Grangemouth Oil Refinery

Lord Offord of Garvel Excerpts

Thursday 27th March 2025 Lords Chamber

[Lord Hunt of Kings Heath (Lab)]

My Lords, Project Willow set out nine potential developments. The most near-term developments include hydrothermal plastic recycling, dissolution plastics recycling and ABE bio-refining. On the question about the task force, I will certainly discuss with my colleagues the ability of the task force to input into this. Clearly, in terms of decision-making, the key thing now is to find investors for those projects. Clearly, the National Wealth Fund, with the £200 million that it is going to make available, will play an important role in that.

[Lord Offord of Garvel (Con)]

My Lords, the closure of Grangemouth is indeed a tragedy for the UK, and even more so for Scotland and for the 400 highly skilled jobs that are being lost. Of course, we know that this is what is referred to as the transition as we go from hydrocarbons to renewables, but, if you talk to the folk in Grangemouth, the problem, they say, is that this just transition is not very just. Indeed, if you talk to the folks in Aberdeen, they say that the just transition is not very just, as we now have data that shows that the transition of jobs from the North Sea oil and gas fields to renewable wind farms is running at 58%, and that jobs that were previously paid at £55k are now paid at £35k. So I ask the noble Lord to consider the patronising language of this just transition. Will he please go back to the department, drop the concept of a just transition and perhaps introduce a new concept called an affordable transition?

[Lord Hunt of Kings Heath (Lab)]

My Lords, I think the noble Lord is being unfair. Of course we want to see workers who are being displaced by changes in the industrial sector being helped and supported as much as possible, with additional training to enable them to accept good jobs in other sectors. At Grangemouth, a support facility is being made available, with training need analysts for each worker, and I gather that 300 such employees have already requested to take advantage of that. There are open evenings, career fairs and direct engagement with local employers.

As for the North Sea, I just make the point to the noble Lord that, although he has an obsession with gas, the fact is, as he knows, that the UK continental shelf is a declining basin. In the last 10 years, 70,000 people lost their jobs under the stewardship of the Government he served. I did not see much effort there by that Government to establish programmes to provide good jobs. We are at the early stages. We are working very hard. The green energy sector, including nuclear, has huge opportunities and we need to do everything we can to ensure that skilled workers being displaced in some areas of the energy sector are given every opportunity to take up new roles.

Energy Prices

Lord Offord of Garvel Excerpts

Wednesday 26th March 2025 Lords Chamber

[Lord Hunt of Kings Heath (Lab)]

My Lords, that is an interesting comment, and the noble Baroness is of course absolutely right. Our problem is that we are tied to international gas prices, and noble Lords who are fixated on our using even more gas need to consider the implications of that. We are looking at how future gas market networks would work in a situation where gas is used much more infrequently. On marginal pricing, the more we use renewables, the less we are concerned about the international market. The contract for difference limits enable us to pay the renewable developers at a price that has already been agreed, rather than worrying about what the international price market will be.

[Lord Offord of Garvel (Con)]

My Lords, the Minister is always reminding us from the Dispatch Box that our electricity is the most expensive in the OECD. He blames international gas markets for that, but our European neighbours are subject to the same markets and seem to have cheaper electricity. Take France, for example. Our electricity is 80% more expensive than France’s. Why is that? It has a more balanced energy system, and it uses nuclear for its baseload. It is a simple fact that just shy of 50% of our electricity bills is comprised of green levies, subsidies and network realignment. I ask the Minister to slow down. Can we now just take some time to reflect, and reassess this mad dash to renewables by 2030? Please let us not put all our eggs in one expensive and fragile basket.

[Lord Hunt of Kings Heath (Lab)]

My Lords, I do not agree with the noble Lord at all. I remind him that our electricity market structure and its reliance on the international gas market is an inheritance from the last Government, and the highest prices we had were under the stewardship of the last Government. In getting ourselves off these international market prices, going to renewables and using nuclear as the essential baseload, we can grow the economy and give ourselves security. I totally disagree about the speed; we need to do this as quickly as we can.

UK Energy: Grid Decarbonisation

Lord Offord of Garvel Excerpts

Monday 24th March 2025 Lords Chamber

Asked by

[Lord Offord of Garvel]

To ask His Majesty’s Government what assessment they have made of the impact of their plans to decarbonise the grid by 2030 on the United Kingdom’s energy security.

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

My Lords, in an era of heightened geopolitical risk, switching oil and gas for home-grown clean energy from renewables and other clean technologies offers security that fossil fuels cannot provide. NESO’s independent modelling confirms that achieving clean power by 2030 is feasible, while ensuring security of supply without increasing costs to consumers, with scope for lower bills.

[Lord Offord of Garvel (Con)]

My Lords, this self-imposed target of decarbonising the grid by 2030 is all very admirable but is it realistic and is it achievable? Looking at my national grid app, it is telling me that right now, today, renewables are 43% of the grid and the rest is non-renewables. Noble Lords may have noticed that this is quite a good day for sun and wind, which is why it is at a high number. Last year, the average was 37% from green energy. That is precisely why this is unachievable, and a target that we cannot hit in 2030. In one simple word, it is called “baseload”. In China, they use coal for baseload and in America they use shale gas for baseload. That is why factory electricity is seven times cheaper in China and five times cheaper in the United States. We have abundant hydrocarbons in the UK and we have great nuclear capability. Is now not the time to review this target to make it realistic and, more importantly, affordable for British consumers and businesses?

Scotland: New Nuclear Power Generation

Lord Offord of Garvel Excerpts

Tuesday 18th March 2025 Lords Chamber

[Lord Hunt of Kings Heath (Lab)]

My Lords, we are always open to discussing nuclear power in that group, and with the Scottish Government. However, it is very difficult to make progress in view of the current Scottish Government’s position on nuclear. I can say that, on 6 February in the Scottish Parliament, Anas Sarwar, the leader of the Scottish Labour Party, called on John Swinney, the First Minister, to drop his ideological opposition to nuclear power in Scotland.

[Lord Offord of Garvel (Con)]

My Lords, the GMB came out and said that the Scottish economy is losing out to the tune of £1 billion because of the Scottish Government’s ideological indifference to nuclear. Am I right that, last week, the noble and learned Baroness the Advocate-General said that there had been a fundamental reset in the relationship between the UK and Scottish Governments? I ask the Minister if this is not the time to demonstrate that reset. Can we please have a joined-up, holistic strategy for nuclear that does not stop at the Tweed?

[Lord Hunt of Kings Heath (Lab)]

My Lords, there has been a reset and we have been in close discussions with the Scottish Government on a number of energy matters, but the fact is that the Scottish Government are opposed to new nuclear development. I agree with the noble Lord—and Anas Sarwar said it too—that the refusal to allow new nuclear power plants is costing Scotland billions in investment and thousands of jobs, which will go to England and Wales instead. I agree with that, but the fact is that we are dealing with the Scottish Government, who, at this stage, are not prepared to go for new nuclear.

Licensed Oil and Gas Fields: Emissions

Lord Offord of Garvel Excerpts

Tuesday 11th March 2025 Lords Chamber

[Lord Hunt of Kings Heath (Lab)]

My Lords, we are of course in discussions with His Majesty’s Treasury over the next spending review and it would be premature for me to comment on any of the detail. Clearly, carbon capture, usage and storage have a very important role to play in the future, and I have noted my noble friend’s elegant bid for investment in Scotland in that regard.

[Lord Offord of Garvel (Con)]

My Lords, the Government have repeatedly refused to clarify whether Jackdaw and Rosebank will be shut down under their policy of refusing to grant any new oil and gas licences. That is despite both licences being granted in 2022 and 2023 in recognition of their contribution to net zero and to our national energy security. Will the Minister please clarify that this is not another example of government policy being dictated by lawyers rather than by politicians? How does he expect the Chancellor to fulfil her growth agenda with the most expensive energy prices in the OECD?

[Lord Hunt of Kings Heath (Lab)]

My Lords, the best way to deal with energy prices is to move from being utterly reliant on international gas prices subject to the volatility that has arisen from the invasion of Ukraine by Putin. That is why we must move towards clean power as soon as we possibly can, to give ourselves energy security.

I cannot answer that question in relation to Rosebank and Jackdaw. The original consent decisions were subject to judicial review, which was paused pending the outcome of the Finch judgment. In the light of the Finch judgment, as I have said, we are consulting on new environmental impact assessments. When we have produced those, it will then be up to developers to make applications for consents according to the new guidelines we have produced. I cannot forecast the outcome of that process.

Climate Change

Lord Offord of Garvel Excerpts

Monday 3rd March 2025 Lords Chamber

[Lord Hunt of Kings Heath (Lab)]

The right reverend Prelate is absolutely right to identify those issues. It is worth making the point that the World Meteorological Organization has recently confirmed 2024 as the warmest year on record. I also refer the right reverend Prelate to the UN biodiversity summit in Rome on 25-27 February, where key decisions were agreed on resource mobilisation, monitoring and review of the global diversity framework. On his specific question, I will follow up with a letter.

[Lord Offord of Garvel (Con)]

My Lords, China is top of the league table for global CO₂ emissions, accounting for roughly a third of the total. In contrast, the UK’s share is a paltry less than 1%. In the last year alone, China had more coal capacity in construction than at any point in the last decade and, as a result, China’s industrial energy prices are seven times cheaper than the UK’s. Today, respected economics professor Gordon Hughes has said that the UK Government’s drive for net zero at any cost will add £900 to annual household costs. While we play the good little boy scout on net zero, does the Minister believe that this is an equitable trade-off for the British public?

Warm Home Discount

Lord Offord of Garvel Excerpts

Monday 3rd March 2025 Lords Chamber

[Lord Offord of Garvel (Con)]

My Lords, the Government have announced an expansion of the warm homes discount: a change that will see more low-income households receive a £150 payment to help them heat their homes. However, this payment is likely to be inconsequential for many households when compared with the increase in the energy price cap. The change to the warm homes discount is only a temporary fix. Ultimately, energy bills for both the British consumer and British businesses are far too high—something I am sure noble Lords on all Benches will agree on.

The Government must look to prioritise cheap energy if they are to protect the most vulnerable households. Instead, they have chosen an approach driven by ideology and it will be the British people who pay the price. The rush to ramp up renewables to meet their own unilateral target of clean power by 2030 will only push up prices and further increase energy bills. The network costs on people’s bills will be increased as the Government race to build twice as much grid in the next five years as has been built in the past decade.

Additionally, the OBR has said that environmental levies will increase from £12 billion to £14 billion by 2030, driven considerably by the hidden costs of renewables. This too will end up on consumers’ energy bills. Indeed, a close look at consumer energy bills demonstrates that half the bills are now accounted for by subsidies and network charges.

So, despite the general election pledge to cut bills by £300, it is plainly clear that the Government have chosen to put a political dividing line before any approach that will reduce the cost of energy. It is their decision to shut down the North Sea. This is an industry that generates billions in tax revenue, supports 200,000 British workers and produces home-grown energy. But the Government have opted instead for a tunnel-vision approach on renewables that relies on coal-power technology imported from China. This will not decrease energy bills by £300, as was promised.

I remind the House that the Prime Minister said:

“I stand by everything in our manifesto and one of the things I made clear in the election campaign is I wouldn’t make a single promise or commitment that I didn’t think we could deliver in government”.


So can the Minister confirm how much energy bills will rise by before households see the promised £300? Will he confirm whether the Government intend to produce a full-system cost analysis of the impact of the clean power target of 2030 and the impact it will have on consumer energy bills? Finally, will he tell the House how much the Government expect levies to increase by over the next five years?

[Earl Russell (LD)]

My Lords, I welcome this Statement—in particular, the clear commitment to provide a one-off payment for next winter. These payments will help with continued rising household energy costs, as the energy price cap has risen again by 6.4%. Until we break our dependence on gas for 30% to 40% of our electricity generation and 85% of our home heating, we will remain at the mercy of the volatile international markets.

Indeed, households are set to pay over £800 more per year for their energy compared with the winter of 2020-21—a 77% increase. The UK has spent £140 billion on the international gas market since the war in Ukraine started, for no long-term energy security or reduction in the energy bills being paid. That is 10 times the total GB Energy budget to date.

We have 6 million households living in fuel poverty today, and most of them have been for some time. We have some of the worst-insulated homes in Europe and some of the highest energy bills. High energy bills are a continued legacy issue and are, in part, a direct result of the last Government’s failure to do more to transition to renewable energy earlier. Progress is being made on the transition and we welcome this.

The Climate Change Committee is absolutely clear and unequivocal. Politicians who oppose action on net zero will make their constituents poorer by driving up their energy bills. Although we welcome these measures, we ask the Minister to go further and introduce this much-needed help now, to provide help for those who need it now, and not to make people wait until next winter.

We also call on the Government to scrap the energy price hike for the nearly 10 million pensioners who lost their winter fuel payment and to provide more help to other vulnerable groups, particularly those with disabilities. The estimated cost is about £130 million. We also call on the Government to ensure that all energy companies sign up to a single social tariff as soon as possible, to provide a long-term, stable mechanism for helping to reduce fuel poverty.

We need to do more to smooth the energy price costs as we drive over the energy transition speed bump in the road ahead. We have constantly called for an emergency 10-year home insulation programme. Domestic home heating is still 77% gas powered. We need a huge and urgent increase in the number of heat pumps installed.

Finally, I want to ask about long-term reforms and for some clarity on the direction of travel on measures to reduce our energy bills, and in particular about electricity market reform, which feels like an idea whose time has come. Does the Minister agree? When can we expect progress?

Our electricity prices are linked to the global fossil fuel market. Natural gas prices thus set the UK market electricity price. Will this Government look at the option for decoupling electricity market structures so that we have one rate for gas and one for electricity? Is it not time to stop the artificial inflation of the price of our home-generated renewable electricity, so that the savings can be passed on to our bill payers?

Will the Government publish reports on these matters? Will they also look at reforming contracts for difference?

I am disappointed that we do not have consensus on climate change, but my hope is that we could have consensus on electricity market reform as a measure to save bill payers money.

Great British Energy Bill

Lord Offord of Garvel Excerpts

3rd reading
Tuesday 25th February 2025 Lords Chamber

[Earl Russell (LD)]

My Lords, I will speak first to the amendment in the name of the noble Lord, Lord Hunt, which is supported by the noble Lord, Lord Vaux. These Benches are pleased to see that continued progress has been made and that this government amendment has been brought forward. There has been a unanimous voice across the House that there needed to be more reviews in the Bill and that it was important to have this amendment, so we are pleased to have it in place.

I echo what was said on the Government’s amendment to the amendment and the addition of proposed new subsection (4)(a), which requires a copy of the review to be sent to the devolved Ministers 14 days before it comes to Parliament. My assumption is that that is there so that the devolved authorities have a chance to comment on the review and that those comments have a chance to come before Parliament, but it would be useful if the Minister could confirm why that new subsection has been added and what the Government’s thinking is on it.

We welcome the review, but it is happening over a five-year timeframe, with the first review completed at the important date of 2030. If the Government recognise the need for the review, why not have it on a more regular basis? A three-year or four-year timeframe would be more useful for this proposed new subsection to have the effect that the Government intend it to have.

I turn beyond the amendment to what I want to say at the end of Third Reading. These Benches have been consistently supportive of the Government and their objectives in this Bill. We believe that, done well, GB Energy will help to secure our energy independence and reduce our reliance on volatile international gas markets, which have proved so costly for UK bill payers and our economic prosperity.

The previous Conservative Government spent some £40 billion subsidising bill payers, and that money provided no long-term benefit to our overall energy security. Just this week, the Energy and Climate Intelligence Unit published a report on the anniversary of the invasion of Ukraine, stating that £140 billion has been spent by the UK on the international gas markets since 2021—the equivalent of £1,300 per person. Again, this has brought no long-term benefits.

We have the third-best wind resources in the world, so it is great to see that these are finally being properly developed to bring us long-term energy security and to reduce costs for our energy bill payers. The CBI reported this week that the green economy contributed £80 billion in gross value added to the UK economy last year and grew at a rate of 10%—three times faster than the rest of the UK economy.

Having said all that, I always felt that the Bill was a little bit too short and lacked the content that it needed; that has caused us some challenges when scrutinising it. We welcome all the amendments that have been passed; we believe they add value and that the Bill leaves this place in a stronger position than when it arrived. I am particularly grateful to the Minister and his Bill team for including community energy in the Bill. This is a really important amendment, and it will benefit our communities and help with the energy transition. Community energy has been supported by MPs and noble Lords on all sides, so this is a win for everybody. I am grateful to Power for People, which has provided support to all of us on these matters, and we will continue to press the Government, as others have already mentioned, on the future of the community energy fund.

We also welcome the other amendments that were tabled: the amendment on strategic priorities; and the amendment that the noble Baroness, Lady Hayman, negotiated with the Minister on sustainable development.

Finally, if noble Lords will excuse me, I want to say something about the words that we use as parliamentarians and how we talk to each other on the issues of climate change. I deeply regret the end of the political consensus on climate change. My personal feeling as a relatively new Peer in this House is that while bits of our debates on this Bill were excellent, there were too many moments when points were repeated, purely party-political points were made that did not improve or challenge the Bill, filibustering took place, or we had numerous votes that took place very late at night.

The public support action on climate change. Polling consistently shows 70% support. The public also want to see reductions in their energy bills; they do not much care, frankly, how that happens, but it requires all of us to make progress. These matters are challenging enough to address with a sense of consensus, and they are made even more difficult when political hostility is added to the mix. My final point is that we must all work better together so that we can all achieve more.

[Lord Offord of Garvel (Con)]

My Lords, in concluding for His Majesty’s loyal Opposition, I thank noble Lords from across the House for their tenacity in scrutinising the Bill, and in particular the noble Lords, Lord Alton of Liverpool and Lord Vaux of Harrowden, for their amendments. On my own Benches, I note the contributions of many noble friends, who have done sterling work to temper what is a misguided piece of legislation which will not deliver cheaper energy for UK households or businesses.

GB Energy is flawed because it exposes the conflict at the heart of this Government between the Chancellor’s stated priority of economic growth on the one hand and, on the other, the accelerated pursuit of net zero at any cost that the Energy Secretary has made his ideological obsession. While this scrap rages at the centre of Whitehall, there is only one loser: the public, who, it has been confirmed today, will be loaded up with the price of net zero to the tune of another £111 per household this year. That is directly because of this Government’s policies and a far cry from the promise in the Labour manifesto of a reduction in energy bills by £300 per year per household—a manifesto pledge which this Government have refused to include in this legislation.

As the Bill has progressed through your Lordships’ House and the other place, the chasm between rhetoric and reality has indeed been exposed. I believe that in a decade we will look back and ask why we invented this cardboard cut-out company. But despite our deep scepticism, it would be churlish not to wish GB Energy a positive start, so I offer some start-up advice. With its £8 billion of borrowed money, the first order of business should be a feasibility study of all the energy sources available to us in the UK. If it does so, it will discover the following. The dash for renewables at any price is a folly. In doing so, we are loading excessive costs on to our energy bills, to the point now where our industrial energy in the UK is five times more expensive than in the US and seven times more expensive than in China. All the while, we are offshoring jobs from the UK to China, turning UK revenue into Chinese profits. This is impoverishing our nation.

The Government are denying the facts. We are an energy-rich country, and our hydrocarbon industry is the envy of the world in terms of compliance and sustainability. Surely it is irresponsible to refuse to even explore the opportunities that onshore gas could bring, while of course undertaking an assessment of risk. The fact that this Government’s policy continues to tilt towards shutting down offshore oil and gas is surely an affront to the hundreds of thousands of skilled workers in Aberdeen and the north of Scotland. They surely deserve better than this.

Meanwhile, both parties agree that nuclear is efficient and clean, but it should be accelerated. We should cut the red tape by unleashing our homegrown engineers while being unafraid to learn from those, such as the Koreans, who have been able to roll out nuclear energy more quickly and at a lower cost.

If GB Energy does this feasibility study, it will realise the facts and then it should pivot net zero accordingly to ensure that our transition to a cleaner energy system is both fair and affordable to UK households and industry. For the sake of the country, we can only hope that it does so.

Finally, I believe it is important to state unequivocally that my own party must reflect on the last 14 years of government energy policy. The verdict of the electorate in July was clear and resounding. As many noble Lords are aware, an error does not become a mistake until one refuses to correct it, and I would encourage the current Government to heed these wise words.

[Lord Hunt of Kings Heath (Lab)]

My Lords, we were debating my amendment, but we seem to have done the “the Bill do now pass” speeches as well, so if noble Lords allow, I will do both in my response.

I thank noble Lords for their general welcome for my amendment. I think it is a very satisfactory outcome of our debates in Committee and on Report. On the question asked by the noble Lord, Lord Vaux, and the noble Earl, Lord Russell, about the devolution aspect, the noble Earl put his finger on it. It seems perfectly appropriate that the devolved Governments should receive a copy before publication, because that then allows them to have sight of any findings that might be relevant and which they may have to answer on the day of publication. No slight is intended to Parliament in this, it is just the normal business of Government-to-Government relationships and courtesy. That is why we withdrew the original amendment and replaced it with the revised one, in the light of representations made to us by the devolved Governments.

On the timings of the review, noble Lords will know that we had in mind, at first, the UK Investment Bank, which I think has a seven-year review period. The noble Lord proposed three years and in the end we compromised. That is not unreasonable: Great British Energy must be allowed some time to set itself up and get itself into working order and then, at an appropriate point, we will have a review. It is worth making the point that GBE’s work does not come to an end in 2030; that is just a deadline we have given for clean power. We expert GBE to go on for many years to come, and therefore it is going to be a judgment, but we think five years is not an unreasonable time.

I say to the noble Lord, Lord Naseby, that I agree with him about the potential for small modular reactors —we have a programme that Great British Nuclear is running at the moment and I hope it will be able to come to some important decisions over the next few weeks and months—and he is absolutely right to mention them. I also share his view about the potential of hydrogen. We do not disagree at all with the noble Lord on that.

As far as community energy is concerned, this was raised on Report and I do not think there is anything more I can say at the moment. Clearly, we recognise the important role that community groups can play. Our intention is that Great British Energy will build on existing support, by partnering with and providing funding and support to local and combined authorities, as well as community energy groups, to roll out renewable energy projects and develop up to 8 gigawatts of clean power. I am afraid I cannot give any more details at the moment, but I understand and take note of what noble Lords have said about the companies concerned. I take this seriously and will ensure that it is considered, and we will set out further details in due course.

On the issues raised by the noble Baroness, Lady McIntosh, about sustainability, let me be clear that the independent review is focused on the effectiveness of GBE in delivering its mission. It will cover all aspects of the work of Great British Energy and will not focus solely on its financing, as the noble Baroness feared. To give an example, one of its important roles will be to clear the way to allow developers to come in. That will be an important part of the review. Furthermore, as I have already said to the noble Lord, Lord Vaux, additionality will be an important part. Clearly, the amendment that I brought on Report—about GBE needing to keep under review the impact of its activities on the achievement of sustainable development—means that that will be part of any review undertaken by the independent reviewer. I hope that reassures the noble Baroness.

Rosebank and Jackdaw Oilfields

Lord Offord of Garvel Excerpts

Wednesday 12th February 2025 Lords Chamber

[Lord Offord of Garvel (Con)]

My Lords, on many occasions in this House the Minister has made it clear that he recognises the importance of oil and gas to our energy transition. In fact, net zero 2050 envisages that up to 25% of our energy will still be coming from our own clean hydrocarbon fields, and that figure includes Rosebank and Jackdaw. I ask the Minister plainly: what is plan B if these critical fields are not granted a future licence?

Biomass Generation

Lord Offord of Garvel Excerpts

Wednesday 12th February 2025 Lords Chamber

[Lord Offord of Garvel (Con)]

My Lords, I begin by welcoming a more limited role for Drax in our energy power system. However, we must acknowledge that because of the Government’s ideological energy policy—which prioritises naturally unreliable renewable technologies —more biomass subsidies are required. This would not be the case if the Government focused their attention on flexible and reliable baseload power. We must look for a more pragmatic approach: one which prioritises cheap, stable and reliable energy. It goes without saying that Drax’s biomass plant is not clean nor is it cheap. In fact, according to non-profit think tank Ember, burning wood at Drax produces a staggering four times the emissions of our last coal power plant. It is the UK’s biggest polluter, producing double the emissions of our largest gas station, operated by RWE at Pembroke.

As a result, the Government have to make difficult decisions which result in high levels of subsidy, burdening the taxpayer further. Will the Minister confirm what estimates have been made as to how much CO₂ will be released by burning trees at Drax for another four years, and how that compares to using gas to generate the same power?

Ultimately, we must consider the cost of the new agreement. At £160 per megawatt hour in today’s money, the new deal for Drax is 15% higher than its existing agreement of £138 per megawatt hour. Indeed, Baringa’s analysis has shown that bill payers will continue to pay over £450 million a year in subsidies to burn trees. Will the Minister confirm that the Government intend to carry out an independent analysis of how much the increased strike price will cost the British taxpayer? Will he give his word that Drax will not be allowed to burn wood from primary forests during its generation? Finally, while we welcome the new sustainability criteria, will he explain what steps will be taken to make this enforceable in practice?

[Earl Russell (LD)]

I thank the Government for their Statement on short-term support for large-scale biomass generation as part of the UK’s energy generation mix. The Government inherited from the Conservatives a system where large-scale state subsidies are provided for the burning of biomass. This form of energy generation currently plays an important role in our energy system, providing some 5% of our national energy needs. These subsidies are worth some £2 million a day. Over time, Drax has received billions of pounds in government subsidies and from bill payers because wood pellets are classed as a source of renewable energy. Lucrative government subsidies are due to come to an end in 2027, hence the Statement before us today. The new agreement reached with Drax will run from 2027 to 2031 and will see the power station used only as a back-up to cheaper renewable sources of power such as wind and solar.

We can have lots of arguments about the sustainability calculations used to justify Drax. I listened with interest to the noble Lord, Lord Krebs, speaking on the Great British Energy Bill on Report last night, and I am not a scientist and do not have the exact answers. What I will say is that shipping wood across the Atlantic has a carbon footprint. Repeated incidence of old-growth forest being felled and burned undermines credibility and must stop.

Finally, the very fact that the Government are looking at carbon capture and storage to prolong the life of Drax is telling. Labour’s new plan will allow for four more years of unabated wood burning, which produces 18% more CO₂ than burning coal, according to the IPCC data. It takes nearly 100 years for this carbon to be pulled back from the atmosphere. Climate change driven by CO₂ emissions is clearly the greatest threat to humanity’s survival. Even a 100-year, long-term carbon-neutral Drax is hardly beneficial to anything we need to achieve to effect any real change in the race for humanity’s survival.

The Liberal Democrats see biomass as a fundamentally inefficient method of producing electricity, and we strongly believe that it should not qualify as a form of renewable energy. The Government’s plan to continue to subsidise the Drax power plant causes environmental harm and is not beneficial compared to investment in renewable energy. It does not provide good value for money for our bill payers. We are concerned that, although this plan would cut the amount of wood Drax is burning by 50%, the price is still lucrative—indeed, I see in the news that Drax’s share price has risen by 11% this week.

We are deeply concerned about the destruction of primary forests. The new agreement states that the wood must be 100% sustainably sourced. How will the Government verify that this is the case, when it has not been in the past? Further, I ask the Minister to publish the 2022 KPMG report into Drax’s record on claiming subsidies on a false basis. Are the Government prepared to publish that report?

The new proposals will see a halving in the use of Drax and a saving on subsidies of £147 million. Will those savings be redirected into other renewable projects? Under this proposal, Drax can step in to increase energy generation and provide flexibility where it is needed. Is this not just an energy marriage of convenience? Will the Government consider reclassifying Drax as being not a renewable source? It is time to stop calling it such; if the Government need that power generation for flexibility, clearer labels should be given.

The Liberal Democrats are clear that we would ensure that 90% of the UK’s electricity is generated from renewables by 2030—and that would not include biomass. When will the statutory instrument be published? I am pleased that the Government have halved the subsidies for Drax, but I hope that further progress is possible.

Finally, I wish to challenge the Minister. This Government should agree to ask NESO to write an independent report, to be produced relatively quickly, examining: the impacts of ending all subsidies to Drax; how those funds could be replaced and used for alternative renewables technologies; and what the resulting impact would be on our energy security and journey to net zero.