Renewable Energy: Costs

Debate between Lord Howell of Guildford and Lord Hunt of Kings Heath

Thursday 14th November 2024 Lords Chamber

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

My Lords, it is a great pleasure to respond to this morning’s debate and I congratulate the noble Lord, Lord Frost, on initiating it. We have had an interesting discussion on many of the challenging issues that we face around energy. This is our third debate because, although the noble Lord was not present for it, we had one on electric vehicles, which covered many of the same issues. As the noble Lord, Lord Offord, said, we look forward to the Second Reading of the Great British Energy Bill on Monday.

I welcome the interest. It is so important, on an issue that is of such critical importance to our country, that your Lordships are making a real effort, debating some of the difficult challenges that we face. Clearly, there are different views. I agree with the noble Lords, Lord Frost and Lord Whitty, and the right reverend Prelate about the apposite nature of the debate happening at the same time as the discussions in Baku. I also take the right reverend Prelate’s point about our international responsibilities, which we very much understand.

In essence the noble Lord, Lord Frost, has argued today and in previous debate that he sees the net-zero consensus as breaking down. He has said previously, although he did not cover it much today, that he disagrees that investment in net zero will make us richer. He thinks that we should unwind and invest in gas and nuclear. I agree about nuclear. I note his detailed analysis of the costs of renewables. I will ensure that he receives a considered response. I have a response that I could read out, but it might be better if I wrote to him, with a copy to all Members of your Lordships’ House, since it is technical in nature. I get the substance of what he is saying. He will understand that I do not think the consensus was quite with him. There are clearly many different interpretations of the costs, not least, as noble Lords have said, the costs of not taking action. That is one of the great dividing lines between us. It was discussed by my noble friend Lord Hain, the right reverend Prelate and the noble Lord, Lord Oates, whose speech was about the costs of not taking action.

It is interesting that the noble Lord, Lord Frost, made no reference to climate change, as far as I can recollect. I find it very difficult to debate this without taking climate change as the context in which we develop these arguments. I say to the noble Lord, Lord Moynihan of Chelsea, that I see net zero not as a religion but as a rational response to evidence that is becoming clearer and clearer. The noble Lord, Lord Offord, said that he disagrees with the pace at which we are going—I understand that—but he does not resile from net zero. I do not want to waste your Lordships’ time repeating what other noble Lords have said about the impact of climate change. Clearly, it is with us. I took over the Climate Change Bill from my noble friend Lord Rooker in 2008. When we were debating it, it was almost an academic exercise in whether climate change was real. It was a future threat, but now it is with us. The noble Lord, Lord Oates, is so right about what is now happening. It is not a religion but a rational response to say that we have to take action and speed it up as quickly as we can.

I agree with the noble Lord, Lord Frost, that this requires a lot of investment. We cannot get away from that. I know that some noble Lords opposite are saying that the OBR, the Committee on Climate Change, my own department and NESO are all part of a blob. I hesitated to use the word, because it gives Michael Gove credibility and I think it is a word that is very disrespectful to many people who are doing the right thing—but noble Lords know what I mean. You cannot just dismiss the conclusions of those august, independent institutions. Their broad consensus is that we have to go down this route.

I quote the Committee on Climate Change:

“the net costs of the transition (including upfront investment, ongoing running costs and costs of financing) will be less than 1% of GDP over the entirety of 2020-2050, lower than we concluded in our 2019 Net Zero report”.

The party opposite has started to criticise the OBR, which is unfortunate, but it highlighted that delayed action on reaching net zero will have significant negative fiscal and economic impacts, which would be as true for Northern Ireland as for the rest of the UK, as the noble Lord, Lord Elliott, raised. Do we ignore or just dismiss this? I suggest not; that is the basis on which we make progress.

The National Energy System Operator has produced a report; I have realised that noble Lords can find evidence in it to support any case they wish to put forward, but I think that the substance of what it says is significant. It says that an

“investment programme averaging £40 billion or more annually”

can support “economic and job opportunities” across the UK.

I will briefly mention levelised costs to the noble Lord, Lord Frost. As the noble Lord, Lord Oates, suggested, he may not be comparing like with like, which is part of the problem of having a rational debate on the true cost of energy. For instance, you can have a levelised cost of electricity for offshore wind, which reflects the average cost to build and operate a plant, but it cannot be equated to the strike price. The strike price represents the price needed over the contract for difference for a project to be commercially viable, factoring in revenue, market and policy considerations. There are other points that I could make on that, but I think it best that I circulate a paper so that all noble Lords can see that.

I come to the issue that the noble Lord really raised. He agrees with net zero but thinks that we are going too fast. He and my noble friend Lord Rooker and the noble Lord, Lord Elliott, suggested that the 2030 target is unrealisable. We can look again at the NESO report, but it depends how you interpret it. I interpret it as saying that that is very challenging. I do not think anyone has resiled from that; of course it is challenging. It involves plumbing, as the noble Lord said, and there are issues with the planning system at the moment about the grid and what needs to happen, but we are working very fast to try to resolve some of them. I say to my noble friend Lord Rooker that we may not be of the same measure as the members of the original Lunar Society, in our great city of Birmingham, but we believe that we can meet those targets.

To the noble Lord, Lord Swire, I say that of course pylons are not popular. We understand that. I was interested in what he said about potential alternatives, although he will understand that the figures we have so far suggest that they are much more expensive at the moment. In the end, we have to make connections to the grid much quicker and we have to invest in and see an extension of the grid. This is inevitable and it will sometimes involve unpopular decisions. I accept that.

In relation to public opinion on the cost of energy to householders, the noble Lord, Lord Moynihan, made his point very well. I gently say that most of these costs actually occurred under previous Governments, over a long period. The decisions that we are taking now will have an impact—there is no question about that—but noble Lords need to accept that that was an inevitability given what needs to happen to start to invest in the move towards clean power.

The noble Lord, Lord Howell, was absolutely right when he said that this is but one part of the story. The decarbonisation of heating, transport and industrial processes represents an immense challenge too, as we go towards 2050. This is very well understood, and our debate on electric vehicles two weeks ago brought that home to your Lordships.

The noble Lords, Lord Howell and Lord Moynihan, the noble Baroness, Lady Finn, and others mentioned nuclear. I say to the party opposite that, when I was doing this job between 2008 and 2010, we had just taken the decision to go back to new nuclear and were in firm discussions about Hinkley Point C and its siting, the skilled jobs required and the supply chain. I understand that the final investment decision did not take place until 2017, so there was an awful lot of delay. There have been other issues too. The cost of the project was underestimated and there was an unrealistic assumption that taking a technology from France and putting it into Hinkley Point C would not involve design changes because of our approach to regulation.

In July, I went to see Hinkley Point C, and I met the chief executive yesterday to talk about progress. It is fair to say that considerable progress is now being made. It is the largest construction in the UK, if not in Europe. It is immensely impressive, and 65% of the value of the supply chain went to UK companies. Another point is that, when Sizewell C is developed and we get to final investment decisions, which I hope will be in the next few months, it is going to be a replica above ground of Hinkley Point C, so all the lessons that have been learned will be translated. Huge progress has been made between the first and second reactors.

Noble Lords will understand that I am very passionate about the role of nuclear. It provides the essential baseload and deals with some of the issues that noble Lords have mentioned. The issue of intermittency is well understood, and it is part of the cost of what we seek to do. Our approach is to take nuclear as the essential base load.

I think the noble Lord, Lord Moynihan, was a bit unfair about progress. The technology of the SMR programme is being appraised by Great British Nuclear at the moment, and I hope that over the next few months we will begin to see progress there. There is clearly great potential with AMRs as well. We are all excited by what is happening in the US and the link between the major media companies’ data centres and potential AMR technology, and I want the UK to be part of that.

On Wylfa, I understand its potential. We will come to decisions over the next few months.

A number of noble Lords mentioned oil and gas and the North Sea. I understand the potential that it still has, because we are still going to need gas and the flexibility of gas. We want to develop carbon capture, usage and storage to make sure that it is abated gas, which means that we wish to see an orderly transition. We are working, and will work, very closely with industry in relation to the North Sea.

Other technologies have been mentioned: the noble Lord, Lord Moynihan, mentioned hydrogen and the noble Baroness, Lady Whitaker, and my noble friend Lord Hain mentioned wave energy technologies. I readily acknowledge that all that may have a role to play. Essentially, we are ever-open to people coming forward with ideas and new technologies, but, at the moment, we think that in reaching clean power we need to focus on offshore wind, onshore wind and solar, alongside ensuring that the nuclear programme speeds ahead as quickly as it possibly can.

The noble Lord, Lord Frost, did not discuss this today, but implicit in what he says is his doubt about the impact on the economy of investing in renewables. The evidence we have is that many jobs will become available in future because of what is happening and our drive towards clean power. We reckon that 640,000 people are employed in the UK in what are described as green jobs, and that number is going to grow as we accelerate to 2030. We have an office for clean energy jobs that is going to focus on how we can develop the skilled workforce.

On the nuclear side, the national Nuclear Skills Taskforce has estimated that, by 2030, we need an extra 40,000 people. If the programme goes well and we have a continuous number of nuclear power plants being developed, that figure could go well over 100,000 by the 2040s. We are talking about high-quality, well-paid jobs in all these sectors.

In relation to the North Sea, many of the skills being used there are translatable. We want to make sure that happens as smoothly as possible.

[Lord Howell of Guildford (Con)]

My Lords, in a very interesting speech, the Minister said just now that, in the next few months—those were his words—some decisions will be made on the smaller end of modular reactors and so on. My understanding from Great British Nuclear is that no decision will be made before 2029. Is this a new position being taken up? If so, that is extremely encouraging.

[Lord Hunt of Kings Heath (Lab)]

I hope I have not just announced a new position. The position is that they are now going through a technology appraisal, which will take a matter of months. At that stage, the Government will then have to make decisions about what will happen in the future and on the funding, and we will have to have discussions with our friends in His Majesty’s Treasury in relation to that. Before that, I hope we will be having discussions about a final investment decision on Sizewell C.

I am in danger of overrunning. I thank the noble Lord, Lord Frost, again. This has actually been a very interesting debate, although he did not anticipate consensus. I am going to disappoint him on his request for yet another committee. I have picked up the suggestion by the noble Lord, Lord Browne, of an energy institute—without commitment, I should say, but it is very interesting. I am grateful to the noble Lord, Lord Frost, for instituting such an interesting debate.

Algeria

Debate between Lord Howell of Guildford and Lord Hunt of Kings Heath

Thursday 2nd February 2012 Lords Chamber

[Lord Howell of Guildford]

I hesitate to tick the box marked “success”, but this matter is certainly very much on our minds and it is being discussed. In fact, I think it is being discussed this week at the United Nations, among other places, and it has certainly been discussed with our European colleagues. The noble Lord is quite right to draw attention to this. The ransom is the Danegeld. It will never solve the problem but will make it worse. As a government, we are totally against any paying of ransom in all such circumstances.

[Lord Hunt of Kings Heath]

My Lords, the noble Lord mentioned educational links in his first Answer. He will be aware of the restrictions on overseas students coming to the UK as a result of actions by the Government. Is he able to comment on the impact that that has had on students from Algeria coming to the UK as education is a very important export earner for this country?

[Lord Howell of Guildford]

Of course, we welcome bona fide students to our universities and a healthy student exchange. The matter was not raised with me during quite an extensive stay in Algeria a few months ago, but it is a matter that I shall look at again and check whether the Algerians have any particular problems to raise with us.

Cluster Munitions

Debate between Lord Howell of Guildford and Lord Hunt of Kings Heath

Thursday 10th November 2011 Lords Chamber

[Lord Howell of Guildford]

Clearly, we will give primacy to the gold standard, as I call it, of this convention. If it reassures my noble friend, I confess that we are disappointed with the progress of negotiations so far. We will continue to press the world’s major users and producers to give up more, be more transparent and be more explicit in their commitment to working towards a world free of cluster munitions, which is the aim of all of us.

[Lord Hunt of Kings Heath]

My Lords, the point raised by the noble Lords, Lord Elton and Lord Hannay, is that in the current approach there is a risk of legitimising the use of modern cluster weapons. Could the Minister respond to that point?

[Lord Howell of Guildford]

First, let me say that the previous Government made excellent progress on this. The noble Lord may remember that when I was sitting in his place we supported that, and some brave and bold decisions were taken that we were all very pleased with. The risk is there in the negotiation, but it is a risk that we are determined to avoid. We do not want to legitimise lower standards or undermine or dilute the Convention on Cluster Munitions in any way. That is the approach that we will use in our negotiations. I cannot go into our detailed stance because that would not be very helpful at this stage, but the noble Lord is right that there are risks in this matter, and we are determined to avoid them.

Cyprus: EU Presidency

Debate between Lord Howell of Guildford and Lord Hunt of Kings Heath

Wednesday 9th November 2011 Lords Chamber

[Lord Howell of Guildford]

This is the kind of asymmetric situation that is bound to have arisen from the lack of a settlement and the fact that the north is not recognised as a separate state by this country and by many other countries, except Turkey. That is the problem. Somewhere in the future lies a better and happier relationship in which the bi-zonal federal solution for Cyprus is achieved and the whole of Cyprus is represented in the European Union. Somewhere beyond that, perhaps even a satisfactory Turkish relationship with the European Union will also be achieved.

[Lord Hunt of Kings Heath]

My Lords, will the Minister expand a little on the question of potential Turkish accession to the EU? Can he give any prospect of success, given the position that Cyprus is taking?

[Lord Howell of Guildford]

We have always recognised, as I am sure the noble Lord has, that these things are intimately bound up together; and there are dangers. Certainly Turkey has stated that it would freeze further negotiations over the EU unless progress is really made on the Cyprus situation generally and unless issues such as oil and gas and the undersea boundaries can be resolved. So there is always a fragility and a danger that the negotiations between Turkey and the EU will be halted. They have been prolonged for a very long time already, and I am afraid that there are still a number of issues ahead. These things are at risk from the ugly division of Cyprus.

NATO

Debate between Lord Howell of Guildford and Lord Hunt of Kings Heath

Thursday 16th June 2011 Lords Chamber

[Lord Howell of Guildford]

Perhaps I should be but I am not as concerned as he is because I did not know that they were doing this. If Ministers in the Scottish Parliament think that they can somehow opt out of the collective security on which we all depend, and if any country thinks that it can have a free ride, they will need to think again because in this new world most of the operations in which we will be involved will now be completely interdependent, operating closely with a whole range of allies in different combinations. I am sure that the skills, the fighting spirit and the long traditions of Scotland will be just as much needed in global security as everything else. Perhaps these Ministers should think again.

[Lord Hunt of Kings Heath]

My Lords, while I am sure that the noble Lord is right to point to the contribution of other European countries and the need for them to contribute more, does he not think that we have to look at our own capability? Last year, the Government undertook a very hurried defence review. In the light of the current commitments of our Armed Forces, does not the noble Lord think that another review is required?

[Lord Howell of Guildford]

No, I do not. After 2015 our budget will start expanding again. We are much the largest contributor in the European end of NATO. We are fulfilling our commitments. The operations in which we are involved are completely sustainable, contrary to some remarks we have all read about in the press. We believe that we have the dispositions, the patterns and the plans to meet as far as we can individually the crises of the future. The answer to the noble Lord’s question is no, but these are certainly fluid matters and anything could be coming around the corner. Great events could hit us and we always have to be ready to review the situation.