Energy Bill [Lords]

Alec Shelbrooke Excerpts

2nd reading
Tuesday 9th May 2023 Commons Chamber

[Grant Shapps]

Again, I will make a little progress before I take the next set of interventions.

Offshore wind provides a secure and resilient source of energy, and we are already global leaders in offshore wind, with the world’s largest wind farm in the North sea. We also have the world’s second largest wind farm and the third largest. The fourth largest is being constructed now at Dogger Bank, and that will become the largest in the world. In other words, we have become global experts in delivering offshore wind, and that is why this country is now selling that technology and expertise elsewhere in the world. It is also why we have a leadership role in offshore floating platforms; we have both the first and the largest such platform in the world. We are also introducing reforms to assist with security at civil nuclear sites, and we are ensuring that offshore oil and gas regulatory regimes protect habitats as new technologies are developed.

[Alec Shelbrooke (Elmet and Rothwell) (Con)]

I want to bring my right hon. Friend back to his comments about energy security. The Bill outlines lots of ways in which that will be achieved, but he will be aware that the vast majority of materials needed for renewable energy are processed in China. Are we not therefore in danger of creating the same situation with renewables as we had with fossil fuels and Russia, and what assessment has he made of energy security in those particular areas?

[Grant Shapps]

I very much share my right hon. Friend’s concerns. I was recently at the G7 in Japan, where we signed an agreement with other nuclear powers from the G7 on exactly this issue of energy security. Of course, we have Urenco—a third owned by the British Government—which is in many ways very advanced on the production, fabrication and other elements of uranium. It is part of the mix and we must ensure we are able to do that, so I thank him for his question.

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[George Eustice (Camborne and Redruth) (Con)]

This is a large and technical Bill that sets in place important frameworks, particularly when it comes to carbon capture and storage and the wider deployment of hydrogen and heat networks. I will address my comments, in the time that I have today, to part 3 of the Bill, particularly the support for low-carbon heating schemes and the opportunity that this provides for doing something creative for the off-gas grid homes in this country. It links to the earlier intervention of the hon. Member for Strangford (Jim Shannon) and to a private Member’s Bill that I introduced at the beginning of this year.

At the moment, we have 1.7 million homes in this country that are currently off the gas grid, most of which use kerosene at the moment. Under the current Government plan, which is born out of a strategy that dates all the way back to 2017—several Governments ago—the intention is that all those 1.7 million homes would be banned from having a replacement boiler after 2026 and told that, instead, they must have, effectively, either an air source heat pump or a ground source heat pump. As the right hon. Member for Leeds Central (Hilary Benn) said, there is a role for those heat pumps, but they are not for every home. In particular, in rural and especially coastal areas, air source heat pumps can be prone to rusting and decay. It is also the case that they need a lot of insulation to make them work, and, in some older homes, high levels of insulation mean less ventilation, which can lead to problems with damp, mould and all of the health problems that go with that.

Perhaps, more important than anything, the capital cost of these air source or ground source heat pumps for a single property is around four times that of a conventional boiler.

[Alec Shelbrooke]

My right hon. Friend touches on a point that I was going to raise later. My concern about the banning of gas boilers from 2024 is the impact that that will have on industry and on farming in particular, especially in relation to those costs. Farming is under a lot of pressure at the moment. Does he agree that this is similar to the argument that he is making about households in 2026?

[George Eustice]

My right hon. Friend makes an important point. As the right hon. Member for Leeds Central said, we need a diversity of different technologies because it is essential that we have all the tools in the box to achieve our objectives.

There is also a wider problem with the current Government strategy. Just before we get to 2026, we can envisage plumbers and boiler engineers across the land going out to people and saying, “If I were you, I would get a new boiler now because the drawbridge is about to come up.” That will probably mean that we will have a surge of investment in boilers at just the wrong time. On top of that, there is likely to be a “mend and make do” approach that will stretch for many years. All of this means that the objective of making carbon reductions, and getting not just to net zero but to our objectives under carbon budget 5, gets potentially further away, rather than closer.

The good news is that there is a better way. In recent years, the technology and supply of renewable liquid fuels have developed. If we were to use renewable liquid fuels such as hydrotreated vegetable oil, there is a great opportunity for us to get an 88% reduction in our carbon emissions, but far faster than the current Government strategy. It could get us an 88% reduction by carbon budget 5 simply by having an adaptation of those existing boilers.

A pilot in my own constituency has been testing hydrotreated vegetable oil. Residents who have used it report that it burns more efficiently. Some say that the use of the fuel is around 30% lower than with kerosene. The people at the church hall like it because they need intermittent heat, and they can switch it on without having a heat pump running continuously, wasting all that energy. The staff at the school like it because it works for their Victorian building. There is a huge amount to be said for opening the door to the deployment of these renewable liquid fuels. The Government already recognise this, because the renewable transport fuel obligation, introduced in 2007, creates an incentive scheme to require both importers and refiners of fuel to source some of that from renewable sources, such as hydrotreated vegetable oil. The Bill is an opportunity to extend the architecture of the RTFO, a long-standing scheme, to domestic boilers as well so that we can have that incentive.

I know that some officials in the Department argue that we cannot be certain that hydrotreated vegetable oil comes from renewable sources. I do not accept that. There is a British standard—an accreditation scheme for HVO that comes from renewable sources. It would be very easy for the Government, through regulation, to insist that only British standard-certified HVO would be allowed for this purpose. The officials have also raised questions about the supply of renewable HVO, but we are seeing an exponential rise in supply both from the United States and from the European Union and the potential to develop it in this country as well.

I very much hope that the Government will look favourably on amending the Bill—clause 104 of part 3 of the Bill would be key—preferably with their own amendment to give respite to 1.7 million homes in rural locations. If not, I shall seek, if I have the support of the House, to amend the Bill. My private Member’s Bill attracted huge support not just from Conservative Members, but from Members across the House, and the Government should consider it.

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[Alec Shelbrooke (Elmet and Rothwell) (Con)]

In the short time I have, I will focus my comments on vehicle propulsion, but first I draw on the comments from my right hon. Friend the Member for Camborne and Redruth (George Eustice) and the right hon. Member for Leeds Central (Hilary Benn) that the cost we pass on to the public must be minimised. I hope the Minister will take note of the points about the hydrogen levy before Committee stage. It is misguided and it is in the wrong place. We have to take the public with us on this—we cannot keep adding to people’s bills to try to make things work. I hope the Minister will take that point away.

Much has been said about energy security and trying to get away from the situations we face with Russian gas, fossil fuels and so on, but I am concerned that we are moving into another area of energy dependence on another autocracy or dictatorship, China. I raised this point with the Secretary of State earlier, and he focused on uranium, but that was not what I was getting at. China has sucked up the processing of many of the materials in the world that are needed to make renewable energy. According to statistics put forward by Morgan Stanley, China refines 59% of the world’s lithium, 80% of the cobalt, 69% of nickel sulphate, 95% of magnesium, 100% of spherical graphite, 69% of synthetic graphite, as well as producing 70% of battery cells, 78% of cathodes and 91% of anodes.

To build on that, the Mercator Institute for China Studies, a German think-tank, says about nickel processing in Indonesia:

“In 2014, Indonesia banned the export of unprocessed nickel, prompting a wave of Chinese investments seeking to secure battery materials. With China’s help, Indonesia plans to boost its share of global nickel production from 28 to 60 percent… Already several multi-billion USD nickel-focused industrial parks are sponsored by Chinese companies.”

On cobalt in the Democratic Republic of Congo, MERICS states:

“The DRC is home to over half of the world’s cobalt reserves and was responsible for two-thirds of mined output production in 2020. Chinese companies control up to 70 percent of the Congolese mining portfolio, but mining contracts…are under review by the DRC.”

MERICS also comments on the Lithium Triangle,

“a region around the borders of Argentina, Bolivia and Chile. It is thought to hold around half of the world’s lithium reserves. Between September and November 2021 alone, four separate Chinese companies announced acquisitions cumulatively worth USD 1.2 billion.”

That is the reality we live in today. A parallel can easily be drawn to what a hostage to fortune it could be if an autocracy or dictatorship took a direction we were not happy with. We have seen that happen in terms of fossil fuels with Russia.

So what do we do about it? The Bill makes some progress here, but I think we must come up with another technology that can work alongside electric vehicles. I want to draw attention to the fact that we do not put enough energy into hydrogen combustion. There is a lot of research going on. I am a big motorsport fan and I have been taking the magazine “Autosport” for over 30 years, so I will quote from its engineering supplement on 16 March 2023:

“‘People think hydrogen infrastructure is complicated and it doesn’t have to be if you look at it in stages,’ reckons Cosworth CEO Hal Reisinger, his company one of many including ORECA to have invested in hydrogen test cells. ‘Internal combustion engines can be very easily converted to hydrogen; put different injectors in, remap the ECU and there’s this entire infrastructure of engines that are available. It’s much easier to establish a hydrogen infrastructure than an electric infrastructure.’”

There are indeed great demands coming if we want to achieve the target number of electric vehicles. By the Government’s own estimate, the global demand for electric vehicle battery materials is projected to increase by between six and 13 times by 2040 under stated policy. World copper production has to double to be able to meet production policy, yet there was a report only last week that not enough new mines are being exploited to reach the current copper production level.

Hydrogen combustion does have issues. The compression of the hydrogen has to be 700 bar. There are questions about how we manufacture and store it. If we get the technology wrong. it produces dangerous levels of nitrogen oxide. That will have to be addressed, and so will the weight.

However, my argument is that there is an alternative that technically can work. I know that other companies, including JCB, have done a lot of research into it. I urge the Minister, when we are looking at development budgets, to start to put some hydrogen combustion development in there. We could refocus the automotive transformation fund, which perhaps has been too focused on electric vehicles and needs to look at other areas. There is a geopolitical and geostrategic effect that is occurring after some of these policies have been written, and we must be able to adapt and move along.

Every hon. Member in this Chamber wants to move towards a net zero society, but if we do not do so sustainably, taking the public with us, we will find that harder and harder to do, as my right hon. Friend the Member for Camborne and Redruth outlined with regard to the buying of gas boilers making the situation worse. Recognising that the supply of the rare earth elements that are needed may provide hostages to fortune with countries such as China, I urge my hon. Friend the Minister to look into how the Government can help companies to research and develop hydrogen combustion.

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[Dame Maria Miller (Basingstoke) (Con)]

It is a pleasure to see you in the Chair, Madam Deputy Speaker. I rise to support the Bill. I was hoping to hear from the hon. Member for Brighton, Pavilion (Caroline Lucas) a few more of the positive things that this Government have achieved, which are important to acknowledge, so that people can see that progress has been made, not least the fact that half of all our electricity is now generated from renewable energy sources—something we could be forgiven for missing in her speech.

I do not want to repeat what has been said in the debate, much of which I agree with, but I want to bring up two particular issues that I hope the Minister will take note of: fusion power and lithium-ion storage facilities. He will not be surprised by that. They both illustrate the ingenuity of our scientists and the fact that, as our understanding of new energy sources develops, the Government’s response to those energy sources needs to develop and those technologies need different regulation.

Let us take fusion technology first. Last year I visited General Fusion in Vancouver, British Columbia, an incredible Canadian firm working with the Culham Science Centre in Oxfordshire, which will be the home to the firm’s fusion testbed. We should be very proud of that. The Bill fundamentally changes the way in which fusion technology is regulated in the UK, because we understand it much more now. The current regulatory regime characterises fusion in the same way as nuclear, which is just plain wrong. To better recognise the fusion process, the Government are rightly introducing measures in clause 110 to remove fusion from nuclear site licensing requirements. That is very welcome. It is more accurate. It provides confidence to investors, the industry and the public alike, and it is an example of how the Government are recognising the need for regulatory changes.

That is in contrast with the issues around lithium-ion battery storage facilities, which are covered in clause 168—the Minister knows where I am going next. For the first time, the Bill recognises that electricity storage is separate from electricity generation. It is a new sector. In the past, power stations were designed to match consumer demand. With around half of our electricity now generated by wind, it is essential to store electricity to help out when the wind is not blowing, to put it plainly. Over 90% of our UK electricity storage capacity is in lithium-ion batteries, and while recognising energy storage, the Bill is silent on issues that are fundamental to the future of this sector, including fire safety.

[Alec Shelbrooke]

Does my right hon. Friend agree that a lot more research needs to be done on where these storage facilities are based? Thermal runaway can cause fires that take several days to put out, and some of the chemicals used to extinguish those fires are toxic. There are planning applications coming forward for facilities that are far too close to people’s homes.

[Dame Maria Miller]

My right hon. Friend is right that there are hundreds of applications coming forward in around 350 constituencies, and I urge Members to check whether any such applications have been made in their patch.

I would like to draw on a slightly different issue, which is that if we do not have the right regulation for lithium-ion battery storage, we will not attract investment into this area in the future, because we will not be encouraging those lithium-ion battery storage facilities to be designed in a way that mitigates the risks we know exist. At the moment, the planning application process takes no account of the proven fire risks that my right hon. Friend just referred to with lithium-ion battery storage plants. Thermal runaway is a chemical reaction caused by overcharging or a design fault, and these fires cannot just be put out; they can only be stopped by cooling with large amounts of water over several days, which creates toxic fumes and polluted water runoff. Even though the use of batteries for this purpose is relatively new and there are currently only 35 such facilities in action, we have already had one major fire in Merseyside in 2019 that took 59 hours to put out.

This new technology is being rolled out at lightning speed, with 473 new sites under way, yet there is still no planning guidance for local authorities, no requirement to obtain an environmental permit from the Environment Agency and no requirement for the fire service to be consulted over designs or locations. The Bill must directly address that gap in regulation. Since I raised the problem with Ministers in July last year, and following a roundtable with five Departments in March, there now appears to be agreement that regulatory change needs to be considered. This Bill is exactly where it needs to be addressed, and I am happy to table amendments to that effect if the Government are not able to do so themselves.

In an open letter to all Hampshire council leaders, Neil Odin, who is the fire chief of the Hampshire and Isle of Wight Fire and Rescue Service, stated that these batteries

“can malfunction and lead to an intense fire, and when they do, pose a significant harm to the environment”.

That is coming from the head of one of the largest fire authorities in the country. I believe they also pose a significant risk to people, including firefighters, and I hope that in advance of Report the Minister will work with me to amend the Bill, so that lithium-ion battery storage can continue to play a hugely important role in realising the Government’s ambitions but with the right regulatory governance in place, not only to ensure the safety of our residents but to encourage insurance companies and those who want to run these facilities to do so in the future.