Great British Energy Bill

Lord Lilley Excerpts

2nd reading
Monday 18th November 2024 Lords Chamber

[Lord Lilley (Con)]

My Lords, it is a great privilege and pleasure to follow and pay tribute to my noble friend Lord Mackinlay of Richborough. His was an outstanding maiden speech from an outstanding new Member of this House—robust, inspiring, informative, energetic and with a touch of provocation, which he uncharacteristically toned down.

My noble friend Lord Mackinlay is a friend whom I knew before his illness to be as courageous intellectually as he proved to be physically. He is a fighter and a winner, and, mercifully, his lovely wife Kati is also a fighter. We are grateful to her for ensuring that my noble friend is with us today. He entered the Commons in 2015 for South Thanet in a forcefully fought general election, when both Nigel Farage and the comedian Al Murray had the temerity to stand against him. I am glad to say that he saw both jokers off and had the last laugh.

As I rapidly discovered when I got to know him after he entered the House in my last Parliament as an MP, he is refreshingly different from so many of the new intake. He is not just a spad and a PPE graduate, like so many of them; he has a science degree and an accountancy qualification. So he takes into account facts and figures, which is terribly refreshing in Parliament. Noble Lords will find that they have to contend with his facts and figures in debates to come.

My noble friend told me that his mother gave him a piece of advice early on in life: above all, to your own self be true. That he always has been, and it is perhaps one reason, he says, why he did not become a Minister in the House of Commons: he was quite prepared to back up his beliefs with his vote, and clearly the Whips did not think he would cease to do so if they tried to buy him off. But he had more influence in the House of Commons than many who did have a period on the Front Bench, as most of them did during the rapid turnover in the last Parliament. This influence was not least through the Net Zero Scrutiny Group, which I have the privilege to belong to, as well as the Common Sense Group and the European Research Group, in all of which he was an influential person. We look forward with enthusiasm to hearing his combative and well-informed contributions to this House in the years ahead.

I also pay tribute to the noble Baroness, Lady Beckett. She, like me, was President of the Board of Trade, and we presidents must stick together. Probably not all presidents would meet her approval currently, but I have always admired her contribution in the House of Commons over an enormous period of time.

I want to welcome this Bill, which is essentially a prospectus—an incredibly attractive investment opportunity. I use the word “incredibly” advisedly. It is backed by 22 of the most prominent people in this country—members of the Cabinet. True, none of them has ever launched a company before. Indeed, none of them has ever worked in the private sector. But that perhaps gives them a clarity of view which enables them to see investment prospects that have escaped the attention of commercial businesses up and down the country.

The principal promoter of the Bill is of course the Secretary of State, Ed Miliband. It can be said that no company he has been involved with has ever failed—because he has never been involved with any company. He will have the power to issue directions to the board about anything. There is no limitation in the Bill on what he can direct them to do or not to do. He has said, however, that he will use that power sparingly—which will be a disappointment to the board: only rarely will it have his superior wisdom to guide it on the true path.

We are asked to endorse this prospectus before the priorities and strategy of the new company have been published: they will be in due course, but they have not been yet. Investors may be concerned that the Government are putting up costs in the sector in which all the investments are to be made but are saying the prices are going to come down by some £300 per family. Investors might think, “Well, how on earth is it going to make a profit, with rising costs and falling prices?”. But do not worry, the Government have abandoned their promise to cut prices by £300 per family and have rejected all amendments in the other place which would have made that part of the duties of the company, as promised by the Labour Party at the last election. Anyway, as a nationalised company, it will clearly bring the cost control of HS2 and the profit-making capacity of the Post Office to the businesses in which it invests. That must give us all great confidence for the future.

I do not see noble Lords reaching for their chequebooks to invest in this—although clearly the noble Baronesses, Lady Winterton and Lady Hayman, will be, as indeed will the noble and learned Lord, Lord Falconer. They have all welcomed it and they will be putting in their money in—or they would if they could. Sadly, the Government have concluded that they might not be able to attract equity investors into this rather strange company that will not tell us quite what its priorities and strategies are going to be. I think the only previous company that was ever successfully launched like that was the South Sea bubble company, which said in its prospectus that its purposes would be revealed “at a later date”. And it went on to have initial great success—before the bubble burst.

Setting irony aside, this Government have said that, even though they do not expect to be able to attract investors to put their own money into the company, they are going to take £8.3 billion out of the pockets of taxpayers and put it in. But, more than that, they say it is going to crowd in investment several times that amount into the sector. Will it do so? Yes, it will. I am not being ironic here. It will succeed in attracting other companies to invest alongside it, because other companies will know that, if they invest in projects in which Great British Energy has invested taxpayers’ money, the politicians are not going to let those projects fail. That is why they will be attractive to the private sector: because they know the Government will always come and bail them out, because of the embarrassment of failure. That is why—and the only reason why—a nationalised company such as this can crowd in investment from outside. I think we should all realise that that is the case.

It is significant that the Minister, who spoke with great clarity and little conviction about this Bill, did not give any example of any similar nationalised concern that has ever met the expectations that have been raised for it as they have been raised for this. We know that doing the same thing again and expecting a different outcome is supposedly Einstein’s definition of madness. I suspect that is what we are being asked to vote for today.

--- Later in debate ---

[Lord Hunt of Kings Heath (Lab)]

We are. There is always going—

[Lord Lilley (Con)]

I tabled a Question some time ago to ask the Government whether they knew of any peer-reviewed science or any science collected by the IPCC which suggested that there would be extinction of the human race if we did nothing worldwide—not as much as we are doing now, but nothing—and they said that there is no such peer-reviewed science. Why does the Minister rely on alarmism?

[Lord Hunt of Kings Heath (Lab)]

I am not alarmist at all. I rely on report after report showing the consequences. Shall we turn to our own independent Climate Change Committee? The noble Lord supported the Conservative Government over a 14-year period. I did not see that Conservative Government disowning the independent advice they had received. He might as an individual, but I do not think his Government did. Noble Lords opposite, when they run down organisations such as the Climate Change Committee—or, indeed, the OBR, as they seem to now—need to remember that they listened to and reflected on the advice of those bodies during that 14-year period.

I agree with the noble Lord, Lord Cameron, that if climate change is critical, energy security comes a close second. That is, of course, what makes the Bill so important, so I hear what noble Lords are saying. The noble Lords, Lord Offord, Lord Duncan and Lord Bourne, the noble Baronesses, Lady Bloomfield and Lady Hayman, my noble friend Lord Hanworth, the noble Earl, Lord Russell, and a number of other noble Lords have commented on the structure of the Bill, with concerns about a lack of detail and questions about the accountability of GBE to Parliament, how it is to be reviewed, and its relationship with the national wealth fund, Great British Nuclear, the Crown Estate, NESO, and, as the noble Lord, Lord Bourne, mentioned, the Climate Change Committee.

I also say to the noble Lord, Lord Bourne, that the fact that GBE is going to be headquartered in Scotland of course does not inhibit its UK-wide responsibilities. I have noted what he had to say about investment in Wales.

However, I accept that there are a number of organisations here and I will take it upon myself to write to noble Lords, setting out how we think the relationships will work together, as I think that will inform our discussions in Committee. On the structure of the Bill, noble Lords will know that this was laid in the Commons very soon after the election as an early priority of the Government. Because of that, we have focused, inevitably, on the provisions that are fundamental to the establishment of Great British Energy. Clearly, we are still working through some of the policy issues on which we need to come to a view, including, of course, discussing them with GBE and the devolved Governments. That is why the Bill, to an extent, does not have the detail which noble Lords wish to see.

However, I have listened very carefully. We will come to Committee, and I hope I can respond constructively to some of the issues that noble Lords have raised. Equally, I want to ensure that GBE is operationally independent and able to make its own decisions within the structure of the Bill and the strategic priorities laid down by the Secretary of State. We are listening very carefully to what noble Lords have to say.

As I said to the noble Lord, Lord Howell, last week in our debate on energy, I fully accept that our drive towards clean power by 2030 is but one aspect of the decarbonisation of society in this country and the move to net zero. In relation to transport, heating and industrial processes, this is a huge challenge and one which we are committed to achieving. The noble Lords, Lord Offord and Lord Ashcombe, and the noble Baroness, Lady Bloomfield, asked about the clean power target. There are a number of different ways of reading the report from NESO, but it is quite clear that the number one message from NESO was that it is possible to build, connect and operate a clean power system for Great Britain by 2030 while maintain security of supply. I accept that it is very challenging—there is no doubt whatever about that—and the NESO report contains a number of those challenges. However, this is independent advice; it says that it can be done and we believe it can be done. It is very challenging, but it is doable.

On cost, as the noble Earl, Lord Russell, said, the biggest cost is doing nothing. As the noble Baroness, Lady Hayman, said, the Climate Change Committee has said that the net cost of transition will be less than 1% of GDP over the entirety of 2020 to 2050. The OBR has highlighted that delayed action on reaching net zero will have significant negative fiscal and economic impacts and that acting early could

“halve the … cost of getting to net zero by 2050 compared to acting late”.

I noted also the comments of the noble Lord, Lord Ravensdale, on this.

I come to the Bill itself. The noble Baroness, Lady Noakes, and the noble Lord, Lord Vaux, raised that we have partly used the UKIB legislation as a model for some of the clauses in this Bill. The noble Lord and the noble Baroness were particularly focused on the make-up of the board of directors. The fact is that we have brought in clauses from the Great British Nuclear provisions in the Energy Act. The structure very much follows that. We do not think that it was necessary to put into primary legislation provisions in relation to the board, because this will be covered. It is a company, and so will be encompassed within company law, the code of practice and sound corporate governance. GBE will have a chair and a chief executive officer, both of whom will be accountable to Ministers. It will have a board of directors that follows sound corporate governance practice, including the provisions of the UK Corporate Governance Code and those published by the Financial Reporting Council.

We want GBE and the national wealth fund to work closely together. As Great British Energy scales up, we will set out how the two institutions will collaborate and complement each other. On the issue of crowding out investment, surely my noble and learned friend Lord Falconer was right. The whole point about GBE is to speed up the deployment of mature and new technologies but with a focus on where this can complement existing private sector activities.

I must say that the references that the noble Lord, Lord Lilley, made to HS2 and the Post Office were a bit rich, considering the record of the Conservative Government’s stewardship, or not, over 14 years.

I will come on to Clause 3, the objects, which has drawn quite a lot of comment. I say to my noble friends Lady Winterton and Lord Grantchester and to the noble Lords, Lord Cameron and Lord Naseby, among others, that emerging technologies such as CCUS or hydrogen could be very much part of GBE’s portfolio once it is operational. I noted the comments from the noble Baroness, Lady McIntosh, on waste. On Drax, we had a good run on that a couple of weeks ago, although I may not have convinced noble Lords of the Government’s position. I look forward to discussing storage with the noble Lord, Lord Duncan, and my noble friend Lord Stansgate. I also agree with the noble Lord, Lord Ashcombe, on the potential of floating offshore wind.

We, of course, are reluctant to see a list of technologies. Noble Lords sitting on the Front Bench will be readily aware of the list argument, and it is well taken. If you list, you are at risk of excluding other technologies. One must be very careful not to constrain the ability of GBE in its operational independence and its ability to spot the technologies that need supporting. I do accept, with my noble friend Lady Young, that community energy has huge potential in itself and as a way to leverage public support generally for the kinds of changes that we need to see happen. We certainly believe that GBE will deliver a step change in investment in local community energy projects and will work strongly in partnership with local authorities and community groups to deliver this. I know that local authorities would welcome a much stronger partnership to enable this to happen. I take the point from the noble Baroness, Lady Hayman, and my noble friend Lady Young about biodiversity. I look forward to discussing that further with them and in Committee.

I come now to my favourite topic: nuclear energy. First, we want to make sure that GBN can carry on with its work—the technology appraisal of the shortlisted technologies for the SMR programme is particularly important—and that it will work in complementary ways to GBE without there being duplication of effort. I picked up the important contribution from the noble Lord, Lord Ravensdale. I say to the noble Viscount, Lord Trenchard, that nuclear power is not being underprioritised in my department. I need no persuading of the importance of nuclear energy. It acts as the essential baseload, and when it is aligned with gas that, in future, will be abated by CCUS, we will have the right balance to complement the intermittency of renewable energies.

On nuclear and resources, we have just announced a huge resource allocation to Sizewell C to get it over the next two years. We are working very fast towards final investment decisions over the next few months; we have the SMR programme and we are very excited by the potential of AMRs. I very much take what my noble friend Lady Winterton said about the potential of SMR manufacturing in the UK.

A number of noble Lords mentioned the grid and planning and what they described as the roadblocks to developers. I very much take that point. We have already signalled, in parallel with GBE, our intention to reform the planning system to enhance our grid connections. I take the point about the delays to the connection which developers are suffering at the moment. Clearly, we have to do something about that, but GBE’s main priority will be to help developers get through some of the roadblocks and focus on the energies that need support.

I noted with interest the comments the noble Baroness, Lady McIntosh, made about the impact on farmers and on fishing fleets. I accept that consultation and environmental assessments must continue to be made in any more streamlined planning process and expansion of the grid.

My noble and learned friend Lord Falconer and the noble Baroness, Lady Noakes, raised the question of state subsidies and competition law. As an operationally independent company, GBE will be subject to the same legal and regulatory framework as other entities in relation to subsidy control and competition law, such as the Subsidy Control Act 2022. The Bill does not alter that framework.

I hear what noble Lords say on Clause 5 in relation to strategic priorities and the statement. It is unlikely that we will have published the statement of strategic priorities before Royal Assent, but I have listened to what noble Lords have said. I will reflect on that and I am sure we will discuss it further in Committee. Noble Lords seem to be indicating that they would like to discuss it in Committee.

On power of direction, the noble Lord, Lord Lilley, was particularly assertive that the Secretary of State would wish to take almost micromanagement control. I assure him that that is not the intention. It is a backstop, reserve power.

On the annual accounts and reports, there will, of course, be accountability. The chief executive officer will be the accounting officer. The National Audit Office will oversee. Ministers will answer to Parliament. Select Committees can invite GBE in to give evidence. Noble Lords will debate. We will have Questions and more general debates.

I listened to noble Lords and I understand that they have looked at the UKIB legislation. We will reflect on that, but my noble friend Lady Young is right: there is a balance here between due accountability and not putting a load of bureaucratic micromanagement on this organisation, which is not what we want to happen.

I absolutely agree with noble Lords that we must make the most of the supply chain. I picked up the point about skills and managing the transition in the North Sea.

The noble Lord, Lord Alton—my noble friend, if I may call him that—and I have worked together on these issues. I congratulate him on his work and the huge effort that he has made in Parliament, the influence that he has had on legislation, and the help that he gave me around enforced organ harvesting, particularly in Xinjiang province but in China more generally. At this stage, we expect UK businesses, including GBE, to do everything in their power to remove any instances of forced labour from their supply chains. They should not approve the use of products from companies that may be linked to forced labour. I am very happy to talk to the noble Lord about the energy potential of Merseyside, as he suggested, and to discuss the issues that he raised so eloquently.

I have reached the time limit. This has been a very good debate and I am most grateful to noble Lords. I would like to think that contributions were constructive, and I look forward to debating this in Committee.

EV Strategy: (ECC Committee Report)

Lord Lilley Excerpts

Wednesday 16th October 2024 Lords Chamber

[Lord Lilley (Con)]

My Lords, it was a great privilege to serve on the committee under the noble Baroness, Lady Parminter. Like her, I am no longer in it. Her departure is greatly missed; I suspect that mine, since I was the grit in the oyster on that committee, was much welcomed by its other members. It is also a privilege to follow the noble Lord, Lord Woodley. He made some important points, which I hope I will be able to suggest—probably to other people’s surprise—are not quite as much of a worry as he suggested.

One of the problems with most Select Committee reports is that they tend to be all words and no numbers. Committees show an extreme reluctance to discuss the costs of their proposals to the taxpayer or the consumer. I was originally trained as a scientist; drilled into us was Lord Kelvin’s remark:

“When you can measure what you are speaking about, and express it in numbers, you know something about it. When you cannot express it in numbers, your knowledge is of a meagre and unsatisfactory kind”.


It may be the beginning of knowledge, but you have scarcely in your thoughts advanced to the stage of science. That is even more true in economics. If you cannot even estimate the costs or benefits of a policy, you can scarcely claim to have advanced to the stage where you can make policy recommendations.

Happily, this report is not devoid of numbers, albeit that most of the important ones are well hidden and the obvious conclusions that might be drawn from them have not always been drawn. I will focus on some of the key numbers in this report, but none of them appear in the initial recommendations. The upfront conclusions on page 4 use all sorts of euphemisms and verbal circumlocutions to avoid mentioning that they will cost money.

Perhaps I might translate what the report actually says. The first recommendation is:

“Tackle the disparity in upfront costs between electric and petrol and diesel cars”.


That means subsidising or, as the noble Lord, Lord Woodley, remarked, penalising the sale of petrol and diesel cars. The second recommendation is:

“Turbo-charge the charging infrastructure rollout”.


That means subsidise it. The third is:

“Ensure charging is reasonably priced, convenient, and reliable”.


That means subsidising fuel costs further. The report goes on to say that

“the Government must explore options for equalising the discrepancy between the VAT rates for domestic and public charging”.

Now there is no conceivable likelihood that the Government will put up VAT on domestic electricity, so that is a call for VAT on public charging points to be reduced, further increasing the subsidy on fuel costs for electric vehicles. I will return to the important fifth point later, but the sixth point is:

“Enhance UK manufacturing and battery innovation”.


That means more subsidies. The seventh is “Invest in UK recycling”—a new area for government subsidies. And so it goes on.

The problem is that the existing level of subsidies is very high, before we add to them from any of the proposals in this report. You have to get to page 33 or 34 to find out how much the subsidies are. They reveal that a privately owned EV is already subsidised, relative to petrol cars, to the tune of £5,000 over 10 years—it actually says £5,000 on page 34 and €5,000 on page 33, but I think the former is correct. However, corporately owned vehicles are subsidised to the tune of £10,000 in just four years. Those are big subsidies, particularly the latter. No wonder the vast majority of sales are to company fleets. If we are to subsidise EVs, it baffles me why the bulk of the money should go to those owned by companies—but so it is.

The main subsidy for private vehicles is, of course, the fact that they pay no duty on their fuel, which is electricity. You have to reach page 36 to find the total costs of this as EVs gradually replace fossil-fuel vehicles. The OBR has pointed out that fuel duties raised £23.4 billion last year, equivalent to £867 per household. That means that, if we forge ahead and succeed in phasing out those vehicles by 2030, we will have created what we might call a black hole in the nation’s finances, heading towards £23 billion as older vehicles are retired and used less.

The committee mentions the important issue of road tax in its fifth recommendation. It simply says that we should:

“Begin an urgent review of road taxation”.


It calls for an honest conversation with the public—quite right. Sadly, the committee did not agree to initiate this honest conversation by honestly admitting that the only option to replace this revenue is to introduce road charging. If we in this House, who do not have to get re-elected, do not have the courage to be honest enough to say that we are going to have to introduce road charging to replace fuel duty, how can we expect the people in the other House, who do have to get re-elected, to broach the subject until that black hole in the public finances is upon us?

The penultimate figure from the report is highly relevant to the decision on whether to phase out the sale of non-EVs sooner or later. There was much criticism of the previous Prime Minister’s decision to postpone the date beyond which sales of fossil fuel cars would be banned—delaying it from 2030 to 2035. There is rather less criticism now. The car companies seem rather relieved he did that, since sales are slower than was anticipated. We were told by the Society of Motor Manufacturers and Traders—which is of course largely a society of traders, and largely represents foreign companies exporting cars to this country—that this had a damaging effect on British manufacturers, who would not have the incentive to develop EVs. However, this ignores the strange nature of the British car market.

We export the overwhelming majority, more than 80%, of the cars we manufacture, and more than 80% of the cars we consume are imported. Indeed, on page 22 of the report you will discover that no less than 97% of the electric vehicles sold in the UK in the last quarter were imported. Most of the EVs produced in this country are presumably exported. So these changing rules only really have a major effect on EVs and other vehicles sold in the UK. Given that 80% of our vehicles are exported, the effect of these rules on our production falls on only one-fifth of the production, 20%. They are mainly affected by the rules of the countries to which they export, so I hope the damage that it does to British manufacturing will be less than the noble Lord, Lord Woodley, fears.

I am reasonably sure that electric vehicles will, eventually, displace petrol and diesel cars without subsidy, when their upfront price comes down to equal that of petrol and diesel cars, when the range of batteries is sufficient so that a normal journey would never require recharging, and when recharging is rapid. Actually, recharging is probably less of an issue than we imagine in this report. For the 60% of people who can keep cars off-road, the normal thing they will do after they use their car and come home is plug it in. The next morning it will be charged. They will not have to stop at the gas station as they would in a petrol car because they will have a fully charged car—so it is actually better. But for the 40% who do not have off-road parking, there is a problem we did not really find a solution to.

When will the price of electric vehicles come down to that of petrol and diesel? In the report, we quote people as saying that

“Other predictions for when average EV prices will meet those of petrol and diesel vehicles range from 2025–27”,


so, apparently, it will be quite imminent. So why are we subsidising people to buy expensive vehicles when they could have them at more or less the same price as the alternatives in a couple of years’ time? It is forecast that, by 2025, the price would be down to about £21,000 for an EV in Europe. Actually, you can get one for £22,000 now in the UK, so they are coming down to a similar price.

We should remember Dieter Helm, the great energy expert, who was asked by the Government to analyse their energy policy. He concluded that the big failure was that we had invested in immature technologies. He said that investing in technologies—which were going to become mature and cheap—when they were still immature and expensive had probably cost us the best part of £100 billion. So why are we encouraging people to do that in the EV market?

I suggest that we should look at this report and the figures, and draw conclusions from them. We might be a little more optimistic than some of the pessimists and a little more realistic than some of the super-optimists.

King’s Speech

Lord Lilley Excerpts

Thursday 18th July 2024 Lords Chamber

[Lord Lilley (Con)]

My Lords, I welcome the new Ministers to their posts. I wish them well and sincerely hope that they will succeed in their mission to promote economic growth.

The great advantage of speaking in this Chamber is that we can speak perfectly frankly in the certain knowledge that nothing we say here will ever leak out to the world outside, so I want to take advantage of the privacy of this Chamber to offer some advice to Ministers opposite and to tell them some possibly inconvenient truths that we, or I, certainly would not be allowed to voice on the BBC and which they may not even hear from their officials. That is not to impugn the integrity of officials. My officials over 10 years in government were wonderful. Only twice in 10 years did two very virtuous officials succumb to the “noble lie” temptation of concealing information from me or distorting it because they thought that if I knew the truth I might misbehave. I hope it will be rare in the Minister’s department for that sort of thing to happen, but unfortunately virtuous enthusiasm and groupthink go together, so he may find that it is a bit more prevalent than it was in my days.

I met recently an official from my old department who said that they were initially very disconcerted when I took over, because when they gave me some facts or arguments that they were convinced would be absolutely in line with my prejudices, my instant response was, “But is it true?” I urge Ministers to take the same attitude, not least in this area.

The Government promise that tackling climate change and accelerating the move to net zero will lower energy bills and generate economic growth, but is it true? There is no doubt that cheap energy is a prerequisite for growth. America has proved, relative to Europe, that because it has cheap energy it is growing far faster. Equally, we know that expensive energy kills growth. I became an energy analyst in the early 1970s. In 1974, the quadrupling of oil prices killed growth—the end of Les Trente Glorieuses, as the French say. The 30 years of rapid growth after the war was signalled by that and we had much slower growth thereafter. We tend to forget that, in 2009, the great financial crisis was triggered by a rise in oil prices, and growth worldwide has been slower since then.

I therefore support the production of energy from whatever sources are cheapest for this country—I welcome the removal of barriers on offshore wind, for example—but I am sceptical, to say the least, as to whether the Government’s commitment to double onshore, triple solar and quadruple offshore will give cheaper energy. My scepticism has nothing to do with global warming. I studied physics at Cambridge and did the online course on climate change at Chicago University, so I know that the science of global warming is rock solid. My concern is about the costs and economics of the ways we are trying to tackle it.

I was just as sceptical about the claims that achieving net zero would give us cheaper energy and faster growth when they came from Boris Johnson as when they come in the Labour manifesto—indeed, I never expected to find Boris being comparatively a paragon of honesty and understatement until I read the Labour manifesto.

There is a respectable case for saying that we must incur higher costs and forgo cheap energy to prevent the impact of climate change on future generations, but it is surely unlikely that this will be costless, let alone miraculously provide a cornucopia of cheap energy and rapid growth. I therefore urge Ministers to ask their officials why, if it is cheaper, renewable energy needs subsidies. I urge them to ask why, if renewable energy is cheaper, UK electricity prices have risen in 22 of the 27 years since we started the transition to renewables.

If officials say that new offshore fields will provide electricity at below £50 per megawatt hour, Ministers should ask them why the recent contracts for difference, in March this year, offered more than £100 per megawatt hour for offshore wind fields and £89 per megawatt hour for onshore fields. They should ask too why they claim that gas is more expensive than offshore wind. They have set offshore wind at more than £100 per megawatt hour, yet the DESNZ energy generation costs document of last year shows that the cost of a new gas-fuelled plant, excluding tax, is only £60 per megawatt hour.

How come wind is supposedly cheaper when it is more expensive? They will say, “Oh, it’s because if you include in the cost of gas the social cost of carbon, that raises it”. And so it does; that is a perfectly reasonable argument. But it is generally accepted that the social cost of carbon is about £50 per tonne—that is about £10 per megawatt hour—so gas is still cheaper if we include that. But then the officials will come back and say, “Oh, well, we don’t use the social cost of carbon. We impose a tax called the appraisal tax”. That is the tax necessary to make gas uneconomic, so it is a self- referential conclusion. Ministers should therefore ask them some hard questions about that sort of thing.

Ministers should also ask why officials always quote costs as levelised costs of energy and do not take the advice of Dieter Helm, the leading energy economist in this country who was asked by the previous Government to do a review, and compare firm costs: the cost of providing energy, including some of the cost of providing back-up power—in the case of wind and solar when the wind is not blowing and the sun is not shining. Why not include some of that cost? It is the obvious and logical thing to do.

If the back-up is gas, we have to include not only a share of that back-up cost but the carbon capture and storage that will be necessary to extract the CO₂ from the gas in the back-up. Incidentally, I welcome the fact that this Government are proposing to maintain a fleet of gas plants and accept that gas and oil will be needed well into the future. They might also ask officials why they rely on figures from think tanks—and, indeed, their own officials—rather than on the costs of fields, which are produced and published in companies’ documents that are certified by accountants, who would go to jail if they were lying. Those figures show that there is no significant decline in the cost of offshore oil; it remains high, and higher than that of gas.

The second item in the Government’s rosy outlook is that green investment will generate growth. For the sake of argument, let us put aside the impact on growth of higher energy costs. How will the move to green investments produce growth? The noble Lord, Lord Vallance, formerly an impartial adviser and now a Labour Minister, claims in the Labour manifesto that growth will come from selling technology abroad. He says that we can treat this

“like the vaccine challenge … exporting our solutions worldwide”.

However, he says that that will work only if we do it rapidly because

“if we choose to go slowly, others will provide the answers, and ultimately we’ll end up buying these solutions rather than selling them”.

But what are we going to sell to the rest of the world as a result of this great revolution? It is not going to be generators, wind vanes or towers, and it is not going to be batteries. Unless the Government can tell us what it is, we had better invest in things where we have a comparative advantage, rather than one where the rest of the world is overinvesting already.

Offshore Petroleum Licensing Bill

Lord Lilley Excerpts

Committee stage
Tuesday 23rd April 2024 Grand Committee

At the moment, my takeaway is this: when I look at the progress that has been made since 2018, I believe that the voluntary mechanism is working. As the noble Lord, Lord Bruce, said, there is a real will in the industry to reduce emissions. We must work to do that and work comprehensively together in order to achieve what the North Sea Transition Authority seeks to achieve in this context. There are big questions about the operation of, and how to go to, a compliance-based mechanism. With that in mind, I would be cautious about pushing these amendments or something similar to a vote on Report, but they give us an opportunity to hear from the Minister why he agrees with me—if, indeed, he does—that the voluntary-based mechanism is the best way to proceed.

[Lord Lilley (Con)]

May I just add a few brief comments? I endorse what my noble friend Lord Moynihan and the noble Lord, Lord Bruce, have said.

I speak from a position of considerable ignorance. I used to know quite a lot about this but I know much less now. However, it seems that everyone is agreed that future fields will not be allowed to flare and vent and are not planning to flare and vent. So the first subsection of the proposed new clause to be inserted by Amendment 1 would legislate for something that is going to happen anyway.

However, the second proposed new subsection says that we should not allow any new fields until old fields have been prevented flaring. I do not see the relevance of the connection between the two. If we can stop old fields flaring and venting, we ought to. If we cannot, that is a problem, but what has it got to do with new fields, which will not flare and vent? Unless we have some explanation from the backers of this amendment of why they are linking the two, I cannot see why we should support it.

[Earl Russell (LD)]

My Lords, I rise to speak in favour of all the amendments in this group.

I start with the first amendment, which is in the names of the noble Baronesses, Lady Hayman and Lady Blake of Leeds, and the noble Lord, Lord Randall of Uxbridge; I have also put my name to it and support it. The amendment comes out of Alok Sharma’s amendment in the Commons; it was the one amendment that the Minister in the other place said the Government were prepared to go away and look at.

I take the points that have been made about what has been achieved under a voluntary mechanism. I also recognise that the new oil fields do not have this, but I would like to hear from the Minister and get a response from the Government as a productive one was not really given in the Commons. This is a real issue that needs looking at, and the Government may have real concerns about bringing this measure in for old fields.

My understanding is that some of this can be done by replacing methane with compressed air, et cetera. If there are concerns, I would like to hear them because, as we have heard, methane is 80 times more potent over 20 years than carbon dioxide. It is a huge greenhouse gas and the Government have signed up to the 2030 commitment to reduce it; indeed, the UK leads the world in some of these respects. So it would be good to see stricter regulations written in.

Progress has been made. The Government have committed to zero venting and flaring by 2030. Already, a near 50% reduction in flaring since 2018 has been achieved, but to put that in perspective, Norway banned venting and flaring in 1971, which is the year I was born. This is not rocket science; it is not difficult to achieve. While I recognise that progress has been made, I am 52 now, so we are 52 years behind Norway. These are powerful greenhouse gases, so we are waiting for this voluntary system to come in, but we need to take action: we need action at speed, at pace, to make sure that these things happen. I want to hear from the Minister whether he has ideas about how that can be done.

I recognise as well that the NSTA guidance currently states that there should be none for new developments and it should be phased out by 2030. However, the problem with this is that the enforcement is patchy and 2030 is still a long way off. It is a long time for us to be letting out these extremely powerful greenhouse gases, so I think something should be done at scale and speed to make that happen.

The Government argued throughout this Bill that they want to give the industry certainty, and that is one of the underlying themes behind the need to put forward these measures. My question to the Minister is why we are not doing that on venting and flaring. If this is about certainty for industry, and this involves industry having to invest to change and adapt, why are we not giving a clear steer—clear guidance, clear timetables—on the intention to do this? That would seem to be the sensible thing to do and the thing that industry would welcome the Government doing, so I call on the Government to do that and I support the amendment. I thank everybody who has spoken to it.

My Amendment 6 is a simple amendment replacing one word with another. It replaces “must” with “may”, but it goes to the very heart of the Bill. The story is that the Bill was cooked up over a boozy lunch as a way of dividing the Opposition. Who knows whether that is true or not but, if our energy crisis and energy security could be resolved by a two-clause Bill, I suspect that somebody might have done it before and that it would not have magically appeared when nobody else had managed to do it.

The Bill actually says that there is a duty to invite applications. I listened to all the debate in the Commons as part of my preparation for the Bill, partly because I am new to this place and am a bit sad, sitting there on the weekends, but I felt that this point was missed in the Commons, which is why I tabled this amendment. Having spoken to colleagues on the Opposition Benches, I kindly ask the Government to look at this probing amendment, because it is important to understand their motivations. They are putting this legislation forward, taking parliamentary time, telling us that it does things that are needed and are important, and I had to ask the House of Lords Library for a special briefing on the Bill because I was frankly astounded that it could be passed and never again would another North Sea oil or gas licence be agreed. How do these two things happen?

The Government are telling me that this is resolving our energy security and providing certainty, yet the Bill can pass and another licence can never be granted. I am confused about what the Bill actually does and have put forward this amendment in the hope that there is substance in the Bill and it is not just an attempt to divide the Opposition and destroy the consensus that existed on climate change. This is so important not just to the way we work here or in the other place but to the message that we send to the people of this country as we transition. We had the chief executive of the CCC on Laura Kuenssberg this weekend and have heard Alok Sharma; the Government have had resignations and this Bill has damaged our international reputation.

It is important that we understand what the Bill does if we are selling our international reputation for it. What does it do? What is the point of it and what does it achieve? My amendment is really an attempt to figure that out. That is why I have included it and I will question the Minister on that.

My Amendment 7 would mean that only companies that have publicly stated that they will invest in the green economy half the profits derived from winning an application can be invited to apply. I point out that 50% is a random figure—we can amend and debate that—but I believe in the green transition and in the need to protect these jobs. I believe in a just transition and that these things are extremely complicated. I also recognise that we will continue to have some dependence on oil and gas as we transition to net zero, not just for our energy needs but for lubrication and other industrial purposes.

I recognise that we will have oil and gas licences, but we must act at scale and speed to disinvest from oil and gas. We must leave as much of this stuff in the ground as we can. Once it is extracted, it may not count towards our net-zero targets, but it will for some other country after it has been sold on the international market, as 80% of it will be. It will be burned. We live on one planet and have one atmosphere. Emissions go somewhere and they will affect us. The idea that the Bill does no harm is not correct; it has consequences. A lot of oil and gas companies do not invest in the green economy in the North Sea, and they should. This amendment is simply an attempt to lay down a marker.

My Amendment 8 would mean that

“the OGA cannot invite nor accept an application for a seaward area production licence from a Russian oil and gas company”.

This point was raised by Richard Foord in the other place. It is my understanding that one Russian oil or gas company has a licence in the North Sea, when we have a war in Ukraine and continued threats to our European security. The Minister spoke quite clearly at Second Reading about the Bill providing for our energy security, but these Benches have questioned that because 80% of our oil goes into the international market.

This is a simple, clear, straightforward amendment that does what it says on the tin. If we are concerned about energy security, why are we allowing Russian oil and gas companies to bid for, win and run licences to extract our oil and gas, put it on the international market and perhaps even sell it back to us? The Government would then have to subsidise bill payers with billions of pounds to pay for it, in a vicious circle that helps no one. This amendment is clear, and I would like it to be agreed to.

Of the other amendments, I strongly support Amendment 9 on a marine spatial strategy. It is extremely important, and it is important that we plan for the future. If we are to have new oil and gas licences, it is important that we do not rule out the ability to have other green energy. I also support Amendment 10 in this group, but I apologise for getting a bit carried away and going over my time.

Surplus Carbon Emissions

Lord Lilley Excerpts

Wednesday 27th March 2024 Lords Chamber

[Lord Callanan (Con)]

The noble Lord makes a good point. A number of schemes around the country are taking advantage of that. Again, they are relatively small-scale; they will not provide the large amount of power that we need, but they are worth investigating. I think there are a number of noble Lords in this House who take advantage of tidal power in their own areas.

[Lord Lilley (Con)]

The advice from the CCC on this issue seems quite rational, but will my noble friend ask it to review the advice it has offered on the total cost of meeting net zero? It refused for over a year to produce its workings, and at great expense tried to resist freedom of information requirements. When it went to the tribunal and it was forced to reveal its workings, they were shown to be flawed in a number of ways and have now been condemned by the Royal Society as wrong. Will the Minister ask it to review them and produce some new estimates?

[Lord Callanan (Con)]

I was not aware of that case, and I thank my noble friend for drawing my attention to it. I will certainly raise it with the Climate Change Committee.

Offshore Petroleum Licensing Bill

Lord Lilley Excerpts

2nd reading
Tuesday 26th March 2024 Lords Chamber

[Lord Lilley (Con)]

My Lords, it is a great pleasure to follow the noble Baroness, Lady Hayman, and the noble Lord, Lord Lennie, both of whom seem to be against the Bill because the positives are small. One is normally against things because they are negative. The only negative the noble Baroness, Lady Hayman, came up with was that it sends out the wrong messages. I have observed a general rule in politics, that when the only argument anyone has against something is that it sends out the wrong messages, they do not really have an argument against it at all.

The question that faces us is whether this Bill is compatible with our commitment to reach net zero by 2050. It is a huge challenge: a huge engineering challenge that, according to the former chief scientific adviser to the Department for Environment and professor of engineering at Cambridge, Professor Kelly, is impossible to achieve; let us hope he is wrong. It is a huge economic challenge that, according to a former economist at the World Bank and now professor of energy economics at Edinburgh University, is economically impossible to achieve; let us hope that he too is wrong. Let us assume for the purposes of this debate that these objectives are achievable. What we cannot do is add problems, even small ones, to those mammoth engineering and economics problems by doing things that add to emissions, rather than reduce them; that add to costs, rather than reduce them; and that reduce, albeit by a small amount, our own GDP and tax revenues, which we will need to pay for the transition to net zero.

The sensible path to net zero that we, like other like- minded countries, have adopted is to phase out demand for fossil fuels, not their supply. If energy companies choose to invest in more fossil fuel capacity than is needed, they will lose money; that should not be our primary concern, except for those who happen to have a financial interest in the oil industry. If the UK unilaterally stops producing fossil fuels, which would be a bizarre thing to do if we do not ban their import, others will step in and supply the fossil fuels that we failed to produce but could have. They will also replace any fossil fuels that we provided to the rest of the world. If the whole world were to try to reduce the supply of fossil fuels, as well as phasing out demand, that would have no effect if we did not phase out the supply as rapidly as we reduced the demand. Or, if we phased out the supply more rapidly than we reduced the demand, it would create shortages, massive price rises and huge profits for the oil industry. It would do to ourselves and the world exactly what Putin did to us when he invaded Ukraine and reduced supplies. Is that what the opponents of this Bill want to achieve? Or are they solely interested in the UK stopping the production of oil and gas, rather than the rest of the world stopping it?

Even if our fossil fuels did not involve fewer emissions in extraction and transport, or, in the case of gas, additional emissions over and above that in liquefaction and regasification, there would still be a very sensible case for us to keep producing such oil and gas as is available in the North Sea. Remember, the UK plans to reduce emissions not just by reducing demand for and use of fossil fuels, but by employing carbon capture and storage. That is a sensible thing to do because, according to the Climate Change Committee, our estimates and those of others suggest that without resort to carbon capture and storage, the cost of meeting the 2050 targets would be twice as high. We will use carbon capture and storage, which means we will continue to use oil and gas up to and after 2050—unless, of course, people on the other side want to double the cost of meeting the net-zero commitment.

I got the impression from the noble Lord, Lord Lennie, that the Labour Party’s approach to this is based on the assumption that there is a choice between continuing to produce new oil and gas fields in the North Sea and developing renewables in the North Sea and elsewhere. There is no such alternative. We can do both, we are doing both and we should continue to do so. He also argued, as did the noble Baroness, that all the benefits of producing oil and gas in the North Sea are small ones: there will be only a small benefit in emissions reductions; there will be only a small benefit to the economy; there will be only a small benefit in extra tax revenues; and there will be only a small benefit in saving jobs and energy security. Well, small benefits are better than none, and we should pocket them if we can. The noble Baroness quoted Global Witness evidence that the claim that the oil and gas industry employs 200,000 jobs is wrong. She said— and I have no reason to doubt her or Global Witness—that the real figure is 27,600. Global Witness says that this does not matter, but it still seems a lot of jobs. It is pretty heartless to say to those 27,600 people, who are largely in Scotland, that their jobs do not matter and they can probably find a job in the renewables industry, if they are lucky, because they have transferable skills, notwithstanding the disruption and the need to move.

The other argument—

[Baroness Hayman (CB)]

I am grateful to the noble Lord for giving way. He quoted me; otherwise, I would not interrupt him on Second Reading. I did not quote the Global Witness figures—which I do have—because they are complicated and quite difficult to discern. I quoted the ONS figures, which state that, over the period to which they refer, renewable roles increased by 70%, whereas in hard numbers, there were nearly 48,000 roles in renewable energy, which is considerably more than the 30,000 direct roles remaining in oil and gas. I did not talk about the 200,000 figure; I gave simply the ONS figures showing that there are more jobs in renewables than in oil and gas, and they are growing faster.

[Lord Lilley (Con)]

I am grateful to the noble Baroness for that clarification. Somebody used the 200,000 figure—it must have been the noble Lord, Lord Lennie. Anyway, it does not matter.

[Lord Lennie (Lab)]

The Minister.

[Lord Lilley (Con)]

The Minister did. The noble Baroness has acknowledged that the figure is about 30,000, rather than 27,600; I do not really see the difference, frankly. The point is not which figure is bigger. Why should we sacrifice 30,000 jobs?

[Baroness Hayman (CB)]

We are not sacrificing them.

[Lord Lilley (Con)]

The proposal is to sacrifice them if we phase out that industry more rapidly than would otherwise occur. I give way to the noble Baroness if she has some alternative.

[Baroness Hayman (CB)]

I think I quoted the Minister correctly. He talked about the invaluable skills of people in the oil and gas industry, and how those could be transferred into our own industries and not lost to foreign competitors. When I went to a wind farm, the guy who was helping us to go right to the top of the wind turbine told me that he used to work on the oil rigs in the North Sea. He had seen the way the wind was blowing—if that is the correct term—and he took a job in renewable energy, so I am not in the business of sacrificing anybody’s jobs.

[Lord Lilley (Con)]

I mentioned the possibility that people were claiming they could move across, and some of them will, but it will mean disruption. We should not unnecessarily require people to give up a job and —hopefully—take on another one. As the noble Baroness said, these jobs already exist and will go on increasing in number if we increase investment in renewables. I have not argued against that at all. The two types of job are perfectly compatible. Both can exist side by side, instead of there being only one lot of jobs.

The other argument is that 80% of our oil is sent overseas to be refined, and so production of our own crude oil does not result in any security. I used to be an oil analyst in the City, examining how these things work. If, in a crisis, a country has supplies of crude, it can trade it for other types of crude that work in its own refineries. This is how the market works. It does give you security because you can say, “We will send you that and, in return, we want products or the equivalent amount of crude that we can refine ourselves”. It gives greater security—not a huge amount because we do not have a huge amount of oil and gas, but a bit of security is better than none.

The arguments used by the noble Baroness and the noble Lord, Lord Lennie, and in most of the briefing notes that I have seen, are all about how small the advantages from the Bill will be. The Climate Change Committee—the Government’s official independent adviser—has come out against this Bill and the Government’s decision to continue licensing new fields in the North Sea. I put the arguments I have made so far to its outgoing chairman, the noble Lord, Lord Deben, who is a colleague and my old friend, when he appeared before the Environment and Climate Change Committee. I asked him whether he wanted the whole world to phase out oil and gas, or just the UK. He said, in effect, “Just the UK”. He said:

“The world is producing oil sufficient to meet our needs … There are many countries in the world that will still be producing oil and have no intention of reducing that. There are other countries that could produce oil and gas and have to make a choice between going down that route and going down the route of renewables. We have a duty to try to get them to make the right decision because otherwise we will destroy our world and ourselves … We have to get other countries to do the right thing … If you say to a country that does not have oil, ‘You have a chance to produce oil and your future will be with oil’, I am afraid it will not go for renewables, even though this is the real answer … We have to set an example”.


I find that argument absolutely pathetic and incredible. The idea that phasing out production in the North Sea more rapidly than need be is going to persuade some African country which finds oil not to produce its oil but to go down the route of producing renewables is just ludicrous. It could, of course, do both. We should recognise that this is the only argument that the Government’s own independent advisers have against the Bill.

We should recognise that, in law, the Climate Change Committee has no role in advising about the supply of oil and gas. Its role is about phasing out emissions, so it is acting ultra vires even in coming out with its recommendations against this Bill. That is as maybe.

Other arguments suggest that it would be bad for the environment—that dolphins and other wildlife would be disturbed by offshore oilfields. Of course, they would be equally disturbed by offshore wind farms. This does not seem a wholly credible argument.

Most people argue as if allowing petroleum licences and producing renewables are alternatives. The Bill will not stop renewables at all. In so far as it boosts the economy and tax revenues, it will help fund the transition. There is no time limit on speeches. In my view, by the same logic that applies to the Bill, we should also allow the production of oil and gas on shore. We should license onshore exploration and drilling for shale gas, subject to a local referendum in the area where it occurs, and to allowing the companies that wish to drill to offer incentives to those in that area. I have been told that they are prepared to pay £1,000 per head and subsequently to offer cheap gas if they find it.

Why do we not do this? I know enough about the oil industry to know that everything is uncertain, but there is a lot down there. I do not know whether or not we can get it out of the shale. If we can, all the arguments that there is only a small amount disappear because the potential quantities are very large.

I hope that we will not be carried away by those who object to producing oil and gas. It is a luxury belief. They can oppose production because it has no direct effect on them, but it will marginally impoverish the rest of us. This is not something to which we should give in.

--- Later in debate ---

[Baroness Young of Old Scone (Lab)]

My Lords, it is difficult to follow the noble Baroness—I seem to have drawn the short straw on that one—but it is also difficult to follow the noble Lord, Lord Lilley, because it is quite distressing to witness the death throes of a dinosaur.

This is a wholly unnecessary Bill. Its only virtue is that it is brief. The noble Baroness, Lady Hayman, said that the North Sea Transition Authority, for which the Bill is allegedly meant, has been quoted as saying that it does not need or want it.

The Minister kindly wrote to us in February and held a briefing meeting early in March. He tried, and I should say failed, to outline the benefits of the Bill, so let us look at some of the anticipated and promoted benefits. One is jobs. Whether or not it is 200,000 for oil and gas and associated industries, the argument pursued by the Government is that we have to keep these jobs up and that it would be really bad for us to see all these people becoming unemployed or having to change their profession. In fact, they have skills that would admirably fit the transition to low-carbon technologies. Rather than giving the go-ahead for continued licensing in the North Sea and slowing the decline path of North Sea gas and oil, we should get a greater move on with the development of new low-carbon technologies, including by attracting the billions of pounds of potential investments that the Government tell us are out there.

New green jobs using these people’s skills is the humane way to transition from old to new technology, rather than perpetuating oil and gas to support old jobs. This is the sort of illogical thinking that we have come to expect from this Government, in this area. It is like the logic that we heard them use when talking about commissioning new gas-fired power stations to provide resilience to fluctuations in sun and wind power renewables, rather than going straight towards low-carbon, hydrogen, medium-term storage solutions, as advocated by the Science and Technology Select Committee. The only result of commissioning new gas-fired power stations is likely to be a whole load of stranded assets.

The Minister also talked about energy security, and new oil and gas licences helping to safeguard that energy security to ensure that we do not rely on hostile states. That argument does not stack up either. Only 20% of the oil produced in the UK is refined here; 70% is refined in Europe. I do not accept the belief of the noble Lord, Lord Lilley, that we can force trade from having the wrong sort of oil here, with the remainder bartered with Europe. If we end up in a situation where there is a lack of security, international tension or even an international war, having 70% refinable in only Europe will leave us vulnerable.

Some 75% of our oil is exported, since it is the wrong grade for domestic consumption, and 50% of our natural gas comes from outside the UK. None of us wants to see that rise, as liquefied natural gas has a higher carbon footprint than domestic gas, but the answer is not to slow down the transition from a fossil fuel that is on its way out, but to speed it up through increased investment in renewables. They are the future, after all, and that is the most secure way forward.

I too believe that we should increase the burden on carbon capture, storage and use to meet the net-zero target. Carbon capture needs a whole load more technological development before we can really dream of relying on it for carbon removal in any major way. The proof of concept, developed into real schemes on the ground, simply is not happening fast enough or with enough security and science.

[Lord Lilley (Con)]

After the noble Baroness’s gratuitous insult at the beginning, I am grateful to her for giving way at this point.

[Baroness Jones of Moulsecoomb (GP)]

It is the industry that is the dinosaur, not you.

[Lord Lilley (Con)]

That was very kind of the noble Baroness, Lady Jones. She is an apologist for the noble Baroness, Lady Young. Now I have almost forgotten what I was going to ask. Is the noble Baroness, Lady Young, happy that we should do without carbon capture and storage at a risk, according to the estimates of the Climate Change Committee, of doubling the total cost—trillions of pounds—of meeting the net-zero target?

[Baroness Young of Old Scone (Lab)]

I would be delighted to be confident that carbon capture and storage would fill a substantial gap, but so far we do not have the practical evidence that it can be done. Until that is so, we should not increase the burden on a technology that is not yet established or proven. I personally think that, when the Climate Change Committee put the carbon capture and storage element into the net-zero budget, it was being a bit optimistic, as it was about some other issues. When one looks at the amount of public subsidy going towards Drax—the ultimate dream for carbon capture, storage and reuse—one wonders whether this is another example of the overdue influence of industry.

The noble Lord talked about tax revenues and I was a bit speechless in response: “We are getting tax revenues from something that is quite harmful, but the tax revenues are important; therefore, we have to keep doing the harmful thing”. That is like saying that people smuggling is pretty profitable, even if it is harmful, so we should have a national people smuggling enterprise that brings in some reserves and revenue for the Government. I do not accept the tax revenue issue.

The benefits of the Bill are far from what they are cracked up to be and I am sure that the noble Lord, Lord Lilley, will be glad that I will talk about some downsides. The first is marine protected areas. We know that more than a quarter of the oil and gas blocks approved in the October 2023 round were within marine protected areas. Our marine protected areas are in poor condition; only 8% offer effective protection for nature, which is the reason they were created. The clue is in the title. MPAs are an important component of the Government’s Environment Act targets and their international commitment, under the global biodiversity framework, to protect nature effectively in 30% of the sea by 2030. We helped lead that framework at COP and now we are authorising additional licensing of blocks in marine protected areas, as part of the commitment in the Bill.

The International Union for Conservation of Nature, which is the United Nations official body, has guidance that recommends that no industrialised activities take place within MPAs. The Bill clearly rejects that guidance. Just in case noble Lords do not know what the impacts on MPAs are, I should say that they are not the same as for wind power. Some of them are about oil itself. That does not include gross oil spills; generally speaking, we must praise the oil industry around this country—not necessarily elsewhere—for having been fairly successful in reducing the risk of major oil pollution incidents. However, persistent micro-spills do quite a lot of damage to the water quality, from the top to the bottom of the sea. There are also other pollutants from other chemicals used in the operation of oil and gas extraction.

The second issue sounds a bit weird, but is quite important. There is a lot of evidence that seismic survey noise really impacts marine mammals in particular, as well as commercially important fish species and the invertebrates on which they all live. We do not yet know enough about how strong the harm is, but we know that it is substantial.

The third issue is direct destruction of seabed habitats—for example, cold-water corals and deep-sea sponge communities. It is not just that I am carrying a flag for deep-sea sponges, though as a biodiversity fan I am sure they are very lovely; they are actually important carbon storage mechanisms, as mentioned by the noble Baroness, Lady Jones, my partner in crime, and important for nutrient cycles that help keep our oceans clean. We ignore at our peril the biodiversity and conservation downsides.

I personally think this Bill is unnecessary, unwanted and damaging to climate, biodiversity and, as we have said before, our own international reputation, which should not be discounted. It is very easy to say that the only argument we can put is that it will not look good, but that is not what we are talking about. We have taken a leadership role in the world on this issue, and persuaded other countries—of the sort that the noble Lord, Lord Lilley, felt would not be persuaded—to do the right thing rather than the wrong thing. We would be junking that international reputation, as we have done successively with several announcements over the last year and a half.

If the Government really want to waste their political capital driving this Bill through, it needs substantial amendment. First, we need to exempt completely marine protected areas from the oil and gas exploration and production blocks. Secondly—and you would expect this from somebody who has spent their life in government on a land use framework—we need a sea use framework. I understand that the Government are already working on a marine spatial prioritisation programme, designed to allocate and prioritise sea space for currently competing activities. Exactly the same problem that we have on land, we have at sea. I urge the Government to complete that work programme quickly, and to add a further test—a spatial prioritisation test—to the carbon intensity and net importer tests already in the Bill, inadequate as they are. This would make blocks available for licensing only if such activities could be shown to be compatible with the achievement of the objectives of the Environment Act and climate change targets. That would be set out in a marine spatial prioritisation programme.

To be honest, the Minister knows in his heart that the North Sea Transition Authority and the nation do not need this Bill. The Climate Change Committee says that there will be a need for some oil and gas after net zero, but that does not justify the development of new North Sea fields. Although we could amend this Bill, it is bit like the pig in lipstick: we could put lipstick on the pig but it will still be a pig. Why does the Minister not just withdraw this silly Bill and we can all go home for Easter?

--- Later in debate ---

[Baroness Boycott (CB)]

My Lords, it is a pleasure to follow the noble Lord, but I feel reluctant to stand up because the Bill seems to have little genuine purpose. It is distracting us from what we need to concentrate on, which is tackling the twin threats of climate change and biodiversity loss. The context of the Bill and our international reputation are really important, as several noble Lords have said. This is one of the biggest election years in history and one of the most important too, as the fight against climate change becomes so pivotal. We cannot have it both ways: wanting to be a leader in the world and then doing something that contradicts that.

People do read the headlines and they will see the one that says, “UK set to open more oil and gas fields”. What does it tell the world? That we think this is okay and in some weird way compatible with the Paris Agreement? We know that is not the case. The International Energy Agency has been clear about that and, last year, global temperatures were 1.46 degrees above their global pre-industrial average. As we all know, in Paris we agreed to try to shoot for 1.5 degrees. I think I heard the noble Lord, Lord Lilley, correctly when he said that trying to have a non-carbon economy was a luxury belief, but it does not feel much like luxury—

[Lord Lilley (Con)]

I was saying that stopping supply, rather than phasing out demand, is a luxury belief.

[Baroness Boycott (CB)]

I would contradict that too, because we do not have the time to figure out the difference between them. At the end of the day, they are the same thing. Many people who live in California, which was just mentioned, have lost their homes. If you live in Bangladesh, you have lost your homes; if you are a farmer in this country, you have been unable to plant your crops this year because of the level of rain. This is not a fantasy. It is something that is with us.

Personally, if we lived in an ideal world the Bill should be scrapped, and in doing so the Government would find themselves extraordinarily popular with a lot of people. But specifically, I congratulate whoever creatively came up with two tests that are impossible to fail, while ignoring the emissions associated with the predominant commodity in the North Sea—oil. They might as well read, “If autumn has arrived, run a licensing round”. However, we are not in an ideal world so, if the Bill passes, we have to improve it. Thankfully, there are things we can do.

One, of course, is protecting the marine environments or, as the noble Baroness, Lady Willis, just said, having no exploration in MPAs. I hope she will put in an amendment on that at the next stage. We could also look at the weak emissions reduction targets of 50% by 2030 and go instead for what the CCC recommended, which is a feasible 68%. We could do this.

The Bill could also make progress on banning venting and flaring, which has been illegal in Norway since the 1970s. Even though Norway produces a lot of oil, at least it has managed to cut down the methane which, as we know, is 80 times more potent over a 20-year period, so that is something we could do. I urge Ministers to implement the recommendation by the Commons EAC to implement that ban by the end of next year.

Jobs have been in decline, as we have heard, for many years yet there is still no skills passport available for workers who want to transition. We could try to do that.

Taking a step back, let us think about what is going on in the world. This month, the CEO of Saudi Aramco said in Houston at the annual hydrocarbon festival known as CERAWeek:

“We should abandon the fantasy of phasing out oil and gas, and instead invest in them adequately, reflecting realistic demand assumptions”.


However, we can meet the demand we need with renewables if they are sufficiently scaled up. It is more about where the power, or the fuel, comes from: thousands of miles into the earth or from our own natural elements.

Recent policy changes mean that we will need more carbon fuels. For example, the analysis by New AutoMotive shows that the potential supply from future licensing would be completely offset by reduced demand if we returned to the original 2030 target for ICE—internal combustion engine—phaseout. We claim that we are helping people but, in reality, we are not. Money, it seems, always triumphs. This month, Exxon CEO Darren Woods explained it simply as an all-out fight to derail anything green because it would not return “above average profits”. This shows that we can never rely on the industry to take the lead in reducing emissions. The Government have to act.

Let us be clear: the Bill will not help the average citizen of this country or indeed any other. We are kidding ourselves if we think that the oil and gas companies, and increasingly private equity firms, really care about reducing emissions. The Government make great emphasis in their carbon budgets on our having CCS technology, as the noble Baroness, Lady Young, referred to, but despite the fine words this is unproven.

In my role as vice-chair of Peers for the Planet, I recently invited Sir Tim Smit, the founder of the Eden Project, to speak to colleagues. During his speech, he said that we should remember the person—the adult—we wanted to be at 19, stand there and make them proud. It is obviously a challenge to remember what it felt like at 19 but I can remember that I thought it was my role to try to make the world a better place. I suspect that everybody who has found their way on to these Benches had similar thoughts: make the world better and use what energy you have—what God has given you.

At that point when I was 19, fossil fuel companies were just discovering exactly the kind of damage they were doing, but now we know. We have just had the hottest year on record. I would be aghast, as a 19 year- old, that I had to sit here and fight against something that seems so palpably obvious. At 19, I was fighting for women’s rights—quite honestly, there were no women in this place then—and we proved that was right, so now we are having another extraordinary fight about scientific facts.

It is clear that the Bill is the wrong thing to legislate for. I urge noble Lords that if they cannot justify the Bill to themselves, they should at least try to justify it to their children and their grandchildren.

Global Heating

Lord Lilley Excerpts

Thursday 18th January 2024 Lords Chamber

[Lord Lilley (Con)]

My Lords, I congratulate the noble Baroness, Lady Sheehan, on securing this debate. Like her, I want to emphasise the importance of science and the IPCC. I studied physics at Cambridge, so I know that the basic science of global warming is rock solid—but many predictions about the likely consequences of higher temperatures are flimsier and claims of harms attributed to climate change sometimes lack any scientific basis.

First, you cannot prove a trend from a single event, however dramatic, or from a single year, however unusual. As an example, last year wildfires near some fashionable tourist resorts and smoke from Canadian wildfires blowing down to New York led to claims that this proved we were all going to roast. But NASA satellites have monitored wildfires for a couple of decades and I looked up what the NASA site said. It said that the area burned by fires had declined by 25% over the period that it had been monitoring it, and that on a typical day in August—it was August when I looked it up—there are 10,000 fires burning worldwide, so plenty to choose from if you want to be alarmist. Hurricanes and individual storms are dramatic, but there is no upward trend in hurricanes or in the damage they cause relative to the size of the world economy.

In the opposite direction, sea ice, which the noble Baroness, Lady Sheehan, mentioned is currently—this January—at the highest level for 23 years. But of course my point about a single event and a single year not being able to prove a trend applies just as much to that. Like her, I imagine that over time a warmer climate will lead to the melting of Arctic ice. But that is not the same as onshore ice—or rather, it will have the same effect on onshore ice. The noble Baroness quoted the IPCC but did not go on to say, as it says in paragraph 5.22 of its report on 1.5 degrees global warming, that this will take hundreds to thousands of years. I think that we can possibly deal with it over that period.

The best summary of what the IPCC says is in chart 12.2 in its most recent assessment review. It assesses what impact climate change has been having, whether it is out of line with variability in the past and what is expected to happen up until 2050 and the end of the century. It says, of course, that temperatures have been rising and are expected to go on rising. Extreme heat, as a result, has been rising and will go on rising. Mean precipitation has not yet risen out of line with normal variability but is expected to do so before 2050 and in the second half of the century. It will be more extreme in some areas and less extreme in others. However, the IPCC says that it has neither observed, and nor does it forecast, up to the end of the century, anything unusual in the way of river floods, landslides, droughts, wind speeds, storms, cyclones or fire weather. Despite the fact that it expects a continuing rise in sea level, it does not expect that to cause any appreciable or unusual coastal floods or erosion.

I think we ought to take into account what the IPCC says about these things. When I raised it before with the Minister’s colleague, his officials wrote back and said, “Oh, but that’s just in the science section of the IPCC report”. Well, I thought it was the science we were supposed to take seriously. But if we do not, previously I asked Ministers whether they knew of any IPCC-assessed reports that suggested that if we did nothing to stop global warming, it would lead to the extinction or elimination of the human race. They said there were none. So, let us not encourage exaggeration. I do not want to see global warming continue, because I am a Conservative and I do not like unnecessary change—but it is not going to lead to the elimination of the human race.

Let us look at the opening words of the economic chapter of the IPCC report:

“For most economic sectors, the impact of climate change will be small relative to the impacts of other drivers. Changes in population, age, income, technology, relative prices, lifestyle, regulation, governance, and many other aspects of socio-economic development will have an impact on the supply and demand of economic goods and services that is large relative to the impact of climate change”.


So I urge those who get alarmed about climate change to actually read the science. When they do, they will find it is a problem, but not the end of the world.

--- Later in debate ---

[Baroness Jones of Moulsecoomb (GP)]

My Lords, I too congratulate the noble Baroness, Lady Sheehan, on bringing this debate, but when I sat down to write my speech, I felt this great wave of weariness wash over me. Not because of the topic, which is an existential threat for many species and scenarios, but because I have been talking about climate change and its dangers, disasters and opportunities for three decades. Of course, the Green Party has been publishing its policies to cope with these devastating changes for the past 50 years. So, I could simply refer noble Lords to my speech of blah, when I said “Blah”, and so on, but I will play the game and debate.

When 99% of scientists explain that we have a problem, it is a fool who listens to the 1% who disagree. But that is what keeps happening, with individuals and governments. Intelligent people like the noble Lord, Lord Lilley, pick and choose their facts to argue that it is fine: there has always been variation, it has been hotter in the past, it will not be as bad as everybody says it is—but of course, it will be. The 1% of scientists who—

[Lord Lilley (Con)]

My Lords—

[Baroness Jones of Moulsecoomb (GP)]

No, I will not give way and use up my time. You can speak afterwards.

The work of the 1% of scientists who say that climate change is not as bad as it is made out to be often contains errors and cannot be replicated. It is an excuse to keep things as they are when clearly, that is exactly what is causing such serious problems. Somehow, the last few seasons of floods, droughts, record-breaking temperatures and unsettled and unseasonal patterns have failed to wake up these deniers and delayers. The impact of these happenings—the deaths, the starvation, the absolute distress—does not seem to register.

There are things we must stop doing and other things we must start doing: there is a constant balance between mitigation and adaptation. For example, I spoke to a Conservative Peer earlier today and he talked about the future of carbon capture and storage, which the Government have recently ploughed money into. Yet our natural carbon capture and storage systems—the oceans, wetlands, plants, et cetera—are constantly trashed in the name of progress. There are plans for deep-sea dredging, not knowing which ecosystems could be damaged. We know more about the surface of Mars than we do about the deep ocean. Our ignorance will cause more problems, probably not too far in the future.

It is possibly not the end of the world but it is the end for many species, and probably the end of a comfortable life for the majority of people—obviously, not for the super-rich; I dare say, they will cope. For example, yes, we should plant trees, but we should also stop cutting down older trees in forests. We must insulate houses when they are built, which is better for the dwellers and for the planet. Transport accounts for around a quarter of all greenhouse gas emissions across the world, and many Governments are implementing policies to decarbonise travel. We are behind on that. We can make it easy to walk and cycle, to use public transport or car clubs. We must reduce our flights, especially the use of private jets.

Finally, I have a question and also a suggestion. Does the Minister see that this Government have failed on the climate crisis and that they need to dump the idea of new oil and gas licences and adopt the Green Party’s policies, so we can keep our fingers crossed that we do not reach the next two degrees of warming in the next decade or so? I recommend reading our Green Party manifesto. It is chock full of practical, sensible policies, often cheaper than anything the Government are promoting. They are policies that really do make sense—and they will not cost us the earth.

Climate: Behaviour Change (Environment and Climate Change Committee Report)

Lord Lilley Excerpts

Wednesday 7th June 2023 Grand Committee

[Lord Lilley (Con)]

My Lords, it was a privilege for me to serve on the committee, even though it was a pain for its other members to have me on it, since I voted against this report. I will explain why.

Our starting point was that there are two ways to achieve net zero, both potentially necessary. One is to adopt carbon-free technologies, and the other is to adopt more frugal lifestyles, reducing the demand for carbon. The committee decided to investigate how great a role lifestyle changes could play in meeting net zero and how to motivate people to adopt them. Our call for evidence explicitly defined “behaviour change”, for the purposes of this inquiry, as

“the lifestyle changes that may be required by individuals, households, and communities”.

We did not seek evidence about adopting carbon-free technologies such as electric vehicles or heat pumps since, by definition, if they are good replacements for the present fossil-fuelled technologies, they require no behaviour change.

So we invited witnesses to give evidence about lifestyle changes, like driving less, walking or cycling more, flying less, eating less meat and shunning fast fashion. Many witnesses, and some committee members, were keen on these lifestyle changes, for reasons quite independent of reducing carbon emissions. They believe, no doubt correctly, that more frugal lifestyles would be good for our bodies and souls. That appeals to puritans, to those who love bossing people around and to eco-warriors who want us to regress to the pre-industrial world.

An early draft of our report criticised government for a lack of leadership and suggested restricting the number of flights that anyone might make. I proposed that the committee should demonstrate leadership by pledging to limit ourselves to two flights per annum. This was rejected out of hand—lifestyle changes are for them, not us. None the less, the committee was all set to proclaim that, without major lifestyle changes, Britain cannot reach net zero. Our draft criticised government for relying too much on technology change and too little on behaviour change.

Then came the inconvenient truth. We discovered that the Government’s official advisory body, the Climate Change Committee, said that 90% of the carbon reductions on the path to net zero could be achieved by adopting carbon-free technologies. A mere 10% of carbon reduction required lifestyle changes, particularly

“a shift in diets away from meat and dairy products”,

as well as reductions in waste, slower growth in flights and reductions in travel demand. Suddenly, the huge role we had imagined for behaviour change was reduced to something pretty insignificant. So what did the committee do? It voted to exclude any mention of the 10% figure, even in a footnote. I repeat: it voted to exclude that information. I wait for other members of the committee to justify that.

We needed a big figure to get a good headline, so we asked our excellent clerks to conjure up a larger figure over the Summer Recess, however loosely associated with behaviour change. They duly returned with two numbers: 63% and 32%, both of which appear in the final report. The 63% includes savings from carbon capture and storage, a fact omitted from the report, since no one would seriously associate that with behaviour change. The 32% figure mentioned by our excellent chairman as relying on savings that are the result of voluntary changes includes contributions from electric cars and heat pumps, which people will have no option but to buy from the 2030s onwards.

The justification that I was given for redefining “behaviour change” to include these technologies was that range uncertainty and recharging times require complex journey planning that is inconvenient, and heat pumps will likely leave you needing to wrap up warm in winter. That is doubtless true, but it is obviously not mentioned in the report, lest we provoke opposition to electric vehicles and heat pumps.

I have the highest respect for my noble colleagues’ integrity and sincerity, but, instead of producing evidence-based policy proposals, this report is an exercise in policy-based evidence selection. Inconvenient truths were deliberately suppressed, definitions were changed deliberately to mislead, and evidence was cited for which we had not carried out any investigations. However noble the cause, this is not the way that this House should go about producing its reports.

--- Later in debate ---

[Baroness Parminter (LD)]

I thank all Members who have contributed to this excellent debate, including the noble Lord, Lord Lilley.

[Lord Lilley (Con)]

Especially.

[Baroness Parminter (LD)]

Including, not especially. The noble Lord is never a pain. The whole point and value of a House of Lords Select Committee is to bring together people with different perspectives and values and from different parties. We look at the evidence, hear people’s views and come to an agreed position, which in this case was a majority position. The noble Lord, Lord Lilley, was in a minority of one. As we heard from the Minister, even he agrees with our definition of behaviour change. As the noble Lord, Lord Browne, rightly articulated, we see behaviour change as not just about cutting consumption—the 10% referred to by the noble Lord, Lord Lilley—but about helping people adopt new technologies and services. The Minister’s definition of behaviour change was “enabling people to do the same thing greener”. The noble Lord, Lord Lilley, is in a minority of one. I am a Liberal Democrat; I am used to losing. It is time, as they say in “Frozen”, to let it go.

I thank the Minister for his response, although we could disagree about the pace of some of the things he mentioned. We have been calling for an extended producer responsibility scheme for many years. France had one about a decade ago, and the Government called their first consultation on an extended producer responsibility scheme in 2019, so the pace is pretty glacial when the challenge is so big.

However, we are pleased to hear that the Government are at last going to be getting together a net-zero strategy. This needs to be shared endeavour. People around the Room have talked about the need to bring on board local authorities, civic groups, faith groups and businesses, but the only people who can offer that leadership are the Government. We hope that they will accept that people out there are crying out for change. They want to do something about climate change, and they want the Government to lead. The Government have made some good baby steps but need to move much faster and with much greater depth if we are not going to continue having policies that are high-carbon and low-nature. As the noble Lord, Lord Birt, said, we need far greater co-ordination across government to achieve that. I thank the Minister for what he is trying to do in certain areas, but the Government need to do far more, and the evidence of our behaviour change inquiry shows that, unless the Government help people to change their behaviour, we are not going to meet the net-zero goals that the Government have set.

Retained EU Law (Revocation and Reform) Bill

Lord Lilley Excerpts

Report stage
Monday 15th May 2023 Lords Chamber

[Lord Davies of Gower (Con)]

No, it is not appropriate.

[Lord Lilley (Con)]

My Lords, very briefly, the case for what we are doing was put best by the noble Lord, Lord King, former Governor of the Bank of England. He said that there was a case for remaining in the EU to retain some influence, albeit small, over European legislation and there was a case for leaving to enable us to revise EU laws. There was no case for leaving and not using our opportunity to revise those laws.

A paradox arose in previous stages whereby those who, apparently with no problems at all, had allowed laws to be passed with little or no say by Parliament for 44 years became, overnight, welcome champions of full parliamentary process. Those on the pro-Brexit side of the campaign found themselves in the difficult position of arguing for rather streamlined and inadequate processes of parliamentary scrutiny, partly because there was a trade-off: there was a case for taking more time to maximise the thoroughness of scrutiny and a case for seeking speedy completion of the process to minimise uncertainty.

Amendment 2 gives us the opportunity for a degree of more thorough parliamentary scrutiny, which I think both sides welcome, but I would like an assurance from the Government that it will not prolong uncertainty for too long. The fewer the measures in the schedule, the more measures are outside it and could be liable to a process of reform or even removal over a longer period, therefore prolonging uncertainty. I would like to know before Wednesday why the some 2,000 laws that the Civil Service did not know existed have not been put in the schedule. If no one knew that they were there, what harm can there be in removing at least some of them?

More seriously, part of the process of this Bill is surely to enable us to transform legislation that we retain on the statute book into a more common-law process, more suited to Britain and our procedures. I would like some assurance that that will happen and an explanation of why, given that in most common-law countries there is little or no product legislation—they must be of merchandisable quality, safe and not harmful, but the law does not specify how or why they are made, in the way that the EU rules that we inherited do, largely for protectionist reasons—there is no removal of product legislation in this schedule. Surely it would be possible and bring us into line with much of the world.

[Lord Fox (LD)]

My Lords, this has been a very extensive debate. The noble Lord, Lord Jackson, mentioned churlishness in a different context; it would be very churlish for these Benches not to welcome the government amendments in this group and the fact that the Minister has co-signed Amendment 9 in my name and that of the noble Baroness, Lady Chapman.

We owe the Minister a debt of gratitude. All through the grinding Committee, he stuck poker-faced to the party line, but then it seems he sprang into action; he took the spirit of what he heard in your Lordships’ House and, using his not inconsiderable powers of persuasion on the Secretary of State, he ensured that the whole government position flipped by 180 degrees. We need to thank him for listening to your Lordships in Committee.

We heard some concern about what is in the new schedule, which we will debate on Wednesday. Some of us received at 2.40 pm some explanation as to why particular regulations were put in. Clearly, that was late—we should have had it a lot earlier—but Amendment 2 takes the place of our having to work through the night on that spreadsheet. Should the noble and learned Lord, Lord Hope, seek the opinion of the House, we on these Benches will support him. Part of the road can be travelled with this group, as long as the noble and learned Lord’s amendment is included.

Cleaner Energy Technologies

Lord Lilley Excerpts

Tuesday 14th March 2023 Lords Chamber

[Lord Callanan (Con)]

It depends on which projects the noble Lord is referring to. He might hear some good news in the near future with regard to the track 1 cluster announcements.

[Lord Lilley (Con)]

Could my noble friend tell the House what the Government’s estimate is of the social cost of carbon?

[Lord Callanan (Con)]

I am not quite sure where the noble Lord is going on that question. Perhaps we should have a more detailed discussion outside the Chamber.