National Energy System Operator: Blackout Risk
Lord Moynihan Excerpts(1 week ago)
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Lord Moynihan (Con)
I declare my interests as chair of Amey, Acteon and Buckthorn Partners. Can the Minister confirm the comments of whistleblowers that on 23 June
“constraints were breached and system security was compromised”—
and, I might add, five safety limits were breached as well? Can he confirm that such events can directly contribute to potential nationwide blackouts? Why was this not reported to Ofgem within 72 hours, as legally required? Does he agree with Octopus Energy, which told Parliament on 8 July that the cost of balancing the grid, net-work constraints and capacity payments under this Government’s high-cost wind and solar-driven energy policy is to go up from £1.5 billion this year to £10 billion a year by 2030, which will further deindustrialise the country and add higher costs to already unacceptably high domestic and industrial energy bills in the United Kingdom?
The Minister of State, Department for Energy Security and Net Zero (Lord Whitehead) (Lab)
The Government take the allegations that the whistleblowers have made recently concerning the operation of NESO very seriously. An external legal firm has been appointed to investigate, reporting to a panel independent of senior management; indeed, there is the opportunity for anybody independent of senior management to make representations to that inquiry. It would be wrong to prejudge the outcome at this stage.
As for the wider issue of constraint payments, this is substantially an issue of grid management and grid development, which the noble Lord will know were grievously neglected under the previous Conservative Government. The present Government have very ambitious plans to make sure that the grid is expanded, repaired and updated so that constraints can be managed much more effectively as part of the overall grid process.
Energy Prices Act 2022 (Extension of Time Limit) (No. 2) Regulations 2026
Lord Moynihan Excerpts(1 week, 5 days ago)
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Lord Whitehead (Lab)
I think that, in fact, our government lectern is higher than the opposition lectern.
Baroness McIntosh of Pickering (Con)
As we are all about the same height at this end, we do not need it. We should not worry about that.
Can the noble Lord write to me—I have asked this on more than one occasion—to tell me whether he, the department and the Government are inclined to look into this? From the point of view of household energy bills, that would make a real difference. If we could move away from renewables so that the application for the BESS in Knaresborough and Scotton is not approved next week, that would make the world a safer place, because my niece has been told that she will have to evacuate in the event of a fire. Knowing how highly combustible and flammable these things are, the world would be a safer place. However, with those few remarks, obviously I approve the SI before us this afternoon.
Earl Russell (LD)
My Lords, I thank the Minister for the way in which he introduced these regulations. It is almost like double déjà vu because we have considered the Northern Ireland regulations and we considered these ones very recently. We had a good debate on them last time, so I will be incredibly brief on these. I sincerely hope that the Minister stays in post, because I enjoy working opposite him.
On the regulations, the Government need go on seeking these six-month extensions so that they can continue to deliver these savings, which are important at the moment. We have renewed hostility in the Middle East and increased pressures on the cost of energy, so we absolutely recognise the need for this to be done, and these regulations would extend those provisions from 25 October 2026 until 25 April 2027. I therefore recognise that, in the absence of other primary legislation, there is a need continuously to come back with the six-month extensions.
I welcome that the noble Lord said that his department was working on bringing forward a permanent legislative solution so that we do not need to continue doing this. Can we expect that in the energy independence Bill, or is the expectation that it would need to be a stand-alone piece of legislation?
I made all the broader points I need to make on this SI when we debated it previously, so I will not rehearse those again. The Minister knows where I stand on a need to reduce energy costs, and on some of the ideas that I believe in and which my party has put forward. I wanted to ask about the situation in Northern Ireland, on which the Minister kindly updated us. I welcome that his department has been working with the Northern Ireland Executive, and I hear what he says: that has been enabled and has entered into force. If there is anything else on the Northern Ireland situation that the Minister might choose to add, that would be welcome. Other than that, we support these regulations, we will not stand in their way, and I thank the noble Lord.
Lord Moynihan (Con)
My Lords, I declare my interest as chairman of both Amey and of Acteon subsea engineering company, which works on offshore wind and oil and gas around the world, and as chairman of Buckthorn Partners, all of which are involved with energy transition.
I am very grateful to the Minister for the introduction of what is, I hope, the last SI before the Recess. I echo the comments made by my colleagues about the way he always handles the Committee with respect and responds to as many questions as he can in the time available.
I hope that the Government will not continue to keep propping up the renewables obligation to the Exchequer with secondary legislation. The point has been made that it is also important that we have proper scrutiny of it through the introduction of primary legislation. I say to my good friend, the noble Earl, Lord Russell, who is the Liberal Democrat spokesman, that I have no doubt that there will be plenty of room to handle this matter in the so-called energy independence Bill. It is fast becoming a Christmas tree Bill. I would not want to be on that Bill Committee; it must be the worst job in DESNZ at the moment, because it is being written and rewritten. I hope that the clauses about banning licensing in the North Sea have now been removed, in advance of the new government leadership—we will see shortly—but this would be a good opportunity for this specific point to be remedied in primary legislation.
Lord Moynihan (Con)
My Lords, I apologise for the interruption due to the vote. I was simply going to give the Committee one example of the consequences of overreliance on renewables.
On 23 June this year, NESO, the National Energy System Operator, faced severe supply constraints caused by high electricity demand for cooling during an extreme heatwave, combined with—this is important—low wind generation at the time, unplanned gas plant outages and network constraints. These factors cause the grid frequency to fall below the normal operating limits. It should have been reported to Ofgem immediately. I ask the Minister: why was it not reported to Ofgem on the day or early the following morning?
Many other important aspects related to this matter are outside the scope of this SI, so I will either write to the Minister with specific questions or potentially table them in a Written Question. This was an exceptionally important moment for the grid, and it appears that there were many problems associated with it: control room engineers being forced to take emergency action without it being reported; allegations from whistleblowers that the grid came closer to blackouts than was reported; and senior corporate staff instructing control room engineers to avoid making or preserving permanent paper trails of their operational decisions. All of that would be wholly unacceptable; I know that the Minister will share in my condemnation of those working practices.
In closing, I revert to the point that I made at the outset. I sincerely thank the Minister for always being so gracious, receptive, polite and engaging. I wish him a good break. I hope that he will still be in his place when he comes back from the Recess, because I anticipate that the energy Bill will take up a good deal of our time in the next 12 months, and I hope that he will be a renewed voice of influence in the U-turns that Andy Burnham will be making to energy policy. I am very grateful to him for everything that he has done and the courtesy that he has shown me throughout. I attribute those comments also to the noble Earl, Lord Russell, because he has always been similarly engaging in these debates during the current Session. These have been an interesting and appreciated six months back in the job. I look forward to the following year and working with the Minister.
Lord Whitehead (Lab)
I thank noble Lords for their constructive contributions and hope they will forgive me if I do not tarry too long in my closing speech and try to give a detailed response to everything that has been put forward. They are all very valid points but, among other things, we have a vote in about 20 minutes. I will certainly write to noble Lords on those points.
In particular, I am happy to write to the noble Baroness, Lady McIntosh, on standing charges. I have thought about this a great deal, but the issue is fraught with practical difficulties in how you do it. As the noble Lord pointed out, everyone has to pay for something somewhere. The question is what sort of equity you put in place if you are removing standing charges. A standing charge that goes on people’s bills as a block might be more properly allocated in terms of who pays for what and where. It is not a question of just taking standing charges away but of making sure that people are properly remunerated for network costs, distributed costs and all those sorts of things in a different way. That will be part of the content of my letter.
The noble Baroness is also sort of right to say that this measure is having the effect of taking charges off bills and putting them on to the general taxpayer. I would not exactly call it smoke and mirrors, but a charge will continue to be levied. However, there is one important point in this change that I hope noble Lords will consider. This changeover has an effect on the energy price cap each time round; changing billing from the levy to the general taxpayer means that the energy price cap is lower than it would otherwise be, which really is a saving for energy customers. As we can see, that is what has transpired as a result of these changes.
The noble Earl, Lord Russell, asked about the situation in Northern Ireland. I am grateful to him for being brief, as I know he has concerns in a number of other areas. If he has any further concerns, I am sure we can take those up. As far as Northern Ireland is concerned, my understanding is that everything is now complete. We have had the legislation through to enable the Northern Ireland Executive to put their own scheme in place, which they are now doing. The net benefit is going to be less, about £30 per customer, because of the different circumstances in Northern Ireland, but there are now no impediments in the way of that scheme being fully funded by the Treasury and fully operational under the aegis of the Northern Ireland Executive. That process is completed.
I assure the noble Lord, Lord Moynihan, that the costs of operating this will be very small. It involves small administrative changes and no large costs will be outstanding from them. He mentioned NESO, the frequency response and the margin call that was made recently. I can assure him that, as far as the narrow version of events is concerned, there are active inquiries under way as to what happened on that occasion which NESO is undertaking as we speak.
Lord Moynihan (Con)
In the interests of transparency, will the Minister write to us with the outcome of that report, so that this Committee, and indeed the House, are fully apprised of what happened that day and the actions being taken?
Lord Whitehead (Lab)
Yes, I am very happy to do that, but I anticipate—I do not know whether the noble Lord has this actively in mind—that we may have an Urgent Question coming on this, so we may be able to start talking about it at that point.
On the wider question of frequency response, it is true that, as far as having a substantially renewables-based system is concerned, the possibility of wider perturbations in frequency is something that one has to consider. That is why, among other things, as he will know, there have been regular auction calls for frequency response mechanisms which can be brought to bear to make sure that those perturbations are very rapidly brought under control, because it is a question of more than 50 megahertz on either side of the 400 barrier. When it goes down too low, you have to intervene. Those frequency response mechanisms can do that very efficiently and have done it very efficiently. Therefore, there was no question that we were beyond the buffer as far as that margin call was concerned. That may be something that I add to my correspondence with the noble Lord.
Tackling affordability is the Government’s number one priority, and we acted at last year’s Budget by taking, on average, £150 of costs off energy bills, with those decisions now factored into bills for three years to come, as I have said. The recent price cap announced by Ofgem will be deeply concerning news for families. We understand that developments in the Middle East are concerning, and we will continue to monitor that situation ahead of winter and plan for contingencies. Should there be any further action relating to what is happening in the Middle East, it may well be that the Energy Prices Act 2022 comes to the rescue, as far as any of those measures are concerned. We will keep that under close review, and let us hope that things work out in a good way, but the Government will certainly keep a close eye on it should things not work out as well as we hope.
State of Climate and Nature
Lord Moynihan Excerpts(1 week, 6 days ago)
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Lord Moynihan (Con)
My Lords, I declare my interests as the chair of Amey, the chair of Acteon and the chair of Buckthorn Partners, which are all involved, in different ways, with energy transition both in the UK and around the world. I am grateful to the Minister for answering questions on the Statement made in another place yesterday. There the Defra Minister read the Statement, and the exchanges focused on her responsibility. Today it is the turn of the Minister for DESNZ in this House, so I will concentrate my questions on the aspects of the Statement that focus on the Starmer Government’s record on meeting the objectives set out in the Statement—or, more precisely, the consequences of the tenure of the Secretary of State, Ed Miliband, who is rumoured to be heading to the Treasury at the end of the week.
We all recognise the importance of protecting our climate and restoring nature. The key question is whether the Government have been capable of making progress on both. The Statement notes the introduction of carbon budget 7 and praises it, despite it being regretted in your Lordships’ House. The Government claim to be
“working in partnership with local communities, businesses, conservationists and farmers”.
The Climate Change Committee suggested a 35% reduction in meat and dairy consumption by 2050, a 50% reduction in the number of cattle and sheep, a doubling of tree planting rates by 2030 and a doubling of peatland restoration by 2040. Does the Minister agree with those representing the farmers that they will be forced to uproot their entire business models within a single generation?
Similarly, the Statement informs us that the Government will
“protect and conserve 30% of our land and seas for nature by 2030”.
Yet last week, the Government approved One Earth solar farm, a week after approving Peartree Hill and Dean Moor solar farms. One Earth will cover 3,900 acres and will have a capacity of 740 megawatts. Half the farm will be on best and most versatile—BMV—land. Can the Minister explain how that enhances our natural environment? Does he agree with the Secretary of State, who recently overruled his own planning inspectors to approve this, Britain’s second-largest solar farm, despite their recommendations to refuse the application over concerns about environmental damage and the loss of productive farmland, which this Statement is meant to protect? It is estimated that the site’s 660 hectares could produce around 5,300 tonnes of wheat a year. Does the Minister not agree that the Government are getting the balance wrong? Britain needs affordable, reliable, clean power, but covering productive farmland with vast solar developments while ignoring practical alternatives is not the answer. Ministers should be pursuing an energy strategy that strengthens our energy security without undermining our farmers.
However, I understand that there is some good news coming from the Statement. Will the Minister confirm that Andy Burnham is going to accept the long-running campaign from this side of the House to approve the Jackdaw gas field and will be going to Aberdeen during the recess with this welcome news? Let us hope that this is the beginning of the damascene conversion of Ed Miliband, especially if he is to move to the Treasury, although somehow I doubt it. Given the decision to approve Jackdaw this summer, does the Minister now agree that North Sea gas is four times cleaner in production than imported LNG and that UK energy security is strengthened by reducing reliance on imported gas? Does he agree that this would be a first step to protecting and indeed increasing oil and gas jobs, would grow tax revenues, would secure energy transition and, vitally in the context of this Statement, would reduce the carbon emissions our reliance on gas generates?
When the Secretary of State states that the North Sea is a mature oil and gas province, we agree with him. The primary source rocks were deposited about 150 million years ago, and with the right tax allowance, regulatory and decommissioning regimes, as in Norway, we could be producing a similar 4 million barrels of oil by the time the first new-build nuclear comes into generation in the late 2030s—and that is optimistic, given the Government’s unacceptable delay in enacting the Fingleton recommendations. Will the Minister confirm that the Burnham Government will understand that what we are talking about is global warming and that the UK is not detached from the globe? As such, does he agree that we should count all emissions in all the supply chains that deliver solar panels and offshore wind to the UK if we are to be honest with the public and not just virtue signalling to a world that is not listening but looking with incredulity at the Government’s deindustrialisation, with the cost of electricity to our industrial base being the highest in the OECD and four times higher than in the States?
The Under-Secretary of State for Defra noted during the Q&A exchanges following the Statement that a school in her constituency, Richard Lee Primary School, is installing new solar panels. Is the Minister aware that this school sources its solar panels from JA Solar? The company has a “very high” exposure—the highest rating—to the Xinjiang province in China, and the accusations of Uyghur slave labour in that province are well known to your Lordships’ House. Does he agree that our solar panels are neither homegrown nor clean? The component parts come from China and rely heavily on vast coal-fired factories daily belching out CO2 into the atmosphere. Does he agree that the total carbon footprint of a finished Chinese panel averages around 490 kilograms of CO2 equivalent per module, involving extreme furnace temperatures, adding to global warming at an alarming rate, and putting high levels of CO2 into the atmosphere for polysilicon, ingot and wafer production? Then we have imported Chinese offshore wind farms, where Chinese white asbestos ends up in wind turbines, and imported brake pads and hoist components are sourced from third-party suppliers in China, where the material is not prohibited, and are now installed in service lifts that transport our technicians up turbine towers in the North Sea.
Does the Minister agree with me that all these essential steps in the supply chain must be taken into account when considering CO2 emissions globally? Offshore wind turbines rely on powerful permanent magnets with neodymium, praseodymium and dysprosium—the supply of the latter being almost exclusively controlled by China. Add the copper and cobalt from the Democratic Republic of the Congo, where child labour and high CO2 emissions mining take place, and pupils, children and teachers at the Richard Lee Primary School might not be so impressed.
Does the Minister not agree that if we were to transport all these vital elements of this massively misnamed “clean” homegrown supply chain, we could have an acreage close to size of the Isle of Wight with CO2-belching factories and illegal working practices? How would parents, teachers and children at the Richard Lee Primary School regard that? The state of the climate and nature is under threat but, sadly, the Government’s energy response in this Statement is lamentable.
Earl Russell (LD)
My Lords, we welcome this Statement. The science is absolutely certain that human-induced climate change is beyond doubt. What has changed is how fast the impacts are arriving on our very own doorsteps. This summer’s heatwaves in May and June caused as many as 2,700 excess deaths; transport systems were strained; over a thousand schools closed; and the London Ambulance Service endured its busiest ever day.
We are on our third heatwave of 2026, and 2026 is the first year the UK has reached 35 degrees in May, June and July consecutively. Excessive heat is putting a strain on every individual citizen, on our economy, on our schools and on our health systems. Europe is now confirmed as the fastest-warming continent on Earth, warming at more than twice the global average.
This Government have been genuinely good on the energy transition, approving renewable projects to power the equivalent of more than 19 million homes. But nature has been the poor relation. Not a single new site of special scientific interest has been designated in England since 2023, and our tree-planting rate remains less than half the annual target. Labour’s messaging on nature has been muddled, its green mission too often undermined from within. Climate and nature are not separate; they are codependent. A Government strong on one and weak on the other will ultimately fail at both.
Our climate is changing more quickly than our policies. The Climate Change Committee’s fourth independent assessment of UK climate risk was stark: on adaption, not a single delivery pathway was rated good. Inaction cannot continue. Three of our five worst harvests on record have occurred since 2020; our food security is threatened. The Green Alliance has today written to Ministers to warn:
“The UK was built for a climate that no longer exists”,
and emergency action is needed. We must do far more, more quickly, on adaption. It is the vulnerable, the elderly, the sick, the poor and the workers who will suffer the most.
These matters are hard when we co-operate, and they become almost impossible when we do not. So, I say with real regret that the Conservative Party’s ever-continuing retreat from reality, rejecting the 2050 net-zero target and now reportedly barring prospective candidates who continue to support it, is a betrayal of its own history and the consensus that this country requires.
To those who say the UK emits only 1% of global emissions so why bother: every major economy could say the same. To those who say net zero is impossible, I ask: what is possible instead? British leadership works only if Britain leads.
The wildfire risks this summer are at extreme levels, endangering lives and devastating habitats, yet the Government’s wildfire strategy is still not ready and we remain completely reliant on commercial aircraft to fight fires. We have had one mega wildfire already last year, and we are not prepared for the next. That must change before next year’s El Niño impacts are felt.
On tipping points, will the Minister say what more the Government will do to strengthen monitoring of the AMOC system? The Government’s nature security assessment warns that every critical ecosystem is on a pathway to collapse. If that is true, as I believe it is, the public and this House deserve to see the full assessment, not merely a summary. I ask the Minister to commit to its publication in full. The 30by30 on Land: Delivery Plan, published yesterday, is welcome but insufficient. It leans too heavily on farmers and land managers volunteering, with no statutory backstop and no guarantee that voluntary schemes will deliver at the scale required.
Labour must stop doing things to people and start doing things with them. Give communities real opportunities to protect nature, launch a national campaign and provide an emergency briefing, because misinformation is filling the gap left by government silence. Fear alone will not sustain the public throughout this crisis. We must offer hope and invest in the young people who will live the longest with the consequences of what we decide.
Finally, our climate and nature laws are out of date. Can the Minister say whether the Government will finally match strong words on climate with equally strong action for nature?
Electricity Capacity (Amendment and Transitional Provision) Regulations 2026
Lord Moynihan Excerpts(2 weeks, 6 days ago)
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Earl Russell (LD)
My Lords, I thank the Minister for the clarity with which the instrument was introduced. The capacity market has served us well, and we welcome this examination and updating of its functionality so that it can continue to do so long into the future.
From these Benches, the Liberal Democrats have long championed a decentralised, resilient and, above all, clean energy system. We recognise the necessity of the capacity market as a mechanism that keeps the light on during periods of high demand and low generation, and we support the broad thrust of these technical reforms. They should improve confidence that providers can deliver on their obligations, increase value for money and help to further integrate low-carbon technologies into the market. These regulations may be highly technical, but it is important that they are looked at closely, so I hope the Minister will forgive me in advance for asking a couple of technical questions from these Benches.
I welcome the Government’s intent to strengthen the delivery assurance. The 30% increase in termination fees, and in initial credit cover from £10,000 to £13,000 per megawatt, rising to £19,500 for new-build units that miss their 11th-month financial commitment milestone, is a reasonable restoration of real-terms value, given that these figures have not moved since 2016. I find it surprising that these instruments, which govern so finely balanced a market, have not been updated for over a decade. As I understand it, even with these new regulations, there is no standing process to ensure that future regular updates are in place. Were such processes contemplated and examined in the work that was done in preparing this? What guarantees do we have that we will continue to see future upgrades to this important marketplace?
The plan to suspend capacity payments the moment an insolvency termination notice is issued is good stewardship of public money, and we do not oppose it. I am, however, concerned that in seeking real-terms parity, these changes may inadvertently raise the drawbridge behind the incumbents already inside the market. A near doubling of credit cover for those who miss a milestone is a serious sum for smaller storage developers or for demand-side responses, even if it is entirely reasonable for a more established or bigger generator. What assessment has been made of the impact of these credit cover changes on the smaller and newer entrants and on the diversity of technologies bidding in future auctions?
On the new provisions in relation to severe IT issues, which would allow the delivery body to extend the pre-qualification window by up to five working days, we generally welcome this flexibility and understand why this has been updated. But what objective threshold defines “severe”? Bidders deserve certainty that such extensions will be applied consistently and transparently and that they will not be left to the delivery body’s unreviewable discretion. I am not asking the Minister to be too specific, but are these changes partly motivated by any broader concerns about the future functioning of or threats to these systems?
On the treatment of contracts for difference, the instrument will allow a generator that receives a CfD via direct Secretary of State award to pre-qualify for the capacity market, provided that there is no overlap in the delivery period, yet auction-allocated CfD holders are not afforded the same route. I ask the Minister to explain the policy rationale for that distinction and confirm that it will not in any way create a two-tier system for low-carbon generators, depending on how they come by their contracts.
On the shift to accelerated reconciliation, cutting the final settlement from 14 months to four to align with the market-wide half-hourly settlement, we support modernisation, but faster reconciliation means less time to correct errors that might have crept in. What support is being offered, particularly to smaller suppliers, which may lack the systems to absorb the increased administrative velocity?
Finally, the instrument confirms that traditional gas-fired generation continues to sit comfortably within the capacity market alongside wind, solar, storage and demand-side response. Indeed, the market remains technologically neutral. It is worth saying clearly that our systems are among the most resilient in the world and these sensible upgrades will help to keep them that way.
I remind the Minister that this instrument, as sensible as it is, is no substitute for the deeper electricity market reforms that this country still needs. We continue to urge the Government to extend contracts for difference from 15 to 25 years. I have previously talked to the Minister about Greenpeace’s Power Shift proposals and the Minister has spoken about the openness of the Government to perhaps looking at a strategic gas reserve outside of the market. Obviously, those are conversations for another day. We are beginning to see signs of the decoupling of the gas and electricity prices, but more must be done. These changes would unlock future investment in renewables, strengthen our energy security and pass on cheaper home-grown power to consumers. I would welcome the Minister’s thoughts on how the Government plan to keep the capacity market under review and reform it further in the future and I look forward to his response.
Lord Moynihan (Con)
My Lords, I declare my interests as chair of Amey, an infrastructure and support service company in the UK, Acteon, a global subsea engineering company with interests in offshore wind and oil and gas production facilities, and Buckthorn Partners, which invests in energy transition companies.
I am grateful to the Minister for introducing these regulations and for broadening our debate to a wider consideration of the capacity market, which allows me to make a few additional comments. As he said, these regulations make technical amendments to the capacity market, so let me address that first. They provide reliable power generators with CMU auctions at either one year, T-1, or four years, T-4, ahead of when they must deliver future electricity capacity. Does he agree that this instrument allows the capacity market delivery body to extend the window for generators to apply to pre-qualify for the capacity market in the event of a severe IT issue? I believe that he does, but I would like him to confirm that.
I ask the Minister to confirm that the changes in these regulations will not be retroactive. Again, I understand that they will not, but it would be good to have that on the record. As I read it, the instrument accelerates the timetable for reconciliation runs in which the CM settlement body must make reconciliation payments to generators, subject to Ofgem approving them to do so. I would be grateful if the Minister could tell the Committee when the new timetable is expected to be called into force.
The most recent T-1 auction for 2025-26 secured 7.9 gigawatts of capacity compared with 7.6 gigawatts in 2024. The most recent T-4 auction secured 43.1 gigawatts of capacity compared with 42.8 gigawatts in 2024. Let us be clear and blunt about this: the public are being forced to pay an extra £600 million this year to ensure that there is back-up capacity for the already more expensive renewables that they are subsidising. Conventional forms of power generation from existing generating capacity, including nuclear and gas, were the most common source of capacity in the most recent auction, with 3.6 gigawatts of capacity coming from nuclear and 2.4 gigawatts coming from gas. Electricity supply from gas and overseas interconnectors were the most common source of capacity in the most recent T-4 auction, with 27.3 gigawatts of capacity coming from gas and 6.8 gigawatts coming from interconnectors.
It is self-evident that, despite the Secretary of State’s zealous opposition to gas, this instrument demonstrates that it is still needed and demand for it is actually rising as intermittent renewables increase. It is a function of the need for firm and predictable power when the sun does not shine and the wind does not blow. When preparing last week for this important debate, I looked at our high level of reliance and dependence on gas. In our generation mix, when I looked at my watch early in the morning, we were just 19% zero carbon as the country woke to turn on the kettles and the lights and to start the day: no solar, 6% wind, 8% biomass, 12% nuclear, 15% imports and 58% gas. That is how dependent we are on gas to provide baseload power, and we will remain dependent on it for many decades to come.
Nuclear Safeguards (EU Exit and Fees) (Amendment) Regulations 2026
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Earl Russell (LD)
My Lords, I thank the Minister for setting out the purpose of these regulations. Nuclear safeguards and the system for reporting, inspection and verification gives the International Atomic Energy Agency and the wider world the confidence that our civil nuclear material is being used for peaceful purposes and is not being diverted into weapons programmes. Without a credible safeguards regime, we cannot trade in civil nuclear material, operate our existing plants or attract the international partners on whom our nuclear ambitions depend.
The 2019 regulations established our domestic regime post Brexit. This instrument, some seven years on, does several things. It removes transitional provisions that were only ever intended to smooth the exit from Euratom; tightens and clarifies the language operators must work within; introduces new offences to plug enforcement gaps; adjusts reporting timelines to give the Office for Nuclear Regulation more time to scrutinise what it receives; and, most significantly for our international standing, transitions the UK from Euratom-style basic technical characteristic questionnaires to the IAEA’s own design information questionnaire format. It also amends the associated fees regulations to put the ONR’s cost recovery on a clearer statutory footing.
On these Benches, we recognise this as an essential and overdue update to a globally recognised regulatory system, and we support it. We particularly welcome the removal of the Euratom transition provisions and the move to the IAEA’s design information questionnaire format as a sensible step forward towards international harmonisation that will ease collaboration with our partners and materially support the UK, US and global civil industry partnerships.
Our support, however, should not be mistaken for uncritical or entirely enthusiastic support for the wider nuclear policy: we continue to have some concerns about the delivery of large-scale plants. We recognise that nuclear is obviously a crucial part of our energy mix, and we are supportive of the move towards more small modular reactors.
On the detail, I apologise, as I have several questions for the Minister. On the new offences, these regulations introduce criminal liability for non-compliance with particular safeguards provisions and for the failure to declare a change in facility type—corrections to an oversight in the original 2019 regulations. I just want to ask the Minister about this gap, which feels significant in our enforcement regime and why it was allowed to persist for seven years before being addressed here. I further seek assurance that the ONR now has everything that it needs as both legal powers and operational capacity to pursue enforcement action all the way to prosecution, where the gravity of a breach demands it.
On reporting timescales, the Minister has set out the window for operators to declare design information changes, but can he confirm that this tighter window will not place a disproportionate burden on the more than 130 qualifying facilities with limited operations? As he is well aware, we are talking about smaller-scale universities and corporate operations.
On the transition to the new IAEA forms, I welcome the Government’s decision, following consultation feedback, to extend the transition period for adopting the design information questionnaire from two years to three.
I feel that one question did not get sufficient attention in the other place. Are there specific risks during the migration and transition? Moving from one accountancy and control system to another is not just an exercise done on paper. There is a period during any transition when records may exist in two formats simultaneously, when staff are learning new systems and when the potential for gaps or miscategorisation is at its highest. We will also see some new definitions from the SI. What specific guidance will the ONR provide to operators to ensure that no accounting anomalies fall between the two systems and that the integrity of our nuclear accounting records is maintained throughout what will be a difficult transition period?
On record-keeping, this instrument extends the retention period for operating and accounting records from five years to 30. That is a big change. I notice that the costs in the supporting documents were quite low, but keeping computer records for that long is quite a complicated exercise, as computers become obsolete. Is that not putting on too much of a burden? Will the Minister say something about extending computer record-keeping and its security over that long period of time?
Finally, on repurposed facilities, the instrument introduces requirements for operators to notify the ONR 200 days before a change of facility type. Given the Government’s policy ambition to rapidly deploy small modular reactors, are they certain that these regulatory time changes are flexible enough not to impact the rollout and operation of small modular reactors?
We support this instrument. It will strengthen our safeguards regime, bring us more closely into step with our international partners and help guard against the unlawful diversion of civil nuclear material, so we fully support it.
Lord Moynihan (Con)
My Lords, I am grateful to the Minister for coming to the Committee to introduce these regulations. I am particularly pleased to be opposite him for the first time on these issues. I hope we will have many similar exchanges in the years to come. I am glad to say that, on this occasion, we are in agreement. There is little I can add to the excellent contribution of the noble Earl, Lord Russell.
A strong, independent nuclear safeguards regime is vital for our civil nuclear industry to function effectively. However, the Government must support nuclear site operators and other nuclear industry partners to ensure that they are not placing unworkable burdens on the nuclear industry. As the Minister said in his introduction, the instrument will implement most of the recommendations from the post-implementation review in 2019, so it is largely Conservative Party policy.
The Nuclear Safeguards (EU Exit) Regulations 2019 are the current regime used to demonstrate that civil nuclear material is not unlawfully diverted into military use. Also relevant are the Nuclear Safeguards (Fees) Regulations 2021, which regulate the fees payable by operators to the Office for Nuclear Regulation—ONR. This instrument will amend both to remove regulations related to the transition from Euratom, as both previous speakers have said, which are no longer applicable or do not apply to the UK context. We agree with that.
A new offence corrects an oversight, when the NSR 19 was originally implemented, relating to non-compliance with the requirements of the particular safeguards provisions. We also support that. An offence has been added related to non-compliance, with a new provision requiring operators to declare to ONR where there is a change in the type of facility. It also ensures that the regulator has a sanctions regime for non-compliance.
The main change, as the Minister made clear to the Committee, is to replace Euratom’s basic technical characteristics—BTC—questionnaire, which assesses how nuclear site operators account for their nuclear material, with the IAEA’s design information questionnaire, or DIQ. It also reduces the design information changes reporting time, as the Minister stated, from 30 to 23 days. He also stated that it requires operators to give the ONR more notice of imports, from four to seven days, and of exports, I believe from seven to 13 days. I may have missed that in the Minister’s comments, but I understand that that is the case.
It was interesting to see concerns over some of the changes made by nuclear site operators and other nuclear industry parties who were consulted. This includes changes to notification timings for the import and export of nuclear material, with operators questioning why the ONR needed more time to report this information to the IAEA, and the adequate number of staff needed to fulfil accountancy and control plans for nuclear material, with operators concerned that this was not clear enough, having previously questioned the rationale for the plans. Maybe the Minister will be able to comment on that.
In summary, the impact of the costs on business will be about £200,000 to £300,000. The transition period for changing forms from BTCs to DIQs was lengthened, with the ONR still accepting BTCs for the first year and DIQs for the second year. The notification timings for reporting design change, imports and exports were also amended to give operators more time than originally proposed, while still increasing the time the regulator has to quality assure. This instrument introduces changes largely supported by the consultees and initiated by the previous Government, as I mentioned. Therefore, we thank the Minister and are supportive of the proposals he brought before the Committee.
I have a question related to his portfolio. Events of recent days have suggested that the energy Bill may be delayed. I do not imagine that the Minister can possibly comment on that, but I suggest to him that that would be regrettable because the Fingleton recommendations are really important. It would be helpful to the Committee if he could comment on that, if he is in a position to. I am grateful to the Minister and conclude by reinforcing my support for the recommendations he brought forward.
Lord Vallance of Balham (Lab)
I thank the noble Earl, Lord Russell, and the noble Lord, Lord Moynihan, for the support and the useful additional questions. I thank the noble Lord, Lord Moynihan, for his wish to be opposite me for a long time. I cannot make any guarantees on that.
I agree with some of the points made, which largely support what I said. As I said, these amendments strengthen our position and make things easier. They will support trade and operations that are central to the sector’s work. The noble Earl, Lord Russell, asked why there is a gap in closing the offences part. The answer is that a statutory instrument was needed to do that, and this is a statutory instrument to achieve that. It is important that we are now closing those gaps. These amendments remove what has been a long transition agreement that really is not needed any more, given where we are domestically. The industry has largely welcomed this.
By bringing our design reporting requirements in line with those of the IAEA, we will make it simpler for both domestic and international new entrants to the market. That includes, on the point made by the noble Earl, Lord Russell, the SMRs, which are crucially important for where we go next.
The noble Earl, Lord Russell, and the noble Lord, Lord Moynihan, raised operator concerns. There is no doubt that the operators expressed some concerns about the move, for example, to use the IAEA questionnaire so quickly. We listened to that and introduced a longer transition period, to give them a chance to familiarise themselves with the process and to develop the new reporting format. Importantly, the ONR will work very closely with them to facilitate that change. It now has a year of the old system and then two years to make the transition.
Similarly, when operators noted concern about the timelines for reporting—an important point that both noble Lords picked up—there was no time allocated to the ONR. Strictly speaking, the operators could go right the way up to day 30 and hand the information over to the ONR. It then had to get it in by day 30, otherwise it was in breach of our international obligations. Initially, the proposal was to give half and half. We listened to the concerns and changed it so that the ONR will take five working days and the operators have the rest. That is an appropriate and proportionate response to the concerns.
It is particularly important that, as a nuclear weapons state, we demonstrate that we are complying with these safeguards and do not have any mechanism to divert civil nuclear material for military use. This will strengthen our ability to do so. In making these safeguards, we will encourage other states to follow suit, which will support the wider non-proliferation regime.
Two extra questions were asked. On the question about the SMR rollout, which I have partially answered, I can absolutely reassure the noble Earl, Lord Russell, that it is a high priority for us to get that moving. I do not believe that what is in here in any way impedes our ability to do that quickly. That leads on to the point that the noble Lord, Lord Moynihan, raised about what we are doing on the Fingleton review. That legislation will be introduced in this parliamentary Session. We are committed to try to drive the Fingleton recommendations through to completion by the end of next year, as we said when they were first introduced.
I hope that answers the questions that noble Lords have raised and that I have provided the necessary assurances to allow them to approve the regulations before us today.
Climate Change Act 2008 (Credit Limit) Order 2026
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Lord Moynihan
At end insert “but this House regrets that the draft Order will constrain the means by which UK businesses are able to reduce their emissions; and will incentivise the movement of energy-intensive industry overseas, thereby weakening prospects for growth, employment and the UK’s industrial sovereignty.”
Carbon Budget Order 2026
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At end insert “but this House regrets that the draft Order will increase the UK’s reliance on intermittent renewables, causing higher energy prices, further deindustrialisation and lower economic growth; is contingent on retaining a carbon tax which will impoverish households and industry; requires a reduction in livestock numbers and meat and dairy consumption; and will encourage the offshoring of emissions to countries with more polluting energy systems.”
Lord Moynihan (Con)
My Lords, while preceding my noble friend Lord Deben, I pay tribute to his lifetime work on climate change and, while our views will certainly differ this evening, I share with him a passionate belief that we should work towards tackling climate change—he will agree that there are many different routes to achieving that goal. We are meant to be the revising Chamber, capable of detailed consideration of government measures, yet we have just six minutes each and, as the Minister has shown, that is insufficient.
As Minister for Energy in the salient benchmark year of 1990, I launched the first renewables round, the non-fossil fuel obligation, while encouraging the growth in offshore gas, with strong environmental prerequisites to ban non-essential flaring, and securing gas to CCGTs, thus creating firm low-cost power to generate economic growth, jobs and prosperity. Low-cost electricity is the lifeblood of a successful economy. My business career and time in politics have taught me that a headlong rush based on DESNZ zealotry will be costly and unattainable; it will not just jeopardise but destroy economic growth.
The UK produced circa 367 million tonnes of CO2 equivalent in 2025, meaning that by 2039 we will have to reduce our annual emissions by more than two-thirds, with all the low-hanging fruit already picked. The capital and finance costs alone are estimated to be £880 billion. Government claims for the benefits are all target-derived prices to justify the policy, and we have seen the stumbling blocks impeding the rollout of heat pumps and zero-emission vehicles, not to mention the commercial challenges facing carbon capture and storage.
The Climate Change Committee has estimated that, in order to meet the emissions target, household consumption of meat and dairy would have to fall by 25%. The number of sheep and cattle would have to fall by 50%. Farmers will be required to diversify away from livestock farming to double tree-planting rates by 2030 and double peatland restoration by 2040. Where is the plan? When will the Government tell the public that they intend to halve the number of sheep and cattle in the United Kingdom, with inevitable price increases in the supermarkets? When do the Government intend to tell the residential building sector that it will have to spend up to £15 billion a year on low-carbon heating systems?
Add to all this the costs we introduce through this measure: demand management to apply to air travel, increasing the cost of short-haul flights, such as between London and Alicante, by £150 and long-haul flights, such as between London and New York, by £300. Industry is already facing the stark reality of the highest prices for electricity in the OECD, but the Climate Change Committee now estimates that British industry would face net costs of up to £3 billion per year in every year between 2025 and 2050. Does Ed Miliband have the remotest idea of what this will do to British industry and the economy?
What is worse is that my reading of the economics is that the capital expenditures required for solar and offshore wind are hugely underestimated. Perhaps the Minister can explain how the CCC expects offshore wind to cost around £1,500 per kilowatt hour, whereas actual projects such as Hornsea 3 are expected to cost over double that. If he cannot, the up-front capital costs are underestimated, making the CCC’s claim of operating cost savings compared with fossil fuels highly questionable. I look for the CCC’s total gross cost of its pathways and I cannot understand why they are absent. No wonder the UK boss of EDF Energy has said:
“We should stop building wind farms and focus instead on raising demand for electricity … As a country, we’ve always got it wrong … So now we have this large infrastructure, twice as much as we need, which means we also need to build twice”
the transmission grid. No wonder almost £800 million has been spent on so-called curtailment payments so far this year alone, putting 2026 on course to eclipse the £1.4 billion spent on switching off turbines last year.
Heavy manufacturing and chemical sectors have argued that the orders before us this evening introduce additional bureaucracy without tangible environmental benefits. Customers are understandably worried about the costs burden and the major lifestyle changes required by law—not by choice, as the Minister just said, but by law—in how people heat their homes, what they can eat and how they travel.
All this is based on an accounting policy which wholly ignores the impact on global warming from the supply chains that we rely on. We are blind to the coal-fired CO2-belching furnaces in China, many in Xinjiang province with Uyghur labour, which produce the polycrystalline in solar panels for us. China delivers an estimated 140 million to 200 million tonnes of CO2 annually just by manufacturing solar panels, accounting for about 1% of China’s total annual emission, and we do not count that. The Democratic Republic of the Congo produces 70% of the world’s cobalt—a core component in the lithium-ion batteries used for electric vehicles and grid-scale energy storage—with its forced evictions, land disposals and child labour, and we do not count that. We ignore that.
We do not have clean, home-grown energy. It is time to prioritise cheap energy over clean energy, remove the heavy weight of carbon taxes from our electricity prices, and exploit all remaining North Sea oil and gas reserves, in the same way the Norwegians do on their side of the median line, with gas which is four times less polluting than the LNG that we have to import instead from the States. That would strengthen our energy security.
Lord Whitehead (Lab)
Yes, indeed. The noble Lord makes those points, which I have taken well on board. The question of carbon pricing, of course, is a long-standing issue as far as carbon valuation is concerned, but I certainly will write to him about the particular points he raises as soon as possible.
Lord Moynihan (Con)
My Lords, I disagree with the Minister on one thing: I think this was a valuable debate. I thought that contributions from every Member of your Lordships’ House have been helpful and constructive. I do not think it has been, to quote him, “a waste of time”. I do not think anybody who spoke this evening wasted anybody’s time. There is cross-party recognition of the importance of addressing these issues, addressing the carbon order and addressing climate change. The question before us this evening is about the Carbon Budget Order 2026.
The Minister is completely right to say that we should address this in the context of the impact assessment, which he considers to show us the truth. He is completely right to have identified that importance. Everything in my speech related to that—everything. I say to my noble friend Lord Deben that the public and our grandchildren will never forgive us if we destroy our economy with high energy prices. That is a real concern across this Chamber. We currently have electricity prices that are four times higher than the United States. That is the issue that we need to address. The impact assessment shows us that prices will go even higher if we follow these measures.
I say to the noble Lord, Lord Hunt, that we share this factor: neither of us is obsessed with anything. There is no obsession on this side of the House, but there is real concern. There is cross-party concern with what is being proposed. Tony Blair has said that the net-zero policies that are being pushed forward are viewed as
“unaffordable, ineffective, or politically toxic”.
Gary Smith of the GMB, who is absolutely all over these issues, has recently said that the policies being pursued by the Government are “economic madness”. Even the Unite the Union says “No ban without a plan”.
These points are worthy of consideration, because the North Sea issue is very important. I know everybody may have been distracted by Makerfield, but an important referendum was in effect being undertaken in the constituency of Aberdeen South, which was overwhelmingly won by the Conservative candidate. It was an overwhelming rejection of both the measures that are in this climate change Carbon Budget Order and the current Government’s policy on the North Sea, which is referred to.
In closing, it is important for all of us to recognise that there is a universal position across this House that we have to get policy right. I do not think this order does. We cannot afford to damage our economy irreparably through a zealotry on net zero that goes too fast, too far, too early, and jeopardises our economic recovery and the key underlying policy of the Government, with which we agree—economic growth. The impact assessment is fundamentally flawed, not least on the important point about CCS, which, interestingly enough, is one point that was criticised by my noble friend Lord Deben. It is one of the three fundamental pillars on which the whole of this is based.
With those concluding comments, and with my gratitude to everybody who has contributed to this valuable debate, I seek to test the will of the House.
Energy Prices Act 2022 (Amendment) (Northern Ireland) Regulations 2026
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Earl Russell (LD)
My Lords, we welcome and support the Energy Prices Act 2022 (Amendment) (Northern Ireland) Regulations 2026—and particularly the continued effort to ensure that consumers in Northern Ireland receive appropriate protection from the continued volatility of energy costs following the war in the Middle East. I thank the Minister for introducing this.
We are supportive of the Government’s removal of the energy obligations and ECO policies from consumer energy bills that were, in the UK, brought in under the Autumn Budget. Consumers in Northern Ireland should be able to benefit, as consumers in Great Britain have, from these powers. We welcome this SI, but I have some questions for the Minister.
It is ultimately for the Northern Ireland DfE to decide how to use these powers. We welcome the work that is being done to provide it with support in designing that system. That inter-government co-operation is welcome. I note that the exact design of the comparable offer is yet to be finalised, as drafted in the Explanatory Memorandum. I recognise that the Minister might not be able to answer this, but does he have an idea of when the work on this will be completed from the DfE in Northern Ireland? As has been mentioned, it is extremely important that these measures are put in place so that consumers in Northern Ireland can enjoy the same benefits as their counterparts in the rest of the UK.
It is well understood, and the Minister mentioned, that some 61% of households in Northern Ireland are dependent on oil central heating as their primary source. Those figures are from 2024 or 2025. I recognise some of the work that the Government have done since the conflict in the Middle East on trying to prevent price gouging. The Minister has mentioned the £53 million support package that has been provided. We welcome that package, but the Minister will recognise that there is more to be done there. Knowing that Northern Ireland is dependent on this fuel oil and that those prices have been particularly hard hit because of the conflict, will some of these measures help to deal with those problems?
More generally, what further consideration is being given by the DfE in Northern Ireland and GB Energy, as a community energy scheme, to replacing those outdated heating systems and moving to more cost-effective and efficient heat pump technology? Is that perhaps a project for GB Energy, a community energy project? Has any consideration been given to that in government? Also, can the Government outline how long these amended measures are intended for? Is it expected that they will remain in force until 2030, as is possible under the SI? What criteria will determine whether they are withdrawn or extended? We support this instrument and have no objection to it.
Lord Moynihan (Con)
My Lords, this instrument underpins the measures that we have already debated. It creates no new powers and His Majesty’s Opposition are supportive of it. More broadly, as the Minister knows, we do not believe that the Government can lower the structural cost of energy for families and businesses in Britain simply by moving policy costs around from energy bills on to tax bills. But I accept that we have debated the content of the RO and the policy context in which this SI has been brought forward at some length already.
This measure is very specific to Northern Ireland. It is something of a surprise because it extends by six years from a date that has already passed, 3 April. So we are in an unusual position whereby this does not apply but is going to apply retrospectively. I regret that; it should have been brought back at a much earlier stage.
The questions asked by the noble Earl, Lord Russell, just now were very relevant. The Explanatory Memorandum specifically states:
“The UK Government is working with the Northern Ireland Executive as they consider developing a comparable offer”—
at least they know that that is what is intended—
“to the RO to Exchequer policy, and the exact design of this comparable offer has not yet been finalised”.
That makes it clear that we are pretty close to it. We are just short of the exact design.
It is useful for the Committee, I think, to hear from the Minister a bit more detail on the status of the discussions and the status of the project that is being proposed so that we are not simply writing a blank cheque. I accept that, elsewhere in the SI, there is an important recognition that this is clearly a matter for the Northern Ireland Assembly, but, given that they have used the words “exact design”, it is incumbent on the Minister and the Government to provide details to Members of the Committee—not least Members from Northern Ireland—so that they can study them following this debate.
I appreciate that the EM goes on to say that this is an enabling measure and
“does not itself provide financial support or determine the design, timing or announcement of any scheme in Northern Ireland”.
However, we are already well on the road to a final proposal. My noble friend Lord Bew and the noble Earl, Lord Russell, focused on the timing and how long it will take. Given that we now know that the exact design of the comparable offer is yet to be finalised —we are clearly making very good progress—are we talking about six weeks or six months? Are we talking about a year? Why are we talking about six years, rather than three or 16, in the SI?
I would be very grateful if the Minister could give us clarity on the status of the negotiations with colleagues in the Northern Ireland Executive and on what the Northern Ireland Executive are thinking about in this context; after all, they have known about this since the Budget. I ask him to provide as much detail as possible so that Members who are interested in matters relating to Northern Ireland are well briefed. I say that with renewed emphasis today. Regrettably, yesterday evening, we had a debate in the Chamber in which there was real concern from Members from Northern Ireland—or Members with a particular interest in Northern Ireland; they happened to be from Northern Ireland as well. They were worried that Northern Ireland was a sort of afterthought and that the policy had not been properly designed in recognition of the fact that Northern Ireland is absolutely an inherent and important part of the United Kingdom.
There is a danger of a similar interpretation with this measure. Quickly coming to the House with an SI that recognises that the timing has now lapsed and that we need a new extension does not look good unless the Minister can demonstrate clearly that there has been detailed discussion of what exactly this policy is going to look like, with information about the design of the comparable offer given to the Committee and the House; I hope that the Minister will now be able to give that.
I am grateful to the Minister for introducing this SI. I hope that he will be able to provide much further information on it either today, in this Committee, or in writing.
Lord Whitehead (Lab)
I thank noble Lords for their useful contributions to this short debate. I hope I will be able to provide some of the detail that they were looking for on this measure, and particularly on the enhanced sunset clause that noble Lords are now considering. But, before I do that, I have not yet had an opportunity to welcome the noble Lord, Lord Moynihan, back to his slightly amended place in this House, and to say how delighted I was to see his return. I look forward to the many occasions that are now possible for our convivial and constructive debates across the Chamber on the future of energy policy.
Contracts for Difference (Allocation) (Amendment) Regulations 2026
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Earl Russell (LD)
My Lords, I thank the Minister for his introduction—clearly, this stuff is more complicated than eBay. I also thank my noble friend for raising important questions about geothermal that I hope the Minister will come to answer, but we support the inclusion and further development of that technology within our renewables energy mix.
These regulations are modest but worthwhile technical reforms to the contracts for difference scheme, and they have our support. As we know, auction rounds are the central part of our drive to clean energy, the energy transition 2030 and net zero by 2050. As the Explanatory Note sets out, competition has grown, so it is essential and welcome that, between rounds, the Government are undertaking these fundamental reviews of the way in which these complicated auction rounds work in practice. We welcome the fact that that has happened with stakeholders and that the Government are looking to improve and streamline these systems.
I turn to the reforms themselves, the first of which involves NESO reviewing the process for non-qualification decisions, as the Minister set out. Applicants will now be able to submit new evidence when requesting a review. We welcome this; it is overdue and is clearly a sensible reform. When an applicant has got so far in the process, it would be silly not to do that for the sake of one mistake on the form. As the Minister said, we know that many AR7 applications failed due to very minor omissions, so this is welcome. Allowing corrections at review stage will reduce unnecessary exclusion and improve fairness.
The second reform allows the delivery body to amend non-qualification decisions where the framework permits. This introduces much-needed flexibility into what was previously a perhaps overly rigid process and enables errors to be corrected without needing to process further to costly appeals.
Thirdly, Regulations 7 and 8 strengthen the treatment of pending applications. The definition is extended so that those still within appeal windows can submit sealed bids, while Regulation 8 ensures that those bids cannot be disclosed. This is an important safeguard for the integrity of the auction process. I will not ask the Minister to give us a two-hour explanation.
Taken together, these changes are administrative but meaningful and they will help make the process more streamlined and efficient. They reduce barriers, improve fairness and strengthen confidence in the system. As the Minister said, they come at a significant moment in our transition. As he pointed out, allocation round 7 was a landmark—the largest in European history, with 14.7 gigawatts across 201 projects and over £22 billion of investment, and the largest of our rounds to date. Of course, coming after the problems we had with a previous round, it was extremely welcome that it was successful.
I also welcome the fact that the Government have made the decision to bring AR8 forward to July 2026. That maintains momentum and sends a clear signal of the UK’s commitment to the clean power 2030 ambitions. That is, in turn, good for industry and for showing a clear path to investment in our renewable future.
I have a couple of questions generally, since we are here debating this. On contract length for CfDs, we welcome the fact that the Government have already extended the contracts from 15 to 20 years. The Minister will be aware that it is my party’s policy that we would like to see those CfDs extended further, to 25 years, with the asset lifetime stretching from 25 to 30 years. Are the Government open to and actively considering that? Is it on the agenda?
Obviously, the strike prices at the last auction were above those in previous rounds of auctions. There are several reasons for that, primarily global inflation pressures. There is a need in the next round to make sure that we set a competitive price, one that recognises that inflation is there, so I have a quick question for the Minister about the calculations that the Government are making for AR8, because obviously inflationary pressures are still there—in fact they are exaggerating a bit—while making sure that we get a successful auction at a good price.
It was in the press today, and I presume it is accurate, that the Government have now secured grid connections for half of the projects needed to get us to clean power 2030, so I am pleased to see that the grid reforms are having an impact and that we are making that progress. But we have a lot coming through the system, so I ask for reassurance from the Minister: a lot of projects are bunched together, so I want to be sure that a product of our own success is not that we create bottlenecks in the system.
In the last round, AR7, we actually secured only 1.3 gigawatts of onshore wind. I recognise that the Government have removed the effective planning restrictions that previously existed. To my mind, there is more to do. A bit like my noble friend who raised geothermal, I wanted to ask the Minister a quick question: what more can be done to further kick-start onshore wind and onshore wind investment? In particular, what is the Government’s thinking on AR8?
To conclude, these regulations are sensible and proportionate. The Government have clearly worked with stakeholders and have stakeholder support. We welcome the regulations and are pleased to see that really detailed reviews are happening between these essential and important auction processes.
Lord Moynihan (Con)
My Lords, I thank the Minister for his very kind opening remarks, which I greatly appreciate. It is good to be back for what is, as he says, always a constructive and convivial exchange of views with him. I am sure that that will continue to be the case, even in the very late nights that I anticipate we will spend debating the energy Bill when it comes before the House. In the four or five months that I did this job before leaving the House to come back in a new incarnation, I was deeply grateful to his private office as well for always being highly professional and responding quickly to any requests from this side of the House. I would be grateful if he could pass that on.
I am also grateful to the noble Lord, Lord Teverson, except that I want to correct him on one point, which is very difficult, because his knowledge is as extensive on the subject of energy as the Minister’s. When I was Minister for Energy, back in 1990, we launched the first support for geothermal energy. It was part of the non-fossil fuel obligation, which was a precursor of the current regimes. We had a series of technology bands, and one of them was geothermal. We felt it was very important that it should be recognised as an important part of the renewable energy programme moving forward. It was a long time ago, and it may not have made huge progress in the intervening decades, but nevertheless it was certainly identified as an important part of that work at that time. I echo what he says about its continued importance in the context of renewable energy.
Ecodesign for Energy-Related Products and Energy Information (Household Tumble Dryers) Regulations 2026
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Lord Moynihan (Con)
My Lords, we on these Benches fully associate ourselves with the opening remarks of my noble friend Lady Hoey following the appalling tragedy in Belfast. I move on from that, with great difficulty, to say that I welcome the fact that she has brought this issue to the attention of the House. She made a characteristically powerful speech, and I take this opportunity to say that in many respects she is right.
The noble Lord, Lord Dodds, made the important point that there is differential treatment between Northern Ireland and the rest of the United Kingdom. I say to the noble Lord, Lord Davies, who I respect very much indeed—I will come back to some additional comments that he made—that I think we underestimate at our peril the importance and depth of emotion that is felt in Northern Ireland when measures are brought forward that have a significant difference in implementation between Northern Ireland and the rest of the United Kingdom. Of course, it is important to recognise that that will be the case under various agreements in the past, but the point that the noble Lord, Lord Dodds, made, and that I emphasise, is that there has been no debate accorded to this measure in Northern Ireland. That is not something we should be proud of in this House or proud of in the United Kingdom. I think that the point was worthy of being made, and it underpins the depth of emotion that was behind the comments of my noble friend Lady Hoey. She is right: these regulations will impact the lives of many households across the country.
The noble Lord, Lord Davies, is also right to say that the operating costs moving forward should lead to savings for households and consumers, but he might have added that the upfront capital costs are quite significant. At a time when there are serious problems in the economy and people are really feeling the effect of high costs in their household budgets, adding significantly to the capital costs is important. It is therefore true that initially, through the capital cost element, these regulations are regressive and they will add further costs to the working men and women of this country, only to see the benefits in between two and four years, depending on whether you take the Which? report or additional reports on the subject, which have been manifold. From just six months’ time, people will be able to buy only heat pump tumble dryers, which are markedly more expensive up front. No wonder that, as a result, there is already a rush to buy the remaining stock of convector and vented tumble dryers. The important point was made that mandated models will work only at ambient temperatures, restricting their use in previously unheated rooms in domestic dwellings, which will then add to the operating costs.
Of course, I say that there has been little respect for Northern Ireland as part of the United Kingdom, because the point has been made very clearly that the Government have already banned shops from buying in any new conventional convectors or vented tumble dryers, on the Government’s preferred altar of EU net-zero legislation. This has already, as we have debated at significant length, increased costs in Northern Ireland, not least because of the increased costs of ferries and goods made in Northern Ireland, without attention to the increased costs imposed on the people and the companies living and operating in Northern Ireland. My noble friend Lady Hoey was completely right when she said that
“it demonstrates how the mistreatment of Northern Ireland is creating pressures, not for this mistreatment to end, which would be great, but for attempts to be made to limit the destructive effects of divergence with the rest of the country”.—[Official Report, 26/3/25; col. 1778.]
The noble Baroness, Lady Suttie, made the key point about divergence. She touched upon it, and she rightly emphasised that this will be debated in the future. I think the debate this evening is an object lesson in the problems with the Government’s much more ambitious GB dynamic alignment project to avoid divergence with Northern Ireland as set out in the European partnership Bill. My noble friend made the important point that a significant proportion of heat pump tumble dryers do not yet meet the EU minimum condensation efficiency of 80%, which the Northern Ireland tumble dryer regulations now require.
In the short time available, I will pick up on just one or two other points that are relevant to this debate. One is the consistent reference to a more circular, resource-efficient economy. It is misleading—particularly when referenced, I think, four times in the Explanatory Memorandum—to suggest that the circular economy is inherently desirable. Does the Minister agree with me that there are some inherent disadvantages with the circular economy in this instance, including the high initial costs? Businesses often face steep upfront investments to redesign products and implement new technologies. Also, there is the importance of changing consumer behaviour patterns.
Worst of all is the related and critical fact that the Government need, in our view, to bear down on the increasingly high electricity prices, which have now reached historically high levels. These high levels are borne by consumers, and they are key because these dryers are major electricity users. I very much hope that the Minister will take on board that the level of electricity prices in this country has to be addressed.
We on these Benches suggest—this is so important—that the Government would be wise to come forward with measures that address scrapping the carbon tax; axing carbon tax pricing to reduce artificial mark-ups on wholesale electricity prices; abolishing legacy renewable subsidies; temporarily scrapping the 5% VAT on domestic energy bills for three years; and lifting the ban on new oil and gas exploration licences to increase domestic supply and reduce reliance on expensive imported energy. I accept that that would not immediately impact on the price, but it would generate Treasury income, maximise job opportunities—not least in Aberdeen, where 1,000 jobs are being lost every month—and reduce emissions.
The impact assessment points to the relentless justification of central planning:
“The recent increase in electricity prices combined with consideration of pressure on the grid illustrate the need to ensure only the most energy efficient products are available on the market”.
The argument that is being put forward to us tonight is that the energy price increases, a result of the Government’s policies, justify making dryers more expensive—a punitive policy to offset another policy.
In the last 15 seconds, I reinforce strongly from these Benches the importance of the comments that have been made about the differential treatment between Northern Ireland and the rest of the United Kingdom. This is vital, and we should always respect views that are put forward in this House on this important subject.