Renewable Energy

Lord Oates Excerpts

Tuesday 15th September 2020 Lords Chamber

[Lord Callanan (Con)]

My noble friend speaks with great authority on this point, but it is important to say that renewables will be key to meeting our net-zero targets. However, as I said earlier, they will need to be complemented by sources of power such as nuclear and gas, with carbon capture and storage, and additional flexibility such as batteries and interconnection. We should be prepared to support further new nuclear projects in the years ahead.

[Lord Oates (LD)]

Does the Minister agree with the National Infrastructure Commission that hydrogen has a key role to play in meeting our net-zero targets, not least as a storage medium for intermittent renewables? Will the Government therefore ensure that we invest in the hydrogen economy on a similar scale to competitors such as Germany, so that we maintain our leading edge in green hydrogen technologies and do not, once again, miss the bus?

[Lord Callanan (Con)]

The noble Lord makes a very good point. I hope we will see more hydrogen-powered buses in the front so that we do not miss them. We have an excellent hydrogen strategy. We are investing considerable sums in developing hydrogen. We will have further announcements to make on the subject.

Electricity and Gas (Internal Markets and Network Codes) (Amendment etc.) (EU Exit) Regulations 2020

Lord Oates Excerpts

Thursday 10th September 2020 Lords Chamber

[Lord Oates (LD)]

My Lords, I welcome the customary clarity with which the Minister introduced the regulations and the contributions of all speakers to the debate so far. It is a rare pleasure to spend two consecutive Thursdays discussing electricity and gas regulations in the company of the Minster, the opposition spokesperson and the noble Baroness, Lady McIntosh. Great though that pleasure is, I am told you can get too much of a good thing, so I hope we will not put that adage to the test. There is a serious point because last week the noble Lord, Lord Grantchester, raised the issue of the interrelationship between the regulations we were discussing then and the regulations we are discussing now. They are different in many respects, but all relate to EU exit. I wonder whether it is worth taking some of these together in future. It might save the Minister time and allow us to consider the cumulative impact of these exit regulations. My noble friend Lady Bowles raised important questions relating to the impact that changes the EU makes in future may have on our supply companies, particularly in respect of the interconnectors. My noble friend Lord Redesdale made a critical point about if we find ourselves in a no-deal situation, which the Government seem to be rushing headlong into. It is critical that the Minister is able to answer us on the impact of tariffs and the impact on consumers. The Explanatory Memorandum states that these regulations are necessary because the uncertainty that would be caused without them could result in an increase in wholesale prices. Given the volume of electricity through the interconnectors, it would be good to know what the position would be if we are forced onto WTO tariffs. I hope the Minister will address those issues.

I find it somewhat depressing to read the Explanatory Memorandum’s description of what the relevant EU laws did before exit because it summarises them in terms of liberalising energy markets, encouraging co-operation and establishing EU level frameworks. We will lose all that whether we exit in an orderly way after the implementation period or in the disorderly and potentially illegal way which the Government seem set on. Whatever happens, we will also be losing the opportunity for the UK to play a leadership role in shaping energy markets across Europe, particularly to serve our climate goals, and that is a very sad eventuality.

I want to take this opportunity to raise one issue relating to grid connections. I accept that this is not directly related to the regulations, so I will understand if the Minister cannot answer it, but I have had concerns raised with me about the difficulty of getting grid connections for renewable projects in rural areas, particularly agricultural land using solar and solar from rural schools. Can the Minister tell us something about this?

Finally, I asked the Minister last week whether it is the case, as Michel Barnier said in his speech to the Institute of International and European Affairs in Dublin, that in the area of energy, the UK is asking to facilitate electricity trade without committing its producers to equivalent carbon pricing and state aid controls. In what I can only imagine was an oversight, he failed to answer that question, so can he do so now?

Trade Bill

Lord Oates Excerpts

2nd reading & 2nd reading (Hansard) & 2nd reading (Hansard): House of Lords
Tuesday 8th September 2020 Lords Chamber

[Lord Oates (LD)]

My Lords, I congratulate the Minister on his maiden speech and first time at the Dispatch Box. In the short time available, I will address two issues: first, the critical role that trade agreements can play in tackling the global climate emergency and, secondly, the vital role of effective parliamentary scrutiny in ensuring that trade agreements meet our climate ambitions.

It is not so long ago that Brexiters such as Michael Gove were making lavish pledges about the role that the UK would play in pursuing an ambitious environmental agenda, freed from what they saw as the shackles of the European Union. What a distant memory that all seems now, replaced by the reality of the arch-climate-sceptic Tony Abbott’s appointment as trade adviser to the Government. When asked at a speaking event in London last week, his top tip on how to achieve success in trade negotiations was that trade negotiators needed to be encouraged

“not to be held up by things that are not all that important, and not be distracted by things that are not really issues of trade but might be, for argument’s sake, issues of the environment.”

Contrary to the assertion of the former Australian Prime Minister, the environment is both critically important and a key issue for trade agreements. As the 2019 International Chamber of Commerce report, Climate Change and Trade Agreements: Friends or Foes?, noted:

“If the world is to restrict global warming to 1.5°C, trade must be a central part of the solution… it will be impossible for countries to meet their ambitious Paris Agreement targets without strong and coherent trade and environmental policies.”


It is, therefore, very depressing that this Bill has nothing whatever to say on the subject when there is so much that we could be doing.

First, Liberal Democrats believe that we should not seek free trade agreements with any country that is not a signatory to the Paris Agreement. This means that the Government should halt negotiations on a US FTA unless and until there is a US Administration in place who are willing to play their part in combating the global climate emergency. However, given the contempt the Government apparently have for the agreements they have already signed, it may be the United States that decides that concluding an agreement with such an unreliable partner is simply not worth the candle.

Secondly, we should make it a requirement in law that all new trade agreements explicitly enshrine the right of the UK to improve environmental standards and commit parties to binding non-regression clauses.

Thirdly, we need to adopt appropriate and transparent dispute resolution mechanisms to ensure that the UK’s right to regulate in the environmental sphere cannot be curtailed in secretive investor-state dispute proceedings.

Lastly, the UK must use its seat at the WTO to reinvigorate the WTO’s efforts to pursue climate and environmental goals. In all of this, parliamentary and stakeholder scrutiny of our trade approach will be critical.

Time does not allow me to say much more, so I will conclude by endorsing the comments of other noble Lords about the need for Parliament to have much stronger powers to scrutinise and, if necessary, reject trade agreements. Only then will we be able to ensure that UK trade policy can live up to its environmental ambitions rather than descending into Mr Abbott’s environmental abyss.

Electricity and Gas etc. (Amendment) (EU Exit) Regulations 2020

Lord Oates Excerpts

Thursday 3rd September 2020 Grand Committee

[Lord Oates (LD)]

My Lords, I am grateful to the Minister for introducing the regulations with his customary clarity, on what is a series of technical amendments. In truth, two things are going on in the regulations. On one hand, they perform the fairly benign process of tidying up existing statutory instruments, so that they make sense in terms of the withdrawal agreement and implementation period. On the other hand, they expose some profound issues about what our effective exit from the EU will mean for the UK and, in particular, for Northern Ireland.

Before I turn to those issues, I ask the Minister to provide some clarity on a number of issues of detail. First, how were the devolved Administrations consulted and what responses were received from them? The Explanatory Memorandum states that SIs made under the withdrawal agreement “do not require consultation”, but I assume that there is some mechanism for consulting the devolved Governments and I would be grateful if the Minister could explain how that takes place. We have an indication from the Explanatory Memorandum that the Northern Ireland Minister for the Economy made representations requesting changes, but can the Minister tell us if the views of the Welsh and Scottish Governments were sought and whether they made any comments?

The Explanatory Memorandum tells us that the Northern Ireland Minister requested that changes with respect to Northern Ireland were included as part of this instrument. Can the Minister confirm that these changes have been made? It was a little ambiguous to me in the Explanatory Memorandum. Specifically, in addition to the changes relating to the implementation period and the Northern Ireland protocol in the withdrawal agreement, the Northern Ireland Minister for the Economy requested changes to the gas legislation as a consequence of the gas directive. Could the Minister explain what those changes were and what impact they will have?

Underlying this is how GB and Northern Ireland energy markets will work in conjunction with EU energy markets after the actual exit from the EU at the end of the implementation period. Paragraph 2.13 of the Explanatory Memorandum states that without the amendments contained in this SI there would be

“uncertainty and inefficiency in the operation of GB and NI’s market regulation, the role and functions of UK and EU bodies in the markets, and requirements on market participants.”

I notice particularly that the plural of “market” was used:

“the role and function of EU bodies in the markets”.

Does this refer not just to the NI market but to the GB market as well? If so, can the Minister clarify what the role and function of EU bodies would be in respect of the GB market after the end of the implementation period? The Explanatory Memorandum goes on to state that without these changes the uncertainty caused

“could result in increased wholesale prices”.

Can the Minister explain how this would occur?

The heart of the matter relates to the impact on Northern Ireland. It is spelled out in paragraph 2.11 of the Explanatory Memorandum, which explains that EU law will continue to apply directly in Northern Ireland in so far as it applies to the electricity market. However, as we know, EU law will apply directly in respect of many other things beyond the electricity market, but that is not a matter for this regulation.

It is worth reminding ourselves that as a result of the withdrawal agreement, for the first time in our history an overseas entity in which the United Kingdom has neither representation nor legislative authority will be applying law upon the territory of the United Kingdom. We need to remind ourselves of that astonishing fact at every opportunity because it underscores the extent to which the people of Northern Ireland were let down by this Government in the Brexit negotiations.

We also need to remind ourselves of it because it underlines how integrally involved we have been, we are and we will continue to be with the European Union, whether in energy markets—as we are discussing today—or across the whole economic landscape. The real difference is that we will be doing so as bystanders rather than contributors. Even now, the Government seem to be indulging in a fantasy that we can be part of a European electricity trading market without being willing to sign up to its rules. As Michel Barnier noted in an address to the Institute of International and European Affairs in Dublin yesterday:

“In the area of energy, the UK is asking to facilitate electricity trade without committing its producers to equivalent carbon pricing and state aid controls.”


I would be grateful if the Minister could confirm whether this is actually our negotiating position and, if it is, why we have adopted such a patently ludicrous and unrealistic position.

The tragedy is that, today, we face an unparalleled threat as a result of the climate emergency, and at that very point we are removing ourselves from a position of influence in an energy market on our doorstep with hundreds of millions of people. British influence could have operated in that market to continue to drive action on the climate emergency and to clean up energy production, not just in the UK but across the European continent. Instead, we spend our effort and our energy in preparing to mitigate the impact of leaving the European Union, and doing so while surrendering the sovereignty of one part of our United Kingdom and imperilling the economic well-being of the others.

Behind these rather arcane regulations—and indeed all the EU exit regulations that come before us—lies a much bigger issue and a much bigger tragedy. It is a failure of ambition and a loss of confidence in our country’s ability to play a leading role for good within an international organisation such as the European Union, and, sadly, as a result, means a diminished role for Britain in the world.

Electricity Capacity (Amendment etc.) (Coronavirus) Regulations 2020

Lord Oates Excerpts

Thursday 2nd July 2020 Lords Chamber

[Lord Oates (LD)]

My Lords, I am grateful to the noble Lord for introducing these regulations and, as my noble friends have indicated, we recognise the need for them in addressing the unique issues that have arisen as a result of the coronavirus pandemic. However, this is a slightly curious statutory instrument in that it combines the urgent measures needed for the electricity capacity market arising from coronavirus with measures to address issues arising from a judgment by the Court of Justice of the European Union and the later decisions of the European Commission. These are two related matters, but they are definitely different. It is hoped that one will be temporary in terms of the adverse impact of coronavirus on capacity providers to meet their obligations, while the other is, if I understand it correctly, a permanent change to the way in which the market works.

With respect to the former, while we recognise that these measures are urgent and necessary, the Explanatory Memorandum tells us that the relaxation and removal of obligations and deadlines on providers will be temporary. Given that the pandemic is likely to continue to impose constraints on those providers, albeit in a less dramatic way than during the initial phase of the crisis, can the Minister set out how the Government will approach what may well be an ongoing problem and not simply a short-term blip?

The second part of the regulations tackles the commitments made to the European Commission to adjust the mechanism in light of the adverse judgment of the Court of Justice of the European Union on state aid rules. This has caused me a little puzzlement. I am unsure about why that judgment has caused the UK to enter into these commitments, given that my understanding is that the CJEU judgment was against the Commission for the way in which it had investigated whether we were in breach of state aid rules, and that the reinvestigation by the Commission found that we were not. So can the Minister explain to the House how that has led to us entering into further commitments?

The changes that the instrument proposes to the current system to implement those commitments are significant. My noble friend Lord Purvis raised the important question of whether it is the Government’s intention that those changes and their decision to ensure that the market is in compliance with the European Commission’s desires on state aid rules is going to continue after transition. Does the Minister not recognise that the integration of our capacity mechanism via the interconnectors with the European energy market really underlines the hollowness of those who believe that we can somehow separate ourselves entirely from European Union markets or indeed from the EU’s regulatory systems?

I hope that the Minister will be able to give us a little more detail about the impact of some of these changes. In particular, can he explain the exclusion of stand-alone batteries from the mechanism? How will that impact on the expansion of storage within our electricity system which, as my noble friend Lady Sheehan pointed out in the previous debate, is critical if we are to restructure our energy infrastructure so that we can underpin the increased use of renewables within the system?

My noble friend also made the important point that the best way to maintain adequate capacity is to reduce consumption. She raised in particular the issue of new homes, which was also raised by the noble Baroness, Lady Jones. In that context, will the Minister answer the question that I put to him yesterday, but which I fear he chose to sidestep, and tell the House definitively, one way or the other, whether the new homes that were announced this week by the Prime Minister under the new homes programmes, will be built to net zero standards? It is a simple question and I hope that on this occasion he can give me a simple answer.

Finally, I welcome the reduction in the minimum capacity threshold that is set out in these regulations. As the Minister suggested, it is hoped that this will allow more providers to compete in the market, and in particular that it will allow smaller and more innovative providers to take part. With that, as I have said, we recognise the need for these regulations, but we would be grateful if the Minister could answer the questions that I have put to him.

Contracts for Difference (Electricity Supplier Obligations) (Amendment) (Coronavirus) Regulations 2020

Lord Oates Excerpts

Thursday 2nd July 2020 Lords Chamber

[Lord Oates (LD)]

My Lords, I thank the Minister for introducing the regulations so clearly. As my noble friends have indicated, on these Benches we recognise the need to bring forward these regulations in order to tackle the exceptional circumstances that coronavirus has given rise to. It is a reminder of how the pandemic has affected almost every aspect of life. I join the noble Lord, Lord Holmes of Richmond, in paying tribute to the front-line workers in the electricity industry who have worked so hard on our behalf to keep the lights on.

As my noble friend Lady Bowles highlighted, the issue here is not so much the need for these regulations, but how their consequences will work through the system —and indeed out of the system. I note that the impact statement at the end of the Explanatory Memorandum states that there

“is no, or no significant, impact on charities or voluntary bodies”

and that:

“The impact on business is expected to be positive and welcomed.”


The impact assessment also states:

“There is no or no significant impact on the public sector.”


It does not, however, address the potential impact on domestic consumers. Indeed, the only reference to consumers is in the section relating to the positive impact on business, in which the Explanatory Memorandum states:

“It will give electricity suppliers a high level of confidence over the additional costs they will incur for each unit of electricity”


and:

“This will enable suppliers to price the additional costs into consumer energy bills in advance with minimal cost risk.”


I am sure that will be encouraging and reassuring to suppliers, but what about consumers? Will the Minister tell the House what assessment the Government have made of the impact of these regulations on consumer prices in the second quarter of 2021? My noble friend Lady Bowles had a go at suggesting a figure, but it will be useful to know from the Minister whether the Government accord with that. Have they assessed what, if any, impact this will have on fuel poverty, bearing in mind that the impact of even a small rise may be significant on the fuel-poor?

The Government have stated that they regard the loan to the Low Carbon Contracts Company as a one-off response to the current crisis. None the less, they have taken powers in these regulations that are not time-limited. I admit that I would normally be extremely suspicious of Ministers seeking unending powers to tackle what they claim is an exceptional situation. However, given that the reduction in demand has been principally driven by industry, it is unclear how long energy prices in the wholesale market are likely to remain below the strike price, and, as a consequence, whether the Government will need to intervene again. What assessment have the Government made of the trajectory of prices in the wholesale market and how that will impact on the system?

As the Government seek to put the country on the right track to meet our 2050 net-zero target, it is important to bear in mind the points made by my noble friend Lord German. The purpose of the CfD system is to expand investment in renewable and non-carbon sources of energy. It is very important that we bear that in mind as we go forward. Have the Government considered how we may need to adjust market mechanisms in the longer term to support the move away from a carbon economy towards a net-zero figure? What impact does the Minister think the crisis may have on investments in renewables, which have expanded so rapidly and encouragingly in recent years, not least because of the visionary decisions taken by the then Climate Secretary, Ed Davey, during the coalition Government? What steps will the Government take to ensure that the positive picture that has arisen is built on over the coming years?

My noble friend Lady Sheehan raised the important issue of the need for the Government to invest in energy infrastructure through battery storage and other means to help smooth the use of renewables in the supply system. That will be a critical part of building an energy system fit for the future and, in particular, fit to meet the Government’s commitment to net zero by 2050.

I hope that the Minister will be able to answer the questions that my noble friends and I have asked and other noble Lords have raised, but, with that said, we recognise the need for these regulations. We thank the Minister for the clarity with which he introduced them, and we support them.

Committee on Climate Change: Progress Report

Lord Oates Excerpts

Wednesday 1st July 2020 Lords Chamber

[Lord Callanan]

The noble Baroness makes some very powerful points. As I said, we will respond formally to the committee in October, but the Prime Minister set out yesterday a number of measures that we will be taking. He said that we will build back better, we will build back greener and we will build back faster. The committee has made a number of recommendations in all the areas she covers, listed by specific government department, and we will respond in due course.

[Lord Oates (LD) [V]]

Can the Minister tell the House whether the new homes that will be built under the initiatives announced by the Prime Minister yesterday will be zero-carbon homes? If not, can he explain why the Government are ignoring the clear recommendations of the climate change committee and undermining their own net-zero target?

[Lord Callanan]

We are not ignoring the recommendations of the committee. As I said, we will respond in due course, but the noble Lord makes an important point about the importance of getting carbon out of new homebuilding. We will be publishing a heat and building strategy in due course.

Emissions: Housing

Lord Oates Excerpts

Monday 22nd June 2020 Lords Chamber

[Lord Callanan [V]]

I am happy to agree with the noble Lord that fuel poverty is devolved. I have not personally had meetings with members of the Scottish Government or the Welsh Government, but I am always happy to do so.

[Lord Oates (LD) [V]]

Does the Minister agree that in addition to insulating the existing housing stock, we must replace the boilers in these homes if we are to meet our net-zero target? Is he aware that as of today this means replacing over 2,000 boilers every day, 365 days a year every year until 2050—and we have not even started yet? What will the Government do about that?

[Lord Callanan [V]]

We do not necessarily need to replace every boiler. There are a number of alternative courses of action. One would be to investigate the use of hydrogen as an alternative. Already we have pilot programmes that will enable boilers to be quickly and easily upgraded to work on hydrogen.

Oil: Changes in Global Markets

Lord Oates Excerpts

Thursday 21st May 2020 Lords Chamber

[Lord Callanan]

The noble Lord is right to draw attention to the implications for international security from low prices and the impact that it will have on producing countries. We will continue to monitor the situation closely. We believe in a diverse energy supply in the UK, including nuclear. I cannot yet give him a specific date, but we will want to get the new nuclear power station on stream as quickly as possible.

[Lord Oates (LD)]

Can the Minister assure us that the Government will resist the siren voices of those proffering a false choice between action to tackle climate change and action to rebuild the economy? Will he confirm the Government’s commitment to net zero by 2050 and that they will urgently establish schemes to promote a job-rich green recovery?

[Lord Callanan]

I can agree with all the points that the noble Lord has made. We are committed to our 2050 target and we are committed to a green and resilient recovery.

Covid-19: Financial Markets

Lord Oates Excerpts

Wednesday 25th March 2020 Lords Chamber

[Lord Callanan]

I certainly did not dismiss that activity; I said that it was appalling and callous, and obviously I wish that people would not indulge in it. However, criminal law and sanctions exist for activities of this sort. We have some powers in this area, and the department’s officials are looking at this matter at the moment. If wrongdoing and illegal activity are proven, we will not hesitate to take the strongest possible action. I view this activity as appalling and I apologise to the noble Lord if I did not give that impression in my earlier answer.

[Lord Oates (LD)]

My Lords, on the subject of irresponsible behaviour, perhaps I may refer to an issue that has been raised with me by medical personnel working long shifts. When they get home and try to sleep, they find that other people—perhaps because they are at home—are playing loud music, and this causes them real difficulty. Will the Minister join me in asking everybody to act responsibly and to understand that a lot of people are working shifts at the moment and need their sleep?

[Lord Callanan]

We are getting off the subject a little—I never cease to be surprised by noble Lords’ ingenuity in moving the subject on to their favourite topic of the day—but I certainly agree with the noble Lord. This is an important issue. With many people, particularly in big cities, living in flats that are currently all occupied, often with young families, it is incumbent on all of us to be good neighbours. We need to bear in mind the limitations and difficulties posed for shift workers and those with young children and so on, who in many cases are finding it difficult to cope at home at the moment.