Contracts for Difference (Sustainable Industry Rewards) Regulations 2024

Baroness Bennett of Manor Castle Excerpts

Monday 13th May 2024 Grand Committee

[The Parliamentary Under-Secretary of State, Department for Energy Security and Net Zero (Lord Callanan) (Con)]

My Lords, I beg to move that these draft regulations, which were laid before the House on 21 March 2024, be approved.

The Joint Committee on Statutory Instruments and the Secondary Legislation Scrutiny Committee have provided a very helpful review of these regulations and, I am pleased to say, have not drawn any special attention of this House or the other place to them. These regulations amend the regulations underpinning the contract for difference scheme. The CfD scheme is the Government’s main mechanism for supporting new low-carbon electricity-generating projects in Great Britain. It has been hugely successful in driving down deployment costs and driving up the share of renewable energy in the UK.

These amendments are about providing extra funding support through the CfD so that we can better support offshore and floating offshore wind supply chains. Offshore wind in particular is a critical industrial sector. It has been hard-hit by inflationary pressures and supply chain disruption resulting from the Russian invasion of Ukraine. Consequently, necessary investments in manufacturing and infrastructure have been delayed or, in some cases, abandoned altogether.

As the CfD currently focuses on prices of deployment and no other factors, offshore wind developers are incentivised to use the cheapest supply chain options available, regardless of where in the world or how dirty their means of production. We are therefore introducing sustainable industry rewards—SIRs—to rebalance CfDs, to address some of these supply chain challenges which are already causing bottlenecks in the supply chain, further increasing costs and slowing down deployment. This policy intervention has understandably been much welcomed by supply chain companies. It is intended to take effect for the seventh CfD allocation round, which should take place in 2025.

How does this policy work? These regulations require all offshore wind and floating offshore wind CfD applicants, as a condition of entry to the CfD, to obtain an SIR statement from the Secretary of State. Those applicants who obtain an SIR statement will receive additional revenue support through the CfD—a top-up, as it were—for investing in the economic, social and environmental sustainability of their supply chains. SIR statements are obtained if applicants make successful SIR proposals that fulfil one of two sustainability criteria. One is investment in shorter supply chains in UK deprived areas. This means investing in manufacturing in the most disadvantaged parts of the United Kingdom. The other is investment in more sustainable means of production. This means investment in manufacturers who have signed up to the Science Based Targets initiative for the reduction of carbon emissions.

The mechanism to allocate SIR funding will be a competitive auction just before the main CfD auction. An applicant that obtains SIR funding will be contractually obliged to deliver their commitments; undelivered commitments will be subject to a system of performance adjustments. SIRs will make more expensive but more desirable investments from offshore wind developers cost-neutral, and therefore will not impact the main CfD auction, held shortly after the allocation of SIR funding.

Noble Lords should note that the regulations provide the powers to run the SIR allocation. The explicit, detailed rules of that allocation are set in the draft SIR allocation framework that was released in parallel to these regulations. The regulations replace the current supply chain plan process for offshore wind and floating offshore wind. The Government are very conscious that this extra support for offshore wind will have an impact on consumers’ electricity bills as, like the rest of the CfD scheme, SIRs will be funded through the existing electricity supplier obligation levy, which electricity suppliers pay.

The actual budget for SIRs is still being discussed with the Treasury. However, we estimate it could be in the region of £150 million to £300 million per year, for no more than three years, subject to the number of applicants. The impact on consumer bills will be very small, in the region of £2 per year per consumer. I hope that noble Lords will agree that £2 a year per consumer is a small price to pay for the benefits that sustainable industry rewards could bring to UK communities, through creating new and cleaner manufacturing facilities in deprived areas, alongside highly skilled jobs or carving out opportunities for businesses to become part of the offshore wind supply chain.

To ensure that the policy does not become a permanent burden on consumer bills, our proposal is that the intervention is time limited for three years; it is there to address specific market failures. The SIRs work as a prerequisite to the CfD for offshore wind, although applicants will have access to the main CfD round as long as they meet a required minimum standard of investment in their supply chain. The SIRs also complement other government support for renewable supply chains, such as the £1 billon Green Industries Growth Accelerator, which runs to a similar timeframe. I beg to move that these regulations are approved by the Committee.

[Baroness Bennett of Manor Castle (GP)]

My Lords, I have some technical questions, although I begin by broadly welcoming the Government’s direction of travel on this. It really is urgent that we proceed with offshore and floating offshore wind schemes.

I have two questions, one of which refers to the Procurement Act, which I spent more hours than I care to remember debating in this very Chamber when it was a Bill. How does this provision fit with the social value provisions in the Procurement Act? These measures would seem to be carved-out and very narrow provisions within that, so I am wondering how those two legal elements interact. My other question is, this provision provides a mechanism for offshore and floating offshore wind; how will this impact potentially on bids for solar, hydro and other schemes? Will it create a disadvantage for smaller-scale schemes, particularly community schemes?

[Earl Russell (LD)]

My Lords, I note that this SI has not been the subject of any report by the Secondary Legislation Scrutiny Committee. On these Benches, we broadly welcome the SI and its intention to grow the green economy. The UK is one of the best-placed countries in the world for developing and deploying offshore wind to help to provide energy security and meet our net-zero commitments. In 2023, a record 49 terawatt hours, 17% of the UK’s total electricity generation, was produced by offshore wind energy. The UK is aiming to triple its offshore wind capacity in the next six years and desperately needs a successful wind auction this year after the failure to attract any bids from offshore wind developers for the last round of contractual auctions.

The green economy in the UK grew by 6% last year and is crucial to delivering economic growth, the just transition and our climate goals. There are worries about the level of support for future investment in the UK offshore wind sector, and this SI is broadly welcomed on these Benches for recognising this and aiming to improve the situation.

This SI applies contracts for difference sustainable industry rewards—SIRs—which, it is said

“will help to address recent supply chain challenges that could otherwise hinder the deployment of offshore wind (OFW) and floating offshore wind (FOW). They will do so by providing additional revenue support to OFW and FOW developers, through a series of lump-sum payments in addition to their regular CfD payments, should they invest in the economic, social, and environmental sustainability of their supply chains”.

Carbon Dioxide Transport and Storage Revenue Support (Directions and Counterparty) Regulations 2024

Baroness Bennett of Manor Castle Excerpts

Monday 13th May 2024 Grand Committee

[Baroness Bennett of Manor Castle (GP)]

My Lords, the noble Lord, Lord Jones, spoke about a war on carbon. Of course, that is a war we should not be having to fight. The arrival of these regulations is an expression of failure over decades. We have continued to dig up and burn coal, oil and gas, and now, having done all that damage to the natural carbon capture and storage—the best possible form of it, which nature has done for us over hundreds of millions of years—we are trying to find a mechanism to undo some of that damage. Yet what we are doing here is establishing an expensive, top-down framework for a technology that does not yet exist at any scale and which, if successful, will create natural monopolies.

This novel industry has zero customers and no guarantee that there will be any in the future. It will be heavily dependent on the Government to adopt an energy and industrial strategy down a route that makes the carbon capture and storage industry possible. It is heavily centralised, risky and expensive, which must be contrasted with the decentralised, readily available and readily deployable technologies that exist as an alternative to CCS. What the Government are proposing with these regulations are huge subsidies for decades, in the hope that at some point there will be economic developments that will start to reduce the cost to the taxpayer. This means that our situation is a bit like the problem we have with incinerators, whereby we build incinerators with contracts to supply them with waste for decades and then have to generate the waste. The Government are really combining science fiction with dinosaur thinking here.

I feel some sympathy for the Minister, because these regulations have landed in your Lordships’ Committee in a rather unfortunate week. To quote the Energy Mix website, referring to the carbon capture and storage industry,

“Industry Navigates Very Bad Week”.

This article reflects two developments in Canada, where Capital Power has cancelled a 2.4 billion Canadian dollar carbon capture and storage project at its Genesee generating station, saying that it is “technically viable” but “not economically feasible”. It also reflects, as the Canadian national organisation Environmental Defence said,

“the latest failure in carbon capture’s terrible track record”.

This project had already received 5 million Canadian dollars from the Government of Alberta and was being set up for further tax breaks and support from both the federal and provincial Governments. It is just not working.

The other bad week to which the website referred concerned figures that have come out of Boundary Dam Unit 3, a project worth 1 billion Canadian dollars. It promised to capture 90% of the CO₂ that was being generated but, in fact, its capture rate has been only 57%. This gives me a question to ask of the Minister—and perhaps of the Labour Front Bench—about the regulations before us and the Government’s plans: if there are contracts promising a certain rate of capture but that rate of capture is not met and they fail to deliver what is promised, with the potential to cause considerable damage in this new industry, what will be done? I note that the Toronto Globe and Mail is saying that there are

“continuing tensions between industry and the federal government about the extent to which public dollars will be used to provide”

for this industry.

With that in mind, I note the Minister’s comments in his introduction. I also note paragraph 5.10 of the Explanatory Memorandum to the directions, eligibility and counterparty regulations and paragraph 5.9 of the Explanatory Memorandum to the directions and counterparty regulations, both of which refer to the importance of information being deployed publicly, as well as the Minister’s comments about commercial confidentiality. In so many areas of public provision, we have seen real problems with people hiding behind a total lack of transparency arising from that coverall of commercial confidentiality. Can the Minister assure me that that will not happen in this case?

[Earl Russell (LD)]

My Lords, I rise to speak to both of these SIs. I note that neither of them has been subject to any report by the Secondary Legislation Scrutiny Committee.

Both SIs relate to carbon capture, usage and storage—CCUS—and are broadly welcomed on these Benches. I will not partake in any debate on CCUS today. It is a suite of technologies that enable the mitigation of carbon dioxide emissions from large point sources, such as power plants and refineries, and the removal of existing CO₂ from the atmosphere. In short, CCUS is one vital tool in the toolbox to help us reach net zero.

The Government envisaged building a competitive, self-sustained CCUS market in the UK. I note that, as of today, no commercial-scale CCUS projects are up and running. CCUS could provide economic growth potential as part of the transition to net zero—£1 billion of government money has already been made available for investment in four potential clusters, which aim to be capable of storing 20 to 30 megatonnes of carbon dioxide by 2030—but CCUS has had a slow and slightly rough start in the UK.

The revenue, directions, eligibility and counterparty SI establishes the process by which the Secretary of State can direct a carbon capture counterparty to offer to contract with an eligible carbon capture entity. It also sets out the requirement that certain information must be published by the counterparty in respect of contracts entered into, as well as the requirement on the counterparty to notify the Secretary of State promptly if it is likely to be unable to perform its functions. This instrument concerns the implementation of industrial carbon capture business models, or ICCBMs—there must be a better acronym—which are intended to support the ambition set out in the net-zero strategy to deliver carbon capture, usage and storage, or CCUS, in four industrial clusters. The ICCBMs have been designed to incentivise the deployment of carbon capture technology by industrial and waste users who often have no viable alternative, as the Minister set out, and are similar to contract for difference schemes.

My questions on this SI relate to the future review and scrutiny of those contracts. As they are commercial contracts—I note that they are in the public domain, but some of this may not be made public—and are signed off by the Secretary of State, can the Minister explain what, if any, further parliamentary scrutiny there will be of these processes? These contracts are for new and in some cases yet unproven technologies, so how will value for money be ascertained and reported back to Parliament in future, especially given that the SI allows for the amendment of those contracts in future and no statutory review is envisaged? I welcome the response to the consultation and the changes, including the use of the term “energy recovery generating station” and around the exclusions and support.

Because of time, I will not go through all that the SI on carbon dioxide transport and storage does. It seeks to help establish first-of-the-kind infrastructure in the UK to transport and permanently store the carbon dioxide that has been captured. It provides Exchequer-funded revenue support to mitigate the financial risks of the initial investors. The investment in this infrastructure is welcome, and I recognise the need for it, but what level of financial support is envisaged at this stage? If none is required now but money is perhaps required at some later point, can I ask if and how Parliament might be consulted on that and what limits are in place on those future financial investments in this scheme? If more money goes in, how will that be reported and noted by Parliament?

My other questions relate to parliamentary oversight and scrutiny of the new types of technology and new contracts—what they are delivering and whether they are delivering value for money, how they are monitored and how Parliament gets future say in scrutiny of them.

Finally, in relation to both SIs, the process is delivered via commercial contracts, and both SIs allow for alterations and a requirement on the parties to inform the Secretary of State if the counterparty is unable, or likely to be unable, to fulfil its role as entered into. What, if any, dispute resolution mechanisms exist here between the department and the contractors? I am particularly interested in what legal dispute resolution mechanisms exist to give adequate oversight of this process to Parliament before any potential legal disputes end up in court.

--- Later in debate ---

[Lord Callanan (Con)]

My Lords, I thank all noble Lords for their contributions. Before I get into the detail on particular questions, I will talk about the general issue, particularly as raised by the noble Baroness, Lady Bennett, of CCUS and the principle. Obviously, that was a Second Reading speech for the legislation rather than for this particular statutory instrument, but let me explain why I think the noble Baroness is both misinformed and wrong.

First, most informed opinion disagrees with the noble Baroness on this, including the Climate Change Committee, which told us in its advice that CCUS is essential and not an option if we are to reach our decarbonisation goals. She said many other things that were incorrect. To take an example, she said that CCUS had never been tried and was unproven. Again, that is incorrect. There are many operating CCUS plants in the US. I witnessed one in Alberta, Canada, last year and, only last week, I was in Iceland to see the opening of the largest direct air capture greenhouse-gas removal plant in the world. It has an operating CO₂ ejection system into the basalt rock, which has been working successfully for many years.

So, the technology does work and is proven. We are attempting it at a greater scale than many other countries, but that is a fantastic business opportunity for the UK. We are privileged to have fantastic, tremendous storage potential in the North Sea, where we can store not only our own emissions but possibly those produced by other nations and Europe as well. This has the potential to be a massive revenue earner for the UK, generating potentially tens of thousands of jobs and millions of pounds of contributions. There are a number—dozens—of really innovative UK companies that are experimenting and working in this area. There is great export potential for the UK, and potentially many jobs—or rather, there are hundreds of jobs already.

I can understand the noble Baroness’s point—and I agree with her—that we should seek to minimise emissions as much as possible by processes such as fuel switching. But what would she say to those industrial plants that generate CO₂ as part of their processes rather than by heating? What about cement plants, for instance? Does she think that they should just close down? Should they not exist at all? These are the practical issues that, when dealing with policies that affect people’s jobs and livelihoods in the construction sector, we need to have a solution for rather than just airy-fairy academic views. As the CCC said, CCUS will be essential and is not an option. If the noble Baroness wants to make a point, I will be happy to hear it.

[Baroness Bennett of Manor Castle (GP)]

I am not sure whether this is procedurally correct, but the Minister directed the question directly at me. Once we set up these CCUS plants and establish the contracts, as I said with reference to incinerators, we will need to feed them, whereas, if we look at different technologies that are being developed for cement, for steel or electric arc furnaces and so on, the point is to—as the noble Baroness, Lady Blake, said—have a transport modal shift. We need to plan for the shift in operations—in ways of doing things—rather than business as usual.

To address the point about the Climate Change Committee, we come back to the issues around growth and the assumption that we must have economic growth. If we look at social innovation and changing the way in which our society works, we are looking at a very different model for the future than is traditionally presented.

[Lord Callanan (Con)]

The noble Baroness is addressing issues that I never even raised. Her last point is for a completely different debate. Nobody is suggesting CCUS for transport emissions or steel emissions. Again, the noble Baroness is evading the central issue. Some industries have no choice but to produce CO₂. Anyway, it is a separate issue—let us get back to the debate that we are here for today.

These two instruments are broadly administrative in nature but outline vital operational procedures to enable the Government’s proposed business models for carbon capture, transport and storage. I start with the issues raised by the noble Lord, Lord Jones, who asked for the directions of the counterparty and the register to be explained further. In relation to a direction to the counterparty, the counterparty would enter into and manage contracts at the direction of the Secretary of State and would be the conduit for HMG funding to successful projects. A direction to the counterparty would be a direction to offer to enter into a revenue support contract. The register would be a public register of contracts entered into, and the details that the counterparty would be required to publish are set out in the schedules to the regulations.

The noble Lord, Lord Jones, and the noble Baroness, Lady Bennett, asked about confidentiality. It is appropriate for companies to be able to protect commercially sensitive or privileged information—for example, information that relates to a company’s intellectual property. We expect redactions to be made to published contract information only when there is strong justification for doing so. Any redactions or exclusions in the contract do not, of course, limit what information must be disclosed in that public register.

The noble Lord, Lord Jones, asked for a definition of “cluster”. We would define it as carbon capture projects, onshore and offshore pipeline infrastructure, transport infrastructure and the associated offshore storage site, all located in a defined geographical area. We have two in the so-called track 1 process in the UK: one is the HyNet consortium in the north-west and Wales, and the other is on the east coast and is centred around Teesside and, to a certain extent, Humberside. There are two additional ones in Scotland as well as the Viking consortium, which will be in the so-called track 2 process.

The noble Lord, Lord Jones, asked about funding for CCUS, and the geography. We have announced up to £20 billion of funding for the early deployment of CCUS in the UK and, as I have just said, we aim to establish up to four clusters in the UK by 2030. The noble Lord might be a little more interested in the details of the projects of the HyNet consortium, which is located in north-west England and Wales. From memory, there is one project in Wales; it is at the Padeswood cement plant, which we are negotiating with at the moment. I think I am correct in saying that that is the one. We are currently in negotiations on eight projects and transport storage systems in total across the two clusters. We hope to reach final investment decisions by the third quarter of this year for the rollout and deployment of this technology. We have announced those first two clusters and the track1 negotiation list with, as I have said, eight projects selected through the cluster-sequencing projects to progress to negotiations by—I hope—the third quarter.

In addition, we announced two further clusters in July last year: the Acorn cluster in Scotland and Viking in Humberside. Again, those will be two additional T&S systems. We think that, after the first two, they will be best placed to deliver on our objectives—again, subject to appropriate due diligence, consenting, subsidy control, affordability and value-for-money assessments.

The noble Lord, Lord Jones, asked what the department’s understanding is of a reasonable return on investment. I would say that that is the six million dollar question, but it is probably a bit more than that. Of course, this is subject to ongoing contract commercial discussions with the relevant projects. The noble Lord can be assured that we are subjecting all the negotiations to precise considerations on value for money, subsidy control and affordability. As an indication of the scale of support, we have announced up to £20 billion for the early deployment of CCUS in the UK.

Gas-fired Power Stations

Baroness Bennett of Manor Castle Excerpts

Thursday 14th March 2024 Lords Chamber

[Lord Callanan (Con)]

I thank my noble friend for his question. He is, of course, absolutely right, and his extensive knowledge of the power and energy system, based on his previous career, is well respected in this House. I can tell him that we are rolling out CCUS at pace. We have allocated £20 billion for support for CCUS clusters. We are progressing our two initial track 1 clusters: HyNet and the East Coast Cluster. We are in final negotiations with the transport storage systems and the emitter projects, some of which are gas power stations, within those cluster projects.

We again intend to be European and world leaders in CCUS. We have massive storage potential in the seas surrounding us; they have powered this country for many years and will help us to store emissions in the future as well. It is something that could even become a net revenue earner for the UK. We are indeed fully committed to that.

[Baroness Bennett of Manor Castle (GP)]

My Lords, the House of Lords Science and Technology Committee yesterday released a timely report, which I am sure the Minister is aware of, on long-duration energy storage. It stresses the importance of that, rather than relying on expensive gas and the deeply uncertain technology of carbon capture and storage. The report points out that the Government have said that they plan to have enough storage to balance the system and that the cap and floor mechanism has worked very well with interconnectors to deliver that. A key point of the report is that the Government have not set a minimum target for long-duration energy storage. Will the Government now set a target for this clearly preferable alternative for long-duration storage?

[Lord Callanan (Con)]

My Lords, the essential misunderstanding of the energy system from the noble Baroness continues apace. The answer to the noble Baroness’s question is that we need both. We need long-duration energy storage, long-term battery storage, pumped storage and long-term hydrogen energy storage—all of which we are progressing. We have the most ambitious plans in Europe in all those areas. However, all independent forecasters who have looked at this, including the Climate Change Committee, agree that, in addition to that, we may need gas-fired generation, of relatively short duration and maybe only 1% or 2%—obviously, the Greens would prefer the lights to go out in their yurts before the rest of us progress in an advanced industrial society. This is essential contingency planning, and we make no excuses whatever for saying that the energy security of the UK is our priority. We can do that in a net-zero scenario, and we will progress that.

Civil Nuclear Road Map

Baroness Bennett of Manor Castle Excerpts

Monday 15th January 2024 Lords Chamber

[Lord Callanan (Con)]

The noble and learned Lord is absolutely right: Scotland has an excellent long tradition of support for nuclear power. Sadly, that is not shared by the existing Scottish Government. We would like to have discussions with them on this, but they seem to have set their face against nuclear power. Of course, some of the planning powers are devolved, so they are entitled to take that decision. However, speaking on behalf of their friends in England and Wales, I am sure we will be very happy to help them out with power in the future, with the many cross-border connections.

[Baroness Bennett of Manor Castle (GP)]

My Lords, I begin by welcoming the Government’s launch of the consultation on amending the contract for difference bidding, which will potentially allow repowering of onshore wind to be included within it. Of course, that could potentially see us finally getting new onshore wind, which we have not seen for so long—the cheap, affordable facilities that can be spread around the country. That can be done very quickly, if the Government sort that process out. But as the noble Lord, Lord Lennie, said, we are talking about the suggestion of small modular reactors and the final investment decision in 2029. The Minister in the other place said that we would not be looking at them until well into the 2030s. Are the Government not simply being distracted from the solution to our energy issues and energy security, which is renewables?

Given that the last estimate I have seen for the nuclear clean-up of our old nuclear is a cost of £260 billion—an estimate made by Professor Stephen Thomas at the University of Greenwich—and that the Nuclear Decommissioning Authority has just been warning that ageing equipment at Sellafield means that there is a serious risk of a fire there, should we not clean up the old mess before we risk creating new ones? Will the Government make sure that there is no public cost in any future clean-up, if indeed we see any new nuclear?

[Lord Callanan (Con)]

Yet again on this subject, the noble Baroness sets up a false choice between either nuclear or renewables. We are in favour of doing both; they both have a contribution to make to our diverse energy system. I bow to no one in my support of renewables. I think that wind and solar are great, and they are relatively cheap compared with fossil fuel sources; they will make a massive contribution to our energy supply in future. But they are intermittent, so it is important to have baseload capacity as well. You cannot run your whole energy system on wind and solar, however much the Greens would like to tell us you can. We need other sources as well—we need diversity, we need storage, and we need nuclear. We can do both.

Climate Change: Aims for COP 28

Baroness Bennett of Manor Castle Excerpts

Tuesday 28th November 2023 Lords Chamber

[Lord Callanan (Con)]

The noble Lord makes an important point. We helped to secure an agreement on the Kunming-Montreal global biodiversity framework to halt and reverse biodiversity loss by 2030, and the agreement on marine biodiversity in areas beyond national jurisdiction. We were pleased to support that during our COP presidency and want to continue doing so.

[Baroness Bennett of Manor Castle (GP)]

My Lords, a big part of the UK’s COP 26 presidency during the Glasgow conference was the global methane pledge: the focus on methane and the fact that in the next 10 years, slashing our methane emissions will be crucial if we are to stay below the 1.5 degrees above pre-industrial levels. What progress do the Government expect to see on methane in COP 28? Will the Government be taking further progress in the UK, particularly on methane flaring from oil and gas installations, to the COP discussions?

[Lord Callanan (Con)]

The noble Baroness is right that action on methane is important. It is one of the focuses for discussion that we will take forward. I have answered questions on flaring before in this House. She will remember that we are taking action to eliminate flaring completely by the end of the decade. It has reduced considerably in recent years, but clearly we need to go further.

--- Later in debate ---

[Lord Callanan (Con)]

Flaring and venting is something to be avoided by all member states. The noble Baroness is right that we do import a lot of liquid natural gas. Of course, if she and others were not so keen to halt the UK’s extraction of oil and gas, we would not need to import so much from the UAE. So perhaps she might want to indulge in a little bit of introspection.

[Baroness Bennett of Manor Castle (GP)]

My Lords, since there is space, an issue that is fast rising up the climate agenda is private jet flights, which of course have enormous levels of carbon emissions per passenger. Are the Government looking to examine the impact of those private jet flights, and indeed to take any action about flights into the UK?

[Lord Callanan (Con)]

The noble Baroness asks the question on the day that the first international flight with sustainable aviation fuel was launched by, I think, Virgin Atlantic, across to the US. Obviously, that is only one and there is a lot of progress to be made, but sustainable aviation fuel does offer one of a range of potential solutions. I know that the noble Baroness would just ban everything, but that is not practical in the real world. We want to show people that of course we can make progress on progressing the agenda against climate change, but not necessarily by banning everything they want to do.

Biomass Strategy 2023: Cross Sectoral Sustainability Framework

Baroness Bennett of Manor Castle Excerpts

Wednesday 15th November 2023 Lords Chamber

[Lord Callanan (Con)]

I suppose, if we want to get into a debate about that, they absorb CO₂ when they are growing. If they are felled and just rot on the ground they emit CO₂, but also when they are burned.

[Baroness Bennett of Manor Castle (GP)]

Following on from that, does the Minister agree, particularly thinking about not just the products from Drax but local production, there is an alternative use of biomass, which can be put back into the soil to increase soil carbon and soil health? There is a real benefit there that needs to be considered when thinking about whether it is better to use that carbon or simply burn it.

[Lord Callanan (Con)]

I shall ruin the noble Baroness’s social media portfolio and agree with her this once: of course, we need to look at these things in the round and there are lots of alternative uses. It is the whole basis of the biomass strategy, because there are different uses that we can put it to and we need to look at what is most effective both for the environment and for UK power production.

Energy Bill [HL]

Baroness Bennett of Manor Castle Excerpts

Consideration of Commons amendments
Tuesday 24th October 2023 Lords Chamber

[Baroness Boycott (CB)]

I thank the Minister very much for his sort of co-operation through the passage of the Bill. It is hugely important. It was introduced about 16 months ago, and I do not wish to delay it any further. But I speak with great regret that the Government find themselves unable to agree to my simple and incredibly uncontroversial amendment, which just seeks to clarify the Government’s commitment to consult on the barriers that community energy schemes face. I am very pleased that the Minister went to visit one that was working, but I assure him that a lot are not.

While I welcome the steps the Government have taken to re-establish the community energy fund—for instance, reporting to Parliament and consulting—it is important to put a timescale on these plans; 18 months is fair and reasonable. Without a timescale there is a risk that this will not happen. It has been demonstrated that this issue has widespread support across both Houses. When we have something that we agree on, we ought to just get on with it and do it. I fear that this small but significant issue will get drowned out in next year’s general election. I would appreciate reassurance from the Minister that this is a needless worry and that the Government are committed.

I would just like to get some clarity on a couple of points. What will be the basis of this annual report to Parliament? Is it simply to report on the progress of projects, or will it address the challenges that we face and the best route to sort them out? My amendment also sought to ensure that, should any consultation find that there are barriers—new barriers, for instance—the Government will commit to taking steps to address these. Being candid, we know that there are barriers, and I appreciate the argument that you should not legislate for the unknown, but I am simply trying to get an assurance that they would plan to lift barriers that we know are there—including ones that we do not know.

To return to the issue of the consultation, we have rehearsed what issues need to be resolved; thanks to the Bill committee in the other place, there are many views on record. I do not believe that much is likely to change in the next year. While I agree that we should follow due process here, it must not be used as a reason for delay. I urge the Minister to open this consultation ASAP, so that we can get this ball rolling.

[Baroness Bennett of Manor Castle (GP)]

My Lords, I rise very briefly and with great pleasure following the noble Baroness, Lady Boycott, who has done such an enormous amount of work on this issue—I pay tribute to that.

I was the person who started these amendments on their way back in December 2022, after we started work on this Bill last July. A consultation is something but what we really need is action, so I have a simple question for the Minister. As he said, this consultation has already started this month; if the Government see or identify through that consultation some simple, easy-to-remove barriers, will they act on them immediately rather than waiting for the end of the formal process? Surely, if action can be taken then projects, such as the one in Kensington to which the Minister referred, can go forward.

[Lord Teverson (LD)]

My Lords, I too congratulate the noble Baroness, Lady Boycott, on her persistence in this area. One of the strong messages that came out between Committee and Report in this House was the slow progress, and lack of progress, on community schemes. I very much hope that this consultation will reverse that trend. It seems slightly ironic, though typical, that the objection from the Commons is on there being a timetable, whereas we all know that for anything to happen, you need a timetable to focus.

On these Benches we are now keen to get this Bill on the statute book and that it becomes an Act. It has been delayed a number of times, mainly from the government side, as it has progressed through both Houses. There are a lot of important parts of this Bill that need to happen. I very much hope that the future systems operator will be quickly nominated and can move into action, so that a number of the strategic bottlenecks that we have in our energy sector can be swept away and solved. Again, I thank the noble Baroness for her persistence in this area, and I hope that consultation will move to action very quickly.

Climate Financing

Baroness Bennett of Manor Castle Excerpts

Tuesday 17th October 2023 Lords Chamber

[Lord Callanan (Con)]

I do not agree with the noble Lord. We have an extremely good record on energy efficiency. To take one of his examples, we have improved the number of properties that are EPC band C or above from 14% when we came into office up to nearly 50% now. Obviously, we need to make a lot more progress. We are spending £6.5 billion in this Parliament on energy efficiency and have already committed another £6 billion from 2025. We are doing extremely well in this area.

[Baroness Bennett of Manor Castle (GP)]

My Lords, the Minister may be aware that last week, coinciding with the IMF meeting on reform priorities for tackling debt, groups including Extinction Rebellion, Debt for Climate and Debt Justice were outside the Bank of England highlighting the $7.9 trillion in climate reparations that are due to the global south from the global north. He may also be aware that debt is preventing climate action in the global south: five times the amount of money is going on debt repayments than is going on climate action. Are the Government at the forefront of leading on action to deal with this debt crisis in the global south?

[Lord Callanan (Con)]

We are proud of our record on helping the global south to relieve its debts. We have one of the largest programmes of international aid alongside our programmes on international climate finance. Of course, there is always much to be done, but we can be very proud of the record that this country maintains.

Net Zero (Economic Affairs Committee Report)

Baroness Bennett of Manor Castle Excerpts

Monday 16th October 2023 Lords Chamber

[Baroness Bennett of Manor Castle (GP)]

My Lords, it is a pleasure to take part in this debate. I listened particularly carefully to the speech of the noble Lord, Lord Frost, who represents a small but very vocal segment of the debate covered by this report and the broader net-zero issue. I would like to correct one statement the noble Lord made about the Royal Society report. It does not assume a halving of electricity demand. I will quote a paragraph from the report:

“The demand for electricity in Great Britain in 2050 is taken to be 570 TWh/year in this briefing, roughly twice current annual demand”.


I thank the committee for the report and the noble Baroness, Lady Kramer, for her excellent introduction. I will make three points, pairing the 86 pages of the report and the Government’s 28-page official response—I am not counting the letter from the right honourable Mr Rees-Mogg, who was briefly relevant as the Secretary of State—because, despite the change in governing regime, it seems that there has been disturbingly little change in government energy policy.

The noble Baroness, Lady Kramer, focused on paragraph 121 of the Economic Affairs Committee’s report, and I make no apologies for focusing on it as well, because it is absolutely crucial. It quotes Dr Fatih Birol, the executive director of the International Energy Agency:

“Nobody should imagine that Russia’s invasion can justify a wave of new large-scale fossil fuel infrastructure in a world that wants to limit global warming to 1.5°C”.


But in the Government’s written response, as in their subsequent response, there is reference to launching a

“new oil and gas licensing round”,

which is exactly what they have gone ahead and done. You might think that they have not read the report at all. The noble Lord preceding me referred to stranded assets. I point out that the Committee on Climate Change estimates that new oil and gas licences take, on average, 28 years to begin producing. We are talking at a time when we clearly cannot use any significant amounts of oil and gas.

My second point is on the committee’s recommendation that the Government publish an “energy demand reduction strategy”, focusing particularly on home energy efficiency. This is just one of the many disaster areas of energy policy. It is worth noting that insulation rates in homes today are well below where they were when David Cameron, as Prime Minister, decided to “cut the green crap”. Listening to the Prime Minister’s comments at the recent Tory party conference, you might have thought that, given the committee’s report’s focus on the need for green skills—these are often debated in your Lordships’ House—they might have been a focus of Tory education policy. So can the Minister say how the proposed new British baccalaureate, the major education policy announcement, fits with the green skills agenda?

Thirdly, on carbon pricing, the committee calls for the provision of

“clarity to investors and … incentives to fund projects necessary for the transition”.

The official government response here has since been overtaken by events. We have recently seen a sharp decline in the carbon price, attributable to the Government’s decision to release 53.5 million additional allowances from a reserve pot to the market between 2024 and 2027. That means that emissions prices have fallen to less than half of the EU equivalent, when they used to be more or less at parity.

I credit the Financial Times for noting the financial and economic impact of this. It has left British exporters facing hundreds of millions of pounds in EU carbon border taxes within the next decade. That means that money that would have come to the British Treasury will now go to the EU; are the Government happy about that?

Climate Change Policies

Baroness Bennett of Manor Castle Excerpts

Wednesday 20th September 2023 Lords Chamber

[Lord Framlingham (Con)]

My Lords—

[Baroness Bennett of Manor Castle (GP)]

My Lords—

[Baroness Williams of Trafford (Con)]

My Lords, we will hear from the noble Green lady and then from my noble friend.

--- Later in debate ---

[Baroness Bennett of Manor Castle (GP)]

My Lords, in responding to the noble Baroness, Lady Hayman, and a number of others, the Minister has come out with a list of the Government’s claimed achievements. He has not mentioned once the issues of home insulation and energy efficiency, on which the Government’s record is disastrous. As the noble Baroness, Lady Hayman, said, this means that people are in cold, impossible-to-heat and unhealthy homes. Can the Minister reassure me that we are not going to see back-pedalling this afternoon on home insulation and energy efficiency?

[Lord Callanan (Con)]

It is always a pleasure to hear from the “noble Green lady”, even though she sounds increasingly red sometimes. I am very happy to talk about our record on home insulation. In 2010, under Labour, 14% of homes had an EPC rating of C or above. It is now almost 50%. Clearly, we need to go further, which is why we are investing £6.5 billion over this Parliament on home upgrade retrofit measures. The Treasury has already committed £6 billion from 2025 onwards—the noble Baroness shakes her head; she should listen to the facts. Last week, I was pleased to announce the Great British insulation scheme— £1 billion over three years. Even if the noble Baroness wishes to, she can apply for it online as we speak.