Great British Energy Bill

Lord Hunt of Kings Heath Excerpts

Tuesday 14th January 2025 Lords Chamber

Moved by

[Lord Hunt of Kings Heath]

That the Bill be reported from the Committee of the Whole House in respect of proceedings up to and including 13 January; and that the order of commitment of 18 November 2024 be discharged and the remainder of the Bill be committed to a Grand Committee.

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

My Lords, I think it would be helpful to the House if I explain this Motion and, for those noble Lords who were not in your Lordships’ House at 10 pm last night, the circumstances that give rise to it.

The Great British Energy Bill is an eight-clause Bill that provides a statutory basis for Great British Energy as a publicly owned company to become operationally independent and start delivering benefits for the UK. This includes driving clean energy deployment and boosting energy independence so we can enjoy the benefits of clean, secure, homegrown energy. It was in the Government’s manifesto, it was one of the first Bills to be introduced following the general election and it has been through all its Commons stages.

The Bill was initially scheduled for two days of Committee of the whole House. Progress in Committee has been, shall we say, somewhat slow. In total, 153 amendments have been tabled, which is around 19 amendments for every clause of the Bill. Last night, it was the Government’s intent to finish Committee, but at five minutes past 10 the Opposition Chief Whip moved the adjournment of the House, which was successful.

Report has been agreed for 11 February. Noble Lords will have noted that, over the next two weeks, the House will be heavily engaged in this Chamber with the Mental Health Bill and Martyn’s law. So, noting the request from the Official Opposition for more time to scrutinise the Bill, my noble friend the Chief Whip has kindly arranged for it to be considered in Grand Committee on Wednesday 15 January and 22 January if required, and noble Lords will be able to table further amendments today. If the Motion is agreed to, the groupings will be circulated to those who have tabled amendments as soon as possible, with a deadline for changes at 8 pm. I hope this will allow further debate on the Bill, which indeed is what the Official Opposition requested, and I very much hope that the whole House will support the Motion. I beg to move.

[Baroness Williams of Trafford (Con)]

My Lords, last night this House voted to adjourn the House at a conventional time of 10 pm to stop the Government rushing through the Great British Energy Bill—on which the Government intend to spend £8.3 billion of taxpayers’ money. Today, after two and a half days of scrutiny in this Chamber, the Government are seeking to finish the Bill away from the Floor of your Lordships’ House in Grand Committee. As far as I recall, where the Official Opposition object, this is quite an unprecedented move. Before we adjourned last night, we completed nine groups and started a 10th. In all the years that I was a Minister, I would have been delighted to have completed and made so much progress on a Bill in a day. Ten groups is not a filibuster; it is reasonable progress in anybody’s books.

I note the Government’s new habit of labelling groups “degrouped” despite us providing reasoned titles for them. So, for the benefit of the House, I will very briefly run through the groups that we debated yesterday, and then perhaps the Minister, if he wishes, can tell us which of these did not deserve to be debated: directions to GB Energy on consumer energy bills, new jobs, developing supply chains, the cost of fulfilling strategic priorities, national grid infrastructure, carbon emissions, imported energy, UK manufacturers and financial returns; the impact of GB Energy investments on electricity prices, returns, employment and the environment; consultation and oversight; the inappropriate use of prime agricultural land; a large miscellaneous group—actually intended to be helpful to the Government—which included mandatory reinvestment of profits, exclusion of investments to projects with government subsidies, independent evaluation of investments, limitation of investments to UK-registered companies, limitations on money spent on travel to conferences, and support for companies and universities; nuclear energy; curtailment of renewable energy; energy storage; renewable energy generation; and reporting, accounts and auditing.

Which of those topics did not deserve fair and proper scrutiny? Energy security, energy storage and the environment? Just this weekend, we have read reports of the Chancellor of the Exchequer negotiating closer ties with China and of fuel reserves reaching critical lows in the very cold spell. It is very important and topical business. If there is a group of amendments that did not deserve to be debated, I should be very grateful to be enlightened.

Every noble Lord in this House has a right to be heard, and yesterday we heard from Members with widespread experience and expertise. I challenge any noble Lord to read back through Hansard and find me one speech that they consider inappropriate. All of them were informed and insightful, and within the advisory speaking times set out in the Companion.

The job of the Opposition is to scrutinise the work of the Government and hold the Government to account. This is nothing personal; it is simply the proper functioning of our Parliament. When the tables were turned and it was the Labour Party occupying these Benches, we had 13 Bills which took more than 10 days in Committee. The Parliamentary Voting System and Constituencies Act 2011 and the Welfare Reform Act 2012 took 17 days, and the Health and Social Care Act 2012 and the Levelling-up and Regeneration Act 2023 each took 15 days. We debated thousands upon thousands of amendments. I was often the Minister on those Bills. Since 2015, the most amendments tabled to a Bill has been 1,249, but there have been 51 Bills which had more than 200 amendments tabled to them, 23 Bills that had more than 400 and 16 that had more than 500.

We will not be voting against this Motion today. We made our point last night, and I had hoped that the Government might listen. I reiterate that we simply seek to subject legislation to the fullest and most appropriate scrutiny, as is our responsibly.

[Lord Hunt of Kings Heath (Lab)]

My Lords, I am most grateful to the noble Baroness for not opposing the Motion that I intend to press in a moment. Of course I recognise that it is the role of the Opposition to scrutinise legislation. I would say that Grand Committee offers an opportunity for effective scrutiny, and I have no doubt that, in the two days reserved, we will see many more contributions from noble Lords—no doubt repeating the points that they have made time and time again on this Bill.

I just say to the noble Baroness that, in relation to the groups of amendments that we debated last night on directions, it is interesting that when, at the beginning of Committee and at Second Reading, noble Lords opposite seemed to accuse the Government of wishing to use the Clause 6 directions to micromanage the company, we made it abundantly clear that it is a backstop reserve which we hope will never have to be used. Noble Lords opposite then simply used the direction clause to act to come forward with a series of amendments. Many of the issues had already been debated in the first five clauses, and there was a vigorous degrouping to ensure that we had many repetitive contributions. I have been a Member of your Lordships’ House for 27 years. I recognise a filibuster when I see it. Last night was a filibuster.

Motion agreed.

Great British Energy Bill

Lord Hunt of Kings Heath Excerpts

Committee stage
Monday 13th January 2025 Lords Chamber

[Earl Russell (LD)]

My Lords, I will speak very briefly. If I may, I will call out the elephant in the room on this Bill. We have had 10 groups of amendments turned into 18 groups on this final day in Committee—over half of the groups that we are discussing today are the result of one party degrouping amendments. We have spent over two hours speaking to the first group of amendments, and we have 18 groups to speak to today. I have heard a lot of speeches, but in the case of many, I could not tell which amendment they were even speaking to.

I will say just this: we support the Government and the Bill. This is an extremely important Bill. I am pleased to see action taken on these measures after the Conservative Party failed to do anything about it, left bill payers vulnerable to the increase in bills as a result of the war in Ukraine and ended up spending £40 billion of taxpayers’ money subsidising bill payers for no long-term benefits. In this group, we are generally supportive of Amendments 61, 65, 69, 70 and 74. For groups that we feel were unnecessarily degrouped, we will probably not make comments.

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

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

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

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

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

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

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

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

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

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

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

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

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

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

[Lord Hamilton of Epsom (Con)]

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

[Lord Hunt of Kings Heath (Lab)]

My Lords, we rely on agreed definitions as to whether an energy is clean. The noble Lord mentioned biomass and Drax. He will know that the Government’s view, which his party also took when in government, is that the carbon absorbed by the forestry that replaces what has been transported to Drax more than covers the carbon expended in the process of bringing it to Drax, including the use of shipping. For 14 years, the party opposite accepted that this was an appropriate definition.

I turn to my noble friend Lord Berkeley’s amendment, on the risk to off-grid households and the value of renewable liquid fuels to these households. The noble Lord, Lord Bruce, also covered that point, and I listened with great care to what both had to say. Clearly, we want fuel-poor and off-gas-grid homes to benefit from the transition to net zero. The current energy company obligation includes incentives to deliver measures such as low-carbon heating to off-gas-grid rural homes in Scotland and Wales. Phase 2 of the home upgrade grant provides energy efficiency upgrades and low-carbon heating measures to low-income households living in the worst performing off-gas-grid homes in England in order to tackle fuel poverty.

We recognise that renewable liquid fuels could play a role in decarbonising heat off the gas grid. We therefore expect to prioritise the use of renewable liquid fuels for the small number of homes that are not readily suitable for electrification, as these have the fewest options to decarbonise through alternative low-carbon technologies. My noble friend Lord Berkeley suggested a meeting on this; I am very happy to engage with him and, indeed, with the noble Lord, Lord Bruce.

Amendment 76, tabled by the noble Lord, Lord Offord, and Amendment 77, tabled by the noble Baroness, Lady Bloomfield, relate to sourcing materials for GBE projects from the domestic supply chain. Adding the proposed detail to the Bill would too narrowly restrict the company in carrying out its activities, halting the potential feasibility of projects where UK sourcing is not currently possible.

On jobs, I take the point made by the noble Lord, Lord Bruce, concerning the importance of the UK continental shelf and the need for an orderly transition. My daughter supported her career as a wireline engineer in the oil and gas industry working out of Aberdeen, and I am well aware of the importance of the sector, what it has contributed to the UK economy and the skills and dedication of the people working there. As we have described, we want an orderly and just transition.

GB Energy will be committed to helping drive the growth of supply chains in the UK to accelerate the deployment of key UK energy projects. It is important, however, that we comply with the international trading rules that the UK is bound by, such as prohibitions on requiring local content contained under various agreements under the WTO.

Amendment 80, in the name of the noble Lord, Lord Petitgas, requires the Secretary

[Lord Alton of Liverpool (CB)]

I am sorry to interrupt the noble Lord, but I wonder if I can press him further on the issue of jobs and the impact on our own economy when countries run, in their own jurisdictions, the kind of slave labour arrangements that I and others referred to earlier. He will have seen the information about the loss of electric vehicle-related jobs because of the flooding of the market—we do not have any tariffs on those vehicles, whereas every other G7 country does. He will know that, in the last quarter, the trade deficit with China was some £32 billion but at no time since 1995 has there ever been surplus on our side of the equation. How can we justify, therefore, pouring more money into the economy of a country that relies on slave labour? It cannot just be left to companies, even Great British Energy, to identify whether a country is using slave labour or not; surely that is a matter for the Government, too.

[Lord Hunt of Kings Heath (Lab)]

The noble Lord raises matters of great geopolitical importance and importance to the UK’s economy. He will have seen that my right honourable friend the Chancellor has been in China in the last few days, seeking to engage that country in relation to economic co-operation and development, within appropriate security safeguards. We want to see jobs in the energy sector developed as much as possible in the United Kingdom, but equally, we are operating in a global economy. For very good reasons, we are concerned about the introduction of tariffs which may inhibit international trade, and we must also be mindful of the economic value-for-money issues that clearly have to come into play in this area.

Let me return to the Bill and what is appropriate for us to include in it. We believe that this issue is a matter for GBE, working within the constraints set through the statement of priorities and through Clause 3, and also in relation to the further work we are going to do. We have mentioned solar, and noble Lords are right that much of the raw material for solar panels comes from China, although it is British companies working in the United Kingdom that benefit more from the value of the work on solar installations.

Turning to the amendment of the noble Lord, Lord Petitgas, as a publicly owned company, GBE will be held accountable through regular reporting to my department. It will be subject to HM Treasury’s value-for-money guidelines, its investments will be subject to safeguards and risk assessments, and it will invest in the private sector to share risk and reward.

On green taxonomy, a decision about how a potential UK green taxonomy could be used or applied has not yet been finalised. The Government have launched a consultation to gather views on the value of the case for a UK green taxonomy, and it will close on 6 February.

We need to come back to what Clause 6 is for as a whole. It is a backstop which one hopes would never have to be used; it is not a way to encourage the Secretary of State to micromanage a company that we very much want to be operationally independent.

[Lord Petitgas (Con)]

I want to go back to the point about the company acting independently. There is little bit of confusion about this company being an energy company, as opposed to an investment company. There will be myriad small investments. If it acts independently, which is fine, it needs an investment committee, and I have not read anywhere that there will be one. The chairman-elect is Jürgen Maier. He may know the sector but he is not an investor. So, effectively, taxpayers will be limited partners in an investment company without an investment committee and with a chair who is not an investor, so it is not unreasonable to ask for information about rates of return and to understand exactly how it will be done. If the answer is, “Don’t worry, it’s an independent company but value for money will be done by the Treasury with DESNZ”, that is a different governance process, but the governance of investment and selection to me remains relatively obscure.

[Lord Hunt of Kings Heath (Lab)]

My Lords, I do not really think I can go any further than the remarks I have made this afternoon. It will ultimately be for GBE’s board to decide how it will arrange its board committees. I have noted what the noble Lord said about an investment committee. I will certainly draw his remarks to the attention of Jürgen Maier, who may not be an investment expert, as the noble Lord suggests, but my goodness me he has a lot of experience in this sector.

[Lord Offord of Garvel (Con)]

My Lords, in bringing the debate on these amendments to a close, I can deal head-on with the Minister’s comments and those of the noble Earl, Lord Russell, about the time given to the Bill. We have so far had one and a half days in Committee and we have one further day allocated, which will be only two and a half days on a Bill that spends £8.3 billion of taxpayers’ money, has no detail on how that money will be spent and gives endless power to the Secretary of State for Energy. It is entirely reasonable that we scrutinise it. The weekend’s press was full of the energy crisis that we face, with the shortage, storage and national grid issues.

[Lord Hunt of Kings Heath (Lab)]

My Lords, with the greatest respect, there is no energy crisis.

[Lord Offord of Garvel (Con)]

As I said, the point of government is to ensure that there is no energy crisis and at the weekend we had reports of there being gas supplies for less than one week, which is concerning to the public. Therefore, it is only fair and reasonable that Parliament debates that in some detail.

[Lord Hunt of Kings Heath (Lab)]

My Lords, what we had was one company looking for government subsidies using the opportunity to make alarmist headlines.

[Lord Offord of Garvel (Con)]

The point is that this is a topical debate that the whole of the public are interested in. They understand energy prices like nothing else now. They understand that, in terms of their household budgets, this is a major part of their cost of living and it is only reasonable that we get to debate this.

The amendments in this group are straightforward and simple. They are nothing to do with micromanagement; they are only to do with the accountability and transparency of this new company, which, as my noble friend Lord Petitgas pointed out, is not an operating company. The public think this is a company that makes cheap energy. It is an investment company sitting on one floor of a building in Aberdeen making investment decisions, and we have no idea how it will do that.

At the last election, the Government made promises to working people on this topic: to reduce energy costs, create jobs and drive forward our energy transition. Therefore, taking my noble friend Lady Noakes’s constructive point, we can argue about how we deliver the substance of these amendments, but we should not ignore the substance. Is it not fair and reasonable that we have in the Bill some consideration of government promises made to the public about the cost of energy—£300 in savings, which, incidentally, is £8 billion, the same amount as is being invested in 28 million households at £300—or the fact that 650,000 jobs are to be created? Is it not reasonable that the Bill somewhere talks about the fact that we want a strategic priority for the UK to develop its own energy supply chain? Is it not unreasonable that we have amendments that deal with how we make sure that the supply chain is fair? We have talked about a fair transition: well, where is the fair transition, to pick up what the noble Lords, Lord Bruce and Lord Alton, said, when we destroy our own highly skilled jobs in the north-east or end up using products made under dubious circumstances in overseas territories?

I would argue that all these amendments need to be considered. There is consensus in this House that we need energy security and that we need to get to 2050. The question is: why is this being speeded up artificially when we and the technology are not ready? Why are we doing this artificially?

My final point has been mentioned by many noble Lords so far: none of this works without the plumbing working. The national grid needs a serious upgrade and comprehensive investment to deliver this. If in these straitened times—we are continually reminded by the Government Benches that there is no money—there is a spare £8 billion, should it not be better used by being put into the national grid once and for all? In the meantime, given that we are where we are in Committee, I beg leave to withdraw the amendment.

--- Later in debate ---

[Lord Teverson (LD)]

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

[Lord Hunt of Kings Heath (Lab)]

My Lords, I want to make just two points. The noble Lord, Lord Teverson, made a very interesting and wise contribution. I say to the noble Lord, Lord Hamilton, that of course I have heard the expression that Governments are not very good at picking winners. That is why we have set up GBE. We will have a company with people with expertise to enable investments to take place within the context we set under Clause 3 and Clause 5 as strategic priorities. None the less, it will have operational independence.

The noble Lord, Lord Teverson, is right; noble Lords in their various amendments are seeking to pin down GBE through excessive reporting requirements. The risk is that GBE, far from being allowed to flourish and develop, will be inhibited and micromanaged. That is why these amendments are wholly inappropriate in relation to Clause 6. The power of direction is not to be used in the way that noble Lords are suggesting; it is a backstop power. What is the point of setting up GBE if we are to undermine its independence in the way these amendments suggest?

[Lord Offord of Garvel (Con)]

My Lords, as in the previous group, these amendments are not designed in any way to micromanage. There is very little in the Bill that gives us any indication of how this company will operate. As indicated by my noble friend Lord Petitgas, it is an investment company without an investment committee or any investment directors. All that is being sought by these amendments is some level of accountability and scrutiny.

Once again, I say that when promises are made to the public that the Bill will address their concerns, it is not unreasonable that we ask for amendments to be made accordingly. For example, looking at employment in Amendment 68, we are simply asking for a report—as the noble Lord, Lord Bruce, said—on the impact these investments make on employment and bills. Why is that an unreasonable thing to say? We have 200,000 people in highly skilled jobs in the North Sea. They are worried that they are about to be phased out unilaterally and prematurely. Why is it unreasonable to have somewhere in the Bill a requirement that GBE comes to Parliament and explains what it is doing in relation to employment in this key sector?

As we have said before, the Bill has failed to substantiate the promises made. The job of the Opposition is to highlight that and to make it clear that this needs to be debated and scrutinised. That is what we will continue to do. In light of that, for now I will withdraw the amendment.

--- Later in debate ---

In conclusion, Amendments 63, 73, 104 and 105 offer a practical and necessary solution to ensure that the best land is reserved for food production while still allowing for renewable energy development on less productive land. This is not an either/or situation; it is a matter of finding a balance that serves both our energy needs and our need to protect the land that sustains us.

[Lord Hunt of Kings Heath (Lab)]

My Lords, I welcome the contribution of the noble Lord, Lord Fuller, on his first set of amendments. Of course, he is right that our food security is very important indeed to this country, just as moving as quickly as we can towards clean power is also very important, and I certainly accept that of course there is a balance to be drawn. Certainly, the importance of maintaining our natural resources to support UK agriculture, and supporting local stakeholder consultation in affairs that affect their surroundings and the quality of the environment, are values that I share with noble Lords who have spoken in the debate tonight. But I must come back to the fact that we are talking about Clause 6 and the issue of whether we should seek to amend Clause 6 in the directions that the Secretary of State can give to GBE.

I repeat what I said in the first two groups: these directions are a backstop where an intervention is needed, not a way in which to develop policy in relation to land use. In response to my noble friend Lady Young and other noble Lords, my understanding is that the Government plan to publish a 12-week consultation on land use early in this year. The consultation will inform the publication of a land use framework in England, to be published later on in this year.

I have also noted constructive comments about the need for us to develop—indeed, some noble Lords wish us to mandate—the use of solar in warehouses and in industrial and domestic properties, and these matters are under very urgent consideration at the moment. But we will always need ground-based solar, as well as onshore wind, as the noble Lord, Lord Teverson, suggested, which of course is why we got rid of what was in effect a ban that the last Government so grievously introduced in relation to that development.

The projects that GBE will be concerned with, that it will invest in and that it will give guidance and encouragement to—because of course that is an important part of its role, too—will be mandated. Inevitably, its job will be to consider government guidance on the most suitable land for renewable energy projects, and any project that it is involved in will be subject to the same rigorous planning processes that currently exist to protect agricultural land, minimise the impact on food security and provide ample consideration for local community interests.

The environmental impact assessment regulations of 2017 require that certain types of projects, including large-scale renewable energy developments, undergo an environmental impact assessment to assess their potential impact on the environment. Developers must also ensure that their projects comply with environmental regulations, which can include mitigating impacts on local wildlife, water resources and soil quality.

Further, the National Planning Policy Framework includes the preservation of agricultural land for food production as a key consideration in its legal framework governing renewable energy projects. It emphasises the need to protect the best and most versatile agricultural land, namely grades 1, 2 and 3a, from development that could compromise its productivity. Developers must consider the classification of the land involved in renewable energy projects and ensure that developments do not conflict with planning policies aimed at safeguarding agricultural land.

On the noble Lord’s suggestion that there is a dash for renewables, yes, there is a dash for renewables—I do not deny it. We have to have a dash for renewables. But that does not mean that existing protections are being overridden. Of course we recognise that poorly sited onshore projects can have impacts on the local area, which is why we will retain important checks and balances to protect the environment.

But, in the end, we come back to why we have Clause 6. It is a backstop power which we hope will never have to be used; it is not a way of seeking to change policy in relation to land use.

[Lord Fuller (Con)]

My Lords, we have had a good debate that has explored the tensions between food and energy security in the context of the national interest. It has recognised the tensions between the establishment of a private company, GB Energy, acting as it is required to do in its own narrow self-interest, and its responsibilities as a public body with a duty to set the right example.

I have taken from some of the comments that, “Lord Fuller has perhaps played the right notes but in the wrong order”. I am not Morecambe and Wise to my noble friend Lord Roborough, but I would just like to refer to some of the points that have come along.

I am grateful to the noble Lord, Lord Cameron of Dillington, for his comments on the balance of land use and the importance of the “tilted balance”. Please do not misunderstand: my amendments are not saying that there should be no solar or renewables, or that we should have only food production. It is about where we put this thing in the tilted balance.

I am grateful to my noble friend Lord Roborough for shining a light on the fact that, notwithstanding that the Minister said, “Well, there are rules to be followed”, the rules are not being followed. That is why it is important that these amendments are made to the Bill, because we cannot really give the benefit of the doubt: if hitherto they have not been followed, why will they be followed now?

I am grateful to the noble Baroness, Lady Young of Old Scone, but even more grateful to the noble Earl, Lord Caithness, for being gentle with her so I did not have to be.

The noble Viscount, Lord Goschen, talked about the broad picture, and I am grateful to the noble Lord, Lord Bellingham, for his point about tenants, because that has been lost as part of the social fabric in this.

I will be brief. This is such an important issue that I do not feel we can just leave it on trust that the Minister for Energy Security will necessarily dovetail in with the Minister for Food Production to get that tilted balance right. The nation cannot risk GB Energy going rogue, and there has to be a better way with that. It is hard. Energy security and food security can be bedfellows: we are not being fundamentalist about this. At heart, my amendments are about putting food production on the best land, and solar and other renewables on other land.

We have we have fleshed out quite a few details and I know we are in Committee. I hope the Minister will meet with me and colleagues before Report, so that important safeguards can be taken into account in the Bill, if not in Clause 6 then perhaps somewhere else—who knows? I also hope that we may even have the heralded land use framework which the noble Baroness, Lady Hayman, promised before Christmas—but there we are.

On the basis that the Minister will meet me, I am prepared to withdraw these amendments, but in so doing I signal my intention to re-present them on Report, having taken soundings from colleagues that, if we cannot make satisfactory progress towards getting an acceptable way forward, we may need to test the opinion of the House. Meanwhile, I beg leave to withdraw my amendment.

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If the Government are to invest in nuclear energy, using GB Energy as their investment body, they must look to improve the global competitiveness of the UK nuclear industry and seek to crowd-in private investment. High start-up costs of nuclear projects and the potential for cost overruns have long been a daunting obstacle to the private financing of nuclear power plants. Considering this, the Government must look to create a market which is attractive to private investors if they are to achieve their goal of decarbonisation. I look to the Minister to confirm how the Government propose to support and attract this private investment. What consideration have they given to the competitiveness of the UK nuclear sector compared to that in the US, for example, or in France, as my noble friend highlighted? Have the Government carefully considered the many ways by which they can finance nuclear projects? Finally, will the Minister confirm or deny whether GB Energy will be involved in supporting the nuclear industry by way of loans, guarantees or any other financial support?

[Lord Hunt of Kings Heath (Lab)]

My Lords, it is always good to have a discussion about nuclear energy. The noble Viscount, Lord Trenchard, is ever consistent in putting forward his views. I assure him and the Committee that the Government see nuclear power as having a vital and important part in our energy mix.

I say to the noble Lord, Lord Hamilton, that the fact is that no technology is mentioned in the Bill, and that is quite deliberate—so the absence of nuclear in the Bill should not be taken as an indication that we do not think that it has an important role to play. I say to the noble Lord, Lord Offord, on Labour’s record on nuclear, it was in fact a Labour Government, in 2008, who took the decision that we would go back to new nuclear. Shortly afterwards, I was appointed a Minister of State at the Department for Energy and Climate Change, and I took part in many discussions at that point about how we got the sites, developed the supply chain and attracted investment. The fact is that we were succeeded by a coalition Government, followed by a Conservative Government, and it was not until, I think, 2017 that a final investment decision was made in relation to Hinkley Point C.

I am very proud of the nuclear sector. For all the challenges that Hinkley Point C has had, the fact is that a UK supply chain has been developed. The point about replication at Sizewell C is that that supply chain can then continue to service Sizewell C. We then want to see small modular reactors and AMRs developed, because we see them as having great potential. I say to the noble Viscount, Lord Trenchard, that he has not responded to the points raised by his colleague, the noble Lord, Lord Howell, in relation to Sizewell C. I am sure he will agree with me that, if we were to pull the plug on Sizewell C at this point, it would have a devastating impact on the confidence of the nuclear sector, in this country and globally. Actually—although he is not here—the point about replication is about the derisking of Sizewell C, building on what happened at Hinkley Point C, including the design changes and all the other issues, such as the time it took to develop the supply chain and the productivity issues. The case for Sizewell C is very strong indeed, and we look forward to moving towards a final investment decision over the next few months.

On the relationship between GBN and GBE, we have decided that GBN will remain a separate legal entity. That is important, because it makes sure that we have a body that can focus completely on nuclear energy, but working very strongly together with Great British Energy. The two chairs have met and have, I believe, built a very strong relationship already. I expect them to be able to work in strong partnership in future. I do not think it is necessary to put onerous requirements in the Bill. Certainly, Clause 6 is not the way in which to do it.

The noble Viscount, Lord Trenchard, is concerned about the approach that GBN is taking to the SMR technology selection process. It was instituted by his own party in government, and I think he was critical of his own Government. Well, I am not. I think the SMR technology assessment was absolutely the right thing to do. In September 2024 it concluded the initial tender phase of the process and downselected four companies. We hope for further progress over the next few months.

I recognise the huge potential that AMRs bring, and we will respond to the alternative routes to market consultation. We are obviously very keen to do what we can to attract nuclear company developers in this country.

On the impact of competitiveness, I really do not think the Bill is an appropriate vehicle for those considerations, and nor do I see that being part of Great British Energy’s role. But of course I want there to be a thriving nuclear industry in this country. I want to see us build on the supply chain that has been built around Hinkley Point C and then on to Sizewell C, as I have said.

In conclusion, I hope the noble Viscount will recognise that while he may disagree with elements of the Government’s policy on nuclear, he should be under no misapprehension: we believe that nuclear provides an essential baseload. We will continue to support the industry in the future.

[Viscount Trenchard (Con)]

My Lords, I thank the Minister very much for his reply, and I thank my noble friend for his intervention. To some extent I am heartened by the Minister’s words, although I remain a little unconvinced by his assertion that he sees nuclear as being so important. There is a fundamental difference between GBE and GBN, in that GBE has £8.2 billion of capital and GBN has only a few hundred million. The two vehicles are completely different, so I would be rather more relieved if the Minister had explained that the capital made available to GBE would equally be available to nuclear projects that GBN might recommend for investment.

[Lord Hunt of Kings Heath (Lab)]

Can I just respond? Nothing precludes GBE from investing in a nuclear development.

[Viscount Trenchard (Con)]

I thank the Minister again for his reply. Nevertheless, GBN does not have any money for investment, so GBN is by definition a very different kind of vehicle compared with GBE. In light of the Minister’s reply, I would like to withdraw my amendment for now.

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[Lord Offord of Garvel (Con)]

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

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

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

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

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

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

Amendment 85D requires Great British Energy to

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

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

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

[Lord Hunt of Kings Heath (Lab)]

My Lords, I am grateful to the noble Lord, Lord Murray, for Amendments 85D and 85E, which are focused on the issue of renewable energy curtailment. I must repeat, as I said earlier, that this debate is, in essence, about technologies, rather than the appropriate use of the directions in Clause 6. However, I assure the noble Lord that we are determined to increase significantly the deployment of short-term and long-term duration electricity storage to reduce curtailment.

I, too, was present in the debate on energy storage last Thursday, which was very interesting. My noble friend Lady Gustafsson recognised then that a variety of energy storage technologies would be needed to achieve net zero. That includes technologies such as lithium batteries and pumped hydropower storage—which can deploy at different scales and provide output over different lengths of time—and it can include emerging technologies, such as liquid air energy storage and flow batteries. Low-carbon hydrogen, too, can act as a low-carbon flexible generating technology and provide very long duration energy storage.

Today, around 7 gigawatts’ worth of grid-scale electricity storage is operational in Great Britain. This is made up of 2.8 gigawatts of pumped hydrogen and 4.3 gigawatts of grid-scale lithium battery storage. I add that we have announced a long-duration energy support scheme. We will publish a technical document in February. Applications will open in the second quarter, and we hope that the first agreements under the cap and floor system will take place in early 2026. It will be technology neutral, and it will be for projects that could not be built without the cap and floor system.

There are some developments in train: SSE, for instance, is doing exploratory tunnelling in the north of Scotland for pumped-storage hydro. Highview Power has reached FID in terms of liquid air energy storage near Carrington. Points on curtailment costs are well made; we see it as a key priority to accelerate network infrastructure to increase capacity on network and reduce constraints.

I do not think there is a lacuna; the Bill is constructed in the way it is. We have Clause 3 and the strategic statement of priorities in Clause 5. I hope I have reassured the noble Lord that the substantive point he raises is important and accepted by the Government.

[Lord Murray of Blidworth (Con)]

My Lords, I thank the Minister for his reply and am provided with some reassurance that the Government take storage seriously. However, for the reasons given by my noble friend Lord Ashcombe, the cost of curtailing output is presently substantial, as the Minister conceded. As my noble friends Lord Hamilton and Lord Offord pointed out, the difficulty with the current structure of the Bill is that we are not moving fast enough to secure sufficient storage capacity such that we do not need to make such large curtailment payments.

I urge the Minister to consider inserting in the Bill, at the very least, some form of requirement for reporting in relation to curtailment payments, which would encourage the market in storage capacity. With that, I am content to withdraw my amendment.

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[Lord Hunt of Kings Heath (Lab)]

My Lords, first, I welcome so many Members of the Opposition to our debate and I look forward to their continuing interest in our deliberations going on this evening. I must confess to being somewhat at a loss, because all the points raised in this debate have been raised tonight in other amendments. What we are seeing is clearly a filibuster, and the degrouping of so many of these amendments on Clause 6 is the visible evidence of this. We have already had a debate on energy storage, which the noble Lord, Lord Murray, moved. We have already debated power lines and planning environmental protections, and we have discussed nuclear power, SMRs and AMRs. I simply do not understand. What is the point of having yet another debate on these issues, which amount to Second Reading discussions about the Government’s energy policy? We are debating Clause 6 directions. This is a backstop provision, normal in Bills of this sort in relation to the bodies that we are talking about, and it is quite inappropriate for us to seek to micromanage GB Energy in the way noble Lords have suggested.

[Lord Lilley (Con)]

My Lords, I am grateful to the Minister for his non-reply to the debate. The answer to his point about whether it is necessary is that it is impossible to overstate the importance of cheap and reliable energy to the economic growth of this country. If the only way we can have reliable energy is by having hugely costly energy, either because, as the noble Lord, Lord Reay, said, to ward off delays as we saw in recent days costs eight or 10 times what it normally costs or because to prevent that sort of risk involves spending hundreds of billions of pounds, that is hugely important. I am very sorry that the Minister, whom I normally praise for his replies, which are usually fulsome and effective and substantive, has avoided addressing those points, because they are crucially important and they have many aspects and it is important that those many aspects be investigated in the course of these debates in Committee. Obviously, I shall withdraw my amendment, but I hope that none the less that we will force the Government to think seriously about these issues before carrying us further down a route which could make our already very expensive energy even more expensive.

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.

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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?

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[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.

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[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.

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[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.

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[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.

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[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.

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?

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[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.

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.

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.

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.

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[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.

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[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.

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[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.

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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.

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[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.

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[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.

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[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.

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[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.

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[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.

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?

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[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.

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.

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[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.