 is the aim for clean power; the 2035 goal we have agreed on the reduction in greenhouse gases is the UK offer that we have made. The actual target we have set is an 81% reduction in emissions by 2035, against a 1990 baseline. I am clear that this is consistent with 2030—in other words, the 2030 target takes us on to the 2035 target we have now agreed. The noble Lord asked that question on Monday, and we are clear that we are being consistent; and obviously, we are taking the advice of the Committee on Climate Change on this.

Great British Energy Bill

Lord Howell of Guildford Excerpts

2nd reading
Monday 18th November 2024 Lords Chamber

[Lord Howell of Guildford (Con)]

My Lords, I declare my interests in energy-related companies, institutions and organisations, as in the register. I join most heartily in the comments made on the maiden speech we have already heard in this debate, by the noble Baroness, Lady Beckett. She seems to have held an enormous portfolio of high offices over the years, and the way she has swept through the offices of state makes many of us look like part-time politicians. She was Secretary of State for Trade, as the noble Lord just mentioned, Foreign Secretary and—if my memory serves me right, and it serves me wrong more and more nowadays—I think she was leader of her party as well. Anyway, she is a considerable and major figure who we are honoured to have among us as we grapple with the huge new issues sweeping into politics and policy today.

Obviously, I am also looking forward to my amazing noble friend Lord Mackinlay’s maiden speech, which I am sure we will all listen to with enormous interest.

An entirely new politics of energy is taking shape at the moment, at a very rapid rate. I am referring not just to the prospects of President Trump, who, of course, has announced that he will break totally with all the major assumptions on which this Bill and many other energy policies are based, so we will have to think anew on all that. I am talking about the fact that we are heading into yet another era of oil and gas surplus. It all goes up and down in very volatile ways; it always has and will continue to do so.

The new Secretary of State, Mr Miliband, has said that he has, I think, three priorities—he has many, but three in particular. The first is to save the planet; that is the climate change challenge, of course. The second is to create jobs. That is certainly right, because we are heading into a considerably bigger change in world energy than the Industrial Revolution. There will obviously be a huge shift in the patterns of jobs, training and the education behind them.

The Secretary of State’s third concern is lower energy prices. I am very glad to hear that, too, because it makes me uneasy all the time, as I am sure it makes all of your Lordships, that probably 3 million or 4 million families wake up every morning in this United Kingdom of ours in desperation and apprehension about the coming winter and how on earth they are going to pay—or even try to pay—for the necessary energy for putting hot food on the table, heating, cooking, hot water and a comfortable home, which they know they cannot do. The sums still do not add up. Energy cap or no energy cap, they are impossible prices for millions and millions of households in what is supposed to be a mature and rich country in which we look after our citizens. So I am very glad that he puts that as one of his trio. Maybe there are others.

So how will this new body, the Great British Energy company, help tackle all this? The first thing I would add, which has not come up very much in any of our recent energy debates, is that we must be clear about what the real situation is. To get to an all-electric society by 2030, which I think is the Government’s aim—or is it by 2035? I am not quite sure—will require five times more electricity than we are generating now. People say “No, no, that can’t be true”. I was just looking at the briefing from the voice of the energy industry, which says, “Oh, it’s all right. Today, the UK’s electricity grid is powered more by renewable and low-carbon sources of energy than fossil fuel”. Wait a minute; that cannot be right. It sounds right and it may be true at this moment, but, if we are talking not about the electricity grid but about the UK’s economy, that is powered vastly more by fossil fuels than by renewable energies of any kind. This is a complete misapprehension of the reality, which is that renewable energy provides slightly under 10% of the nation’s total energy usage. It is the other 90% that has to be decarbonised if we are to get anywhere near net zero by 2030 or 2035. It is important to start with a realisation of the colossal hill we have to climb to get to a situation where net zero of any kind, even by 2050, is faintly achievable.

Some 27 million households now use about 6 kilowatts of electricity a day. If all gas and oil are illegal and unavailable—just not there—by 2030, each household will need 29 kilowatts, on average. Obviously, some will need much more; some less. This is about 4.5 to 5 times what is currently produced. This nation produces about 65 megawatts of electricity a day, half of which comes from renewables. On good days, all of it comes from renewables but, averaged out over a year, 30 to 40 megawatts come from renewables.

The most sober estimates are that, between now and 2030 or 2035, we will need 200 gigawatts of clean, green energy, plus a back-up system of intermittency, because the wind does not blow all the time and we have not finished redeveloping and rescuing our nuclear industry. The decisions have not yet been made and we have all the problems of storage and hydrogen yet to solve—although they will play their part in in the future and their place will come.

In short, fossil fuels may be fading over the next 20 to 30 years, but in modern economies electricity demand will not fade. On the contrary, it will grow. Although there are mitigations, which I will address in a moment, they will not help the fact that we have to produce vastly greater amounts of electricity. The question is, who will pay?

There are good things in what the Minister and others have said: that this Government are anxious and realise that, being short of money, they will have to rely on the private sector. I would like to hear much more about the private sector, if we are talking about sovereign wealth funds, pension funds with £3 trillion, insurance funds or other international sources of investment. They have the money and the Government have the challenge and the need to finance this colossal energy transition. Somehow, we have to think of new ways to bring these two sides together, possibly as the grandson of the private finance initiatives of the end of the last century—something, at any rate, that faces up to the fact that very large new sums of investment are required.

Will they save the world, as the Energy Secretary wants? Well, we produce about 1% of emissions at present, a tiny little bit. Carbon emissions are rising faster than ever; methane emissions are 80 times as vicious in global warming and are rising faster than ever. Carbon capture and storage will need to capture the carbon that we will still be producing, because obviously will go on burning gas or electricity for many years to come. These schemes are beginning, but they have not got very far and we have not heard much about them.

Meanwhile, the wider world is still dedicated heavily to coal. The Secretary of State wants more jobs. Of course, there will be a lot more green jobs, but many jobs will be lost in the energy transition—thousands in oil and gas and in many other parts of the industry as well, particularly where that industry’s high energy costs undermine our competitiveness and we lose exports.

Lower bills? I just cannot see it. The consumer will have to pay somehow, in some way, for the huge transition. Far from being a world leader, as several people have suggested, we are falling dangerously behind. I will enumerate the real reasons why we are in serious difficulty.

First, the nuclear situation is a mess. Hinkley is turning out to be immensely expensive, years behind on timing, and years over budget. A proposal for Sizewell C as a replication of Hinkley is a very questionable proposition. No private investor will touch Sizewell C with a bargepole. It will cost £20 billion, take 10 years to build, and will not help at all with the move towards net zero.

Secondly, the entire grid needs a remake to accommodate the switching stations bringing our electricity—which has to increase on a great scale—from the North Sea to the market. We can bring it to the coast; it then has to be transmitted to consumers, homes and industry by an entirely new system of pylons. As an example, the Hinkley transmission system, which is being put in now, has taken 10 years to get going. It took seven years of planning argument followed by three years to build.

Thirdly, about 1,000 to 1,500 new pylons will be required. We are told by the national grid that they cannot go underground. I would like to hear a lot more about what Great British Energy can do to change that situation because that will involve years and years of planning as well.

Fourthly, the interconnector system, on which we rely very much, from all the countries around us, as well as from Morocco, is falling behind and not yet under way at the pace that it should be.

Fifthly, according to the Times, we are trying to take the whole thing at breakneck speed, and we all know that in politics the faster you push people without consent, the slower the realisation.

Sixthly, heat pumps are not yet fully efficient, especially below 40 degrees Fahrenheit, and therefore cannot solve the problems of heating domestic homes in the way we want.

Seventhly, this new organisation seems to be part of a sort of political or institutional indigestion. We now have GBE; we already have Great British Nuclear—how they are related I have no idea. We have NESO, which is the operator of the whole system of energy, or is said to be. We have Ofgem, of course, and the national wealth fund, which is deeply involved in this area. We have the UK Infrastructure Bank and many more ministries. All of these have a finger in the energy pie.

The need for co-ordination, and the working out of salaries of every individual, will be colossal. I think that we have an old “socialist Adam” showing through here. It is like the old Neddy system, on which I served many years ago—it is all right as long as we deal with the big boys in the trade unions and the corporations, and the other 99% of enterprises in this nation can go hang. That, I am afraid, will not solve the problem any more than some of these other organisations.

All the world is on fire at the moment, and energy reliability is absolutely essential for a modern industrial nation. This morning, we had Lord Cormack’s memorial service, at which someone reminded us that Lord Cormack would ask, wisely, about new policies: “Is it a plan or is it a story?” Even after listening to the marvellous clarity of the noble Lord, Lord Hunt, I am, frankly, not at all sure which this is. I am sure that the Great British Energy system needs to get its climbing boots on, because the mountains it has to climb are very high and very dangerous. This is the serious situation we face, and which we are only just beginning to address. There is a long, long way to go.

Electricity: Cost-competitiveness

Lord Howell of Guildford Excerpts

Thursday 16th May 2024 Lords Chamber

[Lord Callanan (Con)]

We already have considered estimates—work on this is going on all the time. It is a constantly evolving picture, and we take into account the views of all experts. It is undoubtedly true that renewables are intermittent: we had huge amounts of solar earlier this week, but, looking at the weather outside, I think we will not have quite so much today. That is why we need a diversified supply—nuclear, long-term storage and intermittent storage—to take account of the fact, which we know is true, that renewables are cheap, effective and quick to deploy, but they are intermittent, which is why we need a variety of technologies.

[Lord Howell of Guildford (Con)]

My Lords, following that last question, do the costs that the Minister gave include all the grid and system costs, as well as everything that has been referred to? Will the Minister agree that it is important to get these different costs right if we are going to gain public consent for the various incentives, taxes and charges that will be necessary to guide the system forward? As for gas, which is also mentioned in the Question, is it not the position that, in the long term, it will continue to have a substantial place, particularly in generating electricity? Is it the position that we need to ensure that its carbon emissions are handled by carbon capture and storage schemes, two of which are currently beginning? Should we not be giving a lot more attention to this area if we want a net-zero world?

[Lord Callanan (Con)]

The costs that I quoted are what are called the levelised costs, which are an industry standard, and they take account of other system costs. But, as I said, we will of course need back-up and storage. What the noble Lord said is true: gas will play an increasingly marginal role, but it will play a role in ensuring that we have energy security going forward. The estimates are that we will have about 7% of gas generation by about 2035.

Home Insulation

Lord Howell of Guildford Excerpts

Tuesday 14th May 2024 Lords Chamber

[Lord Callanan (Con)]

Indeed, my noble friend makes a very good point about the extent to which electricity usage will grow. Actually, the peak electricity usage in the UK occurred a number of years ago. We have actually been becoming more efficient in how we use electricity, with better lighting, et cetera. Clearly, if we move to more electric vehicles and more electrically powered heating, along with some of the circumstances that my noble friend outlines, electrical use will go up. We are spending many tens of billions of pounds on upgrading the electrical grid and rolling out increasing amounts of renewable: offshore wind, tidal, solar and so on. But in essence my noble friend is right that we need to plan for an electrical future.

[Lord Howell of Guildford (Con)]

My Lords, following on from that last question, my understanding is that, to have the all-electric, decarbonised, net-zero goal that we really want, we will have to produce and indeed consume about four or five times the present amount of electricity, from various sources. Here we are looking at an area that might reduce the growth of demand by some percentage—and the Minister mentioned the huge figure of some £2.5 billion. Can he give us some idea of what that percentage is? Will we use a quarter less electricity than otherwise, or half, or merely one-tenth? Can he give us a rough idea of where the money is going and what it is going to achieve?

[Lord Callanan (Con)]

I do not quite understand the noble Lord’s question. We will clearly use more electricity as we roll out more electric vehicles, the electrification of heating, et cetera—but we will use it in different ways. There are ways, for instance, in which we can do load spreading. One of the advantages of smart meters is that they allow people to consume electricity at different times and take advantage of different time-of-use tariffs, et cetera. So, as well as having particular peaks, we can also spread out those peaks over longer times of the day. There is a lot of demand management we can do, as well as increasing the amount of renewables we have on the grid, which we are doing.

Hydrogen Energy

Lord Howell of Guildford Excerpts

Tuesday 14th May 2024 Lords Chamber

[Lord Callanan (Con)]

The noble Viscount is absolutely right. I am a huge advocate of hydrogen precisely because of its role in long-term energy storage in the circumstances that he outlined—when the wind does not blow and the sun does not shine. We were debating whether it has a viable use in home heating. I submit that electrification and heat pumps are a much more efficient way of heating homes.

[Lord Howell of Guildford (Con)]

My Lords, my noble friend seems to have to answer every question on these matters these days, and he has another one coming. My understanding is that green hydrogen can be manufactured—all you need is a wind turbine or two—and stored quite near consumer markets in cities and towns, and that it is very effective for trucks and big mobile users but not much use for domestic heating because you cannot get it through the distribution system. Is that a correct assessment? If so, does it put the hydrogen issue in perspective and remind us that we will need a lot more nuclear, and will have to rely on gas as well, to get anywhere near net zero?

[Lord Callanan (Con)]

There was a lot in that question. I agree that there are great potential uses of hydrogen in long-term energy storage, as the noble Viscount just mentioned, and in the decarbonisation of some aspects of rail transport and heavy goods vehicles—particularly for non-road mobile machinery, where there are no real electrification options, and we have a number of successful manufacturers in this country. The original premise of the noble Lord’s question is what the best method of home heating is. All the evidence and reports show that, even if it were technically possible to pipe hydrogen into domestic homes, electrification is a much more efficient option.

Advanced Modular Reactors: Criticality Tests

Lord Howell of Guildford Excerpts

Tuesday 19th March 2024 Lords Chamber

[Lord Callanan (Con)]

Of course we would not, which is why we are offering support for many of these technologies. The noble Lord’s Question asked about criticality tests—we are aware of that requirement and are in discussions with a number of companies interested in carrying them out in the UK, but these are not simple issues.

[Lord Howell of Guildford (Con)]

My Lords, as I understand it, Great British Nuclear says that the final decision on smaller modular reactors will not be made until 2029 for the present competition, and that no smaller modular reactor will be in service until 2035—that is five years and 11 years ahead. Can my noble friend explain why it will take so incredibly long, when other countries are racing ahead?

[Lord Callanan (Con)]

I do not recognise the dates that the noble Lord cited. Great British Nuclear is obviously heavily ensconced in the design selection process at the moment, and I understand that, given a fair wind, the reactors should be online and producing electricity by the early 2030s.

Gas-fired Power Stations

Lord Howell of Guildford Excerpts

Thursday 14th March 2024 Lords Chamber

[The Parliamentary Under-Secretary of State, Department for Energy Security and Net Zero (Lord Callanan)]

I thank the noble Baroness and the noble Earl for their questions, especially the noble Baroness, although I am slightly perplexed. If she thinks that this announcement was unnecessary, why did the Labour Party ask for it to be repeated in this House today, given that it makes the same point? However, essentially, I accept the point that the noble Baroness has made. We think that this capacity is necessary; it is all about security of supply. The estimate is that in 2035, it might account for only 1% to 2% of all of the capacity that might be required. We are looking forward a decade, with uncertain projections of what the demand will be, how much renewable capacity will be available and even what the weather conditions will be like that far ahead. So, this is sensible contingency planning.

On the questions from the noble Earl, we very much hope and expect that these will be hydrogen ready or capable of having CCUS fitted. Indeed, some gas plants are already taking part in the CCUS cluster sequencing process. This announcement is entirely compatible with our net-zero obligations. Indeed, this is net zero: there will be some emissions but those can be abated, eliminated or captured, or the power stations can run on hydrogen.

We are very proud of our record. We have one of the fastest rates of decarbonisation in the G20, and we announced before Christmas that we have reduced our emissions by 50%. We have the five biggest wind turbine farms in Europe, and that capacity continues to be rolled out. This is sensible contingency planning to make sure that the lights stay on at those times when, as we all know happen, the wind is not blowing and the sun is not shining.

[Lord Howell of Guildford (Con)]

My Lords, I welcome this announcement because it seems to have a strong element of realism and honesty in this whole advance towards net zero, which I personally welcome.

If the aim is to ensure that when we get to net zero, although there will be fossil fuel burning, carbon is captured from that—indeed, there will be gas burning, as there is now, as part of our existing electricity generation —does this not have to go hand in hand with dynamic development of cheaper, simpler and more efficient carbon capture and storage systems, which, if applied to gas burning, will enable us to say, “Net zero is roughly there”? That seems to be the key question, and I hope my noble friend will elaborate on it.

[Lord Callanan (Con)]

I thank my noble friend for his question. He is, of course, absolutely right, and his extensive knowledge of the power and energy system, based on his previous career, is well respected in this House. I can tell him that we are rolling out CCUS at pace. We have allocated £20 billion for support for CCUS clusters. We are progressing our two initial track 1 clusters: HyNet and the East Coast Cluster. We are in final negotiations with the transport storage systems and the emitter projects, some of which are gas power stations, within those cluster projects.

We again intend to be European and world leaders in CCUS. We have massive storage potential in the seas surrounding us; they have powered this country for many years and will help us to store emissions in the future as well. It is something that could even become a net revenue earner for the UK. We are indeed fully committed to that.