Energy Costs for Businesses

Lord Hunt of Kings Heath Excerpts

Tuesday 17th December 2024 Lords Chamber

[Lord Evans of Rainow]

To ask His Majesty’s Government what plans they have to reduce the cost of energy for businesses in the United Kingdom.

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

My Lords, the Government believe that the only way to protect bill payers permanently, including businesses and non-domestic organisations, is to speed up the transition away from fossil fuels and towards homegrown, clean energy.

[Lord Evans of Rainow (Con)]

I thank the Minister for that Answer, but Britain’s energy cost for business is the highest in the G20, with Russia, China and the United States having the cheapest. Gary Smith, general secretary of the GMB union, says that Labour’s green strategy is “naive”, displays a

“lack of intellectual rigour and thinking”

and will lead to job losses. Does the Minister agree with Gary Smith? If not, why not?

[Lord Hunt of Kings Heath (Lab)]

My Lords, that is not how I recognise our energy policy. The noble Lord will have seen our action plan towards clean power, published at the end of last week, which sets out how we intend comprehensively to move towards clean power by 2030. I just say to the noble Lord that the highest price that businesses paid for electricity was in 2023, under the Government in which he was a member. What that shows is that, if we remain dependent on the volatility of international fossil-fuel prices, we will always be vulnerable to the kinds of spikes we have seen. That is why we need clean power and homegrown energy.

[Baroness Winterton of Doncaster (Lab)]

My Lords, the Clean Power 2030 Action Plan is clear, on page 81, that nuclear power has a role to play in achieving clean power by 2030. Will my noble friend the Minister give a little more detail on what the Government are doing to support the development of the technology around small modular reactors, so that they can eventually be built in this country, support British jobs and reduce costs for businesses?

[Lord Hunt of Kings Heath (Lab)]

My Lords, my noble friend is right to explore the contribution that nuclear will play in the lead up to 2030, but of course beyond, which is why we have the building of Hinkley Point C, then Sizewell C when we get to a financial investment decision next year, then the SMR programme and then the AMR programme. As far as small modular reactors are concerned, Great British Nuclear is conducting a technology exercise at the moment; it is in financial discussions with four of the companies concerned. We will come to the issue of spend and public support in the multiyear spending review that is taking place over the next few months.

[Earl Russell (LD)]

My Lords, I am sure the Minister will agree about the importance of making sure that we continue to make efforts to reduce the costs of energy for industry. Some 56% of UK businesses would like to increase their on-site power generation, so what are the Government doing to help industries undertake such actions to help with their renewable energy?

[Lord Hunt of Kings Heath (Lab)]

My Lords, first, of course I very much agree with the noble Earl in wishing to see a reduction in the cost of energy, particularly electricity, for our businesses. We believe that in the long term—and in the medium term, to 2030—clean power is the way to do it. He raises a very important point: one of the responses, as he will have seen in the US, is the linking of heavy energy users, which can be companies such as Amazon, with their data centres, to nuclear power generation through advanced modular reactors. Of course, the other very important issue is getting connections to the grid, which is why the clean power action plan is so important in relation to speeding up those connections.

[Lord Alton of Liverpool (CB)]

My Lords, following the very helpful reply which the Minister gave during the earlier stages of the Great British Energy Bill on the subject of slave labour, can he say what further consideration he has given to the dilemma of purchasing solar panels that have been made in a state accused by the House of Commons of committing genocide and using slave labour in the Muslim areas of Xinjiang?

[Lord Hunt of Kings Heath (Lab)]

My Lords, as ever, I am very grateful to the noble Lord for raising these very serious matters and particularly the plight of the Uighurs in Xinjiang province, which we have debated. He knows from my response in the Great British Energy Bill that we are looking at this very carefully. He is right that there is a tension, and clearly many of our solar panels come from China with all the attendant issues that this involves. But we have established the Solar Taskforce to look into the issue of supply chain, and we will be taking very seriously the points that the noble Lord has raised.

[Lord Geddes (Con)]

My Lords, I have berated my own party over many years on this subject; I shall now enjoy doing so to the noble Lord’s opposite. What is the Government’s attitude to tidal power, which is indefinite, utterly predictable and costs nothing once installed?

--- Later in debate ---

[Lord Hunt of Kings Heath (Lab)]

My Lords, I always enjoy the noble Lord’s interventions. I recognise that there is a potential in tidal power, and the noble Lord, Lord Alton, is—can I say—badgering me on this and has had a debate already in the Great British Energy Bill about its potential. At this stage, we remain open to discussions about how that can be taken forward.

[Lord Rooker (Lab)]

Could I ask my noble friend: is fusion energy still 20 years away, as it was 20 years ago?

[Noble Lords]

Oh!

[Lord Hunt of Kings Heath (Lab)]

My Lords, we are putting some resources into the fusion programme. The years that I have in mind are the 2040s, which are a little less than 20 years away. This reflects our belief that there is very much potential now, and that the UK is in a very strong leadership position on it.

[Lord Teverson (LD)]

My Lords, one of the ways that large businesses reduce their energy costs is by signing up to power purchase agreements, or PPAs. That is only possible for large businesses. Is there a way that Government could make sure that those benefits of more competitive pricing could come down to medium or small businesses, maybe by clustering or some other method, so they can get the advantage as well?

[Lord Hunt of Kings Heath (Lab)]

My Lords, I am very happy to give that consideration. The noble Lord will have noted that we are looking at whether we should introduce a regulatory regime for the third-party intermediaries, because some businesses are affected both by mis-selling and other problems with the current system. The other point I would make is that the Energy Ombudsman’s remit is being extended to small businesses within the next few days, and I hope that will also be of advantage to those companies that he mentioned.

[The Earl of Effingham (Con)]

My Lords, the UK is importing record amounts of electricity from Europe. We understand that the EU is to propose limiting access to its electricity markets. How can the Minister ensure that businesses can transition to net zero over time without facing prohibitive energy costs during this process? Surely if supply goes down, costs will go up.

[Lord Hunt of Kings Heath (Lab)]

My Lords, we should not speculate about this until we see actual evidence that it may come to pass. The real way to ensure continuity of supply is to do what we are doing, which is to move as quickly as possible to ensuring that we have homegrown, clean energy. This is what we are seeking to do.

[Lord Watts (Lab)]

My Lords, are we not in a time warp? The problems we now face were created 14 years ago by not having a Government that invested in clean power. Is it not time for them to take responsibility for the mess that they have left for Labour to clear up again?

--- Later in debate ---

[Lord Hunt of Kings Heath (Lab)]

My Lords, I think there is rather something in what my noble friend says. We inherited a parlous situation in relation to the public finances and a failure to invest in essential infrastructure. One example was their dithering about nuclear power. Not one nuclear power station came close to being opened in 14 years under the last Administration.

[Baroness Finlay of Llandaff (CB)]

My Lords, following the discussions about tidal power, what discussions have been had with the Welsh Government about using the very high tides in the Severn estuary? Linked to that, what discussions have been had with the Scottish Government about the potential for hydro-electric power?

[Lord Hunt of Kings Heath (Lab)]

My Lords, right at the start of our new Government’s Administration, my right honourable friend the Prime Minister signalled that we wanted to reset relationships with the devolved Governments. That is happening. We are in regular discussion with the devolved Governments on energy policies. In the Great British Energy Bill, the consultation requirements are set out in relation to those countries.

Great British Energy Bill

Lord Hunt of Kings Heath Excerpts

Committee stage
Tuesday 17th December 2024 Lords Chamber

[Baroness Young of Old Scone (Lab)]

My Lords, if one were of a nervous disposition, one would be alarmed at the clearing of the Chamber that the simple act of standing up to move an amendment can provoke in this House.

I will speak to Amendment 46 in my name and those of the noble Baronesses, Lady Hayman—who, alas, cannot be with us today due to family illness—and Lady Boycott. It deals with the priorities that the Government will set for Great British Energy, and returns to the issue of community energy, which was given an airing by the noble Earl, Lord Russell, in the previous Committee session.

Amendment 46 inserts into Clause 5 a specific requirement that the strategic objectives of GB Energy should include delivering reductions in emissions, improvements in energy efficiency, security of energy supplies and a more diverse range of ownership of energy facilities—especially community energy schemes—whether connected to the grid or providing energy solely for local communities.

The mention of community energy in the debate about Clause 3 was very much about the objects of GB Energy. The amendments in this group are more about framing the articles of association of the company, in line with the strategic priorities that the Government impose on GB Energy. Clause 5 is more specifically about what the Government will determine on the strategic priorities and plans for GB Energy. I believe that the Bill should specify that the key issues outlined in this amendment be included in the objectives and plans. Clause 3 is about what GB Energy could do; Clause 5 is about what it will do. It is important that these priorities are on the face of the Bill.

In the case of community energy schemes, your Lordships will be glad to hear that I do not intend to repeat the excellent case made by the noble Earl, Lord Russell, in speaking to his amendment to Clause 3.

The grouping of amendments in Committee on this Bill has been interesting—I think that is the word—but it has had one silver lining in that it has given us opportunity to debate energy community for a second time. One can never have too many debates about community energy.

Much of the promotional material around Great British Energy has been clear that it will play a role in supporting community energy. Community energy schemes are important if we are to persuade local communities that the disruption and downsides of renewables development and rewiring the grid have something for them by way of cheaper, greener, more secure energy in which they have a stake.

Local power plans, including community energy schemes, are one of the five priorities for Great British Energy that were put forward in the founding statement. If all these assurances and promises represent genuine commitment, why not put this in the Bill, as my amendment proposes, as indeed does Amendment 50 in the name of the noble Earl, Lord Russell, which I also support?

During the debate on his amendment in the previous Committee session, the noble Earl, Lord Russell, indicated praise for Jürgen Maier, who is on record supporting a role for GB Energy in community energy. But Mr Maier is also on record as saying at a parliamentary hearing that he did not believe that community energy had the potential to generate gigawatts. This does not gel with the assurances that we have been given by the Government both in their manifesto and during the passage of this Bill in the other place.

I very much welcome the fact that my noble friend the Minister undertook to give greater consideration to community energy schemes and their place in the Bill between Committee and Report. I hope he will reach a conclusion on the basis of that consideration, which would result in the role of Great British Energy in community energy appearing in the Bill to ensure, above all, that confidence is not lost by communities or investors alike.

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

I thank my noble friend for giving way. She has asked me a question so I might as well answer it. What that means is that the Government have not committed ourselves to a position, but we are looking seriously at the arguments that we received when we debated this issue last time.

[Baroness Young of Old Scone (Lab)]

I thank the Minister for that intervention. It reveals the importance of having more than one debate about community energy that he has now said that twice. I beg to move.

--- Later in debate ---

Through empowering farmers to participate in community energy projects, we can create a sustainable, resilient energy system that works in harmony with the land, supports local economies and strengthens food security. Thus, Amendment 50 offers a vital opportunity to ensure that public funds benefit both the energy and agricultural sectors, driving a future in which farming communities are not left behind but are at the forefront of our green energy transformation. I commend these amendments to the Committee.

[Lord Hunt of Kings Heath (Lab)]

My Lords, this is a very interesting set of amendments, and I am grateful to all noble Lords who tabled amendments and have spoken in this debate. Clearly, as we said before, the overarching aim for the statement of strategic priorities is to ensure that Great British Energy operates in line with, and delivers on, the priorities set out by the Government. That is proper for the Government to do.

It is clearly important that we have a means through which to influence the strategic plans of Great British Energy. Equally, we want Great British Energy to have as much operational independence as possible within the parameters of Clauses 3 and 5. Inevitably, that makes me cautious about a number of the amendments proposed during this debate, which one way or another seek either to constrain the powers of GBE or to direct where it ought to focus its priorities and energies.

Amendment 46 tabled by my noble friend Lady Young proposes an addition to Clause 5 to ensure that Great British Energy will reduce greenhouse gas emissions, improve energy efficiency, ensure security of supply and include community ownership. As she said, we debated some of those matters on our first day in Committee. I agree with her about the vagaries of groupings, which after 27 years of membership of your Lordships’ House remain an eternal mystery to me, as we are enabled to repeat many of the debates already held. Indeed, the noble Earl, Lord Russell, has promised to come back to the very issue of community energy when we meet again on some distant future date in mid-January.

The Bill clearly provides a statutory basis for facilitating and encouraging the reduction of greenhouse gas emissions, improving energy efficiency and ensuring the security of supply of energy under the objects set out in Clause 3. Clearly the statement of strategic priorities must be consistent with these objects. I understand the point that the noble Lord, Lord Hamilton, made about prices; there was an Oral Question today on the impact these are having on UK businesses. He will know that, as I said then, the highest price for energy was achieved under his Government’s watch.

The noble Lord, Lord Offord, also spoke on that topic, and talked about security of supply. I think he very much reinforced what the noble Lord, Lord Hamilton, said when the latter raised the issue of the sun not shining and the wind not blowing, and the resulting reliance on gas. In our aim to move towards clean power by 2030 we envisage using renewables much more than currently. However, we also need nuclear as an essential baseload for our energy generation, and gas as the flexible energy generation which you can turn on and off. Currently gas is unabated, but with CCUS it will largely become abated. That is the way we see ourselves going forward, along with having long-term energy storage as set out in our clean power action plan.

On North Sea oil and gas—again, the noble Lord, Lord Offord, has raised this with me a number of times—I repeat that we are committed to a just transition, working with industry and the workers involved themselves to recognise the importance of the sector, which will operate for decades to come. We remain in close engagement with the industry on these matters. Like the noble Earl, Lord Russell, my essential response to these issues about energy price reductions and the need for long-term price stability is that reliance on international fossil fuels, and the markets that operate in the way they do, is simply not the way to solve them.

I turn to the specifics in Amendments 47 to 50 and 51A, tabled by the noble Lord, Lord Offord, my noble friend Lord Whitty, and the noble Earl, Lord Russell, and supported by the noble Baroness, Lady Bennett, and the noble Viscount, Lord Trenchard, although he did not speak to them. These amendments would require the statement of strategic priorities to include targets relating to consumer bills, jobs and supply chains, and to include reference to community energy schemes.

On the general principle, we want Great British Energy to operate independently. The Bill is focused on making the minimum necessary provisions to support establishing the company—that is why the Bill is constructed in the way it is. Normally, Governments are accused of trying to micromanage the institutions they are responsible for, but here the Government are saying that GBE needs to have as much operational independence as it can within the constraints of Clauses 3 and 5. However, some noble Lords wish to constrain, in one way or another, what Great British Energy should do. We are resistant to that as a general matter of principle.

[Lord Vaux of Harrowden (CB)]

I am rather baffled by the Minister’s argument. The Government are going to publish a statement of strategic priorities, but if Great British Energy is going to be independent why does it need such a thing? Presumably the statement of strategic priorities will point the company in the right direction, but the implication of the Minister’s argument is that it is going to be incredibly thin. Is that correct?

[Lord Hunt of Kings Heath (Lab)]

I do not really know why the noble Lord is baffled by what I said. I thought I clearly said that we wish Great British Energy to have as much operational independence as possible, within the constraints of Clauses 3 and 5. At this stage, I cannot tell him what will be in the statement of strategic priorities, because it is being worked on, but it will have sufficient detail to make absolutely clear the Government’s priorities within the constraints I have suggested, while allowing Great British Energy the breadth and room to move in the way it thinks best.

On the issue of jobs, which my noble friend Lord Whitty was absolutely right to raise, all the organisations he mentioned have a role to play to ensure not just that we create the required jobs but that we can fill them. The issue is not so much lacking jobs for the future but enabling enough people to come forward to be given the right training and skills to fill them as effectively as possible. There is a clear message in the action plan we published last week:

“The wider transition to net zero is expected to support hundreds of thousands of jobs, with Clean Power 2030 playing a key part in stimulating a wealth of new jobs and economic opportunities across the country. These jobs will cross a range of skill levels and occupations, including technical engineers at levels 4-7 … along with electrical, welding, and mechanical trades at levels 2-7, and managerial roles including project and delivery managers at levels 4-7. Many of these occupations are already in high demand across other sectors”.


We have within the department the Office for Clean Energy Jobs, whose role is to co-ordinate action to develop a skilled workforce to support and develop our clean power mission.

I should mention the nuclear industry. I am at risk of repeating myself, but other noble Lords have enjoyed doing that during our deliberation. The Nuclear Skills Taskforce calculated that we need 40,000 extra people working in the nuclear sector—civil and defence— by 2030. That is in five years’ time. That goes up into the 2040s. There is a huge job to be done, and I believe it is my department’s role to work with industry and all the other organisations to spearhead that.

[Lord Hamilton of Epsom (Con)]

Does the noble Lord share my concern that the nuclear power station being built in Somerset is costing four times as much as an identical one in South Korea? Does he have any plans to bring the price down for future nuclear power stations?

--- Later in debate ---

[Lord Hunt of Kings Heath (Lab)]

That question really should be addressed to the noble Lord’s own Front Bench and their stewardship. I want to be fair to EDF: a lot of the reasons for the high cost related to starting afresh with new nuclear in this country and issues with designs, because the UK regulator wanted thousands of design changes. Covid did not help. Developing a supply chain and the skills also contributed. EDF has made considerable progress recently. It is sticking to its commitment that the first unit will start operating between 2029 and 2031.

Of course the noble Lord is right to raise the issue of cost. He will probably know that we will move to a final investment decision on Sizewell C over the next few months, but because it is an 80% above ground replication of Hinkley Point C, a lot of the things EDF learned from the whole process of construction will be transferred to Sizewell C. We are trying to bring in private sector investors to bring in commercial discipline, which, if we can get to FID, should ensure that Sizewell C will basically proceed on time and on budget, while learning all the lessons from Hinkley Point C.

--- Later in debate ---

[Baroness McIntosh of Pickering (Con)]

May I have a reply, if possible, on having joined-up planning applications for offshore oilfields and substations or pylons, so there is one planning application for the whole project?

[Lord Hunt of Kings Heath (Lab)]

I am sorry, I should have responded. Clearly, the noble Baroness will know from the Clean Power 2030 Action Plan the Government’s intent with regard to planning generally. She will have seen what we said in it about seeking to reform the whole planning process. I will ensure that the point she makes is embraced within that. I see the force of her arguments.

[Baroness Young of Old Scone (Lab)]

I thank noble Lords who took part in this debate, including the noble Baroness, Lady Boycott, the noble Earl, Lord Russell, and my noble friend Lord Grantchester. The noble Baroness, Lady Hayman, is no doubt watching Parliamentlive.tv and cheering us on as we speak. I also thank the noble Lord, Lord Offord, for his party’s support for community energy and for the remarks about land use, which we will come to in Amendments 67, 73, 104 and 105. It highlights the need for a land use framework for England. I was kind of hoping that we would get it for Christmas, but it looks like it might be slightly later. We were supposed to get it last Christmas, as well.

I was delighted to hear that the Minister welcomes the further amendments on community energy, tabled by the noble Earl, Lord Russell, that will come up in our next session. It will be the third opportunity for the Minister to tell us that he is pondering. Perhaps I should change my wish for a land use framework this Christmas to a wish for some new arguments in favour of community energy before our next debate, because it is becoming slightly repetitive. On the other hand, a good case can bear repetition.

The Minister clearly understands the importance of community energy. I am not sure he quite understands the distinction I was making between the objectives of GBE—which are about what it can and, by implication, cannot do—and strategic priorities and plans, which are what, in the Government’s view, it must do and do now. That is a material difference. In order to inform these reflections between Committee and Report, and in view of the wide support around the Chamber for community energy issues being addressed in the Bill, will the Minister meet with some of us who have indicated that very wide support?

[Lord Hunt of Kings Heath (Lab)]

I would be happy to do so.

[Baroness Young of Old Scone (Lab)]

I thank the Minister for that. In the meantime, I will withdraw the amendment, though perhaps not before dwelling briefly on the statement from the noble Baroness, Lady Boycott. She talked about looking out your window and seeing the local wind turbine in which you would have some skin in the game as a result of a community energy scheme, and so think kindly on it rather than it being the enemy. That reminded me of how the Labour Party used to feel about Arthur Scargill: “He may be a bastard, but he’s our bastard”. There may well be hope for this policy.

In begging leave to withdraw the amendment, I reserve the privilege to decide, when the noble Baroness, Lady Hayman, is back in harness, whether this should return on Report. That will very much depend on what the Minister tells us about the outcome of his reflection between Committee and Report. I wish him a happy Christmas while he does that.

--- Later in debate ---

[Lord Offord of Garvel (Con)]

My Lords, I thank noble Lords who have contributed: the noble Lord, Lord Vaux, for opening this group, the noble Earl, Lord Russell, and my noble friends Lord Hamilton, Lord Effingham, Lord Howell, Lord Trenchard and Lady McIntosh. I particularly thank my noble friend Lady Noakes for her detailed scrutiny of the Bill and her expertise.

The debate has raised crucial issues regarding how our energy future is shaped, particularly community energy, transparency and the governance of strategic priorities. It is evident that we in this House today share many of the same concerns about the absence of a statement of strategic priorities and plans. I reiterate that this is in the context of the Bill being responsible for £8.3 billion of taxpayers’ money, with no detail as to GBE’s plans, priorities, objectives and purpose. As the noble Lord, Lord Vaux, said, the Bill is merely a skeleton, providing unabridged powers to the Secretary of State without clarity on how they can be used.

With that in mind, I welcome Amendment 119, tabled by my noble friend Lady Noakes, which would delay the commencement of other provisions in the Bill until a statement of strategic priorities has been laid before Parliament. This is a sensible and necessary step to ensure that Parliament and the public have sight of the plans that will guide the operation of this great new company, GBE. Furthermore, Amendment 58 would ensure that Parliament is made aware of Great British Energy’s strategic priorities, and Amendment 52 would give Parliament the power to reject a statement of strategic priorities once received. We cannot, in good conscience, simply allow this Bill to proceed without the opportunity to scrutinise these priorities, which will guide £8.3 billion of taxpayers’ investment.

Amendment 51 would introduce a clear time limit for the Secretary of State to publish the statement, while Amendment 54 would ensure that a motion for resolution is tabled in both Houses of Parliament. These amendments provide the necessary transparency and accountability to ensure that Parliament can scrutinise and approve those priorities before any further steps are taken. The Bill cannot and should not proceed until we have seen the strategic priorities.

This brings me to the question of whether Clause 5 should stand part of the Bill. In its report, the Constitution Committee expressed concern that Clauses 5 and 6 amount to disguised legislation and that Clause 5 does not offer an adequate degree of parliamentary oversight. This is a serious constitutional issue, and I hope that the Minister takes the committee’s concerns seriously as we continue our debate.

Amendment 53, tabled by my noble friend Lady McIntosh of Pickering, seeks to insert a provision into Clause 5 requiring the Secretary of State to produce a statement to the chairs of the relevant Select Committees in both Houses of Parliament. This amendment is fundamentally about transparency, and its purpose is simple: to ensure that Parliament can properly scrutinise the actions of the Secretary of State and guarantee that public money is being used efficiently and in the public interest. This is why we propose that a copy of a strategic statement be sent to the relevant Select Committees for their review and input.

As discussed earlier on Amendment 57, tabled by my noble friend Lord Effingham, transparency is not a luxury; it is a necessity. Transparency ensures that decisions are made openly and subject to public and parliamentary scrutiny. He brought to our attention consideration of the requirement that GBE deal with the devolved Administrations throughout the UK.

Finally, Amendment 90 seeks to insert at the end of Clause 7 the provision that the Secretary of State must

“arrange for a statement to be made in each House”.

The intent behind this amendment is to ensure that the actions of the Government in relation to Great British Energy are made public and accountable. For such a significant and impactful initiative, there must be a mechanism for direct communication with Parliament. This would allow both Houses to question, debate and hold the Government to account on any developments or changes in the direction of the company.

A comparison has already been drawn by the noble Lord, Lord Vaux, with the National Wealth Fund, previously the UK Infrastructure Bank. That organisation experienced thorough scrutiny and testing before its establishment. Why should we treat GBE any differently? If we expect such rigorous assessment for the UK Infrastructure Bank, it stands to reason that a similar level of transparency and parliamentary scrutiny should apply to Great British Energy. I urge noble Lords to support this amendment, as it reinforces the principles of accountability that should be at the heart of this Bill.

In conclusion, I welcome the amendments and the ongoing discussions regarding the strategic priorities and transparency of Great British Energy. The strategic priorities are critical to the success of the Bill, and I am grateful to all noble Lords who have expressed similar concerns. I reiterate my support for my noble friend Lady Noakes and all other noble Lords who have raised similar issues.

[Lord Hunt of Kings Heath (Lab)]

My Lords, I am most grateful again to noble Lords who have raised a number of very interesting points in relation to Clause 5 and the statement of strategic priorities. I remind the Committee that the founding statement set out GBE’s purpose, priorities and objectives, including its mission statements and its five functions. The first statement of strategic priorities is intended to ensure that Great British Energy will be focused on driving clean energy deployment, boosting energy independence, creating jobs and ensuring that UK taxpayers, bill payers and communities reap the benefits of clean, secure, home-grown energy.

Clearly, Clause 5 is important in that respect. The noble Lord, Lord Offord, will not be surprised that I will resist his opposition to it standing part of the Bill. He made another point in relation to the investment bank legislation. I understand the point; he knows that we have looked at this legislation and taken parts from it, but we have also looked at Great British Nuclear, which his Government put through in the last Energy Act. In some cases, we think that that is appropriate to look at in relation to the way this legislation has been framed.

Amendments 51, 52, 53, 54, 57, 58, 90, 119 and 128 all refer to the statement of strategic priorities, with some amendments seeking to defer commencement of the Bill in relation to the statement. The noble Lord, Lord Howell, always speaks with great experience on energy, and he is threatening us with many more amendments the next time we meet. We believe that the best way to get stability on prices and security of energy, and to deal with climate change, is to move in the way that we have set out. Numerous organisations have looked at it and say that, in the context of value for money, investment decisions and cost to government, this will be the cheapest way forward in the end, and that staying reliant on fossil fuels, with the unreliability of the international market, would not be a productive use of our resources and would do nothing for climate change. That is why we are going down this path.

I come to the amendment of the noble Lord, Lord Vaux, and his opening remarks on this group. We do not wish to escape parliamentary scrutiny. I say to the noble Baroness, Lady Noakes, that we do not want to weaken accountability processes. I assure her that there is no way we will use the power of direction in the way that she suggested might happen. She referred to the power of direction and from what she said I took it that she thought it could be used in a way which would simply direct GBE, instead of the statement of priorities, but perhaps I have confused that.

[Baroness Noakes (Con)]

The noble Lord might like to read Hansard. I did not say that, but I do not think that need hold us up. We are not talking about the power of direction in this set of amendments.

[Lord Hunt of Kings Heath (Lab)]

I know we are coming to that in later amendments, so I will certainly do that.

I understand the points that noble Lords are making about parliamentary involvement in the statement of strategic priorities. I have read the report of the House of Lords Constitution Committee. The Government have no interest whatever in delaying the statement of strategic priorities in order to escape parliamentary scrutiny. I would have thought that the publication of our clean power action plan, and the work of the National Energy System Operator in its advice to the Government of a few weeks ago, would suggest that getting to 2030 in the way we wish to do will be very challenging. We believe we can do it, but we cannot mess around.

The statement of strategic priorities is certainly an important element in allowing Great British Energy to move forward, but we have to work through a number of important issues. We have to consult the devolved Governments. I take the point made by the noble Earl, Lord Effingham, about the need for that to be a thorough process, and that will take time. Time is imperative. There are issues about the delay that would be built into this, if we were to accept some of the amendments being proposed.

I hesitate to bite on the comments of the noble Lord, Lord Teverson, about the effectiveness of secondary legislation. I suppose the real response to him is that, in 1911, there was very little secondary legislation, and therefore the Parliament Act 1911 did not encompass it, the result being that your Lordships’ House has an absolute veto on secondary legislation, which it has been loath to use for very understandable reasons.

Amendment 53, from the noble Baroness, Lady McIntosh of Pickering, would require all versions of the statement of strategic priorities to be put before the chair of the relevant Select Committees. Clause 5 already requires the statement to be laid before Parliament, and the chairs of any relevant Select Committee could access the statement and any revised or replacement statements. I assure the noble Baroness that it is the normal practice of my department to provide such information on a regular basis to the chair of the energy Select Committee in the other place. Moreover, where Select Committees in your Lordships’ House have produced reports that are relevant to any announcement being made, it is normal practice to send a copy to the chairs of those Select Committees. I accept absolutely the principle of what she is proposing.

Let me be clear that the process of developing, agreeing and publishing the statement of strategic priorities is intended to enable the Secretary of State to provide strategic steers to Great British Energy within the framework of its objects, as set out in Clause 3. The statement of strategic priorities cannot overrule the objects clause in Great British Energy’s articles of association. Those objects set the overarching framework for Great British Energy. We believe it is right that the framework provided for in legislation is scrutinised by Parliament, through Clause 3, as we have already done in the previous day in Committee.

--- Later in debate ---

[Lord Vaux of Harrowden (CB)]

There was one other question I asked the Minister which he has not answered, which is whether the strategic priorities document will be accompanied by an impact assessment. The impact assessment we have with this Bill basically says that there are no benefits or costs because all it does is create the company, so we are effectively going to go through this process of creating something that can spend £8.3 billion with no impact assessment if that does not happen. Will there perhaps be an impact assessment that accompanies it?

[Lord Hunt of Kings Heath (Lab)]

My Lords, at this stage, I cannot answer that because it is still to be decided as part of the work that we are taking forward in relation to drafting the statement.

[Lord Vaux of Harrowden (CB)]

My Lords, I thank all noble Lords who have taken part in this debate. Before I sum up, I say to the noble Lord, Lord Howell, that I am not against this Bill. The problem we have here is the lack of any detail in it and the lack of any scrutiny once we have that detail, which is what the Constitution Committee pointed out. As the noble Earl, Lord Russell, pointed out, there is a high degree of unanimity around the House that the current situation set out in the Bill in that respect is really not adequate and that we need a greater level of parliamentary involvement in what will be the core element of this Bill: what GBE is going to do.

I take on board the points that the noble Lord, Lord Teverson, made about secondary legislation. I agree, but it is what we have at the moment, so we have little choice but to work with it. I would love to see a change to the way secondary legislation is debated, and it should be amendable, but we have a way to go before we come there.

There were plenty of ideas in this group as to how we might improve the scrutiny. I do not think any of us are wedded to any one of them. I am encouraged by what the Minister says about listening to the Constitution Committee and his belief in parliamentary scrutiny. I therefore hope that we can have some useful and constructive discussions between now and Report on this subject and come up with something that we can all agree on as an appropriate level of parliamentary scrutiny on this most critical aspect of the Bill. If we do not, I am absolutely confident that we will come back to this on Report. For now, I beg leave to withdraw Amendment 51.

--- Later in debate ---

[Lord Hunt of Kings Heath (Lab)]

My Lords, let me begin with Amendment 56 tabled by the noble Baroness, Lady Hayman, and spoken to today by the noble Lord, Lord Ravensdale, and Amendment 56A tabled by the noble Viscount, Lord Trenchard. These amendments propose an addition to Clause 5, which would require the Secretary of State to consult the Climate Change Committee, the National Energy System Operator, Natural England, the Environment Agency, Great British Nuclear, the National Wealth Fund and other relevant people before publishing a statement of strategic priorities.

I pay tribute to the noble Baroness, Lady Hayman, for all the work that she has done and all she has contributed to legislation in the last few years. I also thank the noble Lord, Lord Hamilton, for his rather barbed support in relation to the Government’s response to these amendments. It was not a complete surprise that he does not entirely welcome the Bill, although there will be unalloyed pleasure for my colleagues in Defra at the support that he is giving to our planning reforms, which actually do relate as well to the energy infrastructure and the investment that we wish to see.

The noble Viscount, Lord Trenchard, is particularly focused on nuclear energy and its potential, which I always welcome. Great British Energy and Great British Nuclear are already talking very closely together, and he can be assured that this will continue. In response to the noble Lord, Lord Howell, I say that electricity demand in the future is clearly going to go up hugely over the next 20 to 30 years. If he looks at the clean power action plan, he will see that we really recognise the need to speed up planning consent and connections to the grid. This is fully understood, which is why it is a such an important component. In a sense, this is for the Government to take forward: GBE will have to work within those policies that we are taking forward. It is for the Government to do this, and that is why it is not really reflected in the provisions of the Bill.

--- Later in debate ---

[Lord Bourne of Aberystwyth (Con)]

The same could have been said of Introductions. As I said, it did not intend to go into pig breeding when it set the company up.

[Lord Hunt of Kings Heath (Lab)]

We will reflect very keenly on that between Committee and Report.

There is no doubt about the argument. We are facing a twin climate and nature crisis. They are inextricably linked. Not only are the Government committed to reaching net zero by 2050 and clean power by 2030, we are also committed to restoring nature—for example, with the Environment Act targets in England to halt the decline in species abundance by 2030—and to effectively protect our marine protected areas as part of our global 30-by-30 commitment.

We know that the UK is one of the most nature-depleted countries in the world, so it is not enough for us to protect or conserve. This is why the Government are committed to restoring nature through such targets, and our related international commitments. The real opportunity available to the UK is to deliver clean power by 2030 in a way that does not simply avoid or compensate for damage to nature, but is constantly innovating to deliver the target in a nature-positive way, such as rewetting lowland peat soils at the same time as constructing new solar farms or creating new wildlife corridors alongside or underneath linear energy infrastructure. The noble Lord, Lord Teverson, referred to that potential earlier in our previous debate.

It is not so much about balancing energy and infrastructure needs but about trying to integrate them, rebuilding our natural infrastructure at the same time as building the new energy infrastructure we need in the 21st century. It is significant that in the Clean Power 2030 Action Plan, the Government have said that we

“will launch an engagement exercise in early 2025 to invite communities, civil society and wider stakeholders to submit their ideas on how government can best encourage nature-positive best practice into energy infrastructure planning and development. Feedback from this exercise will allow government to better understand how we can integrate nature restoration through Clean Power 2030”.

We want Great British Energy to focus on its mission of driving clean energy deployment, but I have listened very carefully to what noble Lords have said today and I understand the point that noble Lords are making about the Crown Estate Bill. I assure noble Lords that we are going to reflect on this between Committee and Report.

[Viscount Trenchard (Con)]

My Lords, I thank my noble friend Lord Howell for his support for my amendment and all other noble Lords who referred to my amendment in the debate. I appreciated the whole debate, and I am grateful to the Minister for his thoughtful reply. There will be another opportunity to discuss the same kind of thing in a future group, of which he is aware, so I will have an opportunity to return to that. I beg leave to withdraw my amendment.

Private Low-carbon Investment: Green Finance Institute Report

Lord Hunt of Kings Heath Excerpts

Monday 9th December 2024 Lords Chamber

[Lord Teverson]

To ask His Majesty’s Government what plans they have to respond to the Green Finance Institute’s report A Greenprint for Property Linked Finance in the UK, published in November, to accelerate private low-carbon investment into existing homes.

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

My Lords, we recognise the important role that private finance can play in helping us to achieve our decarbonisation ambitions. My officials have met the Green Finance Institute several times to discuss the potential for property-linked finance in a UK context. We will continue to work with industry stakeholders to explore options for working with the private sector, including banks and building societies, to scale up private finance to accelerate efforts in this area.

[Lord Teverson (LD)]

My Lords, I very much welcome those conversations that the Minister has had. As he knows, the way to bring down energy bills for families is to insulate their homes. Indeed, homes account for almost a quarter of carbon emissions. Perhaps the Minister could be a little more precise. These discussions can take a long time. The £6 billion, which I welcome, in the Government’s warm homes plan is just a small amount of the money that is needed to refurbish UK buildings. Given that legislation is often required to implement these schemes, can he give some sort of timetable of when bringing such private finance into this sector will happen?

[Lord Hunt of Kings Heath (Lab)]

My Lords, the noble Lord is absolutely right that this is an important area of policy. We reckon that buildings account for 31% of total UK emissions, and heating is 75% of that proportion of emissions, so I very much take his point that there is an urgent need to make progress. I cannot give him an exact time. Looking at international experience of these kinds of schemes, it is not altogether positive. In the US experience, for instance, it may have worked for multi-occupational commercial properties but, for individuals, it does not seem to have made much progress.

[Baroness McIntosh of Pickering (Con)]

My Lords, does the Minister not share my disappointment that his Government have no plans to review the level of the warm homes discount? Given that there does not seem to be any urgency in renovating existing homes, will he use his good offices to put pressure on the Government to review the level of the warm homes discount? I refer to my interest as president of National Energy Action.

[Lord Hunt of Kings Heath (Lab)]

My Lords, this is the third time the noble Baroness has asked me this question in the last two weeks. I am afraid that we have not moved on from that position. On the warm homes plan, as she will know, we made it clear in the Budget that we will see a total investment of £3.2 billion in warmer homes across 2025-26. She is right that making progress in relation to energy-efficient homes is very important indeed.

[Baroness Wheatcroft (CB)]

My Lords, while it is important to make sure that older homes are brought up to standard, does the Minister accept that there is merit in ensuring that all developments going ahead use heat pumps for the entire development? That works in areas of Germany. Will the Minister consider doing that?

[Lord Hunt of Kings Heath (Lab)]

My Lords, the noble Baroness is right to raise new homes but part of the issue we have is that we have the oldest housing stock in Europe and a third of our housing was built before World War II. As far as her question is concerned, I can tell her that the Ministry of Housing, Communities and Local Government has indicated that it is working on future standards. These will set new homes and buildings on a path that moves away from relying on volatile fossil fuel markets and ensures that they are fit for a net-zero future. This is likely to see a mix of low-carbon technologies used for heating, including heat pumps and heat networks. Of course, the point the noble Baroness raises is an important one.

[Lord Kamall (Con)]

The Minister raised international comparisons and learning from other countries. He also said—I cannot remember his exact words—that in the United States residential market, property-linked finance has not always been successful or well taken up. Can the Minister explain some of the reasons for that and what his department has learned from that experience in the United States residential market?

[Lord Hunt of Kings Heath (Lab)]

My Lords, one of the issues is that home owners did not really understand what they were signing up to. In California, for instance, the state enacted a preservation and consumer protection Act, which led to an almost 90% decline in originations. More generally, the Green Deal that the coalition Government brought in shows some of the problems. First, the interest rates on offer were not sufficiently competitive; secondly, it was very complex to make an application; and, thirdly, there were lots of allegations of mis-selling. Given all that, the Government withdrew it. We need to learn a lot of lessons if we are going to make progress.

It is thought that currently owners are deterred from making a major investment in energy-efficiency improvements because they do not expect to live in the home for a sufficient length of time to get the money back through energy efficiency. The whole point about the GFI proposal is for longer-term loans that are assigned to the property, to keep interest rates low and give people a much better opportunity to make this investment.

[Baroness Bennett of Manor Castle (GP)]

My Lords, in an earlier Question your Lordships’ House was talking about vocational training and education. However it is funded, can the Minister assure me that ensuring we have the vocational skills and the building skills needed for home insulation is of the highest priority to the Government? That is crucial for the climate, for the health of the nation and for saving households money.

[Lord Hunt of Kings Heath (Lab)]

My Lords, I cannot really respond better than by saying that my noble friend answered the point thoroughly. We at the Department for Energy Security and Net Zero keep a close eye on skills needs. In fact, the whole energy sector has great potential for growth in really high-skilled jobs in the future. Since 2021 the department has invested over £28 million in skills and training, which has resulted in 33,000 training opportunities in retrofit, clean heat and energy efficiency roles. I take the noble Baroness’s point and we keep this issue under very close review.

[Earl Russell (LD)]

My Lords, cold homes drive up ill health, our energy bills and our emissions. At least one-fifth of the UK’s CO₂ emissions come from home heating and our homes are some of the worst insulated in western Europe, with 27 million of our homes needing to be retrofitted. Does the Minister agree that property-linked finance makes sense? I ask him to look at it in relation to heat pumps, particularly with a view to bringing in enabling legislation and pilot programmes so that the Government can find the schemes that really work.

[Lord Hunt of Kings Heath (Lab)]

I agree with the premise of the challenge that we face. We responded positively, as do I, to the proposals made by the Green Finance Institute, which is why we are working on this seriously and discussing it with it, and we will be looking at the outcome of the pilots in commercial properties that the GFI is going to take forward in the next few months. But I have to point out to the House that this is not easy. Current experience suggests that unless you can ensure that a scheme is easy for people to understand and know what they are getting themselves into, and can offer competitive interest rates, it is not going to fly. We need to make this a credible scheme.

[Lord Jamieson (Con)]

My Lords, I refer to my interests as set out in the register. How do the Government plan to balance the drive for low-carbon homes with the risks of increasing housing costs or creating barriers for those already struggling in the housing market?

[Lord Hunt of Kings Heath (Lab)]

My Lords, that is an interesting question. Clearly, one issue about taking forward such a scheme is that one does not want to make it difficult for people to sell their homes. Again, I suggest that evidence from the US shows that, although the intention was for the charge to stay with the property, when it came to individuals, many sellers wiped off the charge to make the sale realisable. We need to keep a careful eye on ensuring that if we introduce such a scheme we do not have a negative impact on the housing market in the way the noble Lord has suggested.

[Lord Kirkhope of Harrogate (Con)]

My Lords, I have asked several Questions recently in connection with solar panels, particularly solar farms, which occupy good agricultural land in this country. Surely the Government can do more to encourage the installation of solar panels, both on domestic properties and, more particularly, on industrial properties, where there are large roof spaces available for solar panels. Would that not be a much better idea?

[Lord Hunt of Kings Heath (Lab)]

My Lords, I very much take the noble Lord’s suggestions. We have seen a big expansion in solar; we could see more. I agree with him about industrial sites, but we also need ground-based solar, and the fact is that, even if we achieved all our ambitions around solar, it would take a very small percentage of agricultural land to provide it.

Greenhouse Gas Emissions Trading Scheme (Amendment) (No. 2) Order 2024

Lord Hunt of Kings Heath Excerpts

Monday 9th December 2024 Lords Chamber

Moved by

[Lord Hunt of Kings Heath]

That the draft Order and Regulations laid before the House on 21 and 28 October be approved. Considered in Grand Committee on 2 December.

Motions agreed.

Great British Energy Bill

Lord Hunt of Kings Heath Excerpts

Committee stage
Tuesday 3rd December 2024 Lords Chamber

[Lord Hunt of Kings Heath (Lab)]

My Lords, I really cannot disagree with anything noble Lords have said in this debate, although I do not believe we need an amendment. I utterly agree that nuclear power is essential to the future; it provides the essential baseload; it is safe, secure and reliable. We have great opportunities in the UK to develop nuclear energy and the supply chain, even more than we have now. Obviously, Rolls-Royce, from a UK company point of view, has great potential.

We are keeping a very close eye on Hinkley Point C; the operational date that has been given for the first unit between 2029 and 2031 is very crucial. We are working very hard to get Sizewell C to final investment decision in the next few months. We have the SMR programme, and I agree with the noble Baroness, Lady Bloomfield, about the importance and value of the work of Great British Nuclear. We are regularly engaged with GBN, and I pay tribute to the great work that its chair and chief executive are doing.

I have met a number of companies who are very interested in developing AMRs. We have all seen the experience of companies such as Amazon, in the US, linking small modular reactors and advanced modular reactors with data centres; clearly, we wish the UK to be very much part of that. In terms of the UK’s growth agenda, if we combine military and civil nuclear defence requirements, we know that the nuclear skills task force has now estimated that we need about 40,000 extra people in the industry by 2030, and moving on with even more people by the 2040s. This is at once a challenge and a huge opportunity, because the careers that are offered in the nuclear industry are secure and well paid, and it is a very exciting industry to go into.

The noble Lord, Lord Offord, quoted figures from the IEA. Although we have seen a global downturn in nuclear energy, it is right to now talk about a renaissance. At international gatherings, it is pretty clear that there are countries coming back to nuclear, as we are, and other countries that wish to develop nuclear energy for the first time. This is very encouraging; we know that, in terms of popular opinion, there is a much more positive attitude among the public towards nuclear energy.

In saying I do not believe that the amendment is necessary, I do very much embrace the comments of the noble Lords and I can assure them that, in the department, we see nuclear energy as having an essential role for the future.

[Lord Offord of Garvel (Con)]

I thank the Minister for his clarity and unequivocal support of nuclear, and, indeed, for his reply to my noble friend Lord Howell of Guildford, who asked a specific question in relation to the GB Energy Bill. GB Energy can, if required, participate in nuclear, but the clear understanding is that discussions are ongoing with GB Nuclear. So I would encourage the Government to continue to clarify what that will look like and how it will be funded going forward.

[Lord Hunt of Kings Heath (Lab)]

If I may come back on that, the noble Lord may have seen that the energy Select Committee had a hearing at which the chair of Great British Energy and then the chair of Great British Nuclear gave evidence. It is clear from what they said that we will have no difficulty at all in establishing a co-operative relationship.

[Lord Offord of Garvel (Con)]

That is noted. I thank the Minister. I beg leave to withdraw the amendment.

[Lord Hamilton of Epsom (Con)]

Can I ask my noble friend why the new power station in Somerset is costing four times as much as an identical one in South Korea? Surely this will add to energy costs, not detract from them.

[Lord Hunt of Kings Heath (Lab)]

I am not sure which “noble friend” that was aimed at, but I will have a go if the noble Lord likes. I was at the department when we started talking about Hinkley many years ago. Two or three things happened. First, it took an awfully long time to come to a final investment decision. Secondly, EDF thought it could bring a design model from France and place it in Hinkley Point C without having to make design changes. The reality was that it had to make thousands of design changes because of the requirements of the regulatory system in the UK.

--- Later in debate ---

[Lord Hamilton of Epsom (Con)]

I hope the Committee will forgive me. I was slow on the uptake and should have preceded my noble friend instead of following him. I think doing so is legitimate within the rules of Committee.

I very much support my noble friend Lord Ashcombe’s amendment. The Minister has already made the point that I have the greatest possible reservations about net zero. This is not because I have some tremendous hang-up and that I want to pollute the atmosphere and make the place less liveable than it might otherwise be, but because we are now reaching the point on net zero where the costs are starting to come in and getting very severe indeed. That is why we have to think very closely and carefully about where we go from here.

We have done an awful lot to lower our net emissions into the atmosphere, largely by closing down vast areas of our generation industry, in which coal-fired power stations have now been phased out almost completely. What has happened? We think we are setting a wonderful example to the rest of the world but our net emissions come down and world emissions go up. That is hardly surprising, because the Chinese and the Indians are still building coal-fired power stations. They account for massive amounts of coal-fired energy, which keeps their energy prices low and makes them very competitive with the rest of the world. Are we really going to see a change of heart from China and India? Will they suddenly say, “No, no, we’ve been polluting the atmosphere too much and we must now start cleaning everything up and working to net zero”? I do not think they will. They want to keep their competitive position.

That is why it is so essential, to refer back to my noble friend’s amendment, that we continue to accept that we will need oil and gas for much longer than we might originally have thought. The cost of saying we will not explore for any more oil and gas in the North Sea is absolutely massive in terms of jobs for people living in Scotland. The pigeons are starting to come home on all this. That is one of the reasons why I have the greatest possible reservations about driving on towards this net-zero target: the costs are becoming prohibitive. Our energy prices are already higher than almost everybody in Europe. This will cost us jobs and competitiveness in the world generally for years to come.

[Lord Hunt of Kings Heath (Lab)]

My Lords, one of the joys of debating energy is that, on every occasion, we come back to the substance of the whole argument about energy and where we are going. I am grateful to the noble Lord, Lord Ashcombe, for stimulating such an interesting discussion. The noble Lord, Lord Hamilton, in a sense, has brought this into the open. Clearly, it was his Government who signed up to the legislation on net zero by 2050. The last Government, as much as we do, saw the huge risks involved in climate change and the need to take action.

The international position is that, despite what the noble Lord says, the fastest growth in use of renewable energy is occurring in China. The International Energy Agency indicated in its recent renewable energy report that we will see a 2.7 times increase in the use of renewables globally between now and 2030. So, there is a global movement towards clean power and net zero. Yes, it is going at different paces, but we believe the UK can gain great advantage by taking a leadership role. The National Energy System Operator—NESO—has shown that there is a pathway to clean power by 2030. We are now committed to taking that and turning it into an action plan, which I hope we will be able to publish very shortly.

I would not deny that North Sea oil and gas still have important roles to play, and I am of course listening to what noble Lords say about the tax situation and proposals, and the investment issue. Clearly, the Government are in very close discussions with the industry. Our aim is an orderly transition, and that is what we mean to achieve. So we clearly see the value of what happens in the North Sea, and we need it to continue to provide supplies to the UK in the years ahead. Equally, however, we need to manage the transition to clean power and net zero.

On the issue of jobs, obviously, the number of people employed by GBE will not balance out the people who may be lost to the oil and gas industry in the future. This is important. It does not really matter where the chair comes from; the point is that the headquarters of GBE will be firmly based in Aberdeen. I have already referred to the extra 40,000 people we need in nuclear by 2030. If you look at the other sectors we are talking about investing in—CCUS, hydrogen—all of them will need more people. So, the energy sector as a whole will provide a huge number of opportunities, but I accept that, if there is a reduction in the number of people employed in the North Sea, it is our responsibility, with industry, to help manage that transition effectively.

In the end, we may disagree about this, but the Government are confident that we are right to go towards clean power as quickly as possible. We have had endorsement, both from the Committee on Climate Change and the Office for Budget Responsibility, that investing in clean energy now will pay dividends in the long term.

[Lord Ashcombe (Con)]

I am grateful to the Minister and, indeed, to my noble friends. I continue to worry that, as we import LNG, our effective emissions, by passing the problem elsewhere, are significantly higher than they would be using our own production. That is an important fact in this debate. We may have to come back to this issue on Report, but for now, I beg leave to withdraw my amendment.

--- Later in debate ---

[Lord Offord of Garvel (Con)]

My Lords, I thank the noble Lord, Lord Alton of Liverpool, and the noble Earl, Lord Russell, for their amendments. We all agree that modern slavery is one of the great scourges of our time. It is estimated that tens of millions of people are trapped in forced labour worldwide, many of them in sectors tied to energy production and manufacturing. Indeed, as the noble Lord and the noble Earl pointed out very eloquently, renewable energy technologies such as solar panels rely on materials such as polysilicon, much of which is sourced from regions where reports of forced labour and human rights abuses are widespread.

These amendments seek to ensure that GBE operates with integrity and accountability in its supply chain practices. Each amendment addresses a crucial aspect of ethical responsibility, and together they would bind the Government to ensure clean energy does not come at the expense of human rights, ethical labour practices or transparency. I encourage the Government to look at this matter carefully. Can the Minister explain what measures will be put in place to ensure that there is oversight of Great British Energy’s supply chains? If Great British Energy is to represent the values of this nation, there is a strong case for tougher measures to prevent public funds being spent in a way that supports or sustains supply chains that exploit human beings.

On Amendment 109, while I recognise the sensitivity and complexity of this issue, it is crucial that we approach it with transparency and courage. Consumers and stakeholders have a right to know the origins of the products they use and the conditions under which they are made. I hope the Minister will listen carefully to the arguments made on this matter; we on these Benches will be very interested to hear his reply.

As a publicly backed entity, Great British Energy has an opportunity to set an example and be a model to other countries. I am sure the Government agree there are opportunities here and we look forward to hearing their response.

[Lord Hunt of Kings Heath (Lab)]

My Lords, I thank the noble Lord, Lord Alton, for his expert introduction to the amendment. I also thank the noble Earl, Lord Russell, for his wise comments. I say to the noble Lord, Lord Offord, that we are, of course listening very carefully to this important debate, and I have no doubt whatever about the gravity of the issue. The amendments seek to highlight the importance of ensuring that our supply chains are protected from forced labour, and I wholeheartedly support this.

Great British Energy Bill

Lord Hunt of Kings Heath Excerpts

Committee stage
Tuesday 3rd December 2024 Lords Chamber

[Earl Russell (LD)]

My Lords, I rise very briefly. I thank noble Lords for bringing forward these amendments. These are really important issues that are worth examining in Committee. However, on these Benches we do not feel that any of these amendments really provide proper solutions to some of the problems that are contained within this Bill.

We feel that GB Energy is separate and distinct from the National Wealth Fund; as GB Energy grows and develops over time, that will become clearer. We welcome the setting up of GB Energy, and we think it is absolutely essential that Britain has a chance to own and manage part of its energy resources and that we are investing in having our energy security and independence.

I read recently on the old Government’s website a press brief from No. 10 during the Sunak Government, which proudly proclaimed that they had spent £40 billion subsidising home owners and businesses through the energy price crisis that we had in the last few years. Obviously, that cannot continue, and our bill payers are suffering, which is not good for us.

We do not really feel that having minority equity stakes is the answer to these problems either. There are problems in this Bill: the Government have chosen to have a very short Bill; the strategic priorities are not written up and are not ready; Clauses 5 and 6 give more control than the Government should have without adequate parliamentary scrutiny—I recognise that this has been picked up by reports in this House. Those are all matters we can discuss and work constructively with the Government to find solutions to them. Ultimately, this is a useful conversation, but we do not see the answers within these amendments; we see the answers within other amendments that are yet to come.

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

My Lords, we have started our proceedings in Committee with a very interesting discussion about the relationship between Great British Energy and the National Wealth Fund. I certainly agree with the noble Lord, Lord Offord, on the importance of our debates on energy and net zero more generally and with the noble Lord, Lord Howell, about the complexities of our energy system and the challenges that we have undoubtedly set ourselves. The recent report by NESO, the National Energy System Operator, sets out those challenges, but gives us some confidence that we can achieve them.

Amendment 1, in the name of the noble Lord, Lord Offord, seeks to require that Great British Energy must be a subsidiary of the National Wealth Fund. Clearly, he indicated he wanted to explore in more detail the relationship between the two organisations. I should say at once to the noble Lord, Lord Howell, that we are certainly not creating organisations for the sake of it. As someone who has spent most of my life dealing with NHS structures and restructuring, I have learnt over the painful years that simply creating new organisations and merging other ones very rarely leads to a successful outcome. We believe that Great British Energy is a key component of our energy and net-zero strategy; that is why it was a manifesto commitment and why we are determined to plough on with this proposal.

On the relationship and the difference between the National Wealth Fund and Great British Energy, the Government have stated very clearly that we see the National Wealth Fund as the state-owned investment bank and wealth fund. It will invest across clean energy sectors, including green hydrogen, green steel, gigafactories and ports, as well as other sectors central to delivering our industrial strategy. On the other hand, Great British Energy will be the UK’s state-owned energy company. It will own, manage and operate key energy projects across the country, including making investments across the clean energy sector and supporting the development of clean energy technologies. It will also support local power and community energy projects as well as supply chains. This is a distinct role, which is why GBE should be a stand-alone company focused on its important mission.

--- Later in debate ---

[Lord Hamilton of Epsom (Con)]

Is it not the case that the Secretary of State can override the chair of Great British Energy?

[Lord Hunt of Kings Heath (Lab)]

The noble Lord is referring to a power of direction. We are coming on to relevant amendments later in the Bill, but let me make it clear that this power is often contained in legislation, although we believe it will be used very rarely indeed. I certainly would not expect it to be used. I think the noble Lord is suggesting that the Secretary of State will attempt to micromanage Great British Energy through the power of direction. I simply do not believe that this will happen under any Secretary of State.

I listened to what the noble Lord, Lord Vaux, said about duplication. At the beginning, we think it is sensible for GBE to use the National Wealth Fund’s expertise. He suggested that this is duplication; I think it is a pragmatic, sensible approach. We have certain expertise within the National Wealth Fund that can help as we establish GBE, but they are complementary functions. Having listened to the debate, I can assure noble Lords that my department will work closely with His Majesty’s Treasury to provide clarity to the market on how the two institutions will complement each other, and set out how this relationship will evolve in time.

I turn to Amendments 3, 4, 5, 6 and 7, tabled by the noble Lords, Lord Offord, Lord Vaux and Lord Cameron. There was an interesting discussion about whether GBE could or should be allowed to raise equity through the sale of shares while it remained majority-owned by the Crown. Amendment 3 proposes enabling external equity ownership of Great British Energy without its losing its status as a Crown-owned company. Similarly, Amendments 4, 6 and 7 specify enabling third-party ownership of up to 25% of the shares in Great British Energy without its losing its status as a Crown-owned company. Amendment 5 seeks to specify that Great British Energy is owned by the Secretary of State, rather than by the Crown.

We do not think that it is necessary for Great British Energy to sell its own shares to bring in external equity funding, or any funding, for its projects. In the case of the example which the noble Lord, Lord Cameron, gave, it would, though, be possible for Great British Energy to encourage private sector investment into the scheme to which he referred, or to co-invest with external partners, each taking an equity stake in a project that Great British Energy wished to support. I understand that the model has been used successfully by similar bodies, such as the former Green Investment Bank.

Clause 4 enables the Secretary of State to provide financial assistance to Great British Energy. This is so it can take action to meet its objectives. To be clear, our intention is for Great British Energy to become financially self-sufficient in the long term. It will invest in projects that expect a return on investments, but it would be prudent to ensure that the Secretary of State has the power to provide further financial support, if required.

Just as private sector companies would rely on the financial strength of their corporate group to raise funds, that could be the case for providing GBE with further financial support for specific projects in the future. However, we believe that any such financial assistance should be provided by the Secretary of State and, as such, be subject to the usual governance and control principles applicable to public sector bodies, such as His Majesty’s Treasury’s Managing Public Money.

It is also unnecessary to specify that Great British Energy is owned by the Secretary of State rather than the Crown. The Bill simply follows normal legislative practice in its drafting. For instance, Section 317 of the Energy Act 2023, which the Government of the noble Lord, Lord Offord, took through, expresses the ownership requirement for Great British Nuclear in the same way. Other legislation, including Section 6 of the Freedom of Information Act 2000, uses the same formulation. Clause 1(6) of the Bill explains that

“wholly owned by the Crown”

means that each share is held by a Minister of the Crown, which includes the Secretary of State, or a company wholly owned by the Crown, or a nominee of either of those categories.

We also think that it is entirely appropriate for the Secretary of State to be the sole shareholder in Great British Energy. I very much agree with the noble Baroness, Lady Noakes, on this. Introducing minority third party ownership, whether held by one minority shareholder or several, would add unnecessary complexity to its governance. A shareholder agreement or agreements would need to be put in place. They would need to cover elements relating to the control of Great British Energy, setting out which matters required approval of a simple majority of shareholders and which might require unanimous consent. For an organisation such as Great British Energy, playing such a key part in our mission to deploy clean energy—I take note of what noble Lords have said about parliamentary accountability—is it not surely right that Ministers both are accountable for their actions and can exercise full shareholder rights?

This has been an interesting debate. I am aware of noble Lords’ issues around the role of Great British Energy and the National Wealth Fund and its ability to draw in private sector investments, but we think—and it was a manifesto commitment—that this is a very important body that should stand alone. We are grateful that the National Wealth Fund is able to provide some support at the moment, but we think that this is the right way forward.

[Lord Offord of Garvel (Con)]

I thank noble Lords for their insightful contributions on the designation of a company as Great British Energy and the ownership of such a company. I welcome the amendments from the noble Lords, Lord Vaux and Lord Cameron—Amendments 4, 6 and 7. They were designed to probe the benefits of having flexibility to allow minority external equity ownership of Great British Energy. However, I cannot disagree with anything that the noble Baroness, Lady Noakes, said about introducing private equity into what is, in effect, government-underwritten risk, which means that it really should be debt.

The fact we are debating this indicates that there is no clarity about the substance and purpose of the Bill or about the exact ownership of Great British Energy. Given that we are debating £8.3 billion of taxpayers’ money, and that there is no limitation on how that financial assistance can be given or structured, we have a concern that will continue through Committee.

The experience of the House was brought into the debate by the noble Lords, Lord Howell and Lord Hamilton, who looked back over previous generations to instances of how overarching powers given to Secretaries of State can be used if not abused, sometimes with the best of intentions. Again, it speaks to how there could be more clarity in the Bill about how those powers will be allocated. We believe that accounting and reporting measures are absent from the Bill and that we need further detail and clarity on the priorities and plans of Great British Energy. I expect that we will return to those matters on Report but, in the meantime, I beg leave to withdraw the amendment.

--- Later in debate ---

Finally, I return to the principles we should be prioritising: prudent economic stewardship, self-reliance and forward-looking governance. This amendment is an opportunity to embed these principles in the DNA of Great British Energy at its birth. I urge the Minister to consider the benefits of a more explicit legislative framework and to recognise that this amendment is not an imposition but merely a refinement of the Bill’s ambitions. I urge my colleagues to support this amendment, which would ensure that Great British Energy is both practical and purposeful, with clear measurable goals that would directly benefit the British people and our economy.

[Lord Hunt of Kings Heath (Lab)]

My Lords, that was an interesting debate, led by the noble Lord, Lord Frost, proposing an addition to Clause 1 which would set Great British Energy’s objectives as

“reducing household energy costs in a sustainable way, and … promoting the United Kingdom’s energy security”.

The noble Lord asked why we are doing this. He then, to be fair, referred to the—I think three—debates we have had on energy policy in the last few weeks, in which we clearly set out our aims and drive towards clean power and net zero. We see Great British Energy, with the provision of financial assistance from the Secretary of State, as being at the heart of our clean power mission. It will speed up the deployment of mature and new technologies, as well as local energy projects. It will support the Government’s aim of decarbonising our electricity system by 2030, while ensuring we can meet future demand as we further decarbonise the economy.

I noted the intervention from the noble Lord, Lord Hamilton, and I thought I detected some scepticism about net zero. I remind him that his party, over 14 years, has made various statements in support of net zero. I note that Mrs Thatcher, at the UN General-Assembly in November 1989, said:

“the environmental challenge which confronts the whole world”—

[Lord Hamilton of Epsom (Con)]

I thank the noble Lord for giving way again. I think he will be the first to acknowledge that two wrongs do not make a right.

[Lord Hunt of Kings Heath (Lab)]

My Lords, it was more than two. I can quote Prime Minister May, and I acknowledge her leadership in this country being the first to enshrine the 2050 net-zero carbon target. Prime Minister Johnson only recently addressed COP 26 in Glasgow; I think we all acknowledge the leadership the noble Lord, Lord Sharma, showed there. The noble Lord, Lord Ahmad, announced to the UN the £11.6 billion in international climate finance for the period 2021-22. Although we are having this friendly discussion about future energy policy, there is still some consensus on the need to decarbonise our energy supply, and Great British Energy is part of the way we are going to do it.

The key thing in the structure of the Bill is the objectives set in Clause 3. They will be informed by the statement of strategic priorities that Great British Energy will operate in, making sure that it will be aligned with the Government’s priorities. We have been clear that the first statement, which will be published in 2025—after due consultation and discussion with the devolved Governments and with Jürgen Maier, the chair of Great British Energy—will ensure that GBE is focused on driving clean energy deployment to boost energy independence, create jobs and ensure that UK taxpayers, bill payers and communities reap the benefits of clean, secure, home-grown energy.

Of course, the issue of energy bills is very important. We are relying strongly on the advice of the Climate Change Committee, of which the noble Lord, Lord Hamilton, is probably not a great fan—but none the less, over 14 years his party listened to it. The committee said that a clean energy future is the best way to make Britain energy independent, protecting bill payers, creating good jobs and tackling the climate crisis.

The independent National Energy System Operator confirmed a few weeks ago that our 2030 clean power goal is achievable and can create a cheaper, more secure energy system. More broadly, the OBR—another body to which the previous Government paid great attention; they ran into trouble when they did not—highlighted that delayed action on reaching net zero will have significant negative fiscal and economic impacts. The Committee on Climate Change has said that 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 to 2050—lower, it said, than it concluded in its 2019 Net Zero report.

I have already said that we will publish the statement of priorities in 2025. How will GBE be judged? It will be judged on its performance against the statement of priorities within the context of the objectives set by Clause 3.

[Lord Vaux of Harrowden (CB)]

The Minister has said again that the objectives of the company are set out in Clause 3. I am afraid that is not correct. The objects of the company are set out in Clause 3. As the noble Baroness, Lady Noakes, said, those objects restrict the activities—they do not set out the objectives. Nowhere in the Bill are the objectives of the company—what it is trying to achieve—laid out. I have not yet heard an argument from the Minister as to why that is.

[Lord Hunt of Kings Heath (Lab)]

I really do not read Clause 3 in that way. Subsection (2) says:

“The statement must provide that Great British Energy’s objects are restricted to facilitating, encouraging and participating in”.


One way to read that is that Great British Energy’s objects are around the following four paragraphs, informed by the strategic priorities and plans that the Secretary of State will prepare over the next few months.

[Lord Vaux of Harrowden (CB)]

There is only one way to read the words the “objects are restricted to”. That is what the clause says.

[Baroness Noakes (Con)]

My Lords, the noble Lord, Lord Hunt, may not be as familiar with company law as the noble Lord, Lord Vaux. The object of a company, which is what the clause refers to, is a constitution document, and it restricts what a company can do. That is what company law sets up for it. The Minister is trying to read “objects” in a broader sense. It is very clear that the clause refers to the legal documentation that will surround the full legal implementation of Great British Energy as a company. It does not have any other meaning.

[Lord Hunt of Kings Heath (Lab)]

My Lords, it is always helpful to have that kind of clarification, because I certainly was not intending to mislead the Committee in any way. From what I see in Clause 3, I am clear that GBE can participate in, encourage and facilitate the production, distribution, et cetera—informed, as I say, by the strategic plans and priorities. But I will obviously look at that and, if I have got myself confused, I will certainly reflect on it.

[Lord Frost (Con)]

My Lords, I am most grateful to the Minister for his response and to all those who contributed to our discussion, including the mini-discussion at the end about the difference between objectives and objects, which is important and I am sure we will return to it. I do not want to detain noble Lords long but, as the Minister repeated the words of Lady Thatcher on this subject, I cannot forbear repeating her words in her final work on it:

“By the end of my time as Prime Minister I was also becoming seriously concerned about the anti-capitalist arguments which the campaigners against global warming were deploying”.


She—rightly, in my view—added:

“We should be suspicious of plans for global regulation that all too clearly fit in with other preconceived agendas. We should demand of politicians that they apply the same criteria of commonsense and a sense of proportion to their pronouncements on the environment as to anything else”.


Those wise words are worth bearing in mind today when we discuss this issue.

I am not sure that we have entirely got to the bottom of this issue, and I suspect that we will have to return to it in some form on Report, because it is so fundamental to what the Bill is about. For now, I beg leave to withdraw my amendment.

--- Later in debate ---

[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.

[Lord Hunt of Kings Heath (Lab)]

My Lords, we think Clause 2 is very important. It ensures that Great British Energy will serve the public as an independent company and operate in the same way as other UK companies. Before I come on to the main body of the argument, I say to the noble Lord, Lord Howell, that he had some interesting points to make about the role of advanced nuclear reactors tied into industrial processes and data centres. We are watching very carefully what is happening in the US and we are in discussion with some of the companies themselves. I very much take his point about that.

The clause ensures that Great British Energy will not have any special status, immunity or privilege normally associated with the Crown, nor will its property be seen as the property of the Crown. It will also be subject to the same legal requirements as other companies. This is in line with the vision we have had for Great British Energy from the beginning: that it should be an operationally independent and agile market player, and we want to ensure it remains that way. If we were to leave out the clause, either Great British Energy would be regarded as a servant or agent of the Crown and have the immunity or privilege associated with that status; or, at least, there would be ambiguity as to whether it has that status.

I understand that the courts in recent years have been faced with questions about whether certain persons or bodies had Crown immunity, and the issue was not clear in the legislation—for example, the Commissioners of Customs and Excise, and the Commissioners of Prisons. The clause avoids that ambiguity and the possibility of any litigation arising regarding Great British Energy’s status. Examples of how this might arise in the context of Great British Energy, are, first, that Crown bodies are generally not covered by the requirements of the Employers’ Liability (Compulsory Insurance) Act 1969; and, secondly, that parts of the Health and Safety at Work etc. Act 1974 do not bind the Crown. We would not want Great British Energy to be exempt from that legislation or for it to be unclear whether it is bound by such legislation.

As I mentioned earlier in response to the noble Baroness, Lady Noakes, we expect Great British Energy and the National Wealth Fund to work well together. It is while Great British Energy is being established that it will utilise the National Wealth Fund’s existing expertise, which I think has been widely acknowledged. This is work in progress, and I cannot say very much more than that at the moment. We are not making it up as we are going along. There are earnest discussions between ourselves, His Majesty’s Treasury and Jürgen Maier, the chair of Great British Energy, and we will work closely with His Majesty’s Treasury to provide clarity to the market on how the two institutions will complement each other and how their relationship will evolve over time.

I also acknowledge that the partnership with the Crown Estate will be hugely valuable. On the question of the Crown Estate’s own position, I will have to seek further advice and write to the noble Baroness, Lady Noakes, because I do not have the answer at the moment.

Clause 2 agreed.

--- Later in debate ---

[Lord Offord of Garvel (Con)]

My Lords, I thank my noble friend Lord Naseby for introducing his thoughtful and technical amendments, which no doubt would improve the quality of the Bill should they pass. I also thank all noble Lords who have spoken on this group. Each amendment contributes meaningfully to the Bill’s ultimate aim by ensuring that governance reflects accountability, fairness and long-term sustainability.

I will limit my remarks to Amendments 8, 9, 12 and 13. Amendment 8 proposes the addition of “investing in” alongside “encouraging”. This is quite important, because it seeks a balance between fostering enterprise and ensuring strategic government investment to safeguard our national energy. We want a partnership between government and the private sector. By explicitly including “investing in”, the amendment aligns with our commitment to a dynamic and sustainable energy sector.

Amendment 9, by adding “one or more of”, would bring clarity and flexibility to the Government’s strategic objectives in advancing energy policies. It would ensure that the Government could prioritise specific energy initiatives based on strategic needs without being overburdened by one limiting obligation. It reflects the core principles of pragmatism and efficiency, ensuring that resources can be allocated where they can deliver the greatest impact.

We know that energy security and innovation in this area—referred to by my noble friend Lord Howell as bigger perhaps than the Industrial Revolution—require adaptability. Whether we are investing in offshore wind, nuclear power or emerging technologies, the amendment would allow for a tailored approach that maximised value for taxpayers’ money and strengthened our energy independence. I urge colleagues to support it to make sure that we have smart, effective and flexible governance in the Bill.

My noble friend Lord Naseby’s Amendment 12 is again quite technical. It seeks to insert the phrase “directly or indirectly” into Clause 3, which would again enhance the Bill by acknowledging the interconnected nature of emissions reductions and energy initiatives. This addition would ensure a pragmatic approach to addressing climate goals. Emissions reductions often involve complex supply chains and secondary impacts. Recognising these indirect contributions reflects our understanding of the broader economic and technological dynamics that drive innovation and decarbonisation. For example, investments in nuclear power or advanced grid infrastructure may not lower emissions immediately but they create the conditions for sustainable reductions in the long term, towards 2050 net zero. The amendment therefore provides the flexibility needed to pursue bold initiatives while holding true to the principle of cost-effectiveness for taxpayers. By adopting it, we would make the Bill more robust, practical and reflective of real-world energy systems. I urge my colleagues to support it.

Finally, my noble friend Lord Naseby’s Amendment 13 proposes the substitution of the word “produced” with “derived” in Clause 3. Again, this is a technical and seemingly small change, but it holds significant importance for our energy policy. “Derived” more accurately captures the diverse and evolving sources of energy in our transition to a low-carbon future. Energy comes increasingly from various integrated systems, including renewable sources, nuclear, tidal—as we have heard in great detail—and hydrogen. The term “produced” can be limiting, whereas “derived” acknowledges the broader, more dynamic approach needed to secure our energy future. The amendment provides the flexibility to encompass a wide range of energy sources and technologies, ensuring that our energy policies remain adaptable and forward thinking. It should reflect our commitment not only to reduce emissions but to foster innovation and maintain energy security in the face of global challenges.

[Lord Hunt of Kings Heath (Lab)]

My Lords, this was a very interesting group. It clearly refers to a range of technologies in which Great British Energy could invest. I should start by saying that we intend GBE to be operationally independent and it is not for us to rigidly define what it should do or in which technologies it should invest.

The noble Baroness, Lady Hayman, of course anticipated my list argument because she has used it herself a number of times, but I take her point about ensuring long-term certainty and a stable environment for some of these crucial sectors. I recognise that GBE has great potential so to do, particularly in sectors where investment from the private sector may initially be difficult. I also take her point about how this has to be aligned with planning reform, enhanced grid connections and infrastructure.

Amendments 8, 9, 12, 13, 14, 23, 31 and 32, in essence, relate to technologies specific to GBE’s objects in Clause 3. Amendment 23 from the noble Earl, Lord Russell, would prevent Great British Energy being involved in CCUS projects, whereas the amendments from the noble Lord, Lord Naseby, would ensure that both carbon capture and storage and hydrogen fell within the scope of the Bill. The Government view both hydrogen and CCUS as vital to our drive towards net zero and to ensuring a just transition for industries based in the North Sea.

--- Later in debate ---

[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.

[Earl Russell (LD)]

I thank the Minister for his detailed response to all the amendments in this group. I want to follow up with a quick question. I and the noble Baroness, Lady Grender, asked the Minister whether any consideration will be given to rolling the warm homes plan into GB Energy. The answer might be that no consideration will be given, or that the Minister does not have an answer—though he could possibly have one in a minute. I am happy to take a written response or come back to it at a later stage.

[Lord Hunt of Kings Heath (Lab)]

My Lords, I am not aware of any intention. I will certainly write to him if I have got that wrong but I am not aware of any intention to do it. The whole issue of home insulation and heating is crucial to getting to net zero and we are giving it a huge amount of attention.

--- Later in debate ---

[The Earl of Effingham (Con)]

My Lords, I thank the noble Lord, Lord Vaux of Harrowden, for his valuable contributions to this group. The amendments noted are crucial for ensuring that Great British Energy remains aligned with its goals of promoting energy security, affordability and sustainability. This fifth group of amendments focuses on the objectives and duties of Great British Energy.

I begin with Amendment 10, which turns the focus on the trading element of GBE. By explicitly including trading, the amendment demonstrates a forward-thinking approach to GBE’s role. While market dynamics naturally encourage competition and efficiency, active participation in energy trading enables GBE to enhance price stability, bolster supply resilience and reduce market volatility. This strategic involvement not only fosters a more competitive energy landscape but empowers consumers by offering greater choice and flexibility. In doing so, it strengthens the UK’s energy security, ensuring the system remains adaptable to both domestic demands and global shifts, while at the same time promoting long-term sustainability and cost effectiveness free from overreliance on dominant energy providers.

Furthermore, on Amendment 11 to Clause 3, the insertion of the line

“including from schemes owned, or part owned, by community organisations”

is important when addressing the need for a more inclusive energy system that empowers local communities. By specifically including community energy schemes, this amendment acknowledges the growing role of grass-roots initiatives in the energy transition. It ensures that GBE will actively support, facilitate and encourage energy generation models that are owned or part-owned by local and community organisations. This naturally leads us to Amendment 15 to Clause 3, which outlines measures to increase low-carbon and renewable energy schemes owned or part-owned by community organisations.

This approach not only helps democratise energy production but empowers communities to take control of their energy future, fostering a more decentralised and resilient energy system. Community-led schemes have proven essential in driving local economic growth, creating jobs and promoting energy independence. By ensuring that GBE is aligned with these objectives, we not only advance environmental sustainability but cultivate a more equitable and diverse energy landscape, one that shifts power back into the hands of local communities.

Amendment 19 proposes important

“measures for reducing the cost of the supply of energy”.

This is a critical step in aligning GBE with the Government’s key missions for this Parliament. The Labour Government committed not only to

“make Britain a clean energy superpower”

but to deliver cheaper bills for British households. The amendment is a fair and necessary step to ensure that the Government deliver on their promises. By incorporating the reduction of energy costs into Great British Energy’s legislated objectives, it would ensure that affordability, alongside security and sustainability, remained a core consideration in its operations.

This leads us seamlessly to Amendment 34 to Clause 3, which would insert a definition of

“security of the supply of energy”

into the objects of GBE. The inclusion of system reliability, price predictability, fuel security and cybersecurity is vital to fully encompass the concept of energy security. This clear and detailed definition ensures that GBE’s mission is comprehensive and aligned with the broader goal of delivering a secure and sustainable energy future for all.

Amendment 27 would ensure that GBE took no action that risked the sustainability of commercial shipping. This is a key consideration in the broader context of balancing the development of renewable energy sites with other vital sectors, such as fishing and shipping. As we know, 90% of goods in the UK are transported here by sea. Ports, often specialising in certain goods, are essential to our economy, and well-established shipping lanes must remain open to ensure the smooth operation of this vital sector. If we are to invest in offshore energy infrastructure, we must not overlook the potential risks posed to these critical maritime routes.

The amendment draws a parallel with the Crown Estate amendments. It specifically aims to ensure that GBE does not take any action that could jeopardise the sustainability of commercial shipping. With offshore energy production, particularly offshore wind, continuing to grow, it is crucial that this growth is balanced with the needs of commercial shipping. If we are to meet our energy goals, we must not undermine the sector that is responsible for bringing nearly all the goods we rely on.

While offshore wind is undoubtedly a critical part of the UK’s energy future, accounting for 17% of our electricity in 2023, up from 14% in 2022, we must recognise the impact that the siting of wind farms and other offshore developments could have on existing industries. GBE has a responsibility to ensure that the growth of sustainable energy does not come at the expense of shipping lanes, port operations or coastal communities.

Amendments 20, 28 and 29 are designed to protect local communities. Amendment 20 would clarify the role of GBE in local area energy planning and governance, ensuring that decisions regarding energy infrastructure were made in collaboration with local authorities. As the energy landscape evolves, it is essential that local communities are not only kept informed but are actively involved in shaping their energy future.

By explicitly requiring GBE to engage with local authorities, the amendment fosters a more inclusive and transparent approach to energy planning, enabling communities to have a say in how energy systems are developed, managed and integrated at the local level. Such involvement is critical for addressing region-specific needs, ensuring that energy solutions are tailored to the unique characteristics and priorities of different areas, from rural communities to urban centres. The amendment supports the broader goal of decentralising energy governance, empowering local authorities to take a more proactive role in shaping the energy systems that affect their residents. It would also ensure that local insights were considered in the development of energy infrastructure, from renewable energy projects to the distribution and storage of energy.

Amendments 28 and 29 address the wider concerns that may be raised by local coastal communities. As we continue to develop renewable energy infrastructure, it is crucial that we consider the impact of such development on the very communities that depend on the seas for their livelihoods and way of life, including the tourism sector, which many coastal areas rely on. I hope the Minister will acknowledge that to achieve the Government’s 2030 renewable energy targets it is essential to balance the need for sustainable energy development with the preservation of those communities. Their voices must be heard; they are important working people, and their livelihoods must not be unduly impacted by offshore energy projects. The presence of offshore developments, particularly wind farms, can have significant consequences for local tourism, which is often a key economic driver for those communities. We must ensure that any developments do not disrupt the natural beauty or accessibility of those areas, which attract visitors year round. This is an additional consideration, not directly addressed by these amendments but worth highlighting.

We may return to this on Report, as I believe that a review and/or an annual report might go some way to reassuring Parliament that GBE is making decisions that truly benefit all stakeholders. Such a mechanism would ensure that potential trade-offs were identified, quantified and fully considered, especially as we navigate the complexities of offshore energy and its impact on local communities.

I trust that the Minister has listened carefully to the concerns raised by all noble Lords and hope that the Government will consider improving the Bill to ensure that GBE properly considers the impacts of its activities on fishing, shipping, coastal communities and the environment. We must not lose sight of the importance of those local industries and the people whose livelihoods depend on them.

[Lord Hunt of Kings Heath (Lab)]

My Lords, I thank all noble Lords who have taken part in this debate. I agree with the noble Lord, Lord Vaux, and the noble Baroness, Lady Noakes, in relation to Clause 3. It does set statutory limits on Great British Energy’s objects, and these must be reflected in the company’s articles of association. However, the four objects in Clause 3 have been broadly drafted, so although they impose a restriction, it is very wide and intended to cover all the conceivable activities that Great British Energy may engage in. If I have confused the Committee by loose terms, I apologise.

In Amendment 10, the noble Lord, Lord Vaux, proposes adding “trading” to Clause 3(2)(a). I will resist this because, although trading is not explicitly referenced, the current objects in the Bill allow Great British Energy to facilitate or encourage the supply of clean energy. We see no reason why that activity could not include the encouragement or facilitation of a trade in clean energy. But, if the noble Lord has examples of schemes that are operating, we would be interested in the details.

--- Later in debate ---

[Lord Ravensdale (CB)]

My Lords, I thank the noble Lord for his response to my amendments. I wanted briefly to clarify something he said in responding to my Amendment 19. He essentially made a link between a clean energy system and price stability, therefore making the argument that “costs” was not required in the objects. But there are of course wide variations in the costs of a clean energy system: there are expensive clean energy systems, and cheaper ones. NESO is developing a wide range of scenarios here. So I argue that we cannot rely purely on making that link—the organisation needs to take costs into account more broadly as well.

[Lord Hunt of Kings Heath (Lab)]

I very much take that point. Clearly, my department is cognisant of costs. Much of our discussion with His Majesty’s Treasury on the resources made available obviously takes in those constraints. The point I made earlier is simply that we believe—and we are supported by NESO, the Committee on Climate Change and the OBR—that the best way to secure stable prices in the future is to charge on to clean power net zero.

[Lord Wigley (PC)]

Could the Minister give some comfort to those waiting to invest in pumped storage schemes about the timescale on which information will be available to enable them to do so?

[Lord Hunt of Kings Heath (Lab)]

My Lords, I cannot give the noble Lord chapter and verse today but will certainly write to him with what we can say in public.

[Lord Vaux of Harrowden (CB)]

My Lords, I thank all noble Lords who took part in this interesting debate and the Minister for his fairly fulsome answer. On Amendment 10, I am not totally convinced that trading is covered by the objects as they stand but I will read his answer in Hansard to see whether I can convince myself that he is right. As he says, the issue is that if it is not in the objects, it is not allowed. I want to make sure that it is allowed—not that it has to happen—in the same way that he argued the other way around on the security definition. That said, I beg leave to withdraw my amendment.

Greenhouse Gas Emissions Trading Scheme (Amendment) (No. 2) Order 2024

Lord Hunt of Kings Heath Excerpts

Monday 2nd December 2024 Grand Committee

Moved by

[Lord Hunt of Kings Heath]

That the Grand Committee do consider the Greenhouse Gas Emissions Trading Scheme (Amendment) (No. 2) Order 2024.

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

My Lords, the draft order was laid before Parliament on 22 October. The UK Emissions Trading Scheme, the UK ETS, was established under the Climate Change Act 2008 by the Greenhouse Gas Emissions Trading Scheme Order 2020, otherwise known as the 2020 order, as a UK-wide greenhouse gas emissions trading scheme contributing to the UK’s emissions reduction targets and net-zero goal. The scheme is run by the UK ETS authority, a joint body comprising the UK Government and the devolved Governments. Our aim is to be predictable and responsible guardians of the scheme and its markets.

We have brought forward this SI to enable several important changes and improvements to the scheme. It resets the UK ETS cap to be in line with the top of the net-zero consistent range. The cap sets a limit on how many allowances can be created over the trading period, which runs from 2021 to 2030, and in each year. That level reduces over time to drive down total emissions. When this scheme was established, the cap for the legislated period of the UK ETS, from 2021 to 2030, was set at 5% below the UK’s expected notional share of the EU ETS cap for the same period. However, this was not consistent with the UK’s net-zero trajectory for the traded sector. This instrument brings the overall UK ETS cap in line with our net-zero target and carbon budgets under the Climate Change Act.

This statutory instrument also reduces the industry cap, which is the total number of allowances which can be made available to existing installations for free, if no cross-sectoral correction factor mitigation is applied. This SI reduces the absolute level of the industry cap while increasing its proportion of the overall cap. While the share of allowances set aside for this purpose will increase from 37% to 40%, the reduction in the overall UK ETS cap means that the industry cap will fall. That will help to mitigate the risk of carbon leakage across participating sectors while maintaining an effective incentive to decarbonise.

The statutory instrument creates a flexible reserve of allowances for maintaining market stability and sufficient carbon leakage mitigation. In addition to allowances specifically created for this reserve, unallocated free allowances from the industry cap and designated free allowances that are returned by operators due to changes in participant eligibility or activity level reductions will also stock the flexible reserve. The flexible reserve can be used to increase allowance supply for market stability purposes, if the cost containment mechanism is triggered. The flexible reserve can also mitigate application of the CSCF through a uniform reduction to all eligible existing participants’ free allocation if the eligibility for free allocation exceeds the industry cap.

Under current legislation, carbon dioxide released through flaring in the upstream oil and gas sector is included in the UK ETS, as it is within the scope of the regulated activity of combustion. This SI introduces CO₂ released through venting in the upstream oil and gas sector into the scope of the UK ETS for installations already covered by the scheme. That means that such emissions will also be subject to a carbon price.

The controlled processes of venting and flaring can sometimes be essential for safety purposes. They are also used in more routine situations where the oil and gas hydrocarbons are unable to be used, exported or reinjected without the CO₂ being removed. The removed CO₂ can then be released in the process of flaring, when waste gas—including the stripped-out CO₂, as well as combustible elements—is ignited, or venting, where unignited gas is released through a vent. The legislation will remove a perverse incentive whereby operators could routinely vent gas that contains carbon dioxide without it being subject to a carbon price, even though it would, if flared, constitute reportable emissions for the purpose of the scheme.

In line with the original policy intent, the instrument extends legislative amendments made by the Greenhouse Gas Emissions Trading Scheme (Amendment) (No. 2) Order 2023 to Northern Ireland. The amendments include capping aviation free allocation at 100% of emissions, clarifying the treatment of carbon capture and storage plants, and amendments to free allocation rules for electricity generation.

In 2022, a memorandum of understanding between the UK Government and the Swiss Government was signed, setting out the intention to include flights from the UK to Switzerland in the UK ETS. Flights from Great Britain to Switzerland were brought into the scope of the UK ETS on 1 January 2023 by the Greenhouse Gas Emissions Trading Scheme (Amendment) (No. 3) Order 2022. The statutory instrument before us extends the scope to cover flights that depart from an aerodrome in Northern Ireland and arrive at an aerodrome in Switzerland.

On enforcement and penalties, scheme regulators are responsible for enforcing compliance, including operational functions such as issuing penalties. The statutory instrument makes a number of amendments to the levels of scheme penalties to ensure consistency and proportionality of enforcement for all operators. It also introduces a new deficit notice, with an associated penalty, to strengthen enforcement of the fundamental scheme obligation to surrender allowances equal to an operator’s annual emissions.

Finally, this instrument makes several corrections and clarifications to existing legislation. The changes follow appropriate and comprehensive consultation with stakeholders. In the Developing the UK Emissions Trading Scheme (UK ETS) consultation in 2022, the UK ETS Authority considered proposals on changes to the rules for sectors covered by the UK ETS to ensure that more greenhouse gas emissions were covered by the scheme, along with changes to the cap.

The authority’s response to this consultation was published in two parts: in August 2023 and July 2023. A majority of respondents agreed with the UK ETS Authority’s proposals on creating a flexible share reserve of allowances; on bringing venting in the upstream oil and gas sector into the scope of the ETS; and on the addition of a new penalty and deficit notice. Several respondents expressed concern regarding the reduction of the cap and the changes to the industry cap.

An assessment of these responses informed the decision to set the cap at the top of the net-zero consistent range. Between 23 February 2024 and 8 March 2024, the UK ETS Authority ran a targeted consultation on the minor penalty amendments. The responses to this consultation were in broad agreement with the proposals or noted that they were not affected by them. The authority’s response to this targeted consultation has been published in advance of the laying of this statutory instrument.

In conclusion, the changes in the draft order will deliver on commitments made by the UK ETS Authority and improve the operation of the scheme. The alterations to the UK Emissions Trading Scheme will support its role as a key pillar of the UK’s climate policy. They show that we will take action to extend and improve the scheme where necessary. I beg to move.

[Baroness McIntosh of Pickering (Con)]

My Lords, I thank the Minister for setting out the contents of the instrument so concisely but comprehensively. I support it but have a number of questions. Obviously, the issue of flaring would arise if the Government were to introduce a policy of fracking—hydraulic fracturing. Can the Minister confirm that the Government have a moratorium on fracking? It was a very real issue in North Yorkshire when I was still a Member of Parliament there; it caused real concern among the locals. It would be interesting to know the answer because flaring would be an issue there.

Secondly, I see that an impact assessment has not been prepared on this occasion because it is not a regulatory provision, but in fact one was done already in 2023, and before that in 2020. Can the Minister confirm that the costs in light of the change to the cap will not be deemed wildly different from the results of those impact assessments in 2020 and 2023, which I understand were different in nature in each case?

It is interesting that the Minister, the instrument and the Explanatory Memorandum refer to the amendment to include flights from Great Britain to Switzerland within the scope. Why was this excluded in the first instance? Were there no flights from that airport? Have they suddenly increased in capacity? Out of interest, which flights are included? In the normal scheme of things, would all major airports and flights to the European Union and Switzerland be included? I imagine they would be, but it would be helpful if the Minister could confirm that.

--- Later in debate ---

[Lord Offord of Garvel (Con)]

My Lords, I support this instrument. This order will expand the scope of the UK Emissions Trading Scheme to include carbon dioxide venting in the upstream oil and gas sector. It will introduce deficit notices to allow regulators to penalise operators for failing to surrender allowances by a set date and makes technical changes to penalties. There is no doubt that climate change is an issue that any Government need to take steps to tackle. That is why the Conservative Government introduced the UK ETS, to ensure that businesses monitored, reported on and surrendered allowances in respect of their greenhouse gas emissions. We are glad that the Government recognise the benefits of the scheme and are taking steps to continue to use it.

However, this Government have prioritised their climate policy above financial and economic concerns. While we understand that there must be trade-offs to reach our net-zero targets, I caution them on raising taxes consistently on the North Sea oil industry—they are now running at 78%. This could put significant costs on companies already navigating a complicated regulatory environment. We must remember that net zero by 2050 does not mean zero hydrocarbons. We will still have about 25%. However, as this ETS will provide support by removing venting and flaring, we can have clean hydrocarbons. We must also consider the impact of the hydrocarbon companies in investing in renewables and the people required in the transition to net zero.

With that being said, I will ask the Minister one question that was left largely unanswered in the other place, to do with the impact of the carbon price rise to £147, as highlighted by NESO. What will the impact be on employment, industry and households, and will there be an impact assessment on those key areas?

[Lord Hunt of Kings Heath (Lab)]

My Lords, I thank noble Lords for their general support for the order, which is much appreciated. I will seek to respond to the points raised but will follow up if I am unable to answer everything.

Clearly, the emissions trading scheme is a key pillar of our climate and net-zero policy regime. It sets a cap on emissions in the sectors covered—currently around a quarter of the UK’s emissions. In doing so, it guarantees that the sectors will reduce their emissions in line with our net-zero target. We see maintaining a strong UK ETS playing a key role in making Britain a clean energy superpower, delivering our mission of secure and clean electricity by 2030, and having a positive impact on bills.

I very much take the point about the impact on industry. In relation to the North Sea, in particular, I understand that noble Lords are concerned to make sure that the transition is as effective as possible—something that we are very much committed to doing.

On the point of the noble Earl, Lord Russell, regarding ETS expansion, we see the scheme continuing to remain a key driver of decarbonisation. Our intention is to expand it further. We have recently consulted on proposals to expand the scheme to energy from waste incineration. We are also currently consulting on expansion to maritime operators and on a regulatory framework for integrating non-pipeline transport for carbon capture, usage and storage. We are exploring options to build the UK ETS into the world’s first integrated market for carbon emissions and carbon removal; subject to consultation, our intention is to include engineered greenhouse gas removals. We see that as supporting the new technologies we will need to meet net zero while providing a sustainable path for industry to decarbonise and to encourage that process.

To refer to the impact assessment and the question from the noble Baroness, Lady McIntosh, I think I can reassure her on fracking. We have no intention to permit fracking. As for the impact assessment, it was published alongside the decisions in the response to the report on developing the UK ETS authority. We stand by that assessment as the best assessment of the implications of our policy changes, and therefore we do not think it necessary to do any further work in that area.

The noble Earl, Lord Russell, was right that, in the absence of the Northern Ireland Assembly, it was not possible to make changes to the UK ETS order that extended to Northern Ireland using an affirmative procedure. It is a very good thing that we have made progress in Northern Ireland and are now able to make that provision.

I should say too that the UK ETS authority agreed that the UK Government should amend the UK ETS auctioning regulations to give partial effect to the agreed policy of reducing the cap, and that the authority would pursue a legislative programme in line with the decisions and intentions made in the main UK ETS authority response, including for the cap, set out in the response for 2026 and beyond. As stated there, the authority is now taking the necessary steps to finalise that legislation, and the IA is being relayed alongside that legislation to support parliamentary scrutiny.

Contracts for Difference (Miscellaneous Amendments) Regulations 2024

Lord Hunt of Kings Heath Excerpts

Monday 2nd December 2024 Grand Committee

Moved by

[Lord Hunt of Kings Heath]

That the Grand Committee do consider the Contracts for Difference (Miscellaneous Amendments) Regulations 2024.

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

My Lords, these regulations were laid before the House on 28 October. They form an important part of the Government’s commitment to accelerate the deployment of the low-carbon electricity technologies that are critical to achieving the Government’s clean energy mission.

The contracts for difference scheme is the Government’s main mechanism for supporting new low-carbon electricity generating projects in Great Britain. Contracts for difference are awarded through annual, competitive auctions where the lowest-priced bids are successful. The sixth allocation round, which ran earlier this year, was the largest round ever and more than double last year’s round held by the previous Government. It awarded contracts to 128 clean energy projects across Great Britain, capturing 9.6 gigawatts of renewable capacity and generating enough electricity to power the equivalent of 11 million homes.

We must, though, ensure its continued success and evolve the contracts for difference scheme to drive progress towards 2030. So, building on auction round 6, we want to update the scheme through this instrument to continue our march towards a low-carbon power system. We propose, first, to extend the option of phased contracts for difference to floating offshore wind projects and, secondly, to enable the eligibility of repowered onshore wind projects to apply for a contract for difference.

On the first point, the Government have committed to radically increasing the UK’s offshore wind capacity, including floating offshore wind. As an emerging technology with less than 250 megawatts of capacity deployed worldwide, the floating offshore wind construction process is yet to be industrialised. Floating wind projects are likely to have a slower buildout rate than established fixed-bottom offshore wind, for reasons including limitations on suitable port capacity and increased sensitivity to adverse weather.

Phasing in the contract for difference allows projects to be built in multiple stages. It was designed to provide support for early fixed-base offshore wind projects by mitigating the specific commercial risks inherent in offshore project construction. Extending this policy to floating offshore wind projects will allow for greater flexibility in the construction phase, allowing delivery to more realistic timelines and providing more certainty and confidence to the wider supply chain. This reduction in project risk will, in turn, increase investor confidence in the UK’s growing floating offshore wind sector.

On the second amendment—to enable repowering for onshore wind—our analysis suggests that approximately 1 gigawatt of onshore wind will come to the end of its operating life between 2027 and the end of 2030. Repowering can help ensure that renewable generation capacity is not lost from older projects. It also provides an opportunity to increase the renewable generating capacity of existing sites through improvements in technology and more efficient use of the site. Enabling access to the contract for difference for repowered onshore wind projects offers them revenue certainty, encouraging retention and expansion of existing capacity. This supports our ambition to achieve clean power by 2030 and make Great Britain a leading place for onshore wind investment.

We have ensured a balance between decarbonisation, consumer value for money and security of supply objectives by enabling repowering only for projects which align to the fundamental contract for difference case for intervention, including high upfront capital costs, and which have reached the end of their operating life. At this point, this applies only to onshore wind. These principles will help enable us to protect the consumer, ensuring we intervene only when and where needed and where it is cost-effective to do so.

The consultation for these policy interventions sought views and supporting evidence on specific changes proposed for allocation round 7. We received a range of responses from across industry, including developers, electricity traders and suppliers, businesses operating in the offshore wind sector, and consumer and environmental groups with an interest in the electricity sector. Most respondents agreed with implementing phasing for floating offshore wind and repowering for onshore wind. Respondents also provided input on how the department should implement these policies. The department continues to engage closely with industry in the development of contracts for difference.

The instrument facilitates the evolution of the contracts for difference scheme by amending two statutory instruments made under the Energy Act 2013. It amends the Contracts for Difference (Allocation) Regulations 2014 and the Contracts for Difference (Definition of Eligible Generator) Regulations 2014. The amendments will have two effects. First, they will expand the existing phasing policy to floating offshore wind projects. The allocation regulations will be amended to allow floating offshore wind contracts for difference units to be constructed in accordance with phasing rules. The second effect is to permit repowered projects to apply for a contract for difference. The contracts for difference scheme did not previously have a formal policy in relation to repowering applications. The amendments ensure that certain generators who repower eligible generating stations can be eligible for the contract for difference. They also remove barriers which would prevent repowering applications being made.

To conclude, we think this is an important step forward in delivering clean power. It builds on the existing success of the contracts for difference scheme, which is evolving to better reflect global market realities and drive progress towards clean power targets. I beg to move.

[Earl Russell (LD)]

My Lords, I rise to speak very briefly to this one. We are happy to support the amendment.

I have a couple of questions for the Minister. First, what measures are the Government taking to ensure that consumers continue to get value for money from these contracts? Secondly, is the Minister certain that the repowering process is treading the right path between getting value for money for the Government with these contracts, while not impeding further development of onshore wind energy?

--- Later in debate ---

[Lord Hunt of Kings Heath (Lab)]

I thank noble Lords for their support, which is encouraging. I readily acknowledge that we are building on the work that the last Government undertook, and I think we are entitled to say that this has been very successful. It is very good to build on it.

I say to the noble Earl, Lord Russell, that obtaining value for money is clearly an important issue. The clearing price for ONW was £50.90 per megawatt hour, meaning that it was our second-cheapest technology after solar. We think that the repowering policy will likely increase the amount of ONW bidding into the contracts for difference. This will increase competitive tensions further—unlike the resulting lower bid prices, which should lead to consumer savings. Generally, as I said, upwards of 1 gigawatt of onshore wind is clearly due to reach the end of its operating life at the end of government support by the end of 2030. It makes sense that we try to ensure that this is extended.

To hark back to the nuclear question, we are obviously awaiting EDF’s formal announcement about an extension of life, potentially, for some of the existing nuclear power stations. I take this as a whole and, where it is right to do so, some support for extending the life of some of these operations is worth while.

Motion agreed.

Great British Nuclear: Modular Reactors

Lord Hunt of Kings Heath Excerpts

Monday 2nd December 2024 Lords Chamber

[Baroness Bloomfield of Hinton Waldrist]

To ask His Majesty’s Government what progress Great British Nuclear has made with its plans to deploy small modular reactors and advanced modular reactors, and what assessment they have made of the process for evaluating their design and manufacturing.

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

My Lords, Great British Nuclear is pushing forward the SMR competition for UK deployment and is now in negotiation with bidders, with final decisions to be taken in the spring. The Government are also actively exploring how we can enable alternative routes to market for advanced technologies, including AMRs, and we will set out our policy position in due course.

[Baroness Bloomfield of Hinton Waldrist (Con)]

I thank the Minister for that Answer. Will he explain exactly what has caused the damaging schedule slippage within GBN? Is it the shortage of staff, underfunding, underestimating the workload required or the many layers of approval—11 separate Whitehall approval committees at the last count—in order to allow GBN to announce the latest download of SMR technologies?

[Lord Hunt of Kings Heath (Lab)]

My Lords, I think the noble Baroness will know the answer, because 16 months of the lifetime of GBN occurred under her party’s Administration. The fact is that we are working very closely with GBN. It has to go through considered processes. It has done two rounds of assessment and, as I have said, four technologies have been shortlisted, all of which are viable options for development. Crucial talks are now taking place. Companies will be invited to make final bids, and decisions will be made in the spring. I am confident that GBN will ensure that we get to that final decision as soon as possible.

[Lord Jones (Lab)]

My Lords, will my noble friend the Minister please consider how we might give good news to those sites in north-west Wales, principally the Wylfa plant in Ynys Môn—Anglesey—now dormant, and Trawsfynydd in Meirionnydd, now dormant? The communities around those great plants that generated nuclear power for Britain deserve consideration in so far as, throughout north-west Wales, skilled jobs with good wages and status are very rare and both communities have deserved investment from our Government.

[Lord Hunt of Kings Heath (Lab)]

My Lords, I think I get the point my noble friend raises. He is absolutely right: new nuclear can bring many high-quality jobs, enhance our skills chain and help us grow the economy. He mentioned Wylfa in particular, and I well understand. He will know that Great British Nuclear has bought Wylfa, which is one of the sites identified in the planning statement in relation to nuclear. We are looking to make our siting policy more flexible to give us more opportunities in the future. We see new nuclear as having a hugely important role to play in our future energy structure.

[Lord Ravensdale (CB)]

My Lords, I declare my interests as in the register. As the Minister will be aware, we currently have an issue with dependence on Russian fuel for our nuclear fleet. What progress are the Government making in bringing forward legislation for a near-term ban on Russian fuel imports, with all the attendant benefits for national security, for convincing others to move internationally and for our domestic industries?

[Lord Hunt of Kings Heath (Lab)]

My Lords, the noble Lord will know that we have already agreed internationally to go for a 2030 cut-off. I have had correspondence from the noble Lord and I know that others would argue that we should bring it forward, as the US has wanted to do. We are in very serious discussions about that.

[Lord Wigley (PC)]

My Lords, the Minister will know about the global shortage of radioisotope supply for treating cancer. Is he aware that the Welsh Government, in co-operation with the Egino company, have financed a feasibility study into establishing a radioisotope production plant on the existing Trawsfynydd nuclear site, to which the noble Lord, Lord Jones, referred a moment ago, and for which an SMR would be highly relevant? Does he accept that such a project would help meet the UK healthcare needs, facilitate valuable exports, help the existing nuclear site to be managed and provide much-needed high-grade jobs? Please will he link up with colleagues in Cardiff to see what can be done on this through GB Nuclear?

[Lord Hunt of Kings Heath (Lab)]

My Lords, I understand the point the noble Lord is raising. My department is exercised by the advantage that could be brought. We are in discussions with the Welsh Assembly Government and my colleagues in the Department of Health and Social Care. I cannot say at this stage whether we can bring this to a successful outcome, but I certainly see the merits in what he is arguing.

[Earl Russell (LD)]

My Lords, can the Minister update the House on the importance of the agreement reached on the sidelines of the COP summit with the United States, which seeks to speed up the deployment of cutting-edge nuclear technology, helping to decarbonise our industry? The agreement aims to support information sharing on advanced nuclear technologies to help make them available to industry by 2030. How important is this agreement, and how will it help us to make sure that this technology is actually deployed?

[Lord Hunt of Kings Heath (Lab)]

My Lords, it is a very important agreement. We have a very good relationship with the US on all things civil nuclear, and this will enable us to enhance that. I should also say that at COP, six new countries joined existing countries in declaration of an aim to triple nuclear power globally by 2050. There are now 31 signatures, which is very important. It is an indication that globally we are seeing a renaissance in nuclear, in which this Government wish our own nuclear industry to be a part.

[Lord Offord of Garvel (Con)]

Last week, in answer to a question on COP 29 from the noble and learned Baroness, Lady Butler-Sloss, referencing GB Energy, the noble Baroness, Lady Smith of Basildon, suggested that the Government would look at nuclear energy, specifically small nuclear reactors. Can the Minister clarify whether that is indeed the case?

[Lord Hunt of Kings Heath (Lab)]

I am not sure I understand the question, but if it is whether we recognise the importance of SMRs in this country and generally, the answer is yes. On the benefits of the use of small modular reactors, having a modular approach in which much can be assembled off-site brings huge advantages. Going forward, we see that SMRs have great potential, and of course UK companies themselves have great potential.

[Lord Spellar (Lab)]

My Lords, the Minister clearly shares my frustration at the time taken in moving this issue forward under the previous Administration. At the same time, is it not a fact that we have a major nuclear reactor constructor in the UK that has been producing reactors for our submarines for over 60 years? Is it not enormously important for that constructor, and equally important for its supply chain, to be able to tool up and organise in order to produce? Is it not the unfortunate reality that the United States is moving ahead on this and has a full-spectrum approach to selling its modular reactors while we slip behind? What is the Minister going to do to speed this up?

[Lord Hunt of Kings Heath (Lab)]

I hope we are not slipping behind. Clearly, the process that GBN is going through will take a few more months, but I hope the outcome will be a satisfactory conclusion. I cannot comment on the companies involved in the appraisal and the discussions taking place with GBN at the moment, but I take the noble Lord’s point about our defence capability and the supply chain. We are increasingly seeing the civil nuclear and defence nuclear industries working more closely together, and I see that as a very important foundation for the future. I take the noble Lord’s point about the US; it is important that where we have a technological advantage, we make the best of it.

[Baroness Bennett of Manor Castle (GP)]

My Lords—

--- Later in debate ---

[Baroness Bennett of Manor Castle (GP)]

Are the Government going to consider security in the same kind of way?

[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 Hunt of Kings Heath Excerpts

Thursday 28th November 2024 Lords Chamber

[Earl Russell (LD)]

My Lords, we welcome this Statement and the progress made at COP 29. The world—indeed the very future of humanity—stands at a cross-roads. One path leads to a near-term end of the viable future of humanity on planet earth, and the other leads to concerted, collective and constructive change and a willingness to fight for humanity’s future. Time is a luxury that is rapidly running out. We are on the cusp of breaching our collective goal of limiting climate change to 1.5 degrees. We must keep hope alive. We must fight for further rapid progress with the little time we have left.

The near future—one that our children will experience—is one where they will need to fight climate change and deal with the ever-growing consequences of the failure to do so earlier. The tragic loss of life and destruction from Storm Bert is the latest reminder of this fact. It is not acceptable that funding shortfalls mean that the number of properties to be protected from flooding by 2027 was cut by the previous Government by 40%. Will the Minister commit to including natural flood defences as a central part of the £5.2 billion flood-defence spending to protect our communities? Much more work is also needed on adaption and resilience programmes.

COP 29 concluded with a deal that, while welcome, still leaves much to be desired. The $300 billion a year is a start, but the developed world must do more to support the developing world to implement its own clean energy and adaption programmes. It is estimated that this funding can deliver reductions equivalent to more than 15 times the UK’s annual emissions. Simply put, we can either pay now or we can pay more later. The greatest cost of all is always that of doing nothing.

We very much welcome the return of UK leadership on the world stage on climate issues, after the dying days of the Conservative Government did so much damage to our international standing and reputation with their retreat from reality. I congratulate our negotiators on their work. We welcome the commitments to new ambitious emissions targets, including the reduction by at least 81% by 2035. Delivery depends on bolder and more decisive action. We support this programme and I express our willingness to work with the Minister to help the UK to seize this opportunity.

We need concentrated and immediate action to insulate our homes, reduce energy costs and ensure that no one has to choose between heating and eating. The delay to Labour’s warm homes plan until spring 2025 is unacceptable when millions of people, including 1.2 million pensioners, face a cold and uncomfortable winter due to the cut in the winter fuel allowance. We need clearer plans to roll out heat pumps, to increase the update of electric vehicles, to fix the unacceptable delays to grid connections, and to achieve rapid progress in improving our energy security and enabling a swift reduction in energy bills.

We will work to progress the GB Energy Bill through this House, but we call on the Minister to give clear commitments to deliver clear community energy programmes. Labour must do more to decentralise the energy transition, bring much-needed jobs and growth from the green economy, and work to ensure that the benefits of our transition and increased energy security are properly communicated. Climate leadership must prioritise solutions that protect communities and restore nature. The nature and climate crises are interlinked and intertwined. We are one of the most nature-deprived countries in the world. Our 30 by 30 target still has unrealistic delivery pathways.

I note that the Statement says:

“The UK will decide what our own contribution will be in the context of our spending review and fiscal situation, and that will come from within the UK aid budget”.


On loss and damage, are these funds ring-fenced against the development cuts announced in the Budget? Lastly, I call on the Government to give the gift of time to the Climate and Nature Bill—a Private Member’s Bill being discussed in the other place. It is so important that we update our climate legislation.

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

My Lords, I thank both noble Earls for their comments and questions. I must say that it is good to welcome the noble Earl, Lord Courtown, to the Dispatch Box to talk on such an important issue; it is like old times. His comments were interesting because he started by talking about his own Government’s achievements in the area of climate change, net zero and the decarbonisation of our power supplies. But then he moved away from that, and it is worth reflecting that, of course, it was Prime Minister May who showed leadership on net zero, and it was the last Government who signed up to the £11.6 billion in international climate finance for the period 2021-26. They also signed up to the national adaption programme 2023-28.

It was the noble Lord, Lord Sharma, who so ably led the COP 26 Glasgow negotiations. I was just reminding myself of the ministerial meeting in Copenhagen only two years ago, co-chaired by the noble Lord, Lord Sharma, in which Ministers agreed the urgency of responding to climate change and of the need to accelerate practical action and support for a just transition to low greenhouse gas emissions. It seems to me that the Conservative leadership is essentially turning its back on climate change, and it seems to be obsessed with fossil fuels.

As we heard from the noble Earl, Lord Russell, both just now and in the Oral Question earlier, climate change is here. It is having damaging impacts in this country and globally. We simply cannot hold back: we have to charge on. I agree with the noble Earl, Lord Russell, on the importance of flood defences, charging on to net zero, heat pumps, and grid connections. His comments on the GBE Bill were helpful, and I noted his point on community energy. He mentioned the warm homes plan: we have that and continue to work on it, but we have already made some substantive announcements, which I hope he will be able to study.

There has been a lot of comment on the outcome of the negotiations, which were obviously very challenging. Developing countries were disappointed with some of the outcomes. The fact is that the focus was on finance, and the agreement calls on all actors to scale up financing to $1.3 trillion for developing countries by 2035 from all sources, public and private. Also agreed was a goal for public and publicly mobilised finances of at least $300 billion per year for developing countries by 2035. I should say that this new goal will take account of contributions from major economies such as China that are in a position to support developing countries.

Although we made strides in relation to finance and carbon markets, COP did not make progress elsewhere. We wanted much stronger outcomes on taking forward the global stocktake, agreed at COP 28, on the transition away from fossil fuels and on keeping 1.5 degrees Celsius alive. We will continue to push that as we move towards the run-up to COP 30 in Brazil.

I acknowledge that both noble Earls have welcomed UK leadership, which has been very important. The visit of the Prime Minister and the Secretary of State was influential, and it is right that Britain should be there at the negotiating table. I know that noble Lords say that we produce only 1% emissions, but there are many countries with 1% emissions, and collectively, we are very powerful. I acknowledge that we want to build on what the last Government achieved in this area. National consensus here is very important indeed.

On the 81% target for 2035, we think that that is in line with the advice from the Climate Change Committee. Clearly, we will now need to work through the implications of that. On our contribution to the £300 billion of public and publicly mobilised finance, clearly, I cannot be drawn on what that will be. As we have said, this will go into the multiyear spending review. However, overall, we can at least recognise that agreement was reached in very difficult negotiations.

I know that noble Lords are concerned about China, and I understand the issues they raise. The fact is that China disclosed that it has contributed £24 billion in climate finance to developing countries since 2016. We know that part of the COP agreement is to encourage more voluntary contributions on that basis. It is interesting that International Energy Agency figures show that China is accelerating its use of renewable energy.

There is clearly much to discuss and to tease out of the agreement, and a lot of work has to be done on the pathway to Brazil. But at least an agreement has been reached which gives us some hope that we can move forward, and for this country, the message is to charge on.

[Lord Woodley (Lab)]

My Lords, the Statement clearly says that the move towards clean energy is unstoppable, and of course I welcome that, but I have two questions for the Minister. First, does he agree that to get consumers to buy more electric vehicles, reducing VAT from 20% to 5% would be incredibly helpful? Secondly, does he agree that the mayor of Liverpool’s proposals for a Mersey barrier—which, obviously, would generate energy not through wind but through tide—would be a fantastic step forward in investing in the long-term prospects of cleaner energy?

[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.

[Lord Teverson (LD)]

My Lords, one of the things that has improved hugely is satellite monitoring of emissions, particularly of methane. According to a recent report, some 1,000 major methane escapes have been identified and notified to the nations which caused them, but there has been very little reaction or implementation of measures. The UK has shown leadership here as part of the global methane pledge. How can we much better ensure that we implement the solution to emissions of this most concentrated of greenhouse gases, as doing so is really important?

[Lord Hunt of Kings Heath (Lab)]

I am grateful to the noble Lord, who raises a very important issue. In fact, during or around the time of the COP 29 discussions, we announced £5 million to help developing countries tackle methane emissions from their fossil fuels. This is supporting delivery of the global methane pledge launched at COP 26. However, I am very happy to take a further look at this and to respond to the noble Lord in some detail about what further actions we might take on this important matter.

[Baroness Hayman (CB)]

My Lords, I declare an interest as the chair of Peers for the Planet. There were two COPs this year but as far as I could see, in the Statement there was only one passing reference to nature, yet biodiversity loss and climate change are profoundly integrated and intertwined challenges. Does the Minister recognise that we need to find the policy synergies to address both issues and to manage the trade-offs that sometimes need to be made? Can he also think about where we could make a start with some integrated language in the Great British Energy Bill?

[Lord Hunt of Kings Heath (Lab)]

That is quite a challenge from the noble Baroness. When we come to Committee next Tuesday, we will certainly discuss this issue further, but I very much take her point about nature and biodiversity. She is also right to highlight that there are sometimes tensions. Yesterday we had an Oral Question on the use of farmland for solar farm development; there is clearly a tension there that has to be managed, and I very much accept the challenge she described.

[Lord Ahmad of Wimbledon (Con)]

My Lords, I welcome both the tone and substance of the Statement. Indeed, I recall the £11.6 billion commitment made by the Conservative Government—because I made it myself at the UN meeting. However, my focus is on the progress that was made. Article 6 of the Paris agreement focused on carbon trading. Can the noble Lord focus on the UK’s approach to that? Linked to that, I associate myself with the just point made by the noble Baroness, on climate-based solutions. In practical terms, we have seen that when we are looking at climate solutions, nature-based solutions provide the best example of both mitigation and adaptation on the ground.

[Lord Hunt of Kings Heath (Lab)]

My Lords, I readily acknowledge the noble Lord’s personal commitment and thank him for it. I do think a consensual approach to this is really important in giving long-term stability both to our country and to industry, in terms of the policies that we are taking forward.

On Article 6, at COP the parties agreed outstanding rules to fully operationalise it. This can enable higher global mitigation ambitions and facilitate flows of finance, particularly to emerging and developing economies. We obviously very much welcome this outcome. It delivers high-integrity rules to govern international carbon markets, which are underpinned by environmental integrity, as he said. Obviously, in terms of what we now do, we will be taking this forward. However, alongside some of the disappointments that have been expressed about the outcome, this is a very important one.

[Lord Browne of Ladyton (Lab)]

My Lords, I draw attention to my entry in the register of interests, particularly as working vice-chair of the Nuclear Threat Initiative. According to the IAEA, nuclear power must significantly expand to new markets if climate rules are to be achieved. Currently, there are 31 countries using nuclear power. We learned from COP 28 and COP 29 that around 30 so-called newcomer countries are either embarking on or considering its introduction, and some are already building their first nuclear reactors.

As nuclear energy expands to new locations, it is critical that non-proliferation in nuclear security practices and standards keeps pace. This will require significant extension. Moving in the wrong direction could foster a world with more weapons-usable nuclear materials that are less secure, more countries with the ability to produce these materials and perhaps even more nuclear weapon states. Engaging with Governments who have established nuclear energy to promote key non-proliferation standards is essential. What steps are we taking in that regard? We need to make sure that Atoms4NetZero does not turn into “Atoms for Peace”, which left many dangerous materials lying about all over the world.

[Lord Hunt of Kings Heath (Lab)]

My Lords, I am very grateful to my noble friend. I understand that six more countries signed the nuclear agreement declaration at COP. These are the countries that have pledged to triple nuclear energy by 2050. It is quite clear that there is a global renaissance occurring in nuclear energy. I have attended a number of international conferences where there is a lot of interest in countries like ourselves, who have turned back to nuclear, in countries that have not had nuclear power stations. This has great potential for the UK. We have great potential for exporting technology and expertise and, in relation to what my noble friend said, efficient systems of regulation. I assure him that we are encouraging business and agencies here to do all that they can in an international setting. I have met a number of Ministers from countries who are going back to or starting nuclear on that. In relation to non-proliferation, the work of the IAEA is critical. I assure him that the United Kingdom plays a very strong role in it and contributes to it extensively.

[Lord Mott (Con)]

My Lords, I refer the House to my entry in the register of Members’ interests. I welcome the Statement today, but can the Minister reflect on the recent COP and those over the last few years and whether the format of discussion, debate and agreement is best achieved through the format of COP or whether there is a better way to move this forward on a more regular basis, perhaps holding to account some of the countries in the world on a more regular basis?

[Lord Hunt of Kings Heath (Lab)]

My Lords, it is clearly an interesting question. The noble Lord will have seen that some of the country participants in Baku were very unhappy with parts of the process. Some felt excluded from some of the key corridor discussions, if I can put it that way. The problem is that it is the only forum that we have for discussing and negotiating these important matters. Whatever fora you have, if you have over 190 countries involved, it is going to be very complex. Notwithstanding that I understand the frustrations of many countries and the difficulties, the fact that agreement was reached and we can now see clear a line to Brazil next year means that we need to continue to work with the process and encourage it to be run as effectively as possible. I do not see any option but to go with the COP process.

[Baroness McIntosh of Pickering (Con)]

The noble Earl, Lord Russell, raised the warm homes discount. I am the honorary president of National Energy Action. I see that the discount rate is still £150. Given the current level of electricity bills, this seems quite low and not to have been reviewed for some time. Will the Minister review this and look at the level of the warm homes discount?

[Lord Hunt of Kings Heath (Lab)]

My Lords, I have to say to the noble Baroness that at the moment we do not have any plans to review it.

[Lord Hamilton of Epsom (Con)]

My Lords, China is a major contributor to global emissions. Much of its energy is still generated through coal and it is still building coal-fired power stations. China is not alone. India is also building coal-fired power stations and depends on coal for much of its energy as well. The result is that both countries are keeping their prices low, compared with the rest of the world, and the undertakings that we have from them seem rather hazy. What guarantees are there that they will reduce their consumption of coal and are they likely to keep to them?

[Lord Hunt of Kings Heath (Lab)]

Obviously, there are no guarantees, but that is why it is very important to move to Brazil and deal with mitigation, in a way that we were unable to do in the last COP negotiations. In relation to China, I understand entirely what the noble Lord is saying. I understand entirely his concerns. However, China was a player at the COP discussions. It did indicate the voluntary payments that it has made to developing countries and I believe we have to work very hard to keep China in the tent.

I repeat again that, although clearly China has overtaken the EU and is now the world’s largest emitter, it is also developing extensively in renewable energy. What alternative do we have? In the end, we must come back to climate change and the awful consequences, for us and globally, of not taking action. It would be a huge mistake to put the brakes on, say, “No, we’re going to rely on oil and gas”, and hope that nothing happens. We just cannot do that. We have to work with China and India. We have to try as hard as we can to bring them with us and that is what we are seeking to do.

[Lord Hogan-Howe (CB)]

My Lords, this is a complex issue and I am a layman in what is a complex world. One thing which we are in control of but which we do not seem to make much progress with is building regulations for new properties. This confuses me. They still seem to allow gas boilers to be put in. They do not seem to encourage solar panels or glass that converts sunlight into electricity. Yet we are already building new properties. This Government quite properly have a huge ambition to build far more properties. Is this not the time to embed the price of some of these changes in the price of the new property, perhaps with some kind of taxation encouragement? At the moment, we are building properties that we know will not be helpful in the future when it is within our gift, with existing technology, to do about something it. It is confusing. Every time I have asked about this, somebody has said that they are looking into it. Is it not time that somebody did something about it and encouraged builders—incentivised them—to help us to make some progress, in this area at least?

[Lord Hunt of Kings Heath (Lab)]

My Lords, the noble Lord is right about the complexity of this whole area of policy, but he makes a powerful point. On Monday, we had an Oral Question from the noble Earl, Lord Russell, on solar panels on roofs, when essentially the same question was asked by a number of noble Lords. I recognise the force of his argument. We are having cross-government discussions at the moment looking at building regulations. I hope that within a fairly short period of time we will have a positive outcome.

[Lord Wilson of Dinton (CB)]

My Lords, I am perplexed by the slowness with which we pursue nuclear power. In 1980, the noble Lord, Lord Howell, announced to the House that we would build one PWR a year through the 1980s. I know because I drafted it. But it did not happen. Why is it so expensive and so slow?

[Lord Hunt of Kings Heath (Lab)]

Oh, my Lords. In 2007, the last Labour Government decided to go back to new nuclear—I was the Minister responsible from 2008 to 2010. We were starting to talk about Hinkley Point C with EDF and about developing a supply chain, and it was not until 2017 that the final investment decision was made. Hinkley Point C had many design changes because it was found that you could not simply take a model from France and put it in Britain without there having to be a lot of changes. However, there were a lot of positives, and it is being built—they are making substantial progress now. The second reactor has been much more efficiently built because they learned from the first reactor. Sizewell C, which will be 3.2 gigawatts, is moving to a final investment decision and will, in essence, be a replica of Hinkley Point C. So, although the noble Lord is right that there has been a lot of delay, I believe we can start to see greater progress. The small modular reactor and advanced modular reactor programmes have great potential for us in this country and for UK companies.

[Viscount Younger of Leckie (Con)]

My Lords, when it comes to the UK share of the $300 billion, whenever it is paid out to developing countries, which we are all for, can the Minister give some assurances that the money will go to the destinations as directed, and that corruption, which can be prevalent, is taken account of? It may be that the new Government have made a reassessment of that.

[Lord Hunt of Kings Heath (Lab)]

My Lords, that is a very important point. The integrity of the process is vital in terms of going forward. On our contribution, I think I said earlier that this will have to wait for the multiyear spending review.