Energy Bill [Lords]

Debate between Alec Shelbrooke and Andrew Bowie

Report stage
Tuesday 5th September 2023 Commons Chamber

[Andrew Bowie]

On the hon. Member’s first point, absolutely, we remain committed to delivering, developing and rolling out heat pumps across the country, and we remain committed to the targets we have set out. On the community energy fund, there is already an equivalent Scottish community energy fund up and running and delivering for communities across Scotland. That is a competency of the Scottish Government at Holyrood. I would be delighted to direct any questions that he or his constituent have on that to the Scottish Government in Edinburgh. [Interruption.] He makes the case from a sedentary position that energy is reserved. Yes, but the Scottish Government have their own community energy fund. We will base a lot of what we are doing on that fund as it is rolled out in Scotland.

With your leave, Madam Deputy Speaker, I will take some time to explain the not insubstantial number of Government amendments to the House. I turn first to Government amendment 148 and the subsequent consequential amendments. I think it is fair to say that considerable concern was raised about the initial proposals for a hydrogen levy. The Government have carefully considered those concerns. I particularly thank my hon. Friend the Member for South Thanet (Craig Mackinlay) for his amendments on the issue, and indeed the right hon. Member for Doncaster North (Edward Miliband) for his amendments relating to those clauses. It is right that we take these considerations seriously and, where appropriate, seek to make changes.

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

Will the Minister give way?

[Andrew Bowie]

I would be delighted.

[Alec Shelbrooke]

May I take the opportunity to thank my hon. Friend for reflecting on what I said in Committee and for the commitments given to me by the Government to bring about an amendment to the Bill? I thank him for listening to Back Benchers’ concerns in Committee.

Energy Bill [ Lords ] (Twelfth sitting)

Debate between Alec Shelbrooke and Andrew Bowie

Committee stage
Tuesday 20th June 2023 Public Bill Committees

[Andrew Bowie]

I will start with the good news and first speak to clause 271 and Government new clause 52. The Government have maintained the view that Ofgem’s principal objective makes its role in achieving the net zero target clear. However, we have carefully considered the effect of clause 271 with Ofgem and sought legal advice to ensure that the Lords amendments would not impact the hierarchy and intended effect of Ofgem’s duties. We are therefore content to clarify Ofgem’s duties by making specific reference to the net zero target in the Climate Change Act 2008.

The Government new clause is equivalent in substance to clause 271, but includes some minor drafting changes to ensure that the duty works in practice. First, it clarifies the authority’s role in supporting, rather than enabling, the Government to meet their net zero target. Secondly, it clarifies the net zero targets and carbon budgets specific to sections 1 and 4 of the 2008 Act. The new clause does not change the intention of clause 271. I thank my right hon. Friend the Member for Kingswood (Chris Skidmore) for the recommendation in his report entitled “Mission Zero”, Baroness Hayman in the other place and the energy industry for working constructively with the Government to bring forward this significant change.

I now turn to clause 270, which was also added to the Bill in the Lords on Report. The clause would prohibit the opening of new coalmines and extensions to existing coalmining in Great Britain. After carefully considering this addition, I tabled my intention to oppose the clause standing part of the Bill on 17 May. The Government are committed to ensuring that unabated coal has no part to play in future power generation, which is why we are phasing it out of our electricity production by 2024. Coal’s share of our electricity generation has already declined significantly in recent years—from almost 40% in 2012 to around 2% in 2021.

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

Does my hon. Friend the Minister agree with me that although, as he rightly says, electricity production by coal has been as little as 1% and huge amounts of work can be done to reduce that carbon dioxide output, it is vital, with electricity generation, to maintain a baseload? As we saw recently when a gas turbine power station was turned off and we were relying on wind power, the baseload could not be maintained and the system tripped out for a large area of the country. Does the Minister agree with me that the objectives are fine, but physics and reality come in at some point?

Energy Bill [ Lords ] (Second sitting)

Debate between Alec Shelbrooke and Andrew Bowie

Committee stage
Tuesday 23rd May 2023 Public Bill Committees

[Andrew Bowie]

Clauses 13 to 15 relate to the modification of licences for carbon dioxide transport and storage.

Clause 13 enables the economic regulator to modify the conditions of a licence after it has been granted. That is to ensure that licence conditions can keep pace with the evolution of the market. It also enables the economic regulator to undertake periodic reviews of the amount of allowed revenue an operator can receive, which will then be set out in the licence. In economically regulated sectors, price controls are a method of setting the amount of allowed revenue that can be earned by network companies over the length of a given period. Regulated companies then recover their allowed revenues through the charges they set.

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

Does my hon. Friend agree that clause 13 is about precisely what I was touching on earlier? It is important to have the flexibility in the legislation to adapt as technology and innovation adapt too.

[Andrew Bowie]

Yes, I agree with my right hon. Friend. It is precisely about what he was touching on earlier: we are able to provide in the legislation the flexibility to allow the technologies for which we are legislating the space to grow, develop and become commercially viable. That is why it is essential to strike the balance between regulation and ensuring freedom for companies to operate. That is exactly why we would like the clause to stand part of the Bill.

As I was saying, allowed revenues must be set at a level that covers the companies’ costs and allows them to earn a reasonable return, subject to their delivering value for consumers, behaving efficiently and achieving their targets as set by the economic regulator. The amount of allowed revenue that an operator is able earn is set out in the licence conditions, which will need to be updated to reflect the outcomes of the periodic regulatory reviews and to keep pace with the evolution of the market more broadly. The power provides for the economic regulator to make such licence modifications, subject to an appropriate consultation process.

Before making any modifications to licence conditions, the economic regulator must give notice of the proposed modifications, the rationale for them, and an appropriate timeframe within which representations may be made. Any representations that are made must be duly considered. As Exchequer support will be available to certain users of the networks, the Secretary of State must be consulted on licence modification proposals and retains the power to direct that a modification may not be made.

Should the Secretary of State object to a particular modification, the economic regulator would need to consider whether to pursue the modification in an alternative form, which would require restarting the process of notifying and consulting on the new proposals. As is the case in other regulated sectors, licensees should have the right of appeal regarding modifications that are made to licences after they have been granted. The Bill provides for that later in chapter 1.

Clause 14 requires that, where the economic regulator has made a licence modification under clause 13 to a standard licence condition, the standard conditions of all future licences of that type should similarly be modified. That ensures a consistent approach to standard conditions across licences of the same type.

Clause 15 makes provisions for the Competition and Markets Authority or, as may be the case, the Secretary of State, to modify licence conditions in specific circumstances in relation to company mergers. Where there is a merger between licensed entities, that may necessitate licence modifications to ensure compliance with competition law. The power enables the CMA or the Secretary of State to modify licence conditions accordingly. I commend the clauses to the Committee.

Energy Bill [ Lords ] (First sitting)

Debate between Alec Shelbrooke and Andrew Bowie

Committee stage
Tuesday 23rd May 2023 Public Bill Committees

[Andrew Bowie]

Of course, none of this is without its challenges, and Ofgem recognises that. However, I have regular conversations with Ofgem and the Department is happy that it is indeed scaling up its capability, to enable it to deal with not only the new carbon capture utilisation and storage procedures that we are discussing but the whole range of areas in which Ofgem will have a role as we move towards a net zero future. Given the aims and purpose of the economic licensing framework that clause 2 establishes, I hope that the hon. Member for Southampton, Test will agree to withdraw his amendment.

Amendment 81 seeks explicitly to include within the scope of the term “revenue support contract” a contract for the use of carbon capture. We understand that to mean a contract to support carbon capture and usage. The carbon capture revenue support contracts are intended to support the deployment of carbon capture technologies. The Bill allows for carbon capture revenue support contracts to be entered into with eligible carbon capture entities. Broadly, a carbon capture entity is a person who, with a view to the storage of carbon dioxide, carries on activities of capturing carbon dioxide that has been produced by commercial or industrial activities, is in the atmosphere or has dissolved in seawater.

Storage of carbon dioxide is storage with a view to the permanent containment of carbon dioxide. It is important to emphasise that provisions in the Bill may therefore allow for a broad range of carbon capture applications, including those carbon capture entities that utilise the carbon dioxide, resulting in the storage of carbon dioxide with a view to its permanent containment. Decisions on which carbon capture entities will receive Government support are to be made on a case-by-case basis. Prioritising support for carbon storage is considered essential to help deliver our decarbonisation targets.

[Alec Shelbrooke]

Will my hon. Friend describe the actual mechanisms of the carbon dioxide storage, geologically? How will that be done—for instance, will that be out into the North sea, using old oil platforms?

[Alec Shelbrooke]

In the context of carbon dioxide storage.

[Andrew Bowie]

I thank my right hon. Friend for his intervention. I would be happy to give a thorough explanation of exactly how the carbon capture and storage will proceed; I am sure we will get to that in the course of our debate on the Bill, and in other places. However, I am not sure where that would fit within the context of this debate, other than to say that the technology being developed by companies, organisations and clusters around the UK is world leading. When it comes to being able to store in the future the carbon dioxide being produced in the UK now, the North Sea is of course the greatest asset that we have as a country. The oil and gas industry will be able to play a pivotal role in that development as we move forward.

Given the reasoning I have set out, I hope that the amendment tabled by the hon. Member for Southampton, Test will be withdrawn.

[Dr Whitehead]

I appreciate what the Minister has said this morning. Frankly, though, I am not wholly convinced that the processes have been fully accounted for. I emphasised the various uses of carbon dioxide. The Minister is right that not all those uses lead to eventual sequestration. However, most of the uses that do not lead to additional sequestration do, on occasions, sequester the carbon dioxide in the process itself.

For example, carbon dioxide used in horticulture is substantially sequestered during the process of growing the plants. There is potentially an important use of carbon dioxide in processing hydrogen and in producing sustainable aviation fuel. Those processes sort of sequester the carbon in producing a different product, which is itself then burned. We then have to sequester the whole lot again, but the product has been used in the meantime.

It is important to concentrate on aligning the processes within carbon dioxide use as closely as possible with the process of sequestration, not simply allowing the carbon dioxide to escape. One thing that concerns me is the use of carbon dioxide in the process of the enhanced recovery of oil, because unless that carbon dioxide can be sequestered at the point it is injected into a well, although it produces greater amounts of oil it leaks into the atmosphere again, so we have a net negative outcome. We have produced more oil, but arguably it should have been left where it was in many instances.

Covid-19: Contracts and Public Inquiry

Debate between Alec Shelbrooke and Andrew Bowie

Wednesday 7th July 2021 Commons Chamber

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

rose—

[Andrew Bowie (West Aberdeenshire and Kincardine) (Con)]

rose—