Great British Energy Bill

Viscount Trenchard Excerpts

Committee stage
Tuesday 17th December 2024 Lords Chamber

for that purpose. These are obviously probing amendments but what this group of amendments, from all noble Lords, shows is that the Committee is not content with the level of parliamentary scrutiny in either House at this time. We are taking a lot on trust and passing over a lot of power and decision-making to the Government. I believe that if it is worthy of scrutiny, the noble Lord and the Government should not be frightened of parliamentary scrutiny: that is the main thrust of the amendments in this group.

[Viscount Trenchard (Con)]

My Lords, I agree with my noble friend Lady McIntosh that the Bill is defective so far in terms of parliamentary scrutiny and involvement. I have added my name to Amendment 51, so ably proposed by the noble Lord, Lord Vaux of Harrowden, and my noble friend Lady Noakes. It requires the Secretary of State to prepare the statement of strategic priorities for GBE within six months. That is quite an easy target. Perhaps when the Minister thinks about this—of course, I am very optimistic that he will come back with his own proposal to deal with the lack of accountability—he could suggest a shorter timescale within which the Secretary of State might lay out the statement of strategic priorities. As has been said, at Second Reading many noble Lords expressed the view that it is a pity that that is not in the Bill.

I apologise to the Committee that I was not able to be present on the first day, when we discussed the objects which refer to clean energy but with little detail. It is very unclear, as other noble Lords have said, what Great British Energy is going to do and particularly how it will relate to other companies and entities in the same space.

I also support Amendment 52 in the name of my noble friend Lady Noakes. It is right not only to prepare the statement of strategic priorities but to give both Houses 40 days to approve it or not. On reflection, I also agree with the noble Lord, Lord Vaux, that it perhaps should be subject to the affirmative rather than the negative procedure.

I look forward to hearing my noble friend Lord Effingham speak to Amendment 57. He rightly proposes that the consultations with devolved Administrations should take place before the publication of the statement of strategic priorities. However, this only goes to show how essential it is, as many of us believe, that we have a co-ordinated national strategy, given that devolution has taken place over many areas of our national life, as it would be cheaper and make more sense. But we are not in that place, and we have to take account of the settlement of the devolved Administrations that exists. So, it is obviously absolutely essential, and I hope the Minister will confirm that he will make sure that the policies put forward and GBE’s strategic priorities will not be squabbled over by the devolved Administrations.

My noble friend Lady Noakes, with her usual forensic expertise, has also identified that the articles of association of GBE need to make sure that it is able to prepare the strategic plans, and that the articles must empower the company to do that. It must reflect the Secretary of State’s statement of strategic priorities.

Lastly, I also support Amendment 119, proposed by my noble friend Lady Noakes, which deals with the accountability and other provisions which must not take effect until after the statement of strategic priorities is laid before Parliament.

[Lord Hamilton of Epsom (Con)]

My Lords, I too support the amendment of the noble Lord, Lord Vaux. It strikes me that the real problem with the Bill is that if nothing happens with GB Energy, the Secretary of State intervenes. On the whole, politicians intervening in investment decisions does not have a very good history, and an awful lot of taxpayers’ money has been wasted. Therefore, it would be a very good idea if there was a system of reporting back to Parliament.

The real problem with the whole energy scene in this country is that the private sector is well in there already. I am not sure how committed these people are to energy, but they are certainly very good at crunching the numbers. Of course, with any project, they establish that the supply of, say, wind, is reasonably constant in a certain area. Then, the key thing is the feed-in tariff that they negotiate. That gives them a guaranteed cashflow. Among other things, with wind turbines they even managed to negotiate that they get paid when the wind is blowing and nobody wants the energy. So, if you can do that, it seems to be relatively easy to make money on these things.

If you want to put up wind turbines, there is no problem getting private finance. It is the more vexed areas of energy where you will find people with DeLoreans appearing, saying, “I’ve got a wonderful scheme all organised for carbon capture”, or something that is incredibly difficult in technological terms—or indeed nuclear fusion, come to that, which is another very hard nut to crack. It would be wonderful if we could have nuclear fusion power stations pumping out energy, but we are still a very long way from getting there. What guarantees do we have that taxpayers’ money will not be ploughed into these things and an awful lot of money completely wasted?

I would like to pick up some remarks from my noble friend Lady McIntosh of Pickering. She was concerned that GB Energy would have great problems raising finance. That is not quite the way it works. You actually get tiered finance when it comes to some of these projects, and I can tell noble Lords what the tiers will be: a whole lot of outside investors will get their money back almost whatever happens, and all the high-risk capital will be produced by GB Energy. GB Energy will be the one that will lose absolutely everything if it goes wrong and make a minimal amount of money if it goes right.

We need to be very wary about all this, which is why I support these amendments. It is important that Parliament has some check on all this and is able to say whether it thinks it is a good idea or a bad one. That discipline on the Secretary of State will be very important. Otherwise, I see politicians wheeling off, backing all sorts of incredibly speculative ventures and losing taxpayers’ money as a result. I am not sure that anybody in this House wants to see that happen.

--- Later in debate ---

Moved by

[Viscount Trenchard]

56A: After paragraph (d), insert—
“(da) Great British Nuclear,(db) the National Wealth Fund, and”

[Viscount Trenchard (Con)]

My Lords, I was interested to read the amendment by the noble Baroness, Lady Hayman, and I tend to agree with it. It makes absolute sense that before the statement of priorities is published, these bodies should be consulted.

As many noble Lords said at Second Reading and on our previous day in Committee, there are many different bodies all trying to do much the same thing in this space. What was the UK Infrastructure Bank is now called the National Wealth Fund, and it is quite rich. It has, I think, £28 billion to deploy, and will no doubt be able to make many investments that will help not only the decarbonisation of the energy system but energy security. But as the Minister knows, I continue to believe that the Government’s energy policy so far does not take enough account of nuclear and its potential. For example, the consumers, whether households or companies—industrial consumers—do not have any say over where their subsidies go. A part of electricity bills goes in subsidies to renewable energy projects, for example, but not to nuclear. This means that the market to date has been distorted to the disadvantage of nuclear projects.

That is one reason why there are not enough viable and financially well-funded United Kingdom nuclear projects. There are quite a lot coming to the UK from the United States, whose Government have been extremely generous in providing grants and financial help to American nuclear consortia. There is a danger that Great British Energy will operate too much in a silo and that Great British Nuclear, which does not have very much money, will not be required to co-ordinate its strategy and policy sufficiently with GBE, or indeed with what is now called the National Wealth Fund.

It is right—as the noble Baroness, Lady Hayman, has proposed, and the noble Lord, Lord Ravensdale, told us—that the Secretary of State should be required to consult those bodies, but we should also include Great British Nuclear and the National Wealth Fund, so that each of these three bodies knows what the others are doing, so that they have a greater chance of working out a co-ordinated policy, and so that we have some joined-up thinking.

That is why I tabled Amendment 56A as an amendment to Amendment 56. I beg to move.

--- Later in debate ---

[Lord Hunt of Kings Heath (Lab)]

We will reflect very keenly on that between Committee and Report.

There is no doubt about the argument. We are facing a twin climate and nature crisis. They are inextricably linked. Not only are the Government committed to reaching net zero by 2050 and clean power by 2030, we are also committed to restoring nature—for example, with the Environment Act targets in England to halt the decline in species abundance by 2030—and to effectively protect our marine protected areas as part of our global 30-by-30 commitment.

We know that the UK is one of the most nature-depleted countries in the world, so it is not enough for us to protect or conserve. This is why the Government are committed to restoring nature through such targets, and our related international commitments. The real opportunity available to the UK is to deliver clean power by 2030 in a way that does not simply avoid or compensate for damage to nature, but is constantly innovating to deliver the target in a nature-positive way, such as rewetting lowland peat soils at the same time as constructing new solar farms or creating new wildlife corridors alongside or underneath linear energy infrastructure. The noble Lord, Lord Teverson, referred to that potential earlier in our previous debate.

It is not so much about balancing energy and infrastructure needs but about trying to integrate them, rebuilding our natural infrastructure at the same time as building the new energy infrastructure we need in the 21st century. It is significant that in the Clean Power 2030 Action Plan, the Government have said that we

“will launch an engagement exercise in early 2025 to invite communities, civil society and wider stakeholders to submit their ideas on how government can best encourage nature-positive best practice into energy infrastructure planning and development. Feedback from this exercise will allow government to better understand how we can integrate nature restoration through Clean Power 2030”.

We want Great British Energy to focus on its mission of driving clean energy deployment, but I have listened very carefully to what noble Lords have said today and I understand the point that noble Lords are making about the Crown Estate Bill. I assure noble Lords that we are going to reflect on this between Committee and Report.

[Viscount Trenchard (Con)]

My Lords, I thank my noble friend Lord Howell for his support for my amendment and all other noble Lords who referred to my amendment in the debate. I appreciated the whole debate, and I am grateful to the Minister for his thoughtful reply. There will be another opportunity to discuss the same kind of thing in a future group, of which he is aware, so I will have an opportunity to return to that. I beg leave to withdraw my amendment.

Amendment 56A (to Amentment 56) withdrawn.

Great British Energy Bill

Viscount Trenchard Excerpts

2nd reading
Monday 18th November 2024 Lords Chamber

[Viscount Trenchard (Con)]

My Lords, I thank the Minister for introducing this Bill today. I declare my interests as a member of the advisory board of Penultimate Power UK Ltd and as a consultant to Japan Bank for International Co-operation. I, too, congratulate the noble Baroness, Lady Beckett, and my noble friend Lord Mackinlay of Richborough on their excellent maiden speeches.

In the debate on the King’s Speech, the noble Lord, Lord Hunt of King’s Heath, explained the Government’s aim to make this country a clean energy superpower. He told your Lordships that the Government were focused on achieving clean electricity by 2030, with a system based on renewables and nuclear power, and then building on that momentum to achieve the ultimate goal of net zero by 2050.

It is not widely understood that the electricity grid provides only around one-fifth of our total energy consumed. The Minister said:

“The Great British Energy Bill, put forward in the gracious Speech, will establish a publicly owned company to spearhead our mission to become a clean energy superpower”.—[Official Report, 18/7/24; col. 33.]


Although he mentioned nuclear power as well as renewables, it appears that His Majesty’s Government have little interest in nuclear. In his briefing on the Bill, the Minister said that GBE, for now, would invest solely in renewables. That will disappoint the noble Baroness, Lady Winterton, who asked whether GBE could fund an SMR factory in South Yorkshire. Can the Minister confirm that he agrees that nuclear power provides energy that is just as clean as that from renewables? Could he also confirm that there is a compelling need for firm baseload power that does not suffer from intermittency? Large-scale, affordable energy storage is still decades away.

It is surprising that the Government have introduced this Bill to set up GBE without clarifying how GBE is going to relate to Great British Nuclear—GBN. GBN’s remit is not sufficiently clear, but, if the Government properly recognised our need for new nuclear and the huge contribution it could make to achieving clean energy, surely the two bodies should be combined, or at least work together. I was pleased to hear the Minister say that the Government will explore how GBE will work with GBN, but there is nothing at all, yet, in the Bill about this. The noble Viscount, Lord Hanworth, expressed similar concerns in his well-informed speech, with all of which I was in full agreement.

There is of course, as my noble friend Lady Bloomfield well explained, a third government body in this space—the former United Kingdom Infrastructure Bank, now known as the national wealth fund. Its website explains that it will continue to make private sector investments against a clear set of priorities, with a focus on “crowding in” private finance to sectors and technologies that are critical to the UK’s clean energy and growth ambitions.

Clause 3 of the Bill before us today states the objects of GBE, of which the first is the provision of clean energy. Another object is improving energy efficiency. But pursuing a dual system of renewables and gas which you only use when there is not enough wind is inherently inefficient and leads to excessively volatile and unnecessarily high prices. These objects are substantially the same as several of the objectives of the national wealth fund, contained in Clause 2 of the UKIB Act. The NWF is set to be capitalised with £27.8 billion, compared with £8.2 billion for GBE, and that only within the course of this Parliament. GBN is clearly the poor cousin as it does not have any money to make investments. It has only the £342 million of net assets showing on its balance sheet on 31 March 2023. This again shows the low priority that the Government give to nuclear power. How is GBN going to make a contribution to funding the procurement of at least two SMRs, as declared?

In January this year, the former Secretary of State designated the former British Nuclear Fuels Ltd as GBN under the Energy Act 2023. According to Companies House, the Secretary of State referred to in the Act as the “person of significant control” is the Secretary of State for Energy Security and Net Zero, Ed Miliband. Can the Minister tell the House what ambitions the Secretary of State has for nuclear in the next five years? Could he tell the House whether the last Government’s 24-gigawatt target for nuclear, which many think too low, is still in place, and, specifically, what are the targets for large-gigawatt stations, SMRs and AMRs?

It is widely accepted that we need firm baseload power to provide electricity when the wind does not blow and the sun does not shine. My noble friend Lord Frost, in his excellent speech on 14 November, drew attention to the fact that in the week of 3 to 10 November, wind accounted for a mere 10% of electricity generated. I have checked this fact on the National Grid’s energy dashboard website. What that means, as was so well explained by my noble friend Lord Howell, is that wind power provided only around 2% of the country’s energy consumption during that week. As noble Lords are well aware, we have not seen much sunshine lately.

In the same week, solar power accounted for 0.7% of electricity generated: that is, 0.14% of total energy consumed. During that same week, gas-fired power stations accounted for 52.2%, nuclear for 14.3% and electricity imports for 11.3%—even that was more than the contribution from wind. And what do imports do for energy security? Do these facts not suggest that we absolutely cannot rely on renewables to continue to decarbonise the grid, or even begin to replace our much larger industrial energy consumption, which is still dependent largely on oil and gas?

Even those of us who are not convinced that the slight increase in the proportion of carbon dioxide in the atmosphere in recent years—from 0.037% in 2000 to 0.042% in 2024—controls nearly all aspects of climate strongly support the development of clean energy. But if we need firm baseload energy, as shown in the week of 3 November, why do we not prioritise nuclear power now? The Government have said that they will work with the private sector to double onshore wind, triple solar power and quadruple offshore wind by 2030. They will invest in carbon capture and storage, and hydrogen and marine energy, and ensure that we have the long-term energy storage our country needs. That would all be prohibitively expensive, and we are already losing our remaining manufacturing competitiveness because our electricity is among the most expensive in the world: twice as much as in Japan and more than twice as much as in the United States.

The OBR’s economic outlook forecasts that subsidies to gas providers to maintain a fleet of power stations “just in case” will have to quadruple. Is it not true that the Government continue to push the 2030 net-zero agenda harder and faster than ever, but without any proper cost-benefit analysis? My noble friend Lord Frost has queried why we need subsidies at all if the real cost of offshore wind is £44 per megawatt hour, as suggested by NESO—well below current market prices and the prices agreed in auction rounds. Onshore wind projects have been subsidised since the first wind farm at Delabole in Cornwall in 1991. Why are we still subsidising them? Why are electricity consumers forced to pay much higher prices for their electricity because a significant part of those charges are subsidies for renewables? That has distorted, and continues to distort, the market.

The proposal to transfer renewables electricity subsidies to gas bills does not solve the problem; it merely delays it for another day. But if subsidies are justifiable, why is the consumer not subsidising nuclear technologies too? Can the Minister justify continuing to force the consumer to pay for wind but not nuclear? The Government have provided a tiny amount of financial support to developers of nuclear technologies, compared with other countries such as the United States and France. France generates around two-thirds of its electricity from nuclear power. By 2018 the United States was generating half its emissions-free electricity from nuclear sources.

GBN is concentrating on selecting winners in the SMR competition. There are four companies still in the race, of which three are American-owned. Only Rolls-Royce represents British industry and technology. There are other technologies, some of which were invented here, such as the high temperature gas-cooled reactor technology invented at Winfrith, Dorset in 1965 by the UKAEA. The IP is owned by the Japan Atomic Energy Agency. The Japanese Government, who are still constrained in their domestic development of nuclear power because of the 2011 Fukushima disaster, have wanted to collaborate with overseas Governments, especially the UK, in supporting the commercial development of this technology. The demonstrator has been running in Japan for more than 10 years and is inherently safe. The heat energy produced by an HTGR at 950 degrees Celsius enables the decarbonisation of many industrial processes, including the production of green hydrogen at scale.

Unless the Government change course very soon, we will miss the chance to become the manufacturing and distribution hub for EMEA—this invaluable technology, which is now languishing in phase B of the Government’s AMR competition. They have committed a mere £55 million from the future nuclear enabling fund, to be shared between two successful bidders, but there is no commitment that this competition will continue; its only purpose is to construct a demonstrator by the early 2030s, in time for potential AMRs to support net zero by 2050. We will have missed the boat by a country mile.

We have the chance to put together a public-private UK-Japan consortium to commercialise this technology now. We should press ahead with that, and with Rolls-Royce’s SMR technology, using home-grown knowledge and experience developed over 60 years of supporting the Royal Navy’s nuclear fleet. New nuclear builds would support thousands of highly-skilled jobs, directly and in the supply chain, during construction and then for decades during operation, often in remote areas of the country. They would reuse locations where existing grid connections are in place.

The Bill is very short and says little about the governance of the company. Some of it is similar to the UKIB Act but it gives little indication of what the company will do and how it will operate. The Government claim that

“GBE will take a stake for the British people in projects and supply chains that accelerate technologies for the future”.—[Official Report, 18/7/24; col. 33.]

Yes, the Government should do this but GBE, as envisaged by the Bill, does not provide the answer. As my noble friend Lord Lilley said in his powerful speech, we need to know much more about the strategies and priorities of GBE.

We may or may not be close to a climate emergency or climate crisis, but we are most certainly facing an energy apocalypse now. The Government should urgently reconsider the role of nuclear energy and bring GBE together with GBN now, properly capitalised to act as a catalyst in averting the energy emergency we face; or, at the very least, they should devise a structure whereby possible nuclear energy projects are evaluated in a manner similar to renewables projects. Furthermore, the Bill gives the Secretary of State very great powers. He is required to inform Parliament of general or specific directions, but he is not accountable to Parliament at all in respect of his position of control within GBE. Parliamentary oversight needs to be strengthened.

I apologise for going on for so long, but this is very important. I look forward to working with noble Lords on all Benches to carry out our duty to scrutinise and improve this Bill.