Retained EU Law (Revocation and Reform) Bill

Lord Lilley Excerpts

2nd reading
Monday 6th February 2023 Lords Chamber

[Lord Lilley (Con)]

My Lords, it is a great pleasure to follow the very witty speech from the noble and learned Lord, Lord Judge. Whenever I negotiated laws in Brussels, my ministerial brief usually began, “We don’t want this measure, Minister, but we cannot stop it. The best we can hope is to negotiate one or two amendments from the long list we have proposed to you”. I therefore fully support the need to revise, retain or repeal EU law and I urge Ministers to rake out these old negotiating briefs, which will reduce the burden of work on departments when deciding what revisions to propose.

That said, I largely share the concerns expressed by noble Lords about the constraints on parliamentary scrutiny and the limited time to complete this process. I understand their fears that this could result in poor revision, and even wholesale repeal of necessary legislation. However, I also understand the fears that led the Government to adopt this tight timetable, and I think the latter fears negate and should dispel the former. Let me explain why. As parliamentarians, especially in this Chamber, whose only power is to make the other House consider our amendments and arguments, we are bound to want the maximum time and strongest procedures to fulfil that function. It is true that almost all these 4,000 laws went through Parliament under the biggest Henry VIII clause of all time—the European Communities Act 1972—with little debate and without a vote, and they would have become law even if every Member of this and the other House had voted against them.

Many noble Lords now calling for more scrutiny never complained about that lack of scrutiny in the past. I rejoice in their damascene conversion to the supremacy of Parliament—there is more joy in heaven over one sinner who repenteth than 99 just men who need no repentance—but when they suggest that taking back control is meaningless without maximal parliamentary scrutiny, they are exaggerating the purpose of Brexit with the zeal of converts. Brexit was, above all, about the British people getting back control. As my referendum leaflet put it:

“In a democracy, if the Government does not deliver ... the people can throw them out.”


The Government will be accountable to the British people at the next election, not least for how they handle these 4,000 laws, and that is the accountability that lies behind the timetable the Government have set for getting this done. I was surprised by the timetable and when I asked Ministers to take it at a more leisurely pace, they explained that it is essential to complete this process before the next election, not because we promised to get Brexit done but, above all, because this is the only way we can prove to the electorate that the scare stories about the process that we heard today are false. Completing the process will show that the Bill was not about removing workers’ rights or demolishing environmental protection or safety standards; nor will it result in huge gaps in our law book. The fact that the Government intend to complete this process in time to face up to their accountability to the electorate makes most of the scare stories ring hollow.

If we had world enough and time, we would undertake this process in a more leisurely fashion, but we do not, so I entirely support my noble friend’s wish to get it done as speedily as possible by processes that are as rigorous as those by which the legislation was introduced, and thereby demonstrate that all the scare stories are untrue.

Energy Bill [HL]

Lord Lilley Excerpts

Committee stage
Monday 16th January 2023 Grand Committee

[Lord Teverson (LD)]

I shall speak to my Amendments 223 and 232, but I am in sympathy with my noble friend Lady Sheehan’s amendments. On flaring, we are undoubtedly the dirty man of the North Sea. Although the Minister may say that over the past year we have reduced our flaring by some 20%—we are starting to get there—as my noble friend said, really it should be zero, as many North Sea neighbours have been able to do.

Amendment 223 effectively bans fracking. It is straightforward, in black and white. I shall go through a bit of modern history—this Government’s view of fracking. In November 2019, there was a moratorium on fracking. In September 2022, fracking was allowed. In October 2022, fracking was banned. Let us be clear about this: we need a little certainty and the firm smack of decisive government here. Let us put this to bed by putting a ban on fracking in primary legislation.

With the cost of energy from gas at the moment, the problem is that in the UK we are still overdependent on gas, but our production, even with fracking, would be minuscule in terms of global production, so it would have little effect on the market price. Looking back to last February, Kwasi Kwarteng tweeted

“UK producers won’t sell shale gas to UK consumers below the market price. They are not charities.”

Indeed they are not. Fracking in this country will make no difference to gas prices at the moment. It will take some years to develop it, and the time is past. Let us be decisive about this and make clear where the UK stands.

Amendment 232 is very similar; it concerns England, because this is a devolved area. We should end the licensing of new coal mines. I was quite shocked at the end of last year that the Whitehaven mine in Cumbria was approved, and that it was approved by the Levelling-Up Secretary, Michael Gove, who should know better, having invented the 25-year environment plan, knowing all about these issues and being one of the best Environment Secretaries we have had for many years and a member of a Government who have sufficient respect and leverage to say no to something that should not happen. We have become an international laughing stock in many ways. Our reputation has been straightforwardly destroyed by hypocrisy.

I looked at a BEIS press release from just over a year ago, on 3 November 2021, regarding COP 26. It says:

“The end of coal—the single biggest contributor to climate change—is in sight thanks to the UK securing a 190-strong coalition of countries and organisations at COP26, with countries such as Indonesia, South Korea, Poland, Vietnam, and Chile announcing clear commitments to phase out coal power … Business & Energy Secretary Kwasi Kwarteng said: ‘Today marks a milestone moment in our global efforts to tackle climate change as nations from all corners of the world unite in Glasgow to declare that coal has no part to play in our future power generation. Spearheaded by the UK’s COP26 Presidency, today’s ambitious commitments made by our international partners demonstrate that the end of coal is in sight.’”


A year later, just after COP 27 has finished, we have the Government declaring that a coal mine should open in England.

[Lord Lilley (Con)]

Would the noble Lord remind the Committee that that coal mine will not produce power—all the pledges that he has just talked about concern the use of coal to produce power—but steel?

[Lord Teverson (LD)]

The noble Lord makes a very good point. One-fifth of that production is estimated to be going towards steel, an industry that needs to decarbonise and has said that it will do that itself. The other 80% is to be exported and will be used as energy. I cannot understand what else it would be used for.

[Lord Lilley (Con)]

Steel.

[Lord Teverson (LD)]

But that industry should be decarbonised. Whatever the noble Lord says, it goes exactly against what we as a nation have said about the future of coal. That brings disrespect, I am sad to say, on not just this Government but this country. That is why I believe this amendment is an important one to go forward.

If the Government cannot agree to the amendment from the noble Lord, Lord Lennie, on the name of the Oil and Gas Authority then there is absolutely no hope for the Bill. I also very much support the amendment by the noble Baroness, Lady Bennett. I remind the Committee that the International Energy Agency’s executive director, Fatih Birol, said at the end of last year:

“If governments are serious about the climate crisis, there can be no new investments in oil, gas and coal, from now—from this year.”

--- Later in debate ---

I conclude by restating the point that I made at the start. Here we have a chance; the nation is listening, as perhaps it does not terribly often listen to our detailed debate in the Moses Room. What does each party represent in this Room? What is their position on new coal, oil and gas? If there is no answer to that question, the country will draw its own conclusions, and many people will highlight what is said in this Room today.

[Lord Lilley (Con)]

I shall speak to Amendment 226 and say a few words about Amendment 223 in the name of the noble Lord, Lord Teverson, and, by implication, Amendment 227 to which the noble Baroness, Lady Bennett, has just referred.

The noble Lord, Lord Teverson, said he is against just new supply and not fracking as such, in which case, why has he singled out fracking and not sought to ban new North Sea fields? If he were logical, he would be signing the amendment tabled by the noble Baroness, Lady Bennett of Manor Castle, which seeks to ban all new fields.

[Lord Teverson (LD)]

That is a very good question. It is partly answered by the fact that I put my amendment down first before the other amendment went down. The other answer is that in all legislative processes—the noble Lord, Lord Lilley, will know far more about this than me—you try to go for what might be possible, and I suspect that the Government are less keen on the amendment tabled by the noble Baroness, Lady Bennett, whereas all my amendment does is confirm present government policy.

[Lord Lilley (Con)]

So, had the noble Baroness, Lady Bennett, got her amendment in first, the noble Lord would have signed it. It is interesting to know that the Liberal Democrats are against any new fields in the North Sea.

What I want to try to get home to those members of the Committee who have not yet taken it on board is that up to now we have pursued a path to net zero which involves reducing demand for fossil fuels by replacing fossil fuels with renewable energy. That is a logical path to pursue. We have not been seeking to achieve it by reducing supply of fossil fuels. As a result, if people choose to produce more fossil fuels than there is demand, as demand falls fossil fuel producers will be left with stranded assets and lose money. It could not happen to a nicer bunch of people, but why should we think that our judgments are better than theirs or worry about them erring and producing too much, investing too much and not getting their money back? That is up to them.

[Baroness Bennett of Manor Castle (GP)]

My Lords—

[Lord Lilley (Con)]

May I pursue the point? When I have made it and made my own case, I look forward to the noble Baroness demolishing it.

We will continue to use gas, albeit in reducing amounts, for decades, probably alongside carbon capture and storage. That is accepted by almost everybody I know. If the UK bans production, which would be an absurd thing to do, given that we do not ban imports of natural gas, we will simply leave others to supply our needs and needs elsewhere in the world. If lots of countries decide to ban new supply, if they succeed in reducing supply faster than we reduce demand, there will be shortages. Prices will shoot up. There will be the same sort of crisis—and huge profits for the oil industries—and we will have done to ourselves what Putin has done to us by reducing supply more rapidly than demand. I want to know why the noble Baroness, Lady Bennett, and the noble Lord, Lord Teverson, want to introduce that sort of risk into the system. Why not just pursue the steady path of reducing demand until it is net zero?

[Baroness Bennett of Manor Castle (GP)]

It is interesting that the noble Lord’s analysis bears a great deal of resemblance to that of the fossil fuel non-proliferation treaty proponents, who point out that we have been seeking to reduce demand and say that they explicitly want to reduce supply. I think the noble Lord was making the case that the price will go up if there is not enough supply. Of course, the reverse is true: if there is too much supply, the price will go down. Indeed, we saw this during Covid, with petrol in the United States—gas, as they call it—where people were actually being paid to store and hold it, because you cannot switch these supplies on and off like a tap. Once you build a field, you are going to keep producing that stuff: you cannot suddenly switch it on and off. So, if you have overproduction, you have extremely low prices and those prices, of course, do not reflect the actual cost and the damage being done, either in terms of the climate or all the other damages that the WHO, signing up to this treaty, points out, in terms of the damage done to human health by burning fossil fuels.

[Lord Lilley (Con)]

If that the best argument against the thesis I put forward, I know I am on strong ground. The noble Baroness says that we might end up with cheap fuel and the oil companies losing money: well, I can cope with both those things.

[Baroness Sheehan (LD)]

Will the noble Lord at least agree that, when we are looking at supply and demand and prices going up and down, that will work only where we have a level playing field? Where you have a market that is skewed, with perverse incentives, such as tax reliefs in the example I gave on my first amendment, that really negates his argument: you cannot say supply is going to be one factor and then have it overridden by incentives to investment that reduce the risks for the people taking them.

[Lord Lilley (Con)]

I think that is a rather different set of arguments. My point is that we can approach net zero by reducing demand and let supply find its own level, with or without incentives. Incidentally, the idea that there are incentives to oil production, when the taxes at our pumps are a massive proportion of the price we pay and when oil in the North Sea pays double the corporation tax rate that other companies do in any other industry, is simple nonsense.

However, now I will turn, if I may, to my own Amendment 226, which would ensure that the conditions relating to vibrations from drilling for shale should not exceed those applied to other industries, for example under British Standard 5228. There is no reason that shale drilling should face different conditions as to the tremors it may cause from, say, quarrying, mining, construction or pile driving. In particular, there is no reason, other than environmentalist virtue signalling, why standards for shale as far as tremors are concerned should be stricter than drilling for geothermal or carbon capture and storage—other than that they get positive ticks from the green lobby whereas shale does not, even though we are going to continue using gas for many decades to come.

Indeed, recently, there was a 1.6 magnitude tremor in Cornwall as a result of drilling for geothermal. People could feel it. It did not do any damage, of course, and it is an order of magnitude higher than the maximum tremor that we allow without stopping production in shale. The level set by Sir Ed Davey when he was Secretary of State for Energy was a magnitude of 0.5 and the one in Cornwall was 1.6. Sir Ed Davey has since admitted that he was proud that, by setting this limit, he effectively stopped the fracking industry in this country. Of course, that was not what he said at the time.

At the time, he said that he was accepting the report that came out at the time. It was an excellent report, produced by the Royal Society for Science and the Royal Academy of Engineering, called Shale Gas Extraction in the UK: a Review of Hydraulic Fracturing. The opening paragraph states:

“The health, safety and environmental risks associated with hydraulic fracturing (often termed ‘fracking’) as a means to extract shale gas can be managed effectively in the UK as long as operational best practices are implemented and enforced through regulation.”


So it gave a pretty clear vote of support. It said that the

“magnitude of seismicity induced by hydraulic fracturing would be no greater than”

magnitude 3, which would be

“felt by few people and result in negligible, if any, surface impacts.”

So we are left with this absurdly low criterion, which is an order of magnitude more severe than that applied to any other industry.

It is not only an order of magnitude; it is entirely unreasonable. Natural earthquakes in this country can be several orders of magnitude greater than is permitted as a result of fracturing for shale gas, and these natural earthquakes occur with little damage. I can remember being woken up at midnight on 23 September 2002 in London. My whole house shook and the windows rattled and I was woken. It was the only time—no, I will not say anything about that. The earthquake was actually centred in Dudley in the Midlands and was a force 4.7 and had that effect in London. There were no reports of damage anywhere in the United Kingdom as result of it—and that was 500 times greater than the highest seismicity induced so far by fracking in the UK, let alone the low 0.5 standard set. Over the last 50 years, according to the British Geological Survey, there have been 25 natural earthquakes of greater than or equal to magnitude 4 and in the last 60 days we have had 29 minor earthquakes in the United Kingdom about which no one has complained at all.

The University of Liverpool produced a study using seismicity measurements which showed the impact of a whole range of household events. I have a copy of it here. It showed that, for example, a door slamming uses more vibration at its surface than the maximum magnitude permitted from fracking in the United Kingdom. So does sitting down suddenly on an office chair, or a building site piledriver 15 metres away. They are all similar orders of magnitude—they are 0.6—but you can find things which are an order of magnitude higher, and we should remember that this is a logarithmic scale. Dropping a large bag of shopping has a magnitude of 1.5 and a toddler playing on a wooden floor, I am astonished to learn, can produce seismicity of 2.1. So we are talking about having such a degree of security against any seismic shock resulting from fracking as to be completely ridiculous.

[Baroness Altmann (Con)]

I thank my noble friend for giving way. I have listened carefully to his arguments and would like to ask him whether he is excluding the other risks associated with fracking. Whether or not there are earthquake risks, surely we have the pollution of the groundwater, the toxic chemicals being released, the ground level ozone, air pollution and the use of large volumes of water in a country which had water shortages not that long ago and indeed where the geography seems to be rather different from that in other countries where fracking has been so successful.

[Lord Lilley (Con)]

I have good news for the noble Baroness, because those issues were covered in Shale Gas Extraction in the UK: A Review of Hydraulic Fracturing, produced by the Royal Society and the Royal Academy of Engineering. We are all constantly urged to follow the science, so let us follow the science in that review. She discussed water, and according to the review:

“Overall water use is important. Estimates indicate that the amount needed to operate a hydraulically fractured shale gas well for a decade may be equivalent to the amount needed to water a golf course for a month”.


That seems something with which we can probably cope. She then discussed the possible results leading to the pollution of aquifers. The review says:

“Concerns have been raised about the risk of fractures propagating from shale formations to reach overlying aquifers. The available evidence indicates that this risk is very low provided that shale gas extraction takes place at depths of many hundreds of metres or several kilometres.”


In the UK’s Bowland shale, it would be kilometres deep. The review continues:

“Geological mechanisms constrain the distances that fractures may propagate vertically. Even if communication with overlying aquifers were possible, suitable pressure conditions would still be necessary for contaminants to flow through fractures.”


When you have a kilometre or more of stone—impermeable rock—bearing down, you could not get a better seal.

Nevertheless, we do not have to worry about scientific analysis and theory, because we have practical experience. Over a million wells have been fracked in North America; not a single one has resulted in a building falling down from tremors or in a single person being poisoned by contaminated aquifers. So we are bound to conclude that lots of people have been spreading the sort of scaremongering that would make anti-vaxxers blush—even Andrew Bridgen would probably blush if he heard some of the stuff that has been put out by the friends of the noble Baroness, Lady Bennett, at their various camps around every conceivable attempt to get fracking going. We should rely on the science and the scientific reports and regulate the industry well, as we have done in the past.

[Baroness Bennett of Manor Castle (GP)]

Since the noble Lord addressed me directly on fracking, I ask him if he is aware of the article published in 2020 in Environmental Health Perspectives in the United States which showed that babies with low birth weight are significantly more common in families living close to fracking wells in the US. That demonstrates the practical reality of the outcome of fracking on health.

--- Later in debate ---

[Lord Lilley (Con)]

What is the mechanism by which those babies are born with low health when they are near a well?

[Baroness Bennett of Manor Castle (GP)]

The scientists behind that study say that they cannot explain it, that it needs further examination and that there are a number of possible mechanisms.

[Lord Lilley (Con)]

I have not read the report, but I will read it. I have read similar reports, and almost all rely on the statistical phenomenon that random events are as likely to be bunched together as they are to be evenly spread; I say that as someone who studied statistics. This results in bunches of things; for example, you will get bunches certain cancers somewhere near Windscale, as it used to be called, yet there are bunches elsewhere not near Windscale but people do not worry about them. I very much doubt that there is any scientific basis—and indeed the authors of the article could not think of any scientific basis—as to why we should relate one thing to another in that case. It is the sort of thing that the anti-vaxxers say when they find a little concern. Obviously we should always be concerned about issues such as vaccination or drilling under pressure, but we should not exploit people’s fears to stop something we do not like for other reasons. I hope that my amendment will be adopted and that it will mean that we actually regulate the shale gas industry on exactly the same basis as we do all other industries which can produce similar environmental impacts.

[Baroness Worthington (CB)]

My Lords, I hesitate to speak on this fascinating group of amendments, because we have had a rather long debate already. However, as it is such an important aspect of energy policy, I hope that the Grand Committee will bear with me as I comment on the group of amendments. If I had more time and had not been overseas recently, I would have added my name to Amendment 222A tabled by the noble Baroness, Lady Sheehan, as it is absolutely critical that we have transparency.

Over a series of years, finance measures have allowed us to walk into quite a huge liability on the public purse in relation to decommissioning the oil and gas facilities that are already there. That should not be ignored; it could be huge and very significant, especially as the nature of the investment in the North Sea shifts away from the majors into much smaller, less stable and less financially competent entities. I fully support the amendment and look forward to hearing from the Minister in detail in his response, because it is very well drafted and concerns an absolutely critical issue.

I move to the rest of the amendments, which all relate to the supply side of energy as opposed to the demand side. The noble Lord, Lord Lilley, posed the question: why should we consider supply-side constraints alongside demand-side? There are a number of answers. The most compelling is that essentially to rely on one strategy would be reckless, given all that is at stake with climate change. It would also create conditions that would lead to a very unclear investment environment for those people still involved in the extraction of fossil fuels. That lack of clarity has real-world implications for us as consumers, since we will have spiky prices, and for those employed in the sector, who will have no real sense of whether they are working for a company that is about to go bust because of stranded assets or whether there will be an oversupply and prices will fall. That lack of clarity around the supply side is at the heart of why people are calling for a measured, organised and negotiated exit, so that we all know what we can do to stay within the planetary boundaries which we are so clearly barrelling into. That is one reason.

[Lord Lilley (Con)]

Will the noble Baroness give way?

[Baroness Worthington (CB)]

I will continue if I may, and perhaps the noble Lord will come back to me on all the reasons. Another reason is that there is a moral dimension to climate change. We should never forget that. It is not about number crunching and bean counting of carbon in one country or another. This is a common-action problem. The whole world needs to move. Arguably, we have had the greatest number of years of unfettered exploitation of fossil fuels of any country on the planet. Therefore, it is high time that we signalled an end to that, to allow those countries that have not had that possibility to potentially increase their revenues from their resources while we signal the direction for the whole planet. That moral leadership is what led to net zero and it is what will lead to us acting on the supply side, because we must do both. We cannot effectively do this by cutting with one side of a pair of scissors. We need to cut with both. It seems ludicrous that the only body in the world that discusses supply-side constraints is OPEC. We are a nation state and we should, as a group of countries, come together to negotiate a much more considered and appropriate mechanism for looking at the supply side.

Finally, there is an absolute imbalance of power in those incumbents currently involved in the extraction of fossil fuels. They do not sit by passively, waiting for demand to be destroyed. I can tell the Committee as a matter of fact that money is being put into disinformation and misinformation campaigns to slow down the demand reduction that we want sped up. I do not disagree that demand is a very good way of doing this, but it is not the only way. We must be clear-sighted and honest with ourselves when we look at this problem from the perspective of a single-member state. What influence can we have on the world? Standing up to these giant companies with huge budgets, massive legal teams and huge sophisticated communication exercises is not easy. If we in the UK took this on, we would have to do so in an international context.

Therefore, I am not putting my name to these amendments. They are not appropriate without that commitment to act on an international basis. Here I am echoing some of the comments made about the non-proliferation treaty. Something must happen on the supply side within the auspices of an international agreement. We can then have an orderly transition in which everyone understands what we are allowed to do and what we are not. The current situation, where coal mines can be approved in the UK in the 21st century—sending people underground to dig out coal that no one wants with high sulphur content—is ludicrous. We as a country should lead on this. We should introduce appropriate policy at this stage, not legislation, which leads us to an international agreement.

I am sorry that I have spoken at length, but I feel strongly that we should take this on as a nation, particularly for that moral reason.

[Lord Lilley (Con)]

I was touched by the concern expressed by the noble Baroness for giving people in the fossil fuel industry certainty about the future. I used to be an analyst in the City, analysing energy and trying to forecast. It was very uncertain. The oil, gas, coal and electricity companies all found it very difficult to forecast. It is now somewhat easier because we have spelled out a path to net zero. They know that there will be a decline. They may think that perhaps it will not as much as that, or a bit more, but they have a better trajectory than ever before. In any case, why is she so worried about people in the fossil fuel industry having certainty, which no one else has? Also, she said that it is a moral issue—that it is about signalling something. In other words, it is virtue signalling.

[Baroness Worthington (CB)]

I dispute that point completely. It is not about virtue-signalling; it is about moral leadership. There is a difference. When the UK stood up and passed legislation on climate change, and took those measures to pass net zero, the rest of the world took notice. We can do the same on this issue, and we will need to. It does not have certainty because it depends on who you talk to in the City. At the moment, many people in the City are saying, “Woohoo!” Everybody is piling on to fossil fuels, with record high profits and huge amounts of money to be made in the short term. That short-termism is going to send us as a society collectively off a cliff. We do not want to see that. What happens in that uncertainty is speculation. A huge amount of trading that goes on with these commodities creates a bubble that all of us then pay for. I do not want to see any more of that; I want it to become a regulated industry that is declining according to an agreed strategy. Otherwise, I have no doubt that they will push us off a cliff; arguably, they already have.

I turn to other amendments in this group. I do not want to get into a debate about fracking but, for the record, I remember being on the Front Bench when we debated fracking regulations in our debates on the energy Bill that introduced them. Why did the industry not spot this at the time? Perhaps it was a clever move by the Lib Dems that it did not spot, although I would find that surprising. There is a host of regulations that have been passed on this issue. I am not averse to us looking at these seismic limits again because nobody wants to hold the Bill back on that basis. However, my contention is that the time has passed and it will be too slow to make a significant contribution to our domestic gas supply. We would be far better off electrifying everything and reducing primary energy demand by at least a third in that process.

That brings me on to Amendment 224, tabled by the noble Lord, Lord Moylan. Surprisingly, I quite like this amendment because it would force us to think about how we could reduce our domestic reliance on gas. Within that timeframe, no fracking is coming online, I am afraid, so the only option left is massively reducing our dependence on gas. That means electrification, not just because it is abundant, clean and cheap but because it is much more efficient. It is an energy-efficiency measure to electrify, taking down primary consumption. I feel confident that, if we were to produce a strategy, we would see a huge amount of electrification being brought on. That may well be what we should be doing; in fact, Amendment 242, which we debated previously, would have asked the Government to do just that. Perhaps there is something here to come back to on Report.

I turn to Amendment 227A; it was not debated but I am sure that we will come on to it. I just want to say that I lend my support to that renaming.

On Amendment 227AA in the name of the noble Baroness, Lady Sheehan, flaring is absolutely ludicrous in the sense that we should not be allowing this resource to be burned without it being captured and brought to market. However, there is something worse than flaring: venting. I want to hear some reassurance on the banning of flaring—it has been banned at times, specifically for wildlife protection reasons as I remember it—because it can lead to venting. That means allowing methane to be released into the atmosphere, which would be far more damaging and much harder to track. I would not want to see this amendment agreed to unless that issue was addressed.

We have had a debate about coal. If we are looking at this Bill holistically—I offer the Minister this thought for free—there is a way through the apparent contradiction around allowing us to exploit in environmentally sensitive ways the continued use of our own fossil resources where that will avoid us bringing in more polluting sources from America, which I think is the case at the moment. What about a climate recovery fund? We have just created a marine recovery fund for the almost non-existent damage that the offshore wind industry creates. What about a climate recovery fund for the very real damage that the continued extraction and burning of fossil fuels causes? Why do we not innovate around that policy? It would be easy to implement it. It could become a condition of all future licensing of fossil fuels in this country. We could work out the price we think should be paid and give the industry an incentive to make CCS work. That is something the Government could look at; I would be happy to meet the Minister to discuss it but I have only just thought of it.

Battery Strategy (Science and Technology Committee Report)

Lord Lilley Excerpts

Wednesday 23rd November 2022 Grand Committee

[Lord Lilley (Con)]

My Lords, I congratulate the noble Lord, Lord Patel, and his committee on producing a powerful report, which I hope will send an electric shock through the Government and the industry about the need for urgency if we are to move in the direction that they wish and have a sustainable automotive industry in this country with the necessary battery production.

I want to focus on a precondition of that, which is that we have access to sufficient reserves and resources of minerals to produce the batteries if we have the capacity to do so. I draw attention to two documents which highlight this very powerfully. The first is The Role of Critical Minerals in Clean Energy Transitions, produced by the International Energy Authority about a year ago, which paints a fairly disturbing picture of potential shortages of these minerals. It states:

“EVs and battery storage have already displaced consumer electronics to become the largest consumer of lithium and are set to take over from stainless steel as the largest end user of nickel by 2040.”


It predicts that lithium demand will grow 40-fold by 2040, even in the IEA’s more moderate sustainable development scenario. That is followed by graphite, where demand will go up 25-fold, cobalt which will go up 21-fold, nickel which will go up 19-fold and rare earths which will go up sevenfold. In less than two years since January 2021, the price of lithium carbonate has risen more than 13-fold, so the shortage is already demonstrating itself.

The IEA states that the expected supply from existing mines and projects under construction is estimated to meet only half of projected world demand for lithium and cobalt by 2030, and its analysis suggests that on average it takes 16 years from the start of a mining project through to first production, so the scope for ramping up production is much less than one might hope—or so it would appear.

The other source I refer to is a report produced for the Finnish geology institute by Professor Michaux. Those of your Lordships who got up at 6.30 am on Friday to listen to his presentation—750 people did, I am told, although I was too late and had to see it on playback—would have been struck by the analysis that he has produced: to make one battery for each vehicle in the global transport fleet, once we transition to electric vehicles, will require 48% of total global nickel reserves and 44% of total global lithium reserves. He concludes, to cut a long story short, that the whole EV battery solution may need to be rethought and a new solution developed that is not so mineral-intensive.

I hope that he is too pessimistic; I am an optimist where resources are concerned. I recall that famous wager between Julian Simon and Paul Ehrlich, in the wake of the Club of Rome and Paul Ehrlich’s book The Population Bomb, in which he forecast that there would be shortages of everything. Julian Simon took him on and said, “Choose a portfolio of minerals or other resources and a period of your own choosing, and I bet you that the price will come down and not go up”. Ehrlich chose five minerals and a period of 10 years. Ten years later, the average of those prices had fallen: three had fallen in absolute terms and all had fallen in real terms.

So the market is quite good at responding to shortages and can develop things, but doing so will be a huge problem if the world is going to move as fast as it is planning—and hoping—to move in the development of electric vehicles in particular and other uses of batteries that are associated with the move to net zero by 2050. I hope that the committee’s recommendations will be followed with greater urgency than the Government and industry seem to have shown so far. I hope too that we will pay attention to the need to develop the sources of minerals and raw materials that will be necessary to make it a reality.

Climate Change: Behaviour Change

Lord Lilley Excerpts

Thursday 3rd November 2022 Lords Chamber

[Lord Callanan (Con)]

If the noble Baroness wants another example, the Help for Households campaign provides tailored advice on the three cheapest and quickest ways to save energy in your home, No. 1 being to turn the boiler flow temperature down. We are very clear that we are not going to get into telling people what to eat and how to live their lives. We want to provide them with the options to make greener choices.

[Lord Lilley (Con)]

My Lords, may I reassure my noble friend the Minister that the Climate Change Committee does not say that 62% of emissions savings needed for net zero must come from changing behaviour? That would require Stone Age lifestyles. The 62% figure includes savings from carbon capture and storage, and other technologies. In fact, my noble friend Lord Deben’s excellent committee sensibly says that 90% of carbon savings will come from new technologies and just 10% from modest lifestyle changes. Shamefully, the Environment and Climate Change Committee voted to omit that 10% figure from its report, because it would not get a good headline or satisfy the puritans and others who want to make us all adopt frugal lifestyles. Does the Minister agree that being economical with the truth undermines support for sound environmental policies and discredits the committees of your Lordships’ House?

[Lord Callanan (Con)]

My noble friend makes some interesting points and I will certainly have a look at the claims that he makes. I am sure he would not want to mislead the House about the statistics produced, but he makes an important point about the role that technology will play. We have some fantastic and innovative developing businesses in this country providing many of the solutions that we need to overcome these difficult challenges.

Energy Supplies

Lord Lilley Excerpts

Wednesday 12th October 2022 Lords Chamber

[Lord Callanan (Con)]

The Prime Minister and the Secretary of State have said that local support for fracking projects is very important. It is one of the factors that we will take into account.

[Lord Lilley (Con)]

My Lords, more than a million shale wells have been drilled in North America and elsewhere. There is no record of a single building having been shaken down by the occasional microtremors, nor of a single person being poisoned by allegedly contaminated aquifers. Is not the scaremongering of the anti-frackers as bad as that of the anti-vaxxers? Should it not be treated similarly?

[Lord Callanan (Con)]

The noble Lord makes an important point. A number of scare stories have been circulating, although I would gently point out that many parts of America are much less densely populated than many parts of the UK.

Global Energy Sector

Lord Lilley Excerpts

Wednesday 15th June 2022 Lords Chamber

[Lord Lilley (Con)]

My Lords, noble Lords may recall the debate we had in February 2020 on Absolute Zero, the report produced by the Cambridge University engineering department and other universities in this country. It had almost the universal approval of this House. The central thesis of that report was that we cannot rely on

“new or breakthrough technologies … they won’t be operating at scale within thirty years.”

We have to rely on existing technologies and reducing demand. But the IEA road map assumes that what it calls “technologies under development” but not yet in the market will provide almost half the emissions savings by 2050. The main innovation opportunities it identifies to produce these savings are what it calls

“advanced batteries, hydrogen electrolysers, and direct air capture and storage.”

I simply ask noble Lords participating in this debate or reading it in Hansard whether that is remotely credible. Clearly, the practical people in the Cambridge University engineering department do not believe it is. I am prepared to believe that the occasional pig might fly, but the IEA report assumes a whole farmyard of pigs will take to the air. That seems a little unlikely.

It is worth looking at how rapidly—or not—new technologies have been deployed in our pursuit of reducing carbon emissions over the last couple of decades. After 20 years of effort, low-carbon technologies provide just 21% of this country’s total primary energy. That is little more than double the 9.4% that they provided in 2000, almost all of which was from old-fashioned bioenergy. It is that which has produced most of the savings in the subsequent 20 years; it provides 8.8% of our energy now.

The somewhat newer but scarcely novel technologies that have contributed to our progress over that period are wind and solar. Wind has been around since the Middle Ages and solar has been around for quite a long time. Although they have developed over the last 20 years, together they provide just 4.7% of our primary energy in this country. That has taken 20 years to come about.

The IEA also makes heroic assumptions about deploying existing technologies. For example, it says that, from 2025, throughout the world, including this country, no new gas boilers should be installed. I ask participants in the debate whether they believe that should be the case. Should we ban the introduction of new gas boilers from 2025? Presumably they are to be replaced by either heat pumps or direct electricity. We know the problems with heat pumps. They are available and I wanted to install one in my flat, but I was advised by my architect and builder that, unless I was insane, I should not do so. If they are not yet available or cheap, and the costs of insulation and changing radiators are not viable, we will have to do it by direct electricity. Electricity costs four times as much as gas to provide the same amount of therms. Is that what supporters of this report want to see? If not, where are they going to conjure up heat for our households from, once they are no longer allowed to replace their gas boilers?

The IEA also says there should be no new oil or gas fields developed from now. The approach that we and most countries have adopted, in trying to move towards net zero, has been the sensible one of reducing demand, not supply: phasing out demand for fossil fuels by providing alternatives, not forbidding the supply of fossil fuels. That is the sensible thing to do. If, in spelling out how we are going to reduce demand, oil companies none the less go ahead and develop fields that subsequently prove surplus to requirements, they will be left with stranded assets. That is their fault; I am not going to shed any tears for them. If, on the contrary, we stop them developing enough oil and gas to meet our schedule of reduced demand, there will be a shortage. We are seeing it now as a result of the war in Ukraine. Oil has gone up by 60% to 70% and gas has gone up by 130% of what it was before Covid. That is hard and tough for consumers, but it makes wonderful profits for suppliers. Is that what those who advocate this approach of cutting back on supply, rather than on demand, want?

The noble Baroness, Lady Sheehan, asked us to spell out our credentials. I spell out mine. I studied science at Cambridge. Of course, I do not deny the science of global warming; it is about as robust as any science I know, although it is not as alarming as some would have us believe. There is double the amount of CO₂ in the atmosphere; the direct effect is to raise the temperature of the world by 1% and then knock-on effects will significantly increase that. I accept that.

Likewise, the noble Baroness asked whether we had any vested interests. I twice worked for an oil company and, long before that, studied energy and was an energy analyst in the City. I used to upset the oil companies by advocating that we, in this country, stopped giving them free assets in the North Sea. I published something called North Sea Giveaway that prompted the Government of the day—this was before I was in Parliament—to introduce auctions to siphon off some of the profits the oil companies were making. That may be why none of them has ever asked me to go on its board.

The noble Baroness, Lady Sheehan, asserted that there is no benefit from developing new fields, or supplies of oil and gas, in the North Sea or, by extension, shale gas on land. There is; there is a direct reduction in the amount of emissions you would have for a given consumption of gas and oil. Instead of having to liquefy the gas in Qatar, ship it across the ocean and regasify it here, with the creation of emissions at those three stages, you would provide it locally, with reduced emissions. If people are sincere about wanting to reduce emissions, rather than simply wanting to punish oil companies and stop them going about their business, they would welcome domestic production for those reasons.

I hope that the House looks at this report with a critical eye and finds either that my analysis of it is incorrect and that it is full of realistic proposals, rather than flying pigs—if so, I hope someone will tell me what they are—or that it looks at a better solution to reach net zero by 2050 than what is laid out in this report.

Contracts for Difference (Allocation) and Electricity Market Reform (General) (Amendment) Regulations 2022

Lord Lilley Excerpts

Monday 13th June 2022 Grand Committee

[The Parliamentary Under-Secretary of State, Department for Business, Energy and Industrial Strategy (Lord Callanan) (Con)]

My Lords, these regulations were laid before the House on 11 May 2022. The contracts for difference scheme is the Government’s flagship renewable energy support scheme. It is designed to offer long-term price stabilisation to low-carbon generators, bringing investment forward at a lower cost of capital and therefore at a lower cost to consumers. The scheme has been very successful in driving substantial deployment of renewables at scale in Great Britain and has made it cheaper to deliver low-carbon generation.

CfD applicants with a capacity of 300 megawatts or more are currently required to present a supply chain statement to the Electricity Market Reform Delivery Body as part of their application. A statement is provided if a developer can demonstrate to the Secretary of State’s satisfaction that the project is likely to make a material contribution to the development of relevant supply chains. The aim of the policy is to increase productivity, competitiveness and capacity in supply chains, promoting innovation and skills in the low-carbon electricity generating sector.

The current policy approach to CfD delivery and supply chain plans needs to be strengthened. This will also support the move to annual CfD allocation rounds, which the Government announced in February. This will ensure that the scheme continues to operate effectively, encourage low-carbon generation and provide confidence to investors and supply chain companies. It will support the delivery of those renewable technologies identified in the Net Zero Strategy and the British Energy Security Strategy that are key to decarbonising the power sector, such as offshore wind, onshore wind and solar.

I will take a moment to talk through what these regulations will do. They will make several amendments to the Contracts for Difference (Allocation) Regulations 2014 and the Electricity Market Reform (General) Regulations 2014. The amendments include changes to contracts for difference delivery and supply chain policy in preparation for the fifth allocation round. These amendments will help to bolster supply chain development in preparation for the next CfD allocation round, planned to open in March 2023, delivering on the ambitions set out in the Net Zero Strategy and the British Energy Security Strategy.

These regulations amend the current non-delivery disincentive exclusion period that applies if a developer fails to sign a CfD contract or the contract is terminated, so that an application cannot be made for the subsequent two applicable allocation rounds. This strengthens the current policy of excluding a site from only one subsequent allocation round. This change will ensure that the NDD exclusion period is aligned with the decision to hold allocation rounds on an annual basis from 2023, ensuring that the NDD remains an adequate incentive to deliver projects.

These regulations also bring alignment with a change introduced to the valuation formula in the CfD allocation framework for allocation round 4. For allocation round 4, the Government introduced changes to the valuation formula to reduce the complexity of the auction and to ensure that the earliest possible date of CfD payments is considered when calculating the impact on the budget. These regulations introduce this technical change, amending the corresponding contracts for difference allocation regulations to reflect the amended formula.

The regulations amend the validity period of a supply chain plan statement so that it is valid for nine, rather than 12, months. This ensures that, in practice, developers continue to submit individual supply chain plans for each CfD allocation round in light of the move to annual auctions. They also amend the requirement to provide a supply chain plan statement so that it applies to all floating offshore wind projects. This allows the Government to support the development of supply chains for the floating offshore wind industry as it approaches significant commercialisation and deployment. We seek to make these amendments now to give certainty to businesses that might be planning to take part in the next CfD scheme, which will open in March 2023.

We are proposing these legislative amendments following a public consultation, which ran from 4 February to 15 March and gave stakeholders the opportunity to scrutinise and test the policy proposals. The consultation generated 41 responses from a range of developers of renewable generating stations, trade associations and bodies, suppliers and public investment bodies. At the same time, officials engaged wider audiences through an online event.

Overall, the policy proposals received wide support. The consultation led to one policy change to the supply chain policy proposals in response to the feedback received. A minor adjustment was made to the proposal to introduce floating offshore wind projects into the supply chain plan process whereby a bespoke, less burdensome process will be required to account for the smaller size of their projects.

In conclusion, the Government have set out a clear vision for how we will transform the production and use of energy, in a decisive shift away from expensive fossil fuels. These regulations, together with annual CfD allocation rounds, will help support an increase in the pace of deployment of the new renewable electricity generation needed to achieve our ambitions while continuing to consider the likely cost to consumers, energy security, et cetera. Subject to the will of Parliament, we intend that these arrangements will come into force on the day after the regulations are made. I beg to move.

[Lord Lilley (Con)]

My Lords, I will ask some questions, because I do not fully understand all this and these SI debates are often a good opportunity to expand one’s knowledge.

First, I would be grateful if the Minister can explain how a shorter life validity of the supply chain plan acts as an incentive, and what it incentivises. What happens after the plan lapses? None of that is obvious to me from the not very helpful Explanatory Memorandum. Are these supply plans published? Can we all see them or are they private documents between the Government and the supplier? Overall, do they help us to estimate what percent of the value added in supply chains is generated within the UK? If so, I would be grateful to know what it is.

Can the Minister also confirm that although the newest offshore fields won the bidding process with low prices, they have not yet activated their contracts so they are able to sell their electricity at the very high prices now prevailing, making what most people might call a windfall profit? That is the sort of thing Governments love to tax but they seem to have got off scot free. I would be grateful to know whether that is the case and to what proportion of wind generation that applies.

I would also like to know what proportion of wind generation comes from the early contracts, which, if I have correctly understood it—that may well not be the case—got a variable price plus a bonus and therefore are getting not merely the current high price but the current high price plus something extra: jolly good for them, but not so good for the consumer. Again, that is something that Governments might like to tax but they do not seem to have done so in this case. I would like to know what proportion of the renewables supply that is. By deduction, that should tell us what proportion of the renewables supply is under CfDs and therefore is not going up with the gas price. It would be very helpful if the Minister could answer that.

If those questions identify an intrinsic problem in the present system, why does this measure not deal with it—unless it does and I have not been able to find it in the not very helpful Explanatory Memorandum? I will be grateful for the Minister’s replies.

[Lord Teverson (LD)]

My Lords, I start—partly related to what the noble Lord, Lord Lilley, said—by thanking the Minister profoundly. The last time we had a debate around CfDs, I asked a number of questions about the Low Carbon Contracts Company, which is wholly owned by the Government, and how much money it was making because of the energy price in relation to the strike price on CfDs. The Minister provided a comprehensive reply. Unfortunately, I do not have the numbers from it with me, but I thought it was extremely useful and I thank him for that. There is significant money coming back into the Low Carbon Contracts Company and, therefore, the public sector. Of course, the area that does not is the old ROCs regime, where I presume good profits are being made by those renewable companies that still operate under that system—although those presumably are starting to die out fairly quickly.

Energy Security Strategy

Lord Lilley Excerpts

Thursday 7th April 2022 Lords Chamber

[Lord Callanan (Con)]

I understand the thrust of the noble Baroness’s question, but we can prioritise a number of different things at the same time. That is why this is a comprehensive strategy. We are rolling out new nuclear, as indeed we should; we are also rolling out additional offshore-wind capacity and additional hydrogen capacity. As I said, onshore wind is also a priority, but it is a priority that we need to act on in cognisance and recognition of the concerns of local communities. With regard to insulation schemes, we are spending something like £6.6 billion over the term of this Parliament on insulation schemes. It would have been good to have gone further, but the Treasury would not support it.

[Lord Lilley (Con)]

My Lords, given that the two forms of domestic energy that can most rapidly come on stream and displace expensive imports are onshore wind and onshore shale gas, why does the Minister not introduce a system where, if a majority of the people in the vicinity of any proposed site to produce onshore wind or onshore gas vote in favour of it in return for cheap electricity or gas, it can go ahead?

[Lord Callanan (Con)]

Both the cases highlighted by my noble friend show the difficulties of proceeding in this environment, because we are a democratic society; we have strict planning rules and we have to try to proceed with these things with care and the support of local communities. I have outlined the position a number of times in relation to onshore wind. With regard to fracking for shale gas, my noble friend will be aware that the Business Secretary commissioned the British Geological Survey to do a further study to see if extraction of shale gas can take place without the unfortunate seismic events that occurred the last time it was tried. We will continue to be guided by the science in this respect.

Energy Storage Capacity

Lord Lilley Excerpts

Tuesday 5th April 2022 Lords Chamber

[Lord Callanan (Con)]

The noble Lord is correct and, as I said earlier in response to the noble Lord, Lord Oates, we had a call for evidence last year and we will announce our analysis and the results of that shortly.

[Lord Lilley (Con)]

My Lords, could my noble friend confirm that the cost of providing storage for periods when the wind does not blow, which can last for days, will be astronomical? That is particularly true of batteries, since the cost of lithium is 10 times what it was a year ago. We will continue to need gas for quite a considerable while to provide that back-up. Will the Government implement the recommendations of the Dieter Helm report that, when bidding to go on the grid in future, intermittent suppliers should do so in conjunction with the back-up supplies that are needed when theirs are not available as the wind is not blowing?

[Lord Callanan (Con)]

My noble friend’s question deserves a long answer because it is a complicated subject. We need to differentiate between short-term storage, particularly from batteries and elsewhere, which is currently expensive—although prices are coming down—and longer-term storage provided by the likes of pump storage stations such as Dinorwig. That has been around for decades, and there are similar schemes in Scotland too. We need to do all these things. We need to get more offshore wind because it is a very cheap form of power, but it is intermittent, so we also need storage capacity to balance out that intermittency. As the noble Lord, Lord Fox, said, we also need more nuclear for baseload power.

Onshore Wind Bill [HL]

Lord Lilley Excerpts

3rd reading
Friday 18th March 2022 Lords Chamber

[Lord McNicol of West Kilbride (Lab)]

My Lords, the issues raised in the Bill—energy and planning—were always important. With recent events they have become even more so and I congratulate the noble Baroness, Lady Hayman, on bringing the Bill to your Lordships’ House. She is absolutely right: onshore wind delivers cheap, clean, domestically produced electricity. I am sure that in the coming months and years we will come back to the issues raised in this Bill, whether in the Subsidy Control Bill or in many of the other Bills we will discuss. On these Benches we have always been happy to support this.

[Lord Lilley (Con)]

My Lords, I congratulate the noble Baroness on her Bill, which I fully support. I have long opposed subsidies for wind, but I am not opposed to wind. As far as onshore wind is concerned, beauty lies in the eye of the beholder and I find windmills quite attractive—although this was not a view universally shared by my constituents.

In the current circumstances we must support the cheapest, most reliable mix of energy we can produce. With high gas prices, clearly wind is more economical. We should support it and not have artificial barriers to its development. But however much wind power we develop, we will need gas to back it up when the wind is not blowing. As well as liberalising the rules on building wind farms on land, I hope we shall liberalise the rules on exploiting gas to go with it.

[The Parliamentary Under-Secretary of State, Department for Business, Energy and Industrial Strategy (Lord Callanan) (Con)]

My Lords, I join in the thanks to the noble Baroness, Lady Hayman, for this Bill to revise national planning guidance on onshore wind. While the Government were not convinced that the Bill is the right course of action, we agree with the importance of increasing onshore wind deployment in order to reach our net-zero targets. As my noble friend Lord Lilley implied, recent events have demonstrated how crucial it is that we build a strong, homegrown renewable energy sector to further reduce our reliance on fossil fuels.

However, that does not alter the Government’s position here. We welcome the Bill and the opportunity to debate this important subject, although we cannot support it. I congratulate the noble Baroness, Lady Hayman, on bringing the Bill to the House and enabling what has been an excellent debate. I thank all noble Lords for their contributions at Second Reading, which allowed for an insightful and important debate on the subject. I also thank my officials for their support during Second Reading, which enabled noble Lords to receive prompt and, I hope, comprehensive answers on matters of interest.

The Government are not convinced that this Bill is the right solution to bring forward more onshore wind deployment in England. We continue to keep English planning policy under careful review to ensure that decisions on onshore wind can be taken that are in keeping with our carbon budgets.