Great British Energy Bill (Second sitting)

Andrew Bowie Excerpts

Committee stage
Tuesday 8th October 2024 Public Bill Committees

[The Chair]

Mr Zipfel, one of the disadvantages of having a geriatric Chairman is that my hearing is not as good as it used to be. But for everybody’s benefit and, most particularly, for the Hansard reporters, it might be helpful for you to speak up a little and be very clearly on microphone. I call the shadow Minister.

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

Q50 Good afternoon, gentlemen, and thank you for taking the time to be with us today. Clause 3 of the Bill, titled “Objects”, states that GBE’s

“objects are restricted to facilitating…the production, distribution, storage and supply of clean energy”

and must include

“measures for ensuring the security of the supply of energy.”

SSE and EDF Renewables are involved in both those objects right now, so how do you see the Bill and the creation of this company as either assisting or facilitating you in your objectives?

Alistair McGirr: At SSE, we welcome GB Energy, and as a company that is headquartered in Scotland, we particularly welcome its location. We think that Scotland has a larger opportunity for investment across the clean energy transition. To answer your question directly, it depends on how the organisation is set up and on its governance, but if, as has been suggested, GB Energy will be focused on crowding in investment, there is an opportunity for it to help to accelerate that transition and, importantly, to capture some of the wider opportunities that can come from the transition.

Tristan Zipfel: You can probably tell from my accent that I come from a country where state-owned investment in energy assets is commonplace, so that is something that we at EDF are very comfortable with and see very positively. In fact, I would say that any initiative that leads to directing more investment, capital and effort into decarbonisation is a very good thing. As Alistair said, it will be important that GB Energy is set up in a way that triggers and supports investment in the sector and does not disrupt the competitive playing field that we currently have in it.

[Andrew Bowie]

Q Thank you for those clear answers. It says under “Strategic priorities and plans”, which is clause 5 of the Bill:

“The Secretary of State must prepare a statement of strategic priorities for Great British Energy.”

If you were the Secretary of State and were tasked with drawing up strategic priorities, what would they be?

Alistair McGirr: On the way that we think about the particular benefits from GB Energy, first, we look at it as a potential partner for some of our investments. We work with a number of commercial entities, some of which are state owned—for example, Equinor, which we work with on the Dogger Bank offshore wind farm and on our carbon capture and storage projects. We work with these parties on a commercial basis and we would be open to working with GB Energy on projects that would help to accelerate the transition. So co-investment is one area. We would be keen to see that targeted at areas where there may be a bit of policy risk. With things like hydrogen storage, hydro-pump storage or CCS, there may be an opportunity for GB Energy to take some of the policy risks that private companies perhaps cannot.

Offshore wind is an area where there has been lots of debates, and there was some nervousness relating to the initial discussion about the Crown Estate tie-up. However, we think that with the principle they were trying to achieve, which is the acceleration of that environmental consenting process, there is an opportunity to accelerate projects and, importantly, reduce the cost of bringing those projects to fruition.

To give an example, our Berwick Bank offshore wind farm up in Scotland, which is one of the largest in the world, is currently sitting within the planning process and has been for 20-plus months now. Projects like Berwick Bank could be accelerated by a focus on areas where GB Energy can accelerate environmental consenting, basically by taking a more strategic approach to how it thinks about environmental consenting rather than considering that on a project-by-project basis.

To make a point on offshore wind, the one area that everyone will talk about—I am sure we will come back to it—is floating offshore wind. There is a big opportunity for not only GB Energy, but the national wealth fund to capture a whole range of benefits from the emerging sector, in terms of both bringing the costs of delivery down and making sure that there is a supply chain available to deliver the projects that are currently under development.

Perhaps a last point to mention is the local power plan. We would be quite keen, as an operator of electricity distribution networks, that the local power plan was able to be targeted in areas where there is a wider system and societal benefit in supporting and unlocking a lot of the low-carbon projects in the distribution network, because it is no secret that there will be lots of questions about how things connect to that local distribution network. We think that the local power plan has a particular route in targeting some of those investments in a way that can better integrate low-carbon technologies into the distribution network.

Tristan Zipfel: To add to what Alistair said, for a start, the UK is in a really strong position to maintain its leadership in the renewables market. There is a strong industry in place, and I think GB Energy can fit into that and strengthen the framework. As a co-investor, in particular, I think GB Energy could bring value, as Alistair said, by investing in frontier technologies, but also by helping to strengthen the link and connection with local communities. For our projects to be successful, it is absolutely paramount that they are adhered to by the local communities. As a developer, we spend tremendous efforts on being present and creating a connection with local communities. Having GB Energy on board for certain projects could reinforce that link and even provide a sense of public ownership in the project, which I think would be very strong.

Alistair talked about emerging technologies and how some of them present certain risk profiles, where having an investor like GB Energy could help kick-start the development of this segment of the market. He mentioned CCS; I think we could talk about hydrogen as another example.

GB Energy also has an interesting role to play as a developer. We have seen the announcement of the partnership with the Crown Estate on the offshore site. There is an opportunity for GB Energy to focus on the segments of the market where the private sector is struggling to make progress, perhaps because the infrastructure is not yet there, or because there are specific risk profiles that make the private sector struggle to invest in these segments of the market, despite them presenting long-term value. That is where there is a real opportunity for GB Energy.

[Andrew Bowie]

Q I will be brief, because I know that others want to come in. Mr McGirr, you specifically mentioned Berwick Bank and planning and consenting. Obviously, Berwick Bank is in Scotland, and planning and consenting is a devolved competence. Clause 5(4) states:

“The Secretary of State must consult the Scottish Ministers before including in a statement under this section anything which concerns a subject matter provision about which would be within the legislative competence of the Scottish Parliament”.

As a company that has heavily invested in Scotland, did you realise that there was detail in the Bill about how GB Energy will interact with the devolved Administrations, given that so many aspects of what it is seeking to achieve are competences of the devolved Administrations, specifically in Scotland?

Alistair McGirr: In terms of the premise, I definitely agree that the devolved Administrations have to play an important role in the direction of GB Energy. I do not think there necessarily needs to be anything in the legislation. I suppose it is also worth mentioning that there might be a view about how the investments are spread across different parts of the country. In reality, a lot of those will be up in Scotland because of the opportunities that Scotland has.

[The Chair]

I have three Members on my list already, and we have 15 minutes left, so please be short, sharp and to the point.

--- Later in debate ---

[The Chair]

We will now hear oral evidence from Dan Labbad, who is the chief executive officer of the Crown Estate. For this session, I am afraid that we have only until 2.50 pm. For the benefit of the record, Mr Labbad, could you introduce yourself?

Dan Labbad: I am Dan Labbad, the chief executive of the Crown Estate.

[Andrew Bowie]

Q Thank you for giving us your time this afternoon, Mr Labbad. How do you foresee the Bill and the creation of GB Energy impacting on the offices of the Crown Estate? In your answer, could you give some detail on the recent agreement between the Crown Estate and GB Energy, and what that will mean moving forward?

Dan Labbad: First, thank you for having me here this afternoon.

The Crown Estate has been operating in the offshore renewable energy space for a long time—roughly 25 years—and, working with Government, the private sector and the third sector, we have created what is the second largest offshore wind capability in the world. That is something that we as a country should be very proud of, but obviously what got us here will not get us where we need to be.

When you look at the Climate Change Committee’s report on what is required from offshore wind and other renewable and zero-carbon technologies into the future, you see that we need to accelerate our deployment in a way that is balanced with other marine uses, including the environment, and ensure that we are deploying at a rate that meets the targets that were set for good reason. We have been organising the Crown Estate for the last five to 10 years in order to do that, accelerating leasing and starting the de-risking process for developers.

We also have a Bill before Parliament to enhance our powers to do more in this space. For example, we have something called the marine delivery route map, which looks at all uses on the seabed to ensure that we can create spatial co-ordination for different uses. That is fundamental to being able to achieve deployment, but even with our new powers we cannot do it alone. We need support, certainly support from Government.

There are three key areas that we would have called on had GB Energy not been announced, but Great British Energy offers a number of things. First, there is the co-ordination of all the agents involved in what is a very complex energy sector, both within and outside of Government. One of the big encumbrances at the moment is that everyone is working in slightly different directions; you do not achieve targets if everyone is working in slightly different directions.

Secondly, there are the increased investment powers to ensure that we are additive to what the private sector needs and ensure that we can achieve the acceleration throughput that we are talking about and invest in new technologies.

Finally, it can ensure that we are evolving policy around areas that are not limited to planning and grid, for example, so that we have the pathways not only to lease seabed for renewable deployment but to deliver generating capacity. We see GB Energy bringing those things.

[Andrew Bowie]

Q We have spoken with previous guests this afternoon about the necessity for the Secretary of State and the Minister here to have strategic priorities and plans to engage with Scottish and Welsh Ministers and all the devolved Administrations. Obviously, the Crown Estate is an area that is devolved in Scotland. You said that within the market right now there are different plans, priorities and timescales and people are moving in different directions. How are you co-ordinating with Crown Estate Scotland to ensure that your work with GBE will be uniform and joined up across the United Kingdom? Otherwise, none of the targets will be met.

Dan Labbad: Consultation across the country is fundamental. In fact, if you look at our Celtic sea round 5 tender, which is live at the moment, you will see that we consulted heavily with the Welsh Government and with Welsh stakeholders. In fact, we evolved our approach quite considerably in the deployment of that tender approach through that consultation, adding a lot of value.

I should say that to get a leasing programme out like round 5—which is the 4.5 GW floating wind programme that we have at the moment live in the Celtic sea—you engage with many stakeholders. The count in the case of the Celtic sea was more than 70 stakeholders from global and local environmental groups, developers across Government, the third sector again and a whole host of users of the seabed. Without doing that we do not deploy, because we do not get everybody’s buy-in. If we are talking other parts of the country, there is no difference whether it is Northern Ireland or Scotland.

We enjoy a good relationship with Crown Estates Scotland and with the Scottish Government. They are partners in our marine delivery route map and we are co-ordinating on systems issues, because obviously some of the environmental issues and deployment and grid issues do not have borders, so that consultation is, as you suggest, fundamental.

[Perran Moon]

Q In relation to clause 1(5), about the statement of strategic priorities, you just mentioned the Celtic sea round 5 tenders. I think I am correct in saying that they did not have any mandatory social value element. What would be your thoughts on social value being mandated as part of the strategic priorities for local coastal communities, particularly deprived areas such as Cornwall?

Dan Labbad: First, as regards the Celtic sea, there are social requirements as part of the tender process. I obviously cannot talk about them too much, given that we are in a live tender for procurement purposes, but there are social requirements as part of that tender.

To your question, it is fundamental. It will be a real failure if we end up deploying renewable energy on the seabed in the way we need to in the next 20 years and are not able to capture a fair proportion of that industrial complex for ourselves as a country. It would be a real pity if we did not build new jobs and new futures for young people across the country and if we did not support the distribution of that benefit across the country, including to coastal communities.

We have to bear in mind that there is a role for developers and a role for Government and the Crown Estate. For example, in the Celtic sea a 4.5 GW tender does not build a supply chain. It is not enough; the critical mass is not there. Again, that is why it is so important that Great British Energy and the Crown Estate work together, with our additional powers and being able to provide forward commitments to, for example, the Celtic sea. We estimate at the moment that it has the potential for another 12 GW of offshore wind, predominantly floating but also fixed. You need that type of scale so that both Government and private sector investment in the supply chain, including in coastal communities, will stick. That is why this partnership is so important and why we have to remember the size of that prize, so to speak.

--- Later in debate ---

[The Chair]

Good afternoon. We will now hear oral evidence from Josh Buckland, a partner at Flint Global. For this session, we have until 3.10 pm. Mr Buckland, will you identify yourself for the purposes of the record, please?

Josh Buckland: I am Joshua Buckland, a partner at Flint Global.

[Andrew Bowie]

Q Thank you very much for joining us, Mr Buckland. Obviously you come from the perspective of a company that is investing—alongside others that are investing—in the future technologies that will guide us towards net zero and a clean future. One of the objects of Great British Energy, as clause 3 states, is that it should be involved in

“the production, distribution, storage and supply of clean energy”.

Do you see the Bill and the creation of GBE as an assistance in unlocking private capital and the investment that we need in the new technologies, or are you worried, as some are, that this might be a blockage and get in the way of the private sector?

Josh Buckland: I think that that is the right question to ask. Ultimately, the amount of capital we need to invest in the energy transition is so significant that we will have to deploy and leverage in private finance at a scale that has not really been seen before, and any intervention from Government needs to play a role in unlocking that private capital. The Government have set out that Great British Energy will be mobilised with £8.3 billion of public capital. On the surface, that is a significant amount of money, but in comparison with the hundreds of billions that we will need to deploy through the overall transition, the way that it crowds in greater levels of private investment will be the key test of its success.

The Bill sets out a range of roles that Great British Energy could play, some of which could have a bigger impact on mobilising capital than others, and a range of different mechanisms that it could deploy. It is probably too early to tell whether the structure and the decisions it makes will mobilise capital at the scale that the Government intend, but the framework set out in the Bill will definitely give it the potential to do so.

[Olivia Blake (Sheffield Hallam) (Lab)]

Q I am interested to know whether there are any conditions that you would like to see put on the financial assistance provisions and their scope under clause 4, given your unique placement within the system.

Josh Buckland: The financial assistance statements set out in clause 4 are relatively broad; they give Great British Energy the ability to invest in a variety of ways. It comes back to the question of how you create value through Great British Energy. One of the key tests will be whether it can drive additionality, so whether it can deploy capital in a way the private sector cannot. That usually rests on two issues. One is whether it can invest earlier in the development curve when private investment at scale is tricky, so where there is technology risk or development risk. An alternative is whether it can invest on a sub-par basis, so effectively whether it can create catalytic capital—that is the terminology often used—in a way the private sector would not be able to.

Clause 4 could potentially do those things, and there is no restriction on its ability to do them, but obviously the Government have not yet said much about exactly what format these investments will take. That is not necessarily an issue from a legislative perspective. I have looked back at the legislation that underpinned the UK Infrastructure Bank and the Green Investment Bank, which I was involved with when I was in government, and both those Acts are relatively high-level in terms of the interventions and mechanisms that they can deploy. On the surface, there is nothing that restricts that. As the Government think about the deployment of Great British Energy, I imagine that they will want to set out how it will give more clarity to the private market on the sorts of interventions and mechanisms that it will look to deploy at scale.

--- Later in debate ---

[The Chair]

From one Scotsman to another—I call the shadow Minister.

[Andrew Bowie]

Q Thank you, Sir Roger. Good afternoon and thank you for joining us today to help our deliberations on the Bill. My first question was going to be to Ms Powis, but I will expand on it to Ms Dawes to begin with. The Carbon Capture and Storage Association has written to the Committee expressing concern about the definition of technologies that GB Energy might be able to invest in and work on. It would like to see an extension of the definition from

“the production, distribution, storage and supply of clean energy”,

to include technology that might be involved in carbon capture and storage. It is not set out clearly within the Bill that that is the case. Ms Dawes, as somebody who works with the companies involved in the extraction and production of fossil fuels in Aberdeen and the drive to transition to net zero, do you share the concern with the narrow prescription of what GB Energy will be allowed to invest in and be involved in?

Myrtle Dawes: I understand their concern. From my perspective, I understood that that would be covered under clause 1(2)(b), which concerns the reduction of greenhouse gases. Fundamentally, the storage or utilisation of carbon dioxide comes with the reduction of greenhouse gases. [Interruption.] As Olivia is here, she could probably respond.

[The Chair]

Order. If I may interrupt, we have now been joined by Olivia Powis, who is chief executive of the Carbon Capture Association. For the benefit of the record and Hansard, could you identify yourself?

Olivia Powis: I apologise for being a couple of minutes late. I am Olivia Powis, chief executive officer of the Carbon Capture and Storage Association.

[The Chair]

There is no need to apologise; we understand the vagaries of travel in London and are grateful to you for joining us. Minister—shadow Minister, I beg your pardon—would you like to come back?

[Andrew Bowie]

Q It was the case once, Sir Roger.

Thank you for joining us, Ms Powis. I was going to ask about the concerns that your association has brought to our attention about the definitions in the Bill, particularly in clause 3, concerning the objects that GBE is restricted to facilitating, encouraging or participating in. Please could you expand on those, and also on your suggested changes to the Bill, about which you kindly wrote to us two weeks ago?

Olivia Powis: I would be pleased to expand on that. We welcome the Bill and its support. In his opening remarks on Second Reading, the Secretary of State stated that

“Great British Energy will support project development”

to

“help speed up the roll-out of offshore wind and other technologies”—[Official Report, 5 September 2024; Vol. 753, c. 460.]

such as CCUS, wave, tidal and hydrogen.

We believe, however, that the narrow definition of clean energy in the current draft of the Bill could be prohibitive to low-carbon technologies and inadvertently limit the scope of GB Energy’s investments, thereby reducing the potential for public projects and hindering the UK’s ability to meet its net zero targets.

The definition of clean energy should be clarified to ensure that it encompasses energy sourced from fossil fuels when combined with carbon capture and storage—that is, when abated. We, alongside Hydrogen UK, have proposed some alternative wording that would enable abated fossil fuels to be included, and ensure the reduction of greenhouse gas emissions from energy produced from fossil fuels. We must future-proof this definition to make sure that GB Energy is able to invest safely in projects such as low-carbon energy with CCS and is not at risk of being challenged.

Jack Norquoy: I understand the concerns that have been raised. Some of our members will also be members of the Carbon Capture and Storage Association. I understand those concerns and am happy with the suggestions. Our recommendation for the Bill, and moving forward, is that it maintains alignment with what the Climate Change Committee has within its scope as part of our transition to net zero.

[Andrew Bowie]

Q Ms Powis, do you suggest that if we do not make those changes to the Bill, it might be prohibitive to further investment in CCUS, or do you think that the words from the Secretary of State on announcing the Bill were enough to calm any jitters in your industry?

Olivia Powis: No, we would recommend that the wording is changed in the Bill so that it is future-proof. We welcome the words that came alongside it, but we want to ensure that it is future-proofed for when people come back to this legislation in five years’ time. It must be on the face of the Bill.

[Andrew Bowie]

Q This is a question to Ms Dawes and then to Mr Norquoy. You obviously represent two different types of energy companies. The Net Zero Technology Centre represents companies that are still very much involved in the North sea, although investing heavily in the next generation of technology that will get us to a cleaner future. How do you see this Bill, and the creation of GB Energy as a company, as helping to facilitate your work at the Net Zero Technology Centre? To Mr Norquoy, I ask the same question: how do you see it as assisting the members of your organisation, Scottish Renewables?

Myrtle Dawes: I am really excited about this. For reference, the Net Zero Technology Centre received £180 million of Government funding. We have managed to raise and match that with industry and go on to have more than 100 start-ups. We have more than 69 commercialised technologies. We have done more than 300 projects and gone on to give value back to GB of an order of one to nine in cost-benefit terms. When I see something like this, on a much bigger scale—our work is really a microcosm of this—it is really exciting. It is a catalyst sitting at the heart of Government, which will make sure that there is support for innovation during the period when it needs acceleration, when we need this technology to make things more efficient and drive down costs, and when we need to get good technology into the next set of infrastructure projects. For us, it is really exciting. Given what we have seen at the NZTC, it could go on to deliver quite a lot of value.

Jack Norquoy: I share that enthusiasm. Scottish Renewables has welcomed the development of GB Energy, alongside many of our members in industry. Of course, we welcome any additional investment at this time, particularly when we have heightened ambitions towards 2030. We have an unprecedented line of sight in Scotland with our pipeline, so we welcome the conversation and the development of GB Energy to deliver the support that will be needed to accelerate deployment.

We are particularly interested to see what the goals of GB Energy are. That has been set out in the Bill and in the surrounding documents, but we will need to see some clearer objectives and pathways to support that with industry. We appreciate that that might come after the Bill. We have interest in the governance, too; the importance of operational independence has been discussed today. Finance is very important to the heightened ambitions for what GB Energy will do, as the Bill sets out, but we also want GB Energy to work with industry.

This comes at a time when there are a lot of welcome moving parts in industry, such as the development of a strategic spatial energy plan, the national wealth fund and GB Energy. We welcome the Bill and we would like to see the establishment of GB Energy, but in the steps ahead we would like to see a pathway to give some assurance to our members in industry who are now actively involved in the pipeline on how they can help towards the deployment to 2030.

[Andrew Bowie]

Q This will be my last question, Chair, I promise. Mr Norquoy, you represent Scottish Renewables. In the past, there have been moments when the aims and objectives of the UK Government and those of the Scottish Government have not been entirely aligned. Your members operate in a devolved administrative area, Scotland. How content are you, given the provisions of the Bill, that GB Energy—an arm of the UK Government, a company established by the UK Government and answerable to the UK Secretary of State—will have the autonomy and power to work constructively with and under the auspices of the devolved Administration in Edinburgh?

Jack Norquoy: The Bill includes a reference to working with Scottish Ministers, which is welcome, as part of improved relations at the moment, which are welcome too. On governance and devolved competency, as we heard in earlier evidence from the Crown Estate, the partnership with GB Energy is welcome. There will have to be development across the UK to support our net zero targets, but we want to ensure that there is parity with Crown Estate Scotland too. At the start, I highlighted the pipeline that we have sitting in Scotland. On the point about the competency of the Scottish Government, we would like to see some more detail—again, probably outwith the Bill—on how we can ensure parity between extra powers to the Crown Estate and to Crown Estate Scotland.

[Stephen Flynn]

Q We have heard a great deal today, and rightly so, about the potential investment that GB Energy could make, whether that is in production, storage or generation and so on and so forth. I am particularly interested in the innovation space and in your experience with the Net Zero Technology Centre. Do you think that GB Energy’s focus should be on that, given the relatively small quantum that is available, or do you think that it should be broader and more focused on the de-risking of projects that might already be in the pipeline but might require assistance in relation to consent, planning or further capital investment?

Myrtle Dawes: I suppose it would have to be towards the impact. Naturally, the budget we are looking at is well suited to innovation. The crowding in of money that we could get around that from investors—the impact that we could have by moving on a lot of projects—is quite significant.

To take the example of floating offshore wind, we have some of the best wind resources in Europe and actually the world. We are sitting with one of the best supply chains for subsea in the world, because the North sea has been the harshest place in the world to do business. If we are ever going to get an effective floating wind business, with technology and jobs here in the UK, we need to start and move on it now. Not only is there an opportunity to get electricity here in the UK, but we are very close to the heartland of Europe, which is also looking for electricity and for hydrogen. We can do lots of things where the impact, if we were to move now, would be great.

I have also worked on de-risking in major projects. They do need de-risking. I do not think that those in the supply chain are necessarily looking for a handout; they are looking for clarity, for investable business cases and for things where they can do the commercial work that they normally do. I can tell you that at the heart of this is technology that has to be sufficiently robust and reliable, and cheap enough that the product is cheap for the customer, who in this case is those who are using our energy.

Olivia Powis: I support everything that has been said. I think GB Energy offers the potential for targeted investment and support in areas of the value chain, for new innovations and across the supply chain. In particular, we look at some capture technologies with lower TRLs that would benefit from some investment, enabling them to move forward from what we refer to as the valley of death, to be able to compete on the open market. There are many opportunities within the innovation space.

Jack Norquoy: A big part of what GB Energy will do is the local power plan, to which a sizeable contribution of that £8 billion allocation has been made. You raised a point about how the rest of it will be spent; I echo the comments that have been made about innovation.

There will be a need for GB Energy to have a balance. That has been outlined in what we have seen so far, in that there will be a need to generate revenue in order for there to be a public return, but it is important that that money be targeted at high-risk areas where we need the longer-term strategic view to support innovation. Sectors in Scotland such as the marine energy sector would very much welcome that targeted support. So we have a balance between GB Energy being willing to take more risk than perhaps we have seen so far and some investment going towards the local power plan, developing the stable revenue that we will want to see coming through.

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[The Chair]

Thank you. I call the shadow Minister.

[Andrew Bowie]

Q Thank you for joining us this afternoon, Mr Whitehouse. I think it is fair to say that OEUK has been somewhat sceptical, although it obviously wanted to work with the Government, about the overarching policies towards the energy sector, and specifically the sector you represent. Speaking specifically to this Bill and the establishment of Great British Energy, how do you see that company interacting with members of OEUK to deliver what we all want to achieve, which is greater energy security and a drive towards a cleaner net zero future?

David Whitehouse: Looking at the 400 members that we represent—people investing in our oil and gas, wind developers, people investing in carbon storage, but also a huge supply chain—I do not think we are sceptical. As an organisation, looking at our 400 members and at the 200,000 people who work in the sector, we see that journey to net zero as a real opportunity for the UK and for Scotland if we build on our industrial strengths. We are so lucky in this country that we have brilliant people and a world-class supply chain; we are also lucky that the wind blows and that we have the North sea and other assets. We must make best use of them.

Within the context of a wider energy strategy, we absolutely welcome GB Energy. It will play a role in a bigger energy strategy and a bigger industrial strategy. How do we see GB Energy working? We see it unlocking opportunities that otherwise would not happen. It will not create value if it simply replicates what the private sector would do anyway—I think that will be acknowledged in the priorities that I would expect to see from the Secretary of State. There is a still a huge role to play in de-risking projects, as well as in some of the local energy projects that have been raised. There is a huge opportunity to invest in technology and future infrastructure.

We touched on infrastructure with our European neighbours. How do we interact with it? Already, we have a number of companies looking at what kind of projects meet the mandate of GB Energy and would fulfil it. Do not forget the world-class supply chain that we have. We will fail in this country if we do not recognise how important our supply chain is. Our oil and gas supply chain is world-class. The transferability of those skills to what GB Energy needs to deliver is huge. There is a massive appetite for us to leverage the skills that we have and use GB Energy as a vehicle to deliver value for the country.

[Andrew Bowie]

Q Do you think this Bill will do that, Mr Whitehouse?

David Whitehouse: I think what you have is a Bill that, as you have heard in evidence, provides broad definitions and broad statements of intent. In and of itself, it is a platform to deliver that. What will be critical is that the Government, the Secretary of State and the devolved Governments, who have welcomed this, work together and honour the words about working in partnership with industry to take what is on paper and turn it into a reality of unlocking opportunities that would not be happening—opportunities for communities up and down the UK, and certainly for our key supply chain companies—to help us to accelerate some of the critical projects that need to be unlocked.

[Andrew Bowie]

Q We had the CCSA before us a few minutes ago, and there was some concern from its members about the objects in clause 3(2), which states that

“Great British Energy’s objects are restricted to facilitating…the production, distribution, storage and supply of clean energy…the reduction of greenhouse gas emissions…improvements in energy efficiency, and…measures for ensuring the security of the supply of energy.”

Is there any concern from among your members that the stated objects will prevent GB Energy from partnering with or investing in some of those companies, given that they have an existing footprint in the oil and gas sector?

David Whitehouse: We will look to bring clarity in that area. The interpretation we have taken and the conversations we have had indicate that this would not preclude companies from investing in that manner, and that the Bill is broadly defined to allow all companies to invest. That is something we very much welcome. We see the journey to net zero as being one of inclusivity, not exclusivity. As I have said, we represent companies that produce oil and gas, which have a critical role in our energy mix, but in terms of bringing forward technology, as it stands, no, we do not think that. There is an opportunity, though, as the Secretary of State brings forward the priorities, to provide clarity that those things would not be excluded.

[Andrew Bowie]

Q I have one last question, if I may beg your patience, Sir Roger. Obviously, Mr Whitehouse, a lot of the members that you represent are in Aberdeen. In our very first piece of evidence this morning, we heard from Mr Juergen Maier, who is the new chair of GB Energy. It has been announced that the headquarters of GB Energy, established by this Bill, will be in Aberdeen. How important do you think that is, given the links that will have to be established to the existing energy sector and the importance of the supply chain to the success of GB Energy? How do you think the geographical location of the headquarters will affect the future success of the company, and indeed the energy sector in the UK?

David Whitehouse: The position we have always taken is that you have energy communities up and down the UK. We have a very proud energy sector, and in principle I think you could have put GB Energy in many places, but we welcome it in Aberdeen. The reason we welcome it in Aberdeen is because that is where you see a real density of high-quality operators, high-quality developers and high-quality supply chain. That is the right place to put it. We take confidence that this journey to net zero must be about inclusivity, and about breaking down barriers and building bridges. Having GB Energy centred in Aberdeen is a good statement of intent that this Government—it was also supported by the Scottish Government—recognise that as well. We need to make the most of our industrial strength. Placing this in Aberdeen is a good statement of intent, so we welcome that.

[Torcuil Crichton]

Q Mr Whitehouse, I hear what you say about the Bill and GB Energy being an opportunity, but I hear from some of your members that they think renewables are a threat. How can we change that language? To protect that world-class supply chain, what can the industry and GB Energy do to ensure that the supply chain and the jobs stay here?

David Whitehouse: Apologies: what was the word they were using?

--- Later in debate ---

[The Chair]

You are most kind. With that in mind, we will now hear evidence from Andy Prendergast, who is the national secretary of the GMB. We have until 4.30 pm, in theory, but we may be interrupted. Mr Prendergast, for the benefit of the record could you identify yourself?

Andy Prendergast: I am Andy Prendergast, national secretary of GMB union.

[Andrew Bowie]

Q Thank you for taking the time to come and join us, Mr Prendergast. For the benefit of the Committee, could you elaborate on the overarching view of GMB members on the establishment of Great British Energy and on Government energy policy overall?

Andy Prendergast: We see GB Energy as a long-overdue, desperately needed step. As a country, and as someone who works for a union supporting tens of thousands of energy workers and people who work in energy-intensive industries, there is a real problem at the moment when we look across the world at the investments being made in green technologies and what other Governments are doing to ensure that those investments lead to jobs and supply chains in their nations. What we see in Britain is a complete failure to match that, whether it is the Inflation Reduction Act in America, or European subsidies.

As a union, we regularly sit down with investors who have shovel-ready projects that have the opportunity and potential to transform huge swathes of Britain in areas that we have called “left behind”, “post-industrial” or “red wall”, but we simply cannot get the support to get those through. The investors are telling us that if they decide to put their site in Philadelphia, they get huge subsidies and tax breaks; if they decide to put it in Germany, they get subsidies and Government support, but in Britain there is simply a void.

I have heard quite a lot of people talk about the importance of supply chains. I will be honest: for my union, we do not necessarily see that to the same degree. If we look at offshore wind, we see jackets, technology and blades that are not made in Britain. We have huge swathes of the country where people are willing and able to work, yet they are sitting there watching this technology be imported in. In the case of the Methil fabrication site in Scotland, which is currently sitting without work, they are watching the wind turbines that they could be building being put up in the sea in front of them. We need to avoid that, and I think GB Energy is the first step to doing that—a step, frankly, that should have been taken a long time ago.

[Andrew Bowie]

Q In the case of the Methil yard in Scotland—I think it is Burntisland we are speaking about—the UK Government and, I think, the Scottish Government did attempt to save that yard and ensure that it works moving forward. I do not know how GB Energy would have been able to do much more, but I take your point that we need to build up the domestic supply chain and ensure that there are manufacturing jobs here.

Do you think that the aims and objects of this Bill go wide enough? Do you think that there is broad enough scope for the different technologies that GB Energy will have to invest in? We have heard the CCSA raise slight concerns that there might not be the scope for investment in carbon capture, for example, where a lot of new jobs are going to be created, and presumably a lot of those will be members of the GMB.

Andy Prendergast: We fought for carbon capture to be included. As far as we are concerned, having checked the wording, we think that is covered. An issue we have on the scope is whether the funds are sufficient to back the ambition. Before the election, we were talking £28 billion at one point. What we have offers a huge scale and a huge opportunity, and while ultimately we would like to see more money, this is genuine, real money that was not there before. That is a step in the right direction. From a trade unionist point of view, I very frequently argue about a lack of money—we do it on a daily basis everywhere.

Another concern with the Bill, which I think the Bill itself addresses, is the relationship between GB Energy and GB Nuclear. We desperately need new nuclear. We are waiting for the decision on Sizewell and we would like to see the decision on Wylfa as well as small modular reactors. There is a genuine question about whether SMRs fit under the remit of GB Energy or GB Nuclear, and it needs to be resolved. SMRs are another of those technologies that British brains created but, if we are not careful, we will see the supply chains go overseas. It is an industry that is likely to be £180 billion within a decade. The choice we have with that is either to support British companies such as Rolls-Royce or, as with wind, to import this key technology that should be supporting companies and jobs throughout Britain.

[Andrew Bowie]

Q I could not agree more. There will be 70,000 jobs created by SMRs alone over the next few years if we get it right. Would you like to see clarification in the Bill of the relationship with Great British Nuclear?

Andy Prendergast: I am not necessarily saying that it needs to be in the Bill, but it needs to happen quite quickly. The Bill refers to the fact that it needs to be bottomed out, and every route we look at to net zero requires a huge increase in the amount of nuclear power. We need that decision on Sizewell quite quickly. I do not look at that as key to GB Energy, but it needs to be resolved.

[Andrew Bowie]

Absolutely. By the end of the year would be great.

[Josh MacAlister]

Q Welcome, Andy. Thousands of your members are at Sellafield, involved in one end of the energy system, doing brilliant work in the decommissioning field. You have touched on the relationship between GBN and GBE. The Bill does have flexibility for future involvement with nuclear. What I imagine the Government have tried to do, which I think the Bill achieves, is to get the relationship right so that GBN can continue with its programme of work without being disrupted, while opening the door in the future for a bringing together of the two endeavours. Does the GMB have views on how best to enable the multi-gigawatt-scale programmes in the future, and reflections on the experience with GBN today that would inform the Bill?

Andy Prendergast: The most important thing to say about nuclear is that the nuclear industry in Britain is, to a degree, a tragedy. We invented it. The first civil nuclear site in the world was British, and yet when we came to Hinkley Point, we had to import the know-how and technology and reinvent the wheel. What we have done in Hinkley Point has been amazing. The site employs tens of thousands of people and provides real, skilled jobs—the kind of jobs people are proud to do, which is very important.

If we look at the lessons we learned from Hinkley and transfer them to Sizewell, we start speeding up the process. If we then go on to Wylfa, it becomes easier to take them through. The key thing it shows is that we cannot have those huge gaps. When we have gaps, we lose the skills. What is frightening for us in so many areas is that we are talking about an energy transformation, but we simply do not have the skills to transform at the speed we need to.

There is an estimated lack of 40,000 welders in this country. In the near future we will need more pylons, a huge amount of work on the water mains, SMRs, CCS and hydrogen. I sat on a load of Government bodies with the last Government, and all I kept hearing was, “We need more welders.” You had to take a view that, sadly, repeating “We need more welders” does not magically lead to a lot of welders showing up. We need the investment in the skills and in the supply chain to ensure that we get the right people in the right place.

It is important to say that welding jobs are fantastically well paid. They are jobs that get paid more than most people in this room. There should not be a problem employing welders in this country if we simply resort to capitalism, so if there is a problem, how do we identify it and how do we get around it?

--- Later in debate ---

[The Chair]

Q We will now hear oral evidence from Michael Shanks MP, Minister for Energy at the Department for Energy Security and Net Zero. For this session, we think we have until about 5.05 pm. Mr Shanks, could I ask you to identify yourself for the benefit of the record?

Michael Shanks: Good afternoon. I am Michael Shanks, the Minister for Energy.

[Andrew Bowie]

Q Good afternoon, Minister—we have obviously not seen enough of each other today. When you were introducing this Bill on the Floor of the House, you said:

“There will be a range of projects, in some of which we will certainly have the controlling stake, and some of which we might help to get over the line, but in every single project there will be a return for the British taxpayer.” —[Official Report, 26 July 2024; Vol. 752, c. 939.]

We have already talked about how GB Energy will be important—almost the key partner in investing in riskier technologies. How can you guarantee that every single project will have a return for the British taxpayer?

Michael Shanks: It is important to say that the return for the taxpayer will take different forms. We have been really clear in all the briefings we have done on the Bill and in the founding statement that in some we will take an equity stake, in some there will be debt financing, and in others we might provide some of the capacity for organisations to take forward some of the funding or project delivery themselves. In each one of those, we expect that GB Energy will play a part in delivering those projects, getting them over the line and delivering for the British people. That will be done in a variety of ways.

Some of it will absolutely be money coming back to GB Energy, which we have said will either be further invested in more projects or give a return to the Treasury to fund public services in different ways, but it might also be that on community energy, for example, we help community projects to get up and running. That also delivers a return for those communities.

[Andrew Bowie]

Q You can see why the interpretation of what you said might lend itself to the understanding that what is returned to the taxpayer is a monetary value from every single project being invested in. Are you clarifying that today? You are not standing by that statement.

Michael Shanks: I am saying very clearly that the aim of setting up GB Energy is that, like other countries right across the world, we can have a stake in some of the projects we are delivering. That is quite normal in many European countries. Indeed, the previous Government found it acceptable for those projects to set up in the UK too; it is just that they did not want the UK to have a stake in any publicly owned energy. It is a very common method of delivering projects like this, and giving a return to the British taxpayer is important. It will take many different forms.

In time, there will absolutely be a significant financial return on many of these projects, but in some of them, as you rightly say, de-risking them and getting them over the line will involve us taking a strategy that means that, on individual projects, we might not make an immediate return. But the overall vision of GB Energy is that it will play a part in helping us achieve our targets by 2030, and the British public will have a stake in that future. That is something we believe in, and we hope all Members of Parliament support it.

[Andrew Bowie]

Q In the context of the Bill—the objects, the financial assistance and the strategic priorities and plans—it is quite clear that you are seeking to develop a company in the mould of an Ørsted or an EDF. I just quoted you on the target of 2030 for the decarbonisation of the grid. Some of the other witnesses have said that it will take 10 to 15 years and many billions of pounds more than has already been allocated to GB Energy even to begin to compete with an EDF or an Ørsted. How on earth will this company assist on that journey to 2030 decarbonisation if it will take as long as some of the other witnesses have said to begin to compete?

Michael Shanks: I think there are two different questions there. If you look at the rest of Europe, there are fantastic companies—EDF, Ørsted, Statkraft—that are delivering many of these projects in the UK. It is a model that clearly works, and that delivers economic and social benefits to those countries and to the people living in them. If we look at the price spike when Ukraine was invaded, EDF was able to mitigate some of that significant rise in bills for people in France. We are not saying that within six months of setting up GB Energy, it is going to compete with Equinor or Ørsted—of course we are not—but it is important that we start that journey. Of course, all these publicly owned companies started somewhere. They have been able to invest in the future to get to the scale that they are now, and to deliver significant projects in the process.

The second point of the question is important. GB Energy is not designed to displace any of those companies—or any other companies, incidentally—in delivering projects in the UK. It is about crowding in additional investment. We know that 2030 is going to be a real challenge. We have been very clear that we have set a target that we think is extremely ambitious, but achievable. When NESO publishes its road map shortly, it will give the detail on how we are going to get there. But we have to start somewhere, and I think GB Energy is a critical part of delivering that and will play a significant role in getting us to 2030—and, crucially, beyond 2030.

[Andrew Bowie]

Q You are absolutely right in what you say. Some of these companies—EDF, Ørsted, Equinor, Vattenfall—are fantastic companies. It should be noted that while EDF returned for the French taxpayer, it was also bailed out by the French Government to the tune of about €20 billion last year. I hope we do not get into a similar situation with GB Energy.

Moving on, some concern has been raised today that there has not been very much clarification, or that there is some confusion, over the status, operational independence and autonomy of Great British Nuclear within GB Energy. I wondered if you might expand on that and maybe think about putting something in the Bill regarding Great British Nuclear and its relationship with Great British Energy.

Michael Shanks: That is a really important question. We have said throughout that we want to have further discussions about the role of Great British Nuclear. I think folding it into Great British Energy is probably not the right solution, because what is really important—credit to your Government for doing this—is that the board of Great British Nuclear has significant expertise in nuclear projects. I think that is important for us to maintain. Clearly, there will be synergies and work together on certain projects, but they have, in some ways, quite different remits in terms of the investments we expect them to make, so I think they probably will remain in some form independent of each other. Clearly, the partnership working between them will be important, and we will say more on that in the coming months.

[Andrew Bowie]

I agree with you entirely on what you said about Great British Nuclear. Sir Roger, I think we should note that the Minister has just credited the former Government with something. I think it is the first time—

Michael Shanks: I think I credited you earlier as well. This is becoming a habit.

[Andrew Bowie]

Q This is my very last question, Sir Roger, as you will be pleased to hear. Earlier on, Juergen Maier, the chair of GB Energy, committed the headquarters in Aberdeen to employing in the region of hundreds of people—he did say over 1,000 people—in time. Will you be drawn on any specific numbers of people who will be based at the headquarters in Aberdeen?

Michael Shanks: No, I will not be. To be fair to Juergen Maier, what he said very clearly was that in the initial set-up phase and for some time afterwards, we are talking employees in the hundreds based in the headquarters. Eventually, we think it may expand beyond that in Aberdeen and in the satellite offices, and indeed in any other set-ups that we have across the UK. I think the critical point on jobs is that the role of GB Energy is to invest in projects where we are creating new well-paid, trade-unionised jobs in the UK. That is critical. The jobs are not necessarily going to be in the headquarters of GB Energy, but they will be created by GB Energy’s investment. That is where the tens of thousands of jobs right across the UK will come from.