Energy Bill [HL]

Baroness Blake of Leeds Excerpts

2nd reading
Tuesday 19th July 2022 Lords Chamber

[Baroness Blake of Leeds (Lab)]

My Lords, I am grateful for the opportunity to debate this Bill today. I look forward to the contributions that will be made from across the House, and in particular to the closing comments from my noble friend Lord Lennie.

As the Minister mentioned, it is hard to think of a more appropriate day than today to hold this debate. That, together with the illegal Russian invasion of Ukraine, now approaching the end of a fifth month, means this is a very important moment for us to consider the sheer scale of the task ahead of us. It is clear that the Energy Bill is needed, and in this regard it is very welcome. However, we will need to consider what is missing from the Bill.

For the millions of families facing the catastrophe of soaring energy bills, I am afraid the Bill is another missed opportunity as it does not tackle the scale of the issue. It is a missed opportunity to tackle the cost of living crisis; a missed opportunity to bring forward the emergency energy efficiency measure we so desperately need; and a missed opportunity to deliver the green energy sprint that could bring down bills while creating tens of thousands of skilled jobs for future generations if the necessary training programmes and supply chains are developed.

Long-term reform of the energy market is of course necessary, but it must come alongside urgent action to cut bills, strengthen our energy security and tackle the climate crisis now. This Bill will do nothing to buck the Government’s record of failure on these issues as it stands, but perhaps there is an even bigger issue at hand: the Government who presented this Bill already no longer exist. By the time the Bill is in Committee, they will have been entirely replaced. While the leadership selection is still weeks away, we have already heard candidates putting internal politics ahead of science, evidence and the future of the country, at the same time as we experience the dangerous impact of climate change first hand. The country needs to know urgently what their commitment to net zero, for example, really is. I am pleased that they have all finally, publicly committed to net zero, but I have to say that it took a very long time for some of them to get to that point. I cannot ask the Minister to commit to what a future Government will do, but it is important to make the point regardless.

A decade of failed energy policy has left energy bills too high and the UK’s energy system too weak. This Government simply cannot answer the biggest challenges our country faces. While there is a lot in the Bill—243 clauses, as we have heard, covering three pillars, much of which we welcome—what really stands out, as I have said, is what is missing. Where are the urgent measures to help families with soaring energy costs that the Government could be offering, such as delinking the low price of renewable energy from the high price of gas? Where are the desperately needed measures for a green energy sprint that can bring down bills over the years to come? Where is the end to the effective ban on onshore wind—the quickest, cheapest way to reduce reliance on insecure international gas supplies, so starkly exposed by the current crisis in Ukraine? Where is the much-needed extension and upgrade of the national grid?

Where is the long-term mission for home insulation, beginning with the insulation of 2 million homes this year? The UK’s record on energy efficiency in housing is woeful. We need changes to planning law and building regs brought in immediately to stop the building of substandard homes and start closing the gap between our performance and that of other European countries—where, I am afraid, we rank among the lowest.

The Bill is simply not up to the problem at hand. Clauses 1 to 111 and Schedules 1 to 5 address leveraging investments in clean technologies. This sounds great, until you realise that 97 of these clauses and all five schedules relate to carbon dioxide and hydrogen, and that only 14 relate to new technology. Of those 14, 10 clauses are dedicated to low-carbon heat schemes which the Secretary of State “may” make provision for. I am afraid this hardly feels like the sprint to green energy that is needed.

The next six parts of the Bill relate to a pick and mix of energy system reform. There are some welcome and interesting ideas here. The Future System Operator consultation, published earlier this year, set out what we already knew—that the current approach towards delivering net zero was lacking—so the establishment in Part 4 of an independent system operator and planner, ISOP, for the electricity and gas supply sectors is particularly welcome. An expert, impartial body with the duty of facilitating net zero is exactly what is needed. As the pre-existing electricity system operator, which is expected to be at the heart of this new body, has pointed out, it is vital to ensure that ISOP is independent and free from actual or perceived conflicts of interest. It is further welcome that it will be established as a public corporation with operational independence from the Government. Can the Minister expand on the scale and timeline for implementation?

Also found in the second pillar are small pushes in the right direction on the energy company obligation, smart meters and heat networks, but, as is the theme with the Bill, these positive steps are just too timid. We welcome the regulations introducing ECO4 just last week but they are little more than a small step in the right direction on efficiency, and a small step in the wrong direction on bill prices. The provisions expanding the powers in this Bill, while positive for smaller suppliers, appear to be even less significant. Where is the wholesale movement on efficiency that is needed?

As for smart meters, we have heard again and again how their rollout is being developed, facilitated or extended. The provisions in the Bill do not seem to change anything. This is a major consumer issue that could be fixed through the Bill, especially if proper attention is given to using gathered data effectively. That is exactly what we need right now. Why will the Government not mandate the rollout of this legislation, rather than continuing to dither?

The provisions on heat networks are the most welcome in this area. Heat network consumers are currently woefully unprotected; regulation offering much-needed safeguards to the 480,000 consumers who currently use them is long overdue. With the number of heat networks, and the number of consumers they will supply to, expected to grow significantly in our efforts to reach net zero, this is even more pertinent and so we welcome them. However, that perhaps makes the legislation even more disappointing, in a way. It does not encompass the reality and misses yet another opportunity. These systems are poorly funded and poorly maintained; they should be renewable but are not; and they are not covered by the price cap. The legislation fixes none of these much wider issues and it is hard to see this as anything but a failure in the grand scheme of things. Where is the overhaul that heat networks really need?

The third pillar of the Bill contains provisions on maintaining the safety, security and reliance of energy systems across the UK. At this time more than ever, any additional risk of fuel shortages would be most unwelcome. Ensuring that the Government can take steps to maintain or improve fuel supply resilience, if they are needed, is welcome. It is important, however, that any powers introduced are not overextended or misused. I note the factsheet response but would be keen to hear more from the Minister on how far the powers can go—an area I am sure we will discuss at later stages of the Bill’s passage.

There are other welcome provisions in this pillar. There are also a number of provisions in Part 12 on the civil nuclear sector, including on waste storage, decommissioning and more. I would be keen to hear more from the Minister on decommissioning, where I understand we will be reducing ONR regulation as set out under the 1965 Act, which is now deemed unnecessary. The benefits of this have been clearly set out and I understand aligning with international law but, given what is at stake, the more reassurance from the Minister on this being a safe move, the better.

Those are just a few of the areas that need to be addressed, and we will look to do so at later stages if the Government do not. However, I need to ask when a coherent, cross-cutting communication strategy will be ready and when the promised energy advice service will be up and running. Taking public opinion with us and delivering through local networks will be critical to achieving the changes in behaviour that will underpin progress. We have seen from earlier versions of the energy security strategy that agreement on a number of areas is possible, not least onshore wind and solar. We hope the new Prime Minister will not abandon the ambition to deliver.

I am grateful for the amendments that the Minister shared with us this morning. We will be looking at them in greater detail. But the point, running through the Bill, is about not abandoning ambition to deliver when that is exactly what is needed now—ambition and a real commitment to urgency. The scale of the challenge will not be met with anything less.

Energy Bill [HL]

Baroness Blake of Leeds Excerpts

Committee stage
Monday 5th September 2022 Lords Chamber

[Baroness Bennett of Manor Castle (GP)]

My Lords, I rise briefly, having attached my name to Amendment 23 in the names of the noble Lord, Lord Lennie—who, of course, by the nature of these structures has not yet spoken on it—and the noble Baroness, Lady Blake of Leeds. I attached my name only to Amendment 23 but Amendments 27 and 35 form something of a package; they all express concern about requiring regulation so that licences must be only

“granted to fit and proper persons”.

As I was contemplating these amendments, I thought of the Oral Question earlier today in which my noble friend Lady Jones of Moulsecoomb took part, which looked at the situation we have now with the water companies in the UK. There is an obvious parallel with the crucial nature of the water companies and their fit and proper behaviour—and, without reopening that debate, their use of resources et cetera. If we are to go forward with carbon capture and storage at scale, it is obviously crucial that it is absolutely trustworthy and reliable, including in financial terms. We are talking about long-term investments for which we need real stability and certainty. The other parallel that occurred to me in contemplating this group was what happened with carbon offsetting—a phrase that has a bad odour in many parts of the world where we have seen a great deal of cowboy behaviour and many problems occurring.

Putting in this explicit “fit and proper persons” test, which, as the noble Lord, Lord Lennie, explained, is drawn from the National Security and Investment Act, is a very good parallel. If we are to securely store this carbon for the long term, in a manner that means the state does not have to step in to try to clean up a mess left by a private company, this is one way of attempting to ensure that that happens.

[Baroness Blake of Leeds (Lab)]

My Lords, it gives me great pleasure to contribute on this set of amendments. I add my admiration and support for my noble friend Lord Foulkes, who has stepped into the breach admirably in the unfortunate absence of my noble friend Lady Liddell. I very much look forward to her return. I also add my thanks to the Minister for giving us time today to discuss this very important Bill; I think all of us recognise its significance at this time. Without reopening the debate from Second Reading, it is clear to us all that there are gaps. We need to take the opportunity to fill those gaps, given the state of crisis that the country is entering.

I want to speak to the amendments in the name of my noble friend Lord Lennie, starting with Amendments 21 and 22. They seek to make it clear that a licence can be granted for transportation or storage, or both if wanted, but that a licence need not be granted for everything. The activities that Clause 7 relates to are

“(a) operating a site for the disposal of carbon dioxide by way of geological storage; (b) providing a service of transporting carbon dioxide by a licensable means of transportation”.

We have to acknowledge the importance of this section of the Bill. Indeed, the Climate Change Committee has referred to all of this area as a necessity, not an option, particularly as we move forward and technologies improve. As drafted, the Bill provides a single licence for both but, given that they are separate activities, we see no reason why individual licences could not be provided for each activity—even if it may be the case that most of the persons carrying out these activities carry out both.

A broad portfolio of technologies is needed to achieve deep emissions reductions, practically and cost effectively; carbon capture and storage is just one of them. In the International Energy Agency’s sustainable development scenario, in which

“global CO₂ emissions from the energy sector fall to zero on a net basis by 2070”

carbon capture and storage

“accounts for nearly 15% of the cumulative reduction in emissions, compared with the Stated Policies Scenario. The contribution grows over time as the technology improves, costs fall and cheaper abatement options in some sectors are exhausted. In 2070, 10.4 Gt of CO2 is captured from across the energy sector”.

This would provide more flexibility for a developing market, with the intention of driving down price within it.

We have already heard just how expensive carbon capture is and how, despite its importance for achieving clean energy, it has been rather slow to take off. According to the IEA, there were only around 20 commercial operations worldwide midway through last year. Commentators often cite carbon capture as being too expensive and unable to compete with wind and solar, given their falling costs over the last decade, but to dismiss the technology on cost grounds would be to ignore its unique strengths, its competitiveness in key sectors and its potential to enter the mainstream of low-carbon solutions. I am pleased that the Government have not done this. However, as we have made clear, we feel that not enough attention has been given to solar and onshore wind, in particular. It is important that we take whatever steps we can to make the market as attractive as possible and encourage licensing from fit and proper persons.

The noble Baroness, Lady Bennett, has already spoken to the next set of amendments, particularly Amendment 23. We feel that the phrase “fit and proper”, having already had a usage in the National Security and Investment Act, is something that we should take very seriously. The aim of these amendments is to put the responsibility on the Secretary of State to personally deem the individual fit and proper.

Perhaps the greatest concern that we have to acknowledge is the environmental risk associated with long-term storage of captured CO_2, as any gradual or catastrophic leakage would likely negate the initial environmental benefits of capturing and storing CO₂ emissions. It is worth itemising those key risks, just so that we have them on record. First, there are technical hazards: we know that the construction of plants needed to capture and process CO₂ can be complex. Whether for new facilities or retrofitting and enabling the separation of CO₂ from other gases, there are inherent technical exposures in the CO₂ separation process relating to the compression and cooling of gases flying through pipes and the use of chemical solvents, for instance.

Secondly, on fire and explosion, as we know, there are lifting, handling and accidental damage risks at carbon capture plants, as is the case at any construction site. When carbon-capture technology is retrofitted to operate in industrial plants or facilities in typically high-hazard locations such as power stations, the risk of accidental damage and subsequent fire and explosion risks to existing assets might be enhanced. As I have stated, the risk of leakage must clearly be the subject of much consideration as we go forward.

Business interruption is another risk that we have to acknowledge in the failure to meet the carbon goals as they are laid out. Pure carbon dioxide gas can be compressed so that it reaches its dense and supercritical phase. In some cases, it can instead be cooled, which transforms it into a liquid state. Mechanical failures or breakdowns affecting this stage of the process could lead to lengthy business interruptions for clients. If the captured CO₂ cannot be transported, this may affect the emissions targets and carbon credits committed to by clients. Therefore, the need to look at all proper precautions is absolutely vital, and the persons tasked with doing this need to have the confidence of the whole sector.

Amendment 24, in the name of my noble friend Lord Lennie, would make regulations related to carbon dioxide transport and storage licence applications subject to the affirmative procedure. Surely it is sensible that Parliament has a full say in any regulations to ensure that licensing is done both to encourage carbon capture and storage and to ensure that it is properly safeguarded.

We have to see this in the context of an enormous possibility to create significant numbers of jobs—the estimate is 50,000 by as soon as 2030—across industry, power, transport and storage networks. It is absolutely essential that the confidence is there and that all the people who will be engaged in the work we intend to do are properly protected wherever possible.

[Lord Callanan (Con)]

My Lords, this group of amendments considers the licensing of carbon dioxide transport and storage, and I thank everyone for their contributions. I will speak to Amendment 25, in my name, which relates to the definition of “decommissioning costs”. Carbon dioxide transport and storage licence holders will be expected to establish decommissioning funds for each of their transport and storage networks. These funds will accrue money over the operational life of the network to pay for the expected offshore decommissioning and post-closure costs associated with the network.

As originally drafted, the Bill enables the Secretary of State to make regulations about the provision of security for decommissioning in relation to carbon storage installations. This is to ensure that regulations could require relevant persons to provide security for costs that reflect the full range of decommissioning obligations that arise in relation to carbon transportation and storage activities.

Regulations will provide the framework for how the decommissioning funds are to ensure that the funding is secure and available when it is required to pay for the decommissioning and post-closure obligations. The costs are likely to be those associated with the obligations that the licence holder will have under the permit, which could include costs associated with preparatory works between closure and the commencement of decommissioning activities and post-closure monitoring.

As noble Lords will be aware, a series of amendments has been tabled relating to the financing of the decommissioning of carbon storage assets, and I look forward to the forthcoming debate on those amendments. Should our amendments be accepted to apply these decommissioning fund powers to the new defined term “decommissioning costs”, explained in Amendment 70, the previous definition of “decommissioning and legacy costs” becomes redundant and should therefore be omitted from Clause 11.

I will move on to the amendments tabled by noble Lords in this group. Amendment 17, tabled by the noble Lord, Lord Foulkes, and the noble Baroness, Lady Liddell, seeks to amend the scope of the prohibition on operating a CO₂ transport and storage network without an economically regulated licence. Although there is an existing framework for the licensing of carbon dioxide storage activities, established under the Energy Act 2008, that Act provides for technical regulation to ensure the secure geological storage of carbon dioxide. It therefore does not provide any powers in relation to economic regulation.

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[Lord Teverson (LD)]

I asked specifically that all these amendments be grouped together because they have one aim: to make sure that there is a coherence between policy measures and the net zero pathway that is the Government’s own aim. Of course, the Government have undertaken to produce a government strategy and policy statement and the Bill requires a statement focusing on CCUS to be produced as well. However, our contention is that there is no current requirement for policy and infrastructure planning processes to be based on a consistent set of assumptions about the future. That means, in practice, that two projects could get a green light despite being justified by incompatible visions of system need, ensuring that one would ultimately be left stranded. Of course, that does not lead to confidence in this area. So there could be incompatible visions.

For instance, hydrogen electrification visions of the future involve very different supporting infrastructure, and a lack of coherence could create expensive infrastructure which, at the end of the day, is unusable or redundant. The strategy provides an opportunity to set out the latest set of assumptions, projections and decision methodology and I am sure that is what the Government want to do to underpin their policy, to which other processes should align. What we are really trying to do in these amendments is to make sure, practically, that the actions that arise from the Bill are coherent and tie in with the policy statements of the Government. It seems absolutely straightforward to me: it is that missing link, if you like, that pushes together intent in these various areas and makes sure that the strategy is coherent in its delivery. It is as simple as that and I hope the Government and the Minister will look favourably on that approach. I beg to move.

[Baroness Blake of Leeds (Lab)]

I do not have an enormous amount to add to the comments of the noble Lord, Lord Teverson. I highlight again the significance of linking strategy and policy: that is crucial. We will discuss in future debates the issues around the role of the ISOP and its independence, and, particularly in the context of this afternoon’s debate, look at long-term thinking, making sure that we get all the checks and balances in place. We are in a very fast-moving environment and need to make sure that we are absolutely on top of all the changes that are taking place. The noble Lord, Lord Teverson, highlighted the risk of lack of coherence: we need to make sure that everything is nailed down, line by line, and I am sure we will have further discussion on these areas as we go through different aspects of the Bill. I look forward to the Minister’s conclusions on this group of amendments.

[Lord Callanan (Con)]

I thank the noble Lord, Lord Teverson, for his amendments, beginning with Amendments 38 and 112. The Bill provides that the Secretary of State may designate a CCUS strategy and policy statement to set out the strategic priorities of the Government in formulating their CCUS policy. This would also need to take account of any statement designated under Section 131 of the Energy Act 2013. The Secretary of State must carry out their functions under this part in the manner they consider is best to further deliver the policy outcomes set out in the statement. In addition, parliamentarians will have the opportunity to consider any draft CCUS strategy and policy statement before it can be designated, as is provided for by Clause 91(10). Setting out in a strategic policy statement possible scenarios for policy change would start to introduce considerable uncertainty for both investors and the regulator which would, in my view, hamper the stability of the sector.

Amendment 120 to Clause 98 would require that, when making regulations establishing or adjusting a low-carbon heat scheme, the Secretary of State must publish a statement demonstrating how the scheme would deliver in line with both the carbon capture usage and storage strategy and policy statement and any overall strategy and policy statement provided for by the Energy Act 2013. Of course, I agree with the noble Lord in his principle that policy-making should be aligned with the broader strategy and the latest science: that is why all policy on heat and building decarbonisation is and will continue to be developed in line with wider government energy and decarbonisation strategy. As we said in a recent government response to a consultation, the plan to introduce, for instance, the market-based low-carbon heat scheme is aligned with the aim to expand the deployment of heat pumps towards 600,000 installations per year by 2028. I am afraid I do not agree with the noble Lord, and therefore do not believe that requiring another series of publications each time new regulations are made is ultimately necessary. I therefore hope he will feel able to withdraw his amendment.

Turning to Amendment 128, Clauses 108 and 109 will enable the safe and effective delivery of a village-scale hydrogen heating trial to gather vital evidence to help make decisions on the potential role of hydrogen in heat decarbonisation. I reassure the noble Lord that trial development is already following the latest science. This amendment would delay the introduction of new regulations which are focused on the protection of consumers until two strategy and policy statements are published. The exact contents of these documents would also need to be properly consulted on before they are issued.

Energy Bill [HL]

Baroness Blake of Leeds Excerpts

Committee stage
Wednesday 7th September 2022 Lords Chamber

[Baroness Liddell of Coatdyke (Lab)]

Thank you very much. This is another one on future-proofing. The amendment says,

“leave out ‘function on any’ and insert ‘relevant function on any relevant’”

person. The reason is that these delegation powers could be interpreted as being broad and non-specific, and it would be some comfort to insert this language to ensure it is clear that the Bill is referring only to the powers relating to revenue support regulations, and that these will be appropriately delegated to a person with the right capabilities. It seems to open a door that makes us feel a little bit uncomfortable and I think it would be a very sound way to go forward to accept the terms of this Amendment 40. I beg to move.

[Baroness Blake of Leeds (Lab)]

I add my welcome to my noble friend Lady Liddell and I am certain that my noble friend Lord Foulkes will be thinking of organising a party to celebrate her return to Westminster.

I cannot add to the comments she made on her amendment. I completely support what she said. I feel that there is a bit of déjà vu here and that we are going over ground we covered in our first session on Monday, but I think it is really important that we emphasise again, through the amendments that my noble friend Lord Lennie and I have put down, how important it is that we have clarity in all aspects of the Bill. I want to emphasise again the need to ensure that all aspects are future-proofed, thereby giving all parties the confidence that matters of probity, security and appropriate appointments are always taken into account in key positions. It is unfortunate that we need to emphasise this aspect, but I think experience will tell us that it is a very necessary part of all the processes that we bring in place.

To recap briefly, in Amendment 42 we would like to insert the phrase “fit and proper”. As we have said before, this is not the first time this has been used—it was used in the National Security and Investment Bill. Through this amendment we make sure that it is the responsibility of the Secretary of State personally to deem the individual as fit and proper.

Amendment 44 specifically refers to the need for the hydrogen counterparty to be

“a fit and proper person”.

The aim is to make sure that responsibility is very clearly accounted to the Secretary of State.

The explanatory statement for Amendment 64 says:

“If the Secretary of State needs to find a new counterparty, this amendment requires that they must ensure they are a fit and proper person, as with previous amendments in our names”.


I do not think that at this point in the state of affairs we can emphasise enough just how important it is to have accountability, clarity and the ability to have straight- forward lines of communication.

[Lord Teverson (LD)]

I did not like to address the amendments tabled by the noble Baroness before she had addressed them herself. I welcome the amendment tabled by the noble Baroness, Lady Liddell; I think it adds clarity. I absolutely agree with the amendment that the noble Baroness, Lady Blake, has just gone through. I think “fit and proper” is used many times throughout certainly financial services secondary legislation, and when it comes to hydrogen production it seems to me that this is something that is really key. I look forward to the Minister arguing that people in this position should not be fit and proper people, and I pass over to him.

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[Lord Oates (LD)]

My Lords, I declare my interest as a member of the UK Hydrogen Policy Commission. I do not disagree with any of the amendments, and having a stringent green hydrogen standard is important. However, it is also important to stress that hydrogen is for use not only in home heating—I share some of the noble Baroness’s scepticism about that—and there are very significant uses of hydrogen at present in the chemical industry and as a feedstock in fertilisers. They must clearly be the priority, and we certainly need green hydrogen for that, which is a lot of green hydrogen. Although I absolutely share the ambition on tight standards for green hydrogen, we will definitely need it there, and in some of those hard-to-decarbonise areas such as steel production and the building industry. We should absolutely use it for purposes where electricity is not an easy solution, but let us not talk it down or talk about it as if it is a solution only to home heating, where I agree it probably is not practical.

[Baroness Blake of Leeds (Lab)]

Just to add to that list of uses, I am interested in the development of the hydrogen village, as outlined in the Bill, which is a really interesting example. There are also other uses in transport, for example, which are very well advanced, and we very much look forward to the outcome of those debates.

I do not want to prolong the debate, but the obvious question to me is that a standard has been established and had extensive public consultation and multiple engagement sessions with experts by stakeholder groups, as I understand it. I just wonder why we would want to undermine all that work and complicate the situation by suggesting that the Secretary of State could override the standard. Perhaps the Minister could, in his summing up, give us a very clear explanation of how any changes to the standard and protection might be achieved, to ensure that stakeholders and the public are kept informed, as this is, as we have heard, an area of both enthusiastic response and concern.

[Baroness Bloomfield of Hinton Waldrist (Con)]

I thank the noble Baroness, Lady Liddell, and the noble Lord, Lord Foulkes, for their amendments in this group.

Amendments 43, 45 and 48 seek to ensure that the question of who is an eligible low-carbon hydrogen producer is determined solely by regulations that set objective criteria against which to assess eligibility, and in doing so must reference the low-carbon hydrogen standard.

Amendment 58 seeks to clarify that a low-carbon hydrogen producer must be eligible to receive support, which the other amendments would ensure means that they are compliant with the low-carbon hydrogen standard. Amendment 46 has a similar purpose; I thank the noble Baroness, Lady Bennett, for it and for her encouraging comments about the policy.

Amendment 47 seeks to introduce an emissions standard for low-carbon hydrogen production and would require the Government to target support at areas that cannot benefit from other cleaner, more efficient or cost-effective decarbonisation processes. I thank the noble Baroness, Lady Worthington, for this amendment.

A low-carbon hydrogen producer is defined in Clause 61(8) as

“a person who carries on (or is to carry on) activities of producing hydrogen which in the opinion of the Secretary of State will contribute to a reduction in emissions of greenhouse gases”.

The intention of this definition is to ensure that support under hydrogen production revenue support contracts may be provided only in respect of low-carbon hydrogen production that contributes to our decarbonisation ambitions.

Clause 61(3) places a duty on the Secretary of State to make provision in regulations for determining the meaning of “eligible” in relation to a low-carbon hydrogen producer. This approach to defining eligibility in regulations is similar to that taken for low-carbon contracts for difference in the Energy Act 2013. The regulations that define the term “eligible generator” for low-carbon contracts for difference have themselves been updated since they were introduced in 2014 as the industry and technologies have evolved; this has proved a flexible and enduring approach since 2014.

This duty is required as the Secretary of State is only able to direct a hydrogen production counterparty to offer to contract with an eligible low-carbon hydrogen producer. An allocation body will also be able only to give a notification to a hydrogen production counterparty specifying an eligible low-carbon hydrogen producer to offer to contract with. It is not practical to define an eligible low-carbon hydrogen producer in the Bill because eligibility may change over time as the industry and technologies evolve. The Government plan to consult on these regulations by early 2023.

The Government consulted on a UK low-carbon hydrogen standard last year, and a government response was published in April this year. This world-leading standard sets out a greenhouse gas emissions threshold as well as other criteria for hydrogen production to be considered low carbon, and sets out in detail the methodology for calculating the emissions associated with hydrogen production. This includes the steps that producers are expected to take to prove that the hydrogen they produce is compliant.

The standard was developed following a public consultation and multiple engagement sessions with industry and academic experts, including the Hydrogen Advisory Council and its low-carbon hydrogen standard working group. As set out in the response to the consultation on a low-carbon hydrogen business model, published in April this year, we are proceeding with our proposal to require volumes of hydrogen produced to meet the UK low-carbon hydrogen standard in order to qualify for and receive funding under the business model. The low-carbon hydrogen standard is set out in guidance and we expect it to be updated over time to ensure that it remains fit for purpose and reflects our growing understanding of how new technologies work in practice, including how hydrogen production interacts with the broader energy system. I hope that gives some comfort to the noble Lord, Lord Oates, and the noble Baroness, Lady Blake, that the standard may well change over time as our understanding of the practice grows.

With a focus on investor confidence, our current approach gives a significant degree of certainty about eligibility, which will provide prospective investors and developers with the clarity and transparency that they need to bring projects forward. While the low-carbon hydrogen standard is an integral part of the low-carbon hydrogen regime, direct reference to an emissions standard in this legislation would undermine both the need for the standard to be capable of evolving over time and the need for the legislation to be certain. The approach currently set out in the clause makes best use of regulations for setting eligibility and guidance that can be more responsive to the evolving nature of the low- carbon hydrogen standard.

Amendment 58 seeks to insert “eligible” in Clause 70(1)(b). We do not consider this necessary, as the reference to

“that low carbon hydrogen producer”

in subsection (1)(b) is referring back to the

“eligible low carbon hydrogen producer”

in subsection (1)(a).

The noble Baroness, Lady Worthington, mentioned the production of methane and it being an unhealthy by-product of hydrogen, and that a green hydrogen lobby group which I was not aware had been consulted. I will certainly take that back to the department. We have numbers on the rate of hydrogen per kilogram of greenhouse gas emissions compared with the low-carbon hydrogen standard, but I will be delighted to write to her, rather than befuddle everybody with the science here.

I therefore ask that the noble Baronesses and noble Lords withdraw and not press Amendments 43, 45, 46, 47, 48 and 58, but thank them for helping to test the robustness of the Government’s decarbonisation ambitions.

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Moved by

[Baroness Blake of Leeds]

52: Clause 66, page 58, line 4, leave out “relevant market participants (see subsection (8))” and insert “the Consolidated Fund or gas shippers”
Member’s explanatory statement
This amendment means the Secretary of State may put a levy on gas shippers, but may not put it on gas or electricity suppliers, thus taking responsibility away from levies to households.

[Baroness Blake of Leeds (Lab)]

I shall speak also to Amendments 54 and 62, tabled in my name and that of my noble friend Lord Lennie. Clauses 66 and 67 set out a series of powers to raise a levy or levies to fund the hydrogen business model. Detailed design of these will be subject to further consultation, which I hope and assume will take place thoroughly and may indeed reach similar conclusions to those put forward in this group of amendments.

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[Lord Callanan (Con)]

I understand the point made by the noble Baroness. I have also seen the models of where it is most likely that hydrogen would be used, and I have considerable sympathy for many of the points that she made. As to the where it will be used, it will clearly be in industrial processes and heavy-goods transportation. These would be more likely uses than home heating or decarbonisation, but it would possibly play a role. Nevertheless, as I said, I have taken note of what has been said in the Committee and understand the points that have been made. If the noble Baroness allows me, I will take them away to look at, and possibly revisit them at Report.

Amendment 56 seeks to impose restrictions on when the hydrogen levy can be introduced to fund the hydrogen business model. This will help to unlock potentially billions of pounds worth of investment in hydrogen that we need across the UK. The Government are committed to ensuring that long-term funding is provided through the hydrogen business model, and the provisions in the Bill do not require the Government to introduce the levy by a particular date. We do not expect the levy to be introduced any time before 2025, and so we do not expect it to have any impact on consumer bills before then, at the earliest. Decisions regarding when to introduce the levy will take into account wider government policies and priorities, including considerations related to energy bill affordability, which is always at the forefront of our considerations.

The first set of regulations under Clause 66, establishing the levy, will also be subject to the affirmative resolution procedure, so we would fully expect Parliament to exercise its role, and particularly your Lordships’ House to scrutinise how the Government intend to exercise those powers.

Amendment 56 would, in my view, introduce restrictions that are unnecessary, given the Government’s approach to decisions related to when to introduce the levy and the parliamentary scrutiny requirements that would be associated with any relevant secondary legislation.

Amendment 57 seeks to protect consumers by introducing a requirement for the Secretary of State to publish a specific consumer impact report before making regulations under Clause 66, establishing a hydrogen levy. As I mentioned, the parliamentary procedure for the first set of regulations that establish the levy will help ensure that the levy receives sufficient scrutiny from Parliament. Crucially, I can tell the Committee that it is already the Government’s intention to publish an impact assessment alongside the draft regulations made under Clause 66. I hope noble Lords will recognise that the amendment is unnecessary and feel able to not press their amendments.

[Baroness Blake of Leeds (Lab)]

I thank the noble Lord for his comments and welcome, as we all do, the commitment to revisit one of the amendments from the noble Baroness, Lady Worthington. We look forward with interest to that. However, on some of the other aspects, there will be conversations between now and Report, and I am fairly confident that we will come back to discuss what is, in our view, a really important area. With those comments, I beg leave to withdraw the amendment.

Amendment 52 withdrawn.

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[Lord Callanan (Con)]

My Lords, in moving Amendment 65 I shall speak also to Amendments 66, 147, 149 and 190 standing in my name. These amendments will allow the Secretary of State to modify the licences of certain gas and electricity market participants in Great Britain and Northern Ireland. They will also allow the Secretary of State to modify documents maintained in accordance with these licences, such as industry codes, or agreements that give effect to such documents. The Secretary of State will be able to make such modifications only for the purpose of facilitating or supporting enforcement of, and administration in connection with, hydrogen levy obligations.

As I have said, decisions on the detailed design of the levy are pending. However, it is likely that persons other than the levy administrator will need to perform functions, provide services, and/or provide information and advice that support and facilitate the administration and enforcement of the levy. This power is required in order that the Secretary of State can modify relevant licences and codes to support and facilitate the administration and enforcement of the levy. In particular, it is required so that the Secretary of State may make modifications to support or facilitate persons who are parties to relevant industry codes to take on roles related to the levy’s administration and enforcement.

I can tell the Committee that there is precedent for this type of provision, with similar powers contained in the Energy Act 2013 and the recent Nuclear Energy (Financing) Act 2022. Provisions in the Energy Act 2013 were used to make licence and code modifications in relation to the contracts for difference regime. This power will help future-proof the levy, enabling the Secretary of State to implement licence or code modifications in order to accommodate any future changes to the levy design.

I can reassure your Lordships that these amendments of course include a requirement for the Secretary of State to consult the holder of any licence being modified and such other persons as the Secretary of State considers it appropriate to consult before making any modification. This will help ensure that relevant bodies are engaged in any potential modifications.

In addition, before making modifications under this power, the Secretary of State must lay a draft of the modifications before Parliament, where they will be subject to a procedure analogous to the draft negative resolution procedure used for statutory instruments. This also allows for additional scrutiny for any proposed modifications under this power. I beg to move.

[Baroness Blake of Leeds (Lab)]

Briefly, I thank the Minister for that explanation. I am sure, looking back at comments made earlier this afternoon, that the team opposite cannot be happy with the number of government amendments that are coming through on the Bill at this stage—I hope that will be taken up on a serious note on this and other Bills that have come forward.

The only slight question I have is that we talk about consultation as though everyone understands exactly how it happens and everyone is happy with the way it is done. Is it possible to be slightly more specific about who else might be consulted apart from the owner of the licence? I would also like some reassurance around the openness and transparency of a process to make sure that all parties are aware of any changes made in the future.

[Lord Callanan (Con)]

I am happy to reassure the noble Baroness that the relevant consultations will of course take place on any changes made.

Energy Bill [HL]

Baroness Blake of Leeds Excerpts

Committee stage
Monday 12th December 2022 Grand Committee

[Lord Teverson (LD)]

Forgive me. I am looking at a slightly out-of-date document. Anyway, that is the area that I would be interested to understand from the Minister. We will come to other amendments another time.

[Baroness Blake of Leeds (Lab)]

I too welcome the return of the Bill. It is quite interesting to reflect back to the first and second days in Committee, when we were recording the hottest temperatures that we had ever experienced in this country and were making full use of that experience. We were also in the midst of the leadership contest and questioning the commitment of the candidates; we had no way of knowing, of course, that both of them would take their turn in No. 10 and have the ability to demonstrate their commitment.

We are really pleased to see the return of the Bill. We were concerned that there would be changes and, as we said on the first two days in Committee, there are some measures in this Bill that are urgent and that we need to get a move on with in order to address the challenges that we face in this space.

I do not have an enormous amount to add to the Minister’s very full comments. I just seek clarification. When I see an amendment on consultation, I am always slightly concerned to know who exactly would come into the sphere of consultation and make sure that it is as full as it could be. The issues around making sure that the fund remains sufficient are very practical and necessary. With that plea for clarification on consultation, I am happy to leave it there.

[Baroness Bloomfield of Hinton Waldrist (Con)]

I thank the noble Lord, Lord Teverson, and the noble Baroness, Lady Blake, for their remarks. I will start with the noble Baroness’s final question. As set out in the Government’s response to that consultation, it is expected that the owners of the asset will submit their assessment of the decommissioning liability to the Offshore Petroleum Regulator for Environment and Decommissioning for verification. This verification will include consultation with the North Sea Transition Authority, which will be able to compare the assessment against its extensive benchmarking data. OPRED will also be able to engage third parties to provide its own assessment if necessary. Once OPRED is satisfied that the assessment is accurate, it will advise the Secretary of State on approving the amount. That is the advice route that the Secretary of State would take.

In response to the question from the noble Lord, Lord Teverson, transport and storage companies will hold the decommissioning funds, but will be overseen by the economic and operational regulators. Funds to cover decommissioning costs will be included in the allowed revenue paid to the transport and storage company. The proportion of revenue to be paid into the decommissioning fund will be determined by the economic regulator once the decommissioning liability has been calculated. I hope that that deals with that satisfactorily—clearly not.

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[Baroness Young of Old Scone (Lab)]

My Lords, I support the noble Baroness, Lady Worthington, in her two Amendments 130A and 130B and stress that the measurement, monitoring and verification of UK removals is vital. I declare an interest as chairman of the Woodland Trust. I have just been involved in the bowels of the woodland carbon code. It is quite staggering to think that many of these verified units of removal will not achieve full verification for 20, 30, 40 or 50 years and are then required to persist for 100 years. We have to find a way of inventing a system that will keep an eye on a plethora of landowners and land interests who are planting trees to sequester carbon and have that effective supervision, light-touch as it may be, for 100 years.

This will be quite a challenge. It is something I would appreciate the Minister responding to. We are now in the middle of implementing the peat carbon code, which will have similar difficulties, but perhaps the most important one has not yet been developed: the soils carbon code. That is of far more potential than either the peatland or woodland carbon codes in sequestering carbon. It will be a very widespread code because soils exist everywhere, though not all of them will be potentially good at sequestering carbon. I urge the Minister to accept these two amendments and give us a feel, as it were, of those 100 years and how the complexity of the carbon codes can be relied upon.

Before I finish, I make a similar apology to that of my noble friend Lord Whitty, as I was not here to speak to my Amendment 119. I did not miscalculate the pace at which the Bill would go; I was miscalculating the pace at which a snowed-in train would move. Since the Minister is appearing before the Environment and Climate Change Committee on Wednesday, I can ask him the question then anyway.

[Baroness Blake of Leeds (Lab)]

This has become a very rich debate. I thank the noble Baroness, Lady Randerson, for putting her amendments forward to enable us to have these broader discussions. We have said from the start that the difficulty with this Bill is the things that are not in it; this is one area we can all learn from and hopefully move forward on.

I also thank the noble Baroness, Lady Worthington, for the explanation of her Amendments 130A and 130B. I am sure that we would all welcome more clarity in these areas, and indeed a strategy so that we can bring confidence and certainty to the sector in the way that she described.

I will focus most on Amendment 124A in the name of the noble Baroness, Lady Randerson, in my comments and, in particular, the notion of adding local carbon transport schemes to the section on low-carbon heat schemes—indeed, to run alongside them.

As many will know, this was last looked at under the last Labour Government, with the 2009 report Low Carbon Transport: A Greener Future, which, interestingly, was published by the DfT. It made recommendations on supporting a shift to new technologies and fuels, promoting lower-carbon choices, and using market mechanisms to encourage a shift to lower-carbon transport. Of course we have moved on in many ways, but these principles should not be overlooked and we should continue to put in our full effort.

Specifically on hydrogen vehicles, we believe there is merit in looking at potential in the HGV sector. The discussions about shipping were interesting as well, but we feel that so much more focus needs to be put on alternatives, certainly in the short-term. Electric is obviously being looked at.

It is important to debate this at this point because, with the global situation regarding gas supplies, we are focusing our attention on domestic energy in particular, for obvious reasons—the cost of living crisis, security issues and all that goes with it—but we have to bear in mind that transport is one of the biggest sources of carbon emissions in the UK. In 2019, it accounted for 34% of the UK’s total carbon emissions. Its emissions have remained largely unchanged since the 1990s, which we cannot say about the energy supply generally. We have to ask why transport is such a poor performer.

We need to be concerned about where we get the electricity from if we continue with our ambition. If we are to reach our target of net-zero emissions by 2050, the decision to ban new petrol and diesel cars from 2030 will help, but there are so many other areas that we should focus on: alternative modes of transport, cycling and walking, and shared travel options. From my point of view, we have this enormous disconnect between transport policy and the policy we are discussing. We need to pick it up and take it seriously.

I speak with my experience of being a member of Transport for the North. All the schemes we tried to bring in through the integrated rail plan to deliver not only for the travelling public but for the impact on the climate seem to have been left behind. We have discussed this before. We have had Questions in the Chamber about the lack of joined-up thinking from the Government, which needs seriously to be addressed. The noble Baroness, Lady Randerson, referred to it as a lack of leadership and vagueness in the plan, but why are we not cross-referencing within the Bill to the work that needs to be done?

Speaking with my local government hat on, on building new homes, why can we not look at the schemes in Scandinavia in particular, where every new home has solar panels and the excess electricity generated is taken off and fed into personal electric charging points for vehicles? There are so many examples that we should look at.

The amendment has generated an opportunity to discuss this. I look forward to the Minister’s response to the amendments from the noble Baroness, Lady Worthington, but in particular to her explanation as to why there is such a lack of joined-up thinking in these areas, where the potential could be enormous.

[Baroness Bloomfield of Hinton Waldrist (Con)]

My Lords, I thank all noble Lords who participated in the debate, particularly those who tabled amendments.

I will speak first to Amendment 124A, tabled by the noble Baroness, Lady Randerson, but I must start by taking issue with the idea that the Government are not showing leadership. I believe that they are showing leadership with low-carbon transport solutions. For example, this year alone we have announced £200 million for the zero-emission road freight demonstrator programme, which includes hydrogen and electrification for HGVs; another £200 million for zero-emission buses, again including both hydrogen and pure electric; £30 million for a fleet of 124 buses in the West Midlands; £206 million for the UK Shipping Office for Reducing Emissions—or UK SHORE—to decarbonise maritime, which includes a mix of different technologies; and up to £12 million until August 2023 and up to £60 million until March 2025 for the second and third rounds of the clean maritime demonstration competition, funding feasibility studies and pre-deployment trials in zero-emission shipping hydrogen technologies for maritime applications. As the noble Baroness will be aware, there is also £20 million for phase 2 of the Tees Valley hydrogen transport hub, with an additional £300,000 put forward to support local skills.

On aviation, the SR21 funding for hydrogen-related aviation activity has not yet been announced but is forthcoming. We have also announced £165 million for the advanced fuels fund to kick-start a sustainable aviation fuel industry in the UK.

All this goes to demonstrate that we are doing a lot of work to show leadership in this area, putting money into research to help us solve some of the problems raised in this debate. Work is already under way in the Department for Transport in close collaboration with BEIS; it is really helpful that the former Secretary of State for Transport is now the Secretary of State for BEIS, so he will be very well versed in some of these issues. I can reassure noble Lords of the continual conversation that happens between the two departments in this regard. In close collaboration with BEIS, as set out in the Government’s transport decarbonisation plan, the Department for Transport is delivering on its comprehensive plan for decarbonising transport, which includes supporting a greater role for hydrogen through schemes such as those I have mentioned.

As we have seen, there is a significant role for hydrogen in heavier transport applications or where things such as refuelling times and infrastructure constraints make it the best choice. However, we do not consider that a new statutory, regulatory regime would add anything new to the work already being done. It is always necessary to consider whether the benefit outweighs the regulatory burden. I hope that the noble Baroness is reassured by the Government’s commitment to this cause, and I ask her to withdraw her amendment.

Amendment 130A seeks to limit the definition of “UK removals” in Section 29 of the Climate Change Act, excluding mechanisms such as financial instruments that do not relate to the physical removal of greenhouse gases in the UK. I reassure the noble Baroness, Lady Worthington, that Clause 111 does not expand the definition of “UK removals” to non-physical processes, but instead to greenhouse gas removals achieved by engineered methods, such as bioenergy with carbon capture and storage. This is to align the definition with current international best practice, including guidelines set out by the United Nations Framework Convention on Climate Change.

I equally reassure the noble Baroness, Lady Jones, that it is the Government’s priority to reduce emissions of greenhouse gases from human activities and to adapt to those climate change impacts that are unavoidable. We are clear that the purpose of greenhouse gas removals is to balance the residual emissions from sectors that are unlikely to achieve full decarbonisation by 2050. It is not a substitute for decisive action across the economy to reduce emissions. Nature-based methods, such as afforestation and habitat restoration, will be essential in removing and storing carbon dioxide at scale while delivering a range of additional environmental benefits, such as biodiversity gain, air quality and soil health.

The Climate Change Act 2008 allows the Government to purchase off-sets or other traded instruments to set towards our emission reduction targets. The Government do not currently intend to purchase off-sets to set towards our carbon budgets, although they have retained the option to do so in future, if appropriate. I can see that I shall never manage to reassure the noble Baroness, Lady Jones.

Energy Bill [HL]

Baroness Blake of Leeds Excerpts

Committee stage
Monday 19th December 2022 Grand Committee

My third amendment is straightforward; it covers much of the same ground that the noble Lord, Lord Ravensdale, mentioned. It is about ensuring that the regulator also has some obligations in relation to net zero and our decarbonisation programme. It may be argued that that obligation is already there since the regulator is now to be Ofgem, but it is not clearly there; we probably need to reinforce it in this clause. Amendment 161C therefore provides for a reference to being compatible and supportive of the net-zero strategy. We will see whether we need it but I still feel that my first two amendments on consumer protection are needed. I beg to move.

[Baroness Blake of Leeds (Lab)]

My Lords, I rise to address the amendments in this group. My noble friend Lord Whitty outlined clearly the reasons for his amendments. I will speak to Amendment 161CA in my name and that of my noble friend Lord Lennie. At this stage, it is appropriate for me to declare my interest as a vice-president of the Local Government Association because it comes up in subsequent groups.

I want to refer to my experience when I was the leader of Leeds Council. Leeds PIPES is one of the most successful district heating schemes in the country and is expanding. It aims to take more than 16,000 tonnes of carbon out per year. It is already securing reductions in fuel bills of between 10% and 25%. The other element, which we have not addressed, is that, by working locally through these schemes, we have been able to bring training and employment to the local community. Indeed, 60% of the project spend is by local businesses in the community, making it a win-win scenario.

Social housing and council housing are not the only beneficiaries of the schemes, although they are an important aspect as there are more than 2,000 such homes already on the system. The system has started to be installed and expanded into the city centre, including in council buildings, ensuring that it is a sustainable project. I look forward with interest to the Minister’s response to the specific concerns raised by my noble friend Lord Whitty about consumer protection. The third amendment in his name, on the contribution to net zero, is valuable; it highlights how these networks need to be taken seriously. We need to make sure that they are sustainable and that their future is secure on behalf of the consumers that they supply.

Amendment 161CA in my name and that of my noble friend Lord Lennie refers specifically to ensuring

“that regulation covers systems that are operational but are operating inefficiently to the detriment of customers.”

As one of the heat network providers, Switch2, explains, a 2018 study by the CMA found that,

“although heat networks provide customers with a cost effective, efficient supply of heat compared to alternatives, some customers experience poorer outcomes in terms of price and service.”

That provider has contributed to the thinking on why heat network efficiency is so important. It says:

“The efficiency of your heat network is the crux of effective operation. Before the energy crisis and regulatory requirements, heat network efficiency was often seen by operators as a ‘nice to have’, rather than a necessity, despite significant cost saving benefits to both residents and operators.”


I think we have moved forward a great deal on that consideration.

Although we are focused on the incredibly high cost of gas at the moment, I hope that we can do everything in our power to improve efficiency and take this issue forward. It is clear that the Government are aware of this issue and are acting on it to a degree. Would it not be sensible to ensure that the regulatory remit also covers inefficiencies and that consumers are protected from the issue, rather than just requiring operators to apply for grants voluntarily?

[Lord Callanan (Con)]

I thank the noble Lord, Lord Whitty, and the noble Baroness, Lady Blake, for their comments and amendments. As I said on the previous group, the Government are committed to introducing protections for heat network consumers that ensure that they receive a fair price and a reliable supply of heat, and are not disadvantaged compared to other consumers. Ensuring that heat network consumers receive comparable protections to gas and electricity consumers is the primary reason for agreeing to the CMA’s recommendation to regulate heat networks.

We also recognise the vital contribution that heat networks will ultimately make in decarbonising heat in buildings. I highlight to the noble Lord that the Bill already provides for the heat networks regulator to prioritise protection of consumers and the decarbonisation of the sector. The Bill provides for Ofgem to be the heat networks regulator in Great Britain, with the Utility Regulator taking on the equivalent role in Northern Ireland.

Schedule 15 to the Bill provides for regulations making provision about the objectives of the regulator. This includes its principal objective to protect the interests of existing and future heat network consumers. This is equivalent to Ofgem’s principal objectives to protect the interests of existing and future gas and electricity consumers. We intend for this principal objective to be set out in the regulations.

Schedule 15 also provides for regulations specifying the interests of existing and future heat network consumers that are to be protected. This includes consumers’ interests in the reduction of greenhouse gas emissions generated by heat networks. Schedule 15 also provides for the introduction of carbon emissions limits on heat networks in England and Northern Ireland. We intend again for this to be provided for in the regulations.

The regulations will also give Ofgem powers to investigate and intervene on networks where prices for consumers appear to be disproportionate compared to systems with similar characteristics or if prices are significantly higher than those consumers would expect to pay if they were served by an alternative, comparable heating system. Ofgem will also be able to set rules and guidance on how heat networks recover their costs through their heat tariffs.

Amendment 161CA tabled by the noble Lord, Lord Lennie, and the noble Baroness, Lady Blake, is on ensuring the efficiency of existing heat networks. I thank them for highlighting the importance of ensuring that regulation facilitates the improvement of technical standards on heat networks. This will ensure efficient heat networks that provide fair prices and reliable heat to consumers at the same time.

I reassure noble Lords that the Bill, more specifically paragraph 14(3)(d) of Schedule 15, already provides measures for ensuring heat network efficiency. Schedule 15 provides for the introduction of technical standards, which will protect consumers from being supplied by inefficient networks. The regulator’s compliance activity in relation to new and existing heat networks will include work on any standards mandated in authorisation conditions under this power.

I therefore submit that the intentions behind the noble Lords’ amendments are already provided for in the Bill, so I hope that they do not press them.

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The benefits of the schemes envisaged by these amendments would be huge, with lower energy bills and the creation of new jobs, in addition to the all-important contribution to saving the planet with the significant creation of green energy. I am sure the Minister will want to make possible the saving of about 1.5 million tonnes of greenhouse gas emissions, which I understand this would achieve. It would certainly be a rather excellent legacy when this Government hand on to another.

[Baroness Blake of Leeds (Lab)]

I shall speak to the amendments in the names of my noble friend Lord Lennie and myself. Before I get to that point, though, I want to stress that the contributions made in this debate have been so strong that I cannot see how the Government can continue not to take this aspect of the debate with the seriousness it deserves, because at the end of the day we have very serious obligations and commitments to make. We are not going to achieve what we have set out to do if we do not focus on delivery, and the importance of how we take our communities and people with us on that journey. I really do not think that has been stressed enough.

The noble Lord, Lord Ravensdale, put it very well when he stressed the importance of involving local authorities in setting up local area energy plans, particularly something that has to be repeated again and again when we talk about this: the bringing-in of powers that need to go down to local authorities and then into the communities. The important aspect of this is that the resources must be there to accompany those powers. Frankly, we are in a situation where local authorities across the country have lost over 60% of their budgets. This needs to be taken into account when we consider how local areas can contribute to the important work that needs to be done in this space. The noble Baroness, Lady Boycott, expressed it exceptionally well by highlighting the current contradictions in government policies that are holding us back in so much of what we need to do.

Going through the debate, I commend the contributions that have been made from our partners coming in. They have brought such important evidence as to what we could be doing, and about the huge potential that could be unleashed if the Government were able to put the necessary measures in place.

In this group, we have focused specifically on setting up a community electricity export guarantee programme. Our amendments relate to community energy and would bring in new clauses between Parts 7 and 8 and Parts 12 and 13. We have done this because, as we have heard, community energy covers aspects of collective action to reduce, purchase, manage and generate electricity. Projects obviously have an emphasis on local engagement and local leadership and control. I firmly believe that that action can often tackle challenging issues around energy with communities, which are well placed to understand their local areas, and bring people together with common purpose. As we have heard, it often takes only a couple of experienced and committed people at a local level to unlock some of the issues we have faced that have been holding us back, and to advise government on what needs to be changed and done to bring this forward.

I do not know whether others picked up a significant amount of interest in the different media outlets over the weekend about community energy projects and initiatives that are being brought forward. We have heard that those projects are significant and cover a whole range of different aspects and ways of coming forward. I do not want to go over all the contributions that have been made, but I hope that we are all looking for some very specific measures and some movement from the Government that we can take forward to Report to examine how we can make the difference that we need.

Running all the way through this is the cruel impact of energy bills on our communities and local people. The response communitywide is because people have to work across so many different areas. That key element of behaviour change is absolutely essential if we are to bring the necessary partners together.

Our amendments would require the Secretary of State, within six months, to

“require licensed energy suppliers with more than 150,000 customers (‘eligible licensed suppliers’) to purchase electricity exports from sites generating low carbon electricity with a capacity below 5MW, including community energy groups … Licensed energy suppliers with fewer than 150,000 customers may also offer to purchase electricity exports from exporting sites … including community owned energy groups”.

Eligible licensed suppliers must

“offer a minimum export price set annually by OFGEM”,

offer a minimum five-year contract and allow

“the exporting site to end the contract after no more than 1 year.”

These steps are important to make sure that the benefits come to community energy projects and that they have a guaranteed stable market to operate in.

A community smart export guarantee is supported by Community Energy England. It would increase investor certainty, especially for larger-scale ground-mounted projects where most of the energy is exported. I am interested to hear what consideration the Government have given to such a scheme and whether we can look forward to progress to ensure that we can deliver.

[Lord Callanan (Con)]

I thank all noble Lords who contributed to this important debate. Let me start with Amendment 168, moved by the noble Lord, Lord Ravensdale. It seeks to ensure that guidance is published for local authorities regarding local area energy planning. Although the amendment is well-intentioned, in my view, it is not necessary. The Government already have work under way to consider the role of local area energy planning in delivering net zero and supporting efficient network planning, including heat network zoning policy. Through the Government’s Local Net Zero Forum, we are working with local authority representative bodies to discuss the roles and responsibilities of local government, and how we will work with local government to reach our targets.

I am sure the noble Lord agrees that local authorities are already well placed to undertake local area energy planning given their established relationships with many key stakeholders. Guidance to help develop local area energy plans was already published earlier this year and the Government directly supported this activity through the £104 million “prospering from the energy revolution” programme. This included co-funding for the development of guidance for local areas developing local energy plans and the subsequent delivery of those plans. This has so far seen plans produced for Peterborough, Pembrokeshire, Stafford, Cannock Chase and Lichfield. Given that this activity is already under way, I hope the noble Lord agrees that his amendment is unnecessary and will therefore feel able to withdraw it.

I thank the noble Baronesses, Lady Young, Lady Boycott and Lady Blake, and the noble Lords, Lord Teverson and Lord Lennie, for Amendments 238 and 242G, which seek to enable community renewable generation schemes to sell electricity generated to local consumers. I also thank the noble Baroness, Lady Meacher, for her contribution. The Government believe that community groups have a role to play in our efforts to eliminate our contribution to climate change. However, it is our view that encouraging or introducing obligations on licensed electricity suppliers to mandate them to offer local tariffs would be a disproportionate intervention in the market. Local tariffs are better left as commercial decisions for suppliers.

There are already examples of suppliers offering local tariffs through the market. Octopus Energy offers customers in Market Weighton, Caerphilly and Halifax a tariff with discounted prices at times when electricity is generated locally. Any new obligation in this area is likely to be complex and burdensome, particularly if it interferes with suppliers’ existing services and processes already used to serve their customers.

It is therefore more appropriate to allow market-led solutions to continue to develop, rather than us trying to make commercial decisions on behalf of suppliers. As we set out in the British energy security strategy, the Government are developing local partnerships in England that will enable supportive communities to host new onshore wind infrastructure, for example, in return for benefits including lower energy bills. The Government are separately considering wider retail market reforms that deliver a fair deal for consumers, ensuring that the energy market is resilient and investable over the long term.

As I am sure noble Lords are aware, the Government are undertaking a comprehensive review of electricity market arrangements in Great Britain, which considers options that encourage generation and demand to consider location. It also asks how markets can better value the role of small-scale, distributed, renewable electricity. The department is currently looking at the responses to the review of electricity markets consultation, which closed in October.

Amendments 237 and 242F would enable community renewable generation schemes to receive a guaranteed minimum price for the electricity that they export to the grid. Small-scale, low-carbon electricity generation should be brought forward through competitive, market-based solutions, which will help to encourage innovation and investment. We introduced the smart export guarantee in 2020 to provide exactly that: small-scale, low-carbon electricity generators with the right to be paid for the renewable electricity that they export to the grid.  It ensures that these generators, which would otherwise struggle to find a way to sell electricity, can have guaranteed access to the market and a choice of options following the closure of the feed-in tariffs scheme.

To enable the SEG to be truly market-based and encourage innovation, however, suppliers must be in a position to set both the tariff levels and structure for themselves. We should allow the small-scale export market to develop with minimum intervention and not introduce a support scheme that specifies minimum prices or contract lengths for generators.

I say without much optimism that I hope noble Lords are reassured that the Government recognise the role that community-owned and locally owned renewable energy schemes can play in supporting the UK’s national net-zero targets. I hope that noble Lords will feel able to withdraw or not press their amendments.

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[Lord Teverson (LD)]

My Lords, I will speak to Amendment 181 in my name, which follows on from what my noble friend Lady Randerson was talking about.

The whole area of smart appliances is really important. It is in fact where demand management starts to creep into this Bill; it is about the only place that it does. The popularity of their potential has, I think, been shown by National Grid’s call for people to offer to manage their energy usage over particular times in the winter; the Minister may give us the figures but I think that more than a million people have shown an interest in it. I would be interested to know where we are with that.

There is a risk here, however. We have seen it with smart meters. I will not go back to the smart meters argument but one barrier to rollout has been the fear of people sharing information. Clearly, data is core to smart technology; data is personal so there is the question of how that data will be used.

My Amendment 181 is really a probing amendment; it is not in the form that would finally go into a Bill. It seeks to understand how the Government are going to communicate what is a really important thrust in terms of demand management and the way we use dispersed energy systems in a smart grid. How are they going to explain and deliver the strategy outlined so that we do not have the consumer reaction that we have had in other areas, including smart meters—very much media-driven, I should add? I want to avoid that.

The other area on which I want to tackle the Minister is concerns Clause 187(3)(d). It is one sub-paragraph of just three lines about security of information—indeed, the whole area of security. This is a core, important area: we know that, wherever smart systems or information technology are involved, there are all sorts of threats regarding the use of personal information. There is also the threat of external hacking, with state actors or others going into these systems and making them unusable.

It is easy and right to say that personal and other data used with smart technologies are secure or otherwise protected, but who is actually going to do that? I am talking about security or communication software systems. I would like to know from the Minister who will be responsible for the protection and security of these systems. I believe that it is important from the bottom up in terms of personal information but also in terms of smart grids and external, less favourable people towards the United Kingdom intervening here. I am sure that the Government have this under control and consideration but it is a really important area. We need to understand that it is being taken seriously and that, whoever the person or authority, they are going to make sure that these particular three lines in Clause 187(3)(d) are delivered.

[Baroness Blake of Leeds (Lab)]

I will be brief, but I will continue the comments made by the noble Lord, Lord Teverson, on security. I do not have a sense of confidence when we are told that the Government are going to be responsible for these specific areas. Could we have some more detail from the Minister about how this will be put in place and regulated? As we have heard in this discussion, exposure to cyberthreats could be enhanced by the very nature of smart technology. Therefore, we need a great deal of reassurance that this is being dealt with appropriately, and we know who is ultimately responsible for that reassurance.

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[Baroness Blake of Leeds (Lab)]

I shall be very brief. There are many aspects of this that are to be welcomed, but I am just intrigued. The Minister mentioned the section on finances. I am concerned about the capacity of the lead assessors and professional bodies to do this work, with particular reference to the intention to expand the scheme to, I think he said, small and medium-sized enterprises. I understood that it was medium-sized: I do not know quite where the definition lies, which would also be interesting. That is a major expansion, and I wonder whether an assessment has been made of how many additional businesses we could be talking about, and how the work is going to be done in those circumstances.

[Lord Callanan (Con)]

Let me respond first to the final point of the noble Lord, Lord Teverson. He and I know each other well; I have taken a number of Bills through this House, and I think that if he talks to the Official Opposition as well, he will find that I have a reasonable record of listening carefully throughout Committee on Bills and, where I can, within the confines of government policy—he will know how the process works within government—I try to take on board, where possible, the concerns of the Committee. On some Bills, that does mean accepting opposition or Back-Bench amendments directly, and I have done so on a number of occasions.

I am not giving any commitments on some of the amendments we have been debating in this Committee but, as always, I will take careful note of comments, discuss them with the Bill officials and other departments where it is required to do so and, if there are matters on which we can move, then of course we will do so. We will seek to discuss these matters before Report and, as always, I am listening to comments that noble Lords are making and trying to assess the will of the Committee.

ESOS is an important scheme that was originally implemented on the back of the energy efficiency directive, but there were specific parts of it that were UK legislation. We did not directly copy the energy efficiency directive and we will seek to do the same with the new scheme as well. The BEIS Select Committee made recommendations on energy efficiency, including that ESOS should require reports to be made public and should mandate participants to take action to reduce energy review. There was also a post-implementation review of ESOS in 2020, which found that it was largely achieving its original aims and that businesses were unlikely to carry out energy audits unless mandated to do so, but that the scheme could be helpful in producing that. I think that covers most of the points that were discussed and I thank noble Lords for their attention.

[Baroness Blake of Leeds (Lab)]

The Minister did not respond to my question about the capacity and extent of extending the scheme.

[Lord Callanan (Con)]

It is not our intention to extend it to small businesses at the moment. We are obviously always concerned about the impact on small businesses in particular but, if these amendments are accepted, we would have the regulation-making powers to extend it to businesses of different sizes. I think it is very unlikely that we would ever extend it to small businesses but that would be the subject of secondary legislation, which would, of course, be debated in the House.

[Baroness Blake of Leeds (Lab)]

I raised that because I may have misheard what the Minister said in referencing small businesses. I understood that this extended to medium-sized businesses but, even so, that is a significant increase. Have the Government taken on board the additional workload and whether the capacity will be there, assuming that the work is taken on?

[Lord Callanan (Con)]

We are not proposing to extend it to medium-sized businesses at this stage. We would want to work with stakeholders on the detail of any potential future implementation, which would be subject to a further consultation and, ultimately, a cost-benefit analysis. This is a complicated area and there are a number of different views. We have had a couple of consultations on this. With these amendments, we are taking the powers to implement the scheme. Of course, the regulations would be subject to further debate in the House.

Energy Bill [HL]

Baroness Blake of Leeds Excerpts

Committee stage
Monday 16th January 2023 Grand Committee

[Lord Teverson (LD)]

Yes; the noble Lord, Lord Benyon, said that there were 1,200 pieces of legislation. I am therefore very concerned about how those standards will be produced and when. Perhaps the Minister could just give us an idea of those deadlines. I have a concern about enforcement generally but I am sure that the Minister will say, “They will be enforced.”

I have a further question in this area, which is around making sure in future that we have much better co-ordination on new developments and sharing infrastructure. I know this has come up in the Bill, but can the Minister assure us that this will be much better managed than in the past and that it will be a network rather than point to point? I again congratulate the Government on their agreement with the EU last month on the North Seas Energy Cooperation forum, which the UK has now joined. That makes complete sense to me. I will be interested to hear from the Minister what the next step on that co-operation is.

[Baroness Blake of Leeds (Lab)]

I start by thanking the Minister for his full explanation of the amendments in this group. I also thank all those who have contributed to the discussion so far and I very much look forward to the answers the Minister will give to the relevant questions that have been asked.

Obviously, the Government’s ambition of delivering up to 50 gigawatts of offshore wind by 2030, including up to five gigawatts of innovative floating offshore wind generation, is to be welcomed. However, as we have heard, this is a challenge in terms of delivery and obviously, it poses questions about the impact on the wildlife in the areas where these installations will go.

I understand that Denmark is well advanced in this respect, particularly on innovative floating offshore developments. Are we in dialogue with Denmark about its experience in this area? What has it learned, and does it have the same measures in place? It does not seem that we need to be setting this out if some of these challenges have already been met or understood, or indeed through implementation. I know that one of Denmark’s real concerns is moving the energy off the island and how that will be achieved, but also energy storage. Perhaps the Minister could enlighten us as to the thinking on putting in these installations and how we will get the maximum benefit from them without losing, as we have heard, some of the valuable energy delivered through the process.

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[Baroness McIntosh of Pickering (Con)]

My Lords, I was not going to speak, but I think I am the only person in the Committee who has had first-hand experience of a planning application for fracking, which was in my then constituency. This is a classic example of what a broad church the Conservative Party is, because I support Amendment 223 in the name of the noble Lord, Lord Teverson.

I think my noble friend the Minister is going to reply that the government position is that we will only proceed to frack—if I am completely up to date—if local communities are agreeable to it. My concern is how you determine whether the local community is agreeable to it. I am minded to be guided by the science, which is very clear. The British Geological Survey says that

“it is well known that hydrocarbon exploration and production can result in man-made or ‘induced’ earthquakes”.

It goes on to say that fracking is one of the usual causes of these manmade earthquakes.

I am more pro-European than pro-American. What works in America—in the wide open spaces of North America, which are very sparsely populated and have a very isolated population in most cases—does not work in counties like North Yorkshire.

One of the reasons I took the title of “Pickering” is because there was an application in Kirby Misperton. It was well funded by Third Energy and underscored by Barclays. I am delighted to say that the reason it failed—and why I think no future application will be made—is that there was nowhere to put the polluted water. That area is prone to water stress, not only because of its proximity to Scarborough, but because that north-eastern corner of North Yorkshire is prone to water stress. Sometimes we have flooding, as there is in York at the moment. That particular corner is very water stressed. The problem was that there was nowhere to put the polluted water. There was also the usual problem, which all MPs are familiar with, of very narrow rural roads and heavy lorries coming in at the construction phase. The locals did not like the congestion. It was also very close to Flamingo Land, which is probably the second most frequently visited attraction after the North Yorkshire Moors Railway. That is also in Pickering.

With those few remarks, I am minded to support the amendment in the name of the noble Lord, Lord Teverson, rather than my own Government’s position.

[Baroness Blake of Leeds (Lab)]

My Lords, I thank everyone for the discussion. I want to start with Amendment 223 in the name of the noble Lord, Lord Teverson, but I do not intend to open another strand of debate on this. Obviously, the Minister will come back to it.

Picking up on the point made by the noble Baroness, Lady McIntosh of Pickering, from all my experience in planning, I really struggle with leaving these decisions to the planning system. There has obviously been the intervention of the Planning Inspectorate in the decision on the coal mine in Cumbria. We must have much clearer policies to guide us as we go forward, rather than effectively setting people against each other. One year ago, would we have anticipated that this debate could have such a devastating impact on the Government of the day, with the Prime Minister effectively falling afterwards? The heightened emotion of this debate in the Commons is something to behold. I want to clarify that Labour Party policy is to move to a permanent ban on fracking. I think it is very clear where we stand in that regard.

I will also comment on the debate from the noble Lord, Lord Teverson, on coal mines and Amendment 232. I honestly do not think that we could sum it up any better than the president of COP 26, Alok Sharma. On hearing of the possibility, he said:

“A decision to open a new coal mine would send completely the wrong message and be an own goal. This proposed new mine will have no impact on reducing energy bills or ensuring our energy security.”


This was quoted in the Observer on 3 December. I do not know whether noble Lords looked at the press coverage around the world following the decision, but the reputational damage that was done to this country in this space through that one action is incalculable—it is, frankly, shocking.

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[Baroness Blake of Leeds (Lab)]

I thank the noble Baroness. This brings to mind the debate we had in the Chamber last week about greenwashing and all the wider implications.

On the amendments in this group, I will talk about the demand and supply side, because it is important that we do not look at this in isolation; we have to think about the impact on people and how we can motivate our populations and communities to get behind the drive towards net zero. That is a very important consideration in these amendments.

The International Energy Agency clearly set out that there must be no new oil and gas fields and no new coal-fired power stations built if the world is to stay within safe limits of global heating and meet the goal of net-zero emissions by 2050. There is now, finally, acknowledgement and recognition that moving away from fossil fuels is the key to achieving greater energy security. This debate has been going on for decades; what a tragedy that it is the horrendous situation in Ukraine that has brought it to a head. Action much sooner would have helped prevent us being in the position we are in today.

The noble Lord, Lord Lilley, talked about a steady transition. The point we are trying to get across is that there is an urgency here. There needs to be a rapid transition if we are to have any chance of moving along in the way that has been outlined, as we need to.

The other issue is how we permanently help households move away from the volatility of fossil fuel prices and reduce the fiscal burden of financial support to households through this and any future energy crisis. We have talked a great deal on other occasions about energy efficiency. We hear about the amounts that the Government are putting into this space but, quite frankly, the demand in this area is much higher than the response that we have had so far. I will not go into all the cost of living implications, but we cannot forget the millions of households that are set to be in fuel poverty this winter. This has to be one of the main drivers in making sure that we get the amendments we need into the Bill so that we can move away from the volatility and expense of fossil fuels.

Amendment 227A in my name and that of my noble friend Lord Lennie seems to me an absolute no-brainer; it is already in train, and we need to move forward on it. I have one very simple question for the Minister: will he support our amendment today?

[Baroness Bennett of Manor Castle (GP)]

I am very interested and pleased that the noble Baroness referred to the International Energy Agency study that I mentioned. The inference could be drawn from her comments that the Labour Party supports a ban on new oil and gas. I know that many people out there listening to us today would be very interested to know whether that is the case. Can the noble Baroness confirm that the Labour Party supports a ban on new oil and gas?

[Baroness Blake of Leeds (Lab)]

It was a nice try, but I think that is without the scope of this debate.

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[Lord Teverson (LD)]

One thing that the Minister did not mention, although I may have missed it, is the employees and staff of the NDA. What consultation has taken place as far as they are concerned?

[Baroness Blake of Leeds (Lab)]

I have a few questions and, if it is not possible to answer them all, I shall accept a written response. It would appear that the Government are bringing forward legislation that breaks promises of previous Governments, going way back, in relation to nuclear workers’ pensions. The statutory pensions protections that Parliament previously legislated for were vital to the success of privatisation. Is it right for the Government to promise those protections to ensure that success, and then to rip them up that many years after the event? We would like some clarification as to whether the Minister believes that that is the case—and, if not, why not?

Is it accurate to claim that these reforms would bring pension provision across the NDA group into line with wider public sector pensions? These pension schemes underwent much more radical reform long before my noble friend Lord Hutton’s review of public sector pensions. They have been closed to new entrants for many years. My noble friend recommended that public sector pension accrual should remain on a defined benefit basis, but pension provision across the NDA group is mostly on a defined contribution basis. I have it on good authority that there is an appetite from the trade unions to discuss these reforms with Ministers. Would the Minister be prepared to accept this course of action?

Several more questions are coming up, particularly on technical issues and questions about the proposed amendments. The amendments should allow for the implementation of the agreement between BEIS, the NDA and the recognised trade unions. There is a lot of detail about the proposed career average benefit structure in the heads of terms, but the proposed amendments are drafted in more general terms. Regulations are the proper place for the detail to be set out, but might the agreed accrual rate be an important enough term of the agreement to be in the Bill as well? The average member contribution rate of 8.2% is specified.

There are concerns about proposed new subsection 3(c) of the first proposed new clause that adds this chapter to Part 12, which provides for the increase of pensions in line with CPI, not RPI, for active and deferred pensioner members. However, it says that only increases for active and deferred members—that is, re-evaluation—cannot be capped. This opens the real possibility that the Government intend to bring forward regulations that provide for pension increases for at least some members, possibly members of the Magnox group, to be capped. This is contrary to the heads of terms, which explicitly states that pension increases will be in line with inflation as measured by CPI, with no reference to any cap. Would it be possible to propose an amendment so that we can look at ensuring that regulations cannot propose capped increases for any pensioners?

I will end by asking: how confident are the Government that they can identify people in and out of scope of future regulations, given that there is a fair degree of geographical mobility around the industry?

[Baroness Bloomfield of Hinton Waldrist (Con)]

I thank both noble Lords for their contributions to this important debate. I suspect that I might end up having to write to the noble Baroness, Lady Blake, with the answers to some of her questions.

I turn first to the question raised by the noble Lord, Lord Teverson, on what consultation there had been with NDA employees. As I mentioned in my opening remarks, a public consultation was undertaken and published in December 2018. It ran for a number of months before that. All these changes were agreed then with the trade unions, recognising the vital work that the NDA and its workforce delivers. BEIS and the NDA worked with national trade unions in 2017 to develop an agreed pension benefit structure tailored to the characteristics of the affected NDA employees. This resulted in a proposed bespoke CARE benefit structure, which is in line with the key principles of reforms already implemented in respect of other public sector pension schemes. The bespoke CARE scheme design was formally accepted by the national trade unions following statutory consultation with affected NDA employees and a ballot of union members. There are two final salary public sector schemes within the NDA, with a total of approximately 8,000 scheme members, that are therefore within scope for reform.

As I said in my opening remarks, this is still a very good pension. It allows full pension awards at 60 for the majority of members, whereas most public sector pensions are linked to state retirement age. I am afraid there has been a delay in implementing these reforms, purely because the Energy Bill has provided the first opportunity to make the change since the agreement with the unions; previous legislative vehicles were considered but were not deemed appropriate for these clauses. I will respond to any further questions that were raised in writing. I beg to move.

Energy Bill [HL]

Baroness Blake of Leeds Excerpts

Report stage
Tuesday 28th March 2023 Lords Chamber

[Baroness Sheehan (LD)]

My Lords, I declare my interest in the register as a director of Peers for the Planet.

I shall speak to only one amendment in this group, Amendment 33, in the name of my noble friend Lord Teverson, to which I have added my name. It aims to ensure that decommissioning funds, as the noble Lord has explained, are available for decommissioning when the time comes. I support it not least because it complements Amendment 222A, which I tabled in Committee, on transparency of decommissioning, particularly with respect to future taxpayer liability for decommissioning relief deeds, which are agreements between the individual oil and gas companies and the Treasury. The National Audit Office and the Public Accounts Committee have both expressed concern about this public liability. I quote from the 2019 NAO report on decommissioning:

“With decommissioning activity increasing, the government is paying out more in tax reliefs for decommissioning at the same time as tax revenues have fallen due to a combination of lower production rates, a reduction in oil and gas prices and operators incurring high tax-deductible expenditure.”


That represents a triple whammy for UK taxpayers since, as the report says, for the first time ever, in 2016-17,

“the government paid out more to oil and gas operators in tax reliefs than it received from them.”

The scenario under which that public subsidy of oil and gas production took place in 2016-17—that is, the triple whammy of lower production rates, a reduction in oil and gas prices and operators incurring high tax-deductible expenditure—is the future outlook for the gas and oil sector as the world moves ever more rapidly towards decarbonisation. The USA’s inflation reduction Acts and the imminent EU response via the green deal industrial plan will turbocharge that transition, and rapid transformative change is very visible on the horizon.

While oil and gas expansion currently looks secure, it is only artificially so, given the very generous tax reliefs, subsidies and other support that the Government continue to provide, not least via decommissioning relief deeds. With over 100 new licences for exploration and production on offer, the risk of stranded assets is compounded hugely. Why do the Government persist in giving preferential treatment to fossil fuel producers? That is a question that I have put to the Minister before on several occasions, and I hope that this time there might be an answer.

It used to be that a ceiling of sorts was kept on the overall cost to the taxpayer by the fact that a firm could not claim back more in decommissioning tax relief than it had previously paid in tax. That makes sense but, since 2017, the Government have explicitly said that when firms default the partner firms that pick up the bill can claim back more in tax relief than they have ever paid. That certainly needs some digesting.

It cannot be right to put on life support an industry that has had its day—life support that is publicly funded. The amendment asks the Government to take precautions with the public purse, uphold the “polluter pays” principle and ensure that operators of new fields and buyers of existing ones accept that they cannot escape their responsibility to our planet, the one and only planet that we have.

[Baroness Blake of Leeds (Lab)]

My Lords, in speaking to the amendments in this group, I particularly thank my noble friend Lady Liddell for the well-informed and detailed explanation of why the amendments in her name and that of my noble friend Lord Foulkes are so important and relevant. What we heard was the crossover between the considerations within these amendments and the discussions that we had on the previous group regarding the work that we believe needs to be done to strengthen the hand of Ofgem, particularly to justify and evidence decisions, as we heard, enabling strategic anticipatory investment.

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[Baroness Worthington (CB)]

My Lords, I added my name to Amendment 18 in respect of who should be paying a hydrogen levy. I do not consider that hydrogen is going to play a large role in our broader economy. I think it will have specialised uses: it will be used where it is already used, in the production of fertilisers and in certain chemical processes, and it may well be used as a back-up fuel in extremis when we have no other forms of storage. I say that because it is going to be a relatively expensive commodity, it is not going to be easy to handle and it is not necessarily going to be very safe. For those reasons, I think we are overexcited about hydrogen in general, and the Bill is overexcited about hydrogen—and probably, as a result, about carbon capture and storage, which will also be quite expensive.

The reason I lent my name to this amendment is that it seems particularly egregious to expect electricity billpayers to be picking up the price of this expensive commodity, which is not very safe and quite unlikely to be very useful. Therefore, I think it is really important that the Government listen, and listen to everyone outside this Chamber who is saying that we should not be loading any more costs on to electricity consumers but should be doing the opposite. I am looking forward to the Government taking on this issue to redress the balance of how we are tackling climate change and who is paying. At the moment, the electricity consumer is paying nearly everything and the gas consumer almost nothing.

It is time that we started to recognise the value of electricity. It is hugely efficient, and it can be indigenously produced from our nuclear and homegrown renewables and offshore wind. It is that which we should be supporting, not necessarily this rather expensive alternative. Gas, oil and coal companies will continue to promote it, but it is not for the electricity billpayer to pick up the tab. So I fully support Amendment 18.

I would love to hear a little more from the Minister on new subsection (3) inserted by Amendment 20 in relation to the regulations. It is my understanding that that will enable payments to be made back to consumers, but could those regulations also decide not to impose any hydrogen levies on electricity consumers? I would like to understand the extent to which those regulations could solve this problem.

[Baroness Blake of Leeds (Lab)]

I make reference to the Minister’s amendments, particularly the issue he highlighted of including the new subsection that would allow regulations to make provisions requiring that energy consumers benefit. I want to ask just one question on that. While we welcome that provision, there is a concern. If we are allowing regulations to make this provision, what guarantee is there that they will actually be used? Are the Government committing to using them, if they use Clause 66 powers?

I support all of my noble friend Lady Liddell’s comments on her amendment. The main amendment for me is that just referenced by the noble Baroness, Lady Worthington. We spent a significant amount of time talking about this area in Committee, so I will not go through all the detail. However, as the noble Baroness mentioned, in the circumstances we are in, with the extra pressure on the cost of living from energy bills, why are we looking at a situation where we could be asking householders to pay more money? I acknowledge that there will be further consultation but I hope that, as well as it being done thoroughly, its conclusions will lead to the spirit of our amendment. As shown in our amendments, we believe that the Secretary of State could put a levy on gas shippers but not on gas and electricity suppliers, thus preventing responsibility for the levies falling on households.

We need to reflect on the spirit of the Bill—the whole idea is that, while reforming energy systems, we do everything we can to protect consumers and their ability to pay their bills. Every possible action should be taken to minimise the impact on consumers, focusing always on affordability. I am disappointed that the Minister has not gone further on this point. Unless he indicates a willingness to do so, due to the strong feelings surrounding the protection of consumers from inflated bills, I am minded to test the opinion of the House.

[Lord Callanan (Con)]

My Lords, I will start by addressing Amendments 18 and 19, which the noble Lord, Lord Lennie, and the noble Baroness, Lady Blake, have retabled from Committee. I thank the noble Baroness, Lady Worthington, for her contribution. She requested further detail; I will provide clarification in writing, if that is okay with her.

These amendments seek to ensure that funding for the hydrogen production business model can be provided through the Consolidated Fund. They also seek to restrict where a levy may be placed, removing the option for levying energy suppliers and requiring that a levy could be placed only on gas shippers. They are intended, I assume, to take responsibility for levies away from households.

The powers in the Bill already enable Exchequer funding of the hydrogen production business model, which will initially be Exchequer-funded. It is therefore unnecessary to include additional provisions that enable the business model to be funded through the Exchequer.

The proposal in these amendments to require that the levy could be placed only on gas shippers will limit options for the levy design, with possible implications for its costs and ultimate impact on consumers. There is no such thing as a free lunch. A gas shipper levy would be a completely novel scheme, with administration and set-up costs that could be considerably higher than those required to implement a supplier levy; this is well understood.

The Government have set out their intention not to levy gas shippers in the near term. Levies on energy suppliers have been used in the past to support the deployment of low-carbon electricity and increase the proportion of green gas in the gas grid. These levies are well understood by the private sector. By taking a similar approach with the hydrogen levy, we can help provide investors with the confidence they need to invest in low-carbon hydrogen production projects and support the delivery of our 10-gigawatt production capacity ambition.

By seeking to ensure that the levy could be placed only on gas shippers, these amendments appear to try to protect energy consumers from the costs of a levy. However, as I outlined when they were tabled previously, we anticipate that any costs associated with a levy on gas shippers would ultimately be passed on to energy consumers in a very similar way to levies on energy suppliers. As I say, there is no such thing as a free lunch. It is the opinion of all the policy analysts that it is unlikely that the amendments would have their intended effect.

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Moved by

[Baroness Blake of Leeds]

18: Clause 66, page 57, line 25, leave out “relevant market participants (see subsection (8))” and insert “the Consolidated Fund or gas shippers”
Member's explanatory statement
This amendment means the Secretary of State may put a levy on gas shippers, but may not put it on gas or electricity suppliers, thus taking responsibility for levies away from households.

[Baroness Blake of Leeds (Lab)]

My Lords, on behalf of consumers I express my disappointment in the Minister’s response, and I would like to test the opinion of the House.

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My instinct says that the best place for fossil fuels is in the ground, out of harm’s way. Any system that perpetuates their production must also ensure that we bear down meaningfully on reducing their production. Only the hardest-to-abate residual emissions would be captured and locked away, and I hope the industry will pay for it. With that proviso, ultimately I support this amendment because I too want to see carbon capture and storage a reality. It may well be that DAC—direct air capture—will be necessary to stop runaway climate change. It seems right that storage facilities should be developed and paid for by the companies that made it necessary.

[Baroness Blake of Leeds (Lab)]

I will speak to Amendment 40 in the name of the noble Baroness, Lady Worthington. I acknowledge that this will be her last meeting for some time; I think I am allowed to say that. In my relatively short time here, I have come to value her passionate interjections and her incredible knowledge on the subjects on which she has spoken. I wish the noble Baroness well in her temporary visit overseas and look forward to when she is able to come back and join us. I hope that we can keep in contact in the meantime.

While we do not support new fossil fuel extraction licences, we have to be mindful of existing licences and renewals. We have to take these issues seriously.

It is fair to say that we do not want to turn off the taps, so there will be merit in reducing carbon emissions from those existing licences. To what extent are the Government considering geological storage as a solution? I am sure we have all received briefings giving us the background on how successfully CO₂ has been stored over many years. There is an opportunity, but how much can be stored, and can we make full potential of the opportunities that are presented to us off the shores of this island?

[Lord Callanan (Con)]

I also pay tribute to all the work that the noble Baroness, Lady Worthington, has done. It is indeed a great mystery to all of us why she seemingly wishes to swap the lovely, warm, calm weather of southern England for California, but I suppose that will become clearer over time. I thank her for the contribution she has made, and I am sure that we will hear a lot more from her in the future.

I am happy to contribute to this debate on Amendment 40 and the issue of the carbon take-back obligation for fossil fuel extraction. The concept of such an obligation is indeed worthy of debate, but the noble Baroness will understand when I say that its inclusion in the Bill is a little premature. Our primary instrument to decarbonise the UK economy is the emissions trading scheme, which provides a market price for emissions of carbon dioxide, incentivising investment in decarbonisation and ensuring that it happens wherever—and however—it is most cost effective to do so.

Introducing a carbon take-back obligation now, at such a pivotal time for the development of CCUS in the UK, could create uncertainty for industry and have a detrimental delaying effect on investment, resulting in investors looking to opportunities that exist in many other countries—perhaps even in California; one never knows. Such an obligation could also increase the costs of CCUS, making UK production of steel, chemicals, refinery products and other industrial products more expensive than that of their competitors, potentially impacting on our industrial competitiveness. All these issues need further detailed policy consideration before further legislation can be considered.

As I mentioned to the noble Baroness before the debate, the CCUS Council is the Government’s primary forum for engaging with representatives across the CCUS sector, and we have indeed asked the council to consider and provide advice on carbon take-back obligations. The concept indeed warrants further consideration, but I am sure the noble Baroness will accept that it is not for this Bill at this time. With that explanation, I hope she will feel able to withdraw her amendment.

Energy Bill [HL]

Baroness Blake of Leeds Excerpts

Report stage
Tuesday 28th March 2023 Lords Chamber

[Lord Foster of Bath (LD)]

My Lords, in Committee, I tabled an amendment that proposed to extend the zero VAT that is offered for some green energy items to the batteries used to improve the efficiency of solar panel arrays. Unfortunately, the Minister was non-committal, but, having written to the Chancellor, I found that he was rather more enthusiastic, and I was delighted to see in the recent Budget that that measure will now go ahead, so I have not had to bring that amendment before your Lordships’ House again.

However, because of my involvement with solar panel arrays and batteries, quite a number of people got in touch with me to draw attention to their concern about some safety issues with solar panels and lithium-ion batteries, not least in relation to fire. For example, Zurich Insurance recently did some research that showed that, during the last year, fire crews across England were called out 10 times a month, on average, to deal with solar panel-related fires. It gave an example of a claim that it had to deal with in 2020 for a solar panel fire in a block of flats in Kent which left 30 people temporarily homeless and caused £1.5 million-worth of damage.

But there is a much bigger problem with lithium-ion batteries, which you find in many household products, of course—our mobile phones, for example, and even those singing birthday cards that we sometimes get. Perhaps most significantly, more and more of them are in the increasingly large number of e-scooters and e-bikes. As there is a growing number of those batteries, there are growing fire problems, because lithium batteries provide high energy densities, which mean that they can create severe fires with very high temperatures and exothermic reactions, creating significant challenges for our firefighters. Research, again from Zurich Insurance, found that there has been a 149% increase in the number of e-bike and e-scooter fires since 2021. Research shows that fires resulting from other devices powered by lithium batteries has increased by 63% in that time.

Zurich Insurance has sent me details of several incidents involving lithium batteries, including an £84,000 claim for a scooter that went up in flames in a garage and a £13,000 claim for an e-bike that exploded in a customer’s bedroom. AXA, the insurance company, has given me evidence that shows that, in just the two months of June and July last year, it was involved in claims of around half a million pounds.

The London Fire Brigade and other fire brigades have expressed concern. In June 2021, 60 London firefighters were needed to tackle a blaze on the 12th floor of a tower block in Shepherd’s Bush caused by a faulty e-bike battery. In July of that year, five people in Walthamstow were hospitalised by a fire started by an e-bike.

The other fascinating thing is that, until recently, the number of fires in waste disposal sites had been going down. Sadly, that trend has now been reversed, and the evidence shows that somewhere in the region of 48% of all landfill site fires are now caused by lithium batteries. The cost to the waste disposal people and the fire brigades is something in the region of £158 million a year to deal with just that.

Clearly, there are very significant problems which need to be addressed, but we do not want to stop using these technologies; indeed, we want to move rapidly forward, exploring ways to capitalise on how best we can make use of them as sources of new clean energy. However, as we increasingly use these green energy sources, we have to acknowledge that new and emerging risks are coming down the track.

I accept that there are many rules and regulations that already govern the sale and use of these products, but the warning signs are there that the regulations we currently have—those designed to keep us safe—are not keeping pace with the real-world application of these new technologies.

Interestingly, the National Fire Chiefs Council recently said, very significantly, that

“the problem has ‘blind sided’ conventional systems processes and solutions”.

In other words, we need to look for a new way forward—and that is all that the amendment I am proposing does. It asks the Government to look into the issue and to bring forward a report as soon as possible. Nothing could be simpler than that, but it is what a lot of people would like to see happen. I beg to move.

[Baroness Blake of Leeds (Lab)]

I thank the noble Lord for bringing this information to our attention. Some interesting reports documenting the risks are available, and I refer particularly to the report from the Institution of Fire Engineers on solar power fire risk and to batteryfiresafety.co.uk.

I have a couple of points to add to the comments already made as to whether it would be worth directing information about the storage of the batteries. It should be highlighted in particular that batteries are often stored in garages next to parked cars, which can have similar battery systems, and will not always be easily accessible.

The risks of lithium ion batteries from a fire safety perspective apparently have been well documented. However, the other element is that the risk with lithium ion batteries is not just fire. Once the battery fails—I think the term is “runs away”—the cells usually start to give off smoke. Thermal runaway is the chemical process within the battery which produces heat, as well as flammable toxic chemical gases, very quickly, often before any flames arise.

I think it is fair to say that, although the information is out there, it has not been properly documented. I wonder whether the health and safety considerations of the increasing use of these batteries and solar panels have been taken on board. Does the Minister think that there is a problem and, if the answer is yes, what does she propose to do about it?

[Baroness Bloomfield of Hinton Waldrist (Con)]

My Lords, I thank the noble Lord for his amendment on requesting a report into the fire risks of photovoltaic panels, lithium ion battery storage facilities and similar technologies. I was delighted to hear of his welcome in the Budget for the VAT exemptions.

First, I reassure the noble Lord that the health and safety regimes surrounding net-zero technologies are a priority for the Government. All electrical equipment requires safe installation and use. The Government recognise the importance of net-zero technologies such as electricity storage and solar PV in their ability to help us to use energy more flexibly and decarbonise our electricity system cost-effectively.

The data collected so far indicates that the risk from solar PV fires is low. However, it is right that we work with the industry to understand why any incidents happen and help to stop future occurrences. Over a three-year period and an overall cost of £135,000, the Government commissioned the Building Research Establishment to develop new guidelines for PV system installers, designers and the fire services, with the aim of making solar PV even safer. In February this year, the RISC Authority, the Microgeneration Certification Scheme and Solar Energy UK published an updated joint code of practice on recommendations for fire risk prevention in UK solar systems. Grid-scale lithium ion battery energy storage systems are covered by a robust regulatory framework, which requires manufacturers to ensure that products are safe before they are placed on the market and installed correctly, and that any safety issues found after products are on the market or after installations are dealt with.

In 2018, the Government set up an industry-led electricity storage health and safety governance group, which is responsible for ensuring that an appropriate, robust and future-proofed health and safety framework is sustained as the industry develops and electricity storage deployment increases. The Government are currently working with the group to support the development of a product and installation publicly available standard for domestic small-scale battery storage and guidance for grid-scale storage. They will both be published this year.

Most of the specific issues of e-scooters and bicycles fall within the remit of the Office for Zero Emission Vehicles, and I shall ask it to write to the noble Lord. I can also confirm that Defra will soon publish a consultation on battery recycling.

I do not believe that a specific report on fire risk of photovoltaic panels, lithium ion battery storage facilities and similar technologies mandated by the Secretary of State is necessary. While I welcome the noble Lord’s intention, we believe that working alongside industry and the fire services to manage specific risks is the appropriate way forward. It ensures that these vital technologies are installed, operated and decommissioned in a safe way, while still delivering the best outcomes for consumers. I hope that the noble Lord can recognise the Government’s sustained commitment to enabling the deployment of net-zero technologies in a safe and sustainable way.

In addition, on the concerns expressed by the noble Baroness, Lady Blake, about lithium ion batteries and their ability to combust, I visited last week a very clever packaging firm called Tri-Wall in Monmouth, which has developed packaging specifically for lithium ion batteries to be transported by air safely. The packaging itself will detect any change in heat in the batteries that it contains and change the structure of the packaging into water that will put the fire out before it even gets out of the packaging. Very clever technologies are being developed specifically around lithium ion battery transport and storage.

I hope that, with those few reassuring remarks, we can ask the noble Lord to withdraw his amendment.

Energy Bill [HL]

Baroness Blake of Leeds Excerpts

Report stage
Monday 17th April 2023 Lords Chamber

[Baroness Bennett of Manor Castle (GP)]

My Lords, I will speak briefly to Amendment 68 in the name of the noble Lord, Lord Whitty, to which I have attached my name. I will also make a couple of other comments on this group.

I can probably predict some of what the Minister will say about the amendment from the noble Lord, Lord Whitty. I note, as I am sure all Members of the House have, that, three days ago, the Government announced £30 million for experimental or first-stage renewable storage projects. We have pump thermal, thermal and compressed air, and a number of other schemes. What is really important about this amendment is the context of the report to Parliament in six months. This is something that is absolutely crucial to the renewables transition, and we really need to see democratic oversight of where it is going.

I particularly make the point that this must be a strategy. Instead of one-off projects here and there, we need a whole integrated system. One thing that is really unconsidered is vehicle-to-grid storage. As we have more and more electric cars, if we have innovation in management we can use those cars as storage when people do not need them for transport. This is a way in which we would need much less resources—the Government are themselves saying that we could save £10 billion by 2050 by reducing our need to generate electricity.

I have just a couple of comments to make on the other amendments in the group. It will not surprise anyone in your Lordships’ House to hear that I oppose Amendment 137 in the name of the noble Lord, Lord Ravensdale. However, its very existence is a demonstration of the way in which new nuclear can be a distraction from the renewables investment that is our energy future.

On the amendments in the name of the noble Lord, Lord Teverson, on electrifying and decarbonising oil and gas facilities, I am afraid that the term “greenwash” has to appear at this point. I have an amendment in a later group asking for no new oil, gas or coal. Any reduction in energy use on a new oil rig because it has some solar panels on top of it does not take us anywhere like where we need to go in this climate emergency.

[Baroness Blake of Leeds (Lab)]

My Lords, I will speak briefly to the amendments in this second group, starting with Amendment 65 from the noble Lord, Lord Teverson. All I can do is echo his clear requests for confirmation that the Government will be more flexible and for clarity around multipurpose interconnectors, particularly with regard to the relationships between Great Britain and other jurisdictions. Will the interconnectors operate in a similar way to the offshore electricity transmission regime? I hope that the Minister will be able to give the reassurance and clarification that the amendments in the name of the noble Lord, Lord Teverson, ask for.

I thank my noble friend Lord Whitty for tabling Amendment 68, on an issue that he feels passionately about and comments on whenever the opportunity arises. We know that, as the electricity network develops new facilities and new renewable sources of generation, there will be a need for more storage capacity. As we have said, there is a non-exhaustive list of technologies, and new ones coming on stream that we might not have considered so far, and so comments must extend beyond batteries. The important part of this amendment to consider is a commitment from the Government to give support to assist with developing the storage capacity that we need.

The further amendments, led by the noble Lord, Lord Teverson, look to remove legislative barriers to the electrification and decarbonisation of oil and gas facilities, and to work towards a green financing framework. We must be mindful of the uncertainty of costs, going forward. When considering these amendments, it is important to consider decarbonisation, which is critical to the Bill, but also affordability and ensuring that energy is within the reach of every person in the country.

We know that the zero-carbon electricity system is possibly 19% cheaper than gas-based facilities, and that UK gas power is currently estimated to be nine times the amount of renewable power. Driving down energy costs means that we need cheap, clean power. We must take this rare opportunity presented by the Bill to ensure that we use the legislative framework to drive measures that will, in the short-term, reach towards action to decarbonise the electricity system and bring down costs.

The passage of the Bill through the House has been quite lengthy, but we really must take the opportunity presented to us to ensure that we make the progress that is required.

[Lord Callanan (Con)]

My Lords, I thank all Members who have contributed to the debate.

I completely agree with the last point made by the noble Baroness, Lady Blake. It is very important that we use the powers to do exactly what she suggested: to drive the decarbonisation agenda. Despite some of the criticisms, we are making excellent progress in this country—much better than most other G7 countries. However, we must be very conscious of the cost to consumers.

Amendments 125 to 129 were tabled by the noble Lord, Lord Teverson. I was amused to see that he has incurred the wrath of the noble Baroness, Lady Bennett, in trying to come up with pragmatic, sensible solutions for the energy system of this country. All I can say is, “Welcome to the club”.

I will start with his comments on the North Sea Transition Authority. We are engaging with industry to ensure the delivery of the North Sea transition deal emissions reduction targets and the successful rollout of electrification, which we all want to see. We are also considering how to utilise the Secretary of State’s existing powers, if needed, to support electrification. We are confident that, in this area, additional primary legislation is not required. As the noble Lord mentioned, the North Sea transition deal commits the offshore oil and gas sector to reducing emissions from operations to 50% of 2018 levels by 2030. As I have said repeatedly in this House, during the transition there will be an ongoing need for existing oil and gas resources, but it makes sense to extract them with the minimum possible carbon emissions.

--- Later in debate ---

[Lord Teverson (LD)]

My Lords, from these Benches I welcome particularly the amendments in the name of the noble Baroness, Lady Boycott. I will not detain the House except to say that it is quite clear that community schemes have not operated effectively for many years. I should declare that I am an insignificant shareholder in a local community scheme in my own home area, which was set up under the feed-in tariffs. The schemes as put forward are not a kind of feed-in tariff regime: they are really looking for stability of price and are not around subsidy. I just say to the Minister that the Government’s overall target is decarbonisation of the grid by 2035: let communities play a big part in that, because one thing that is really important here is that community schemes allow for communities, individuals, households, families and small businesses to participate in the decarbonisation of our economy and net zero. They can be a part of it and that is why these amendments are so important.

On the amendment in the name of the noble Lord, Lord Ravensdale, it is indeed very important that local authorities are involved and are movers in this area. All I can say is that I have to learn from him: he has the ear of the Government and the Minister far more than I do, and perhaps I could have some lessons afterwards about how to be successful in getting amendments into Bills.

[Baroness Blake of Leeds (Lab)]

My Lords, I declare my interest as a vice-president of the Local Government Association. It will come as no surprise to Members of the House that I support all these amendments, particularly Amendment 94 in the name of the noble Lord, Lord Ravensdale. Going by my personal experience, not giving a broader role to local authorities is such a missed opportunity and I cannot understand why these amendments would not be supported, particularly since it is, in all honesty, such a mild request: better definition of local authorities’ role; and asking for guidance, which is a perpetual demand from local authorities, I have to say, in trying to move things forward. As we know, other key reports and reviews have recognised just how important it is to get local buy-in and to get local stakeholders involved.

I turn to the amendments in the name of the noble Baroness, Lady Boycott, and signed by others. It is essential that we bring these elements together. What we are talking about, without repeating the technical issues that have been raised so powerfully today, is that we need to aim to have a framework that will support the growth of community and smaller-scale energy schemes and also provide regular reporting so that everyone knows how things are progressing. I have to say that all we are asking for is the following of an evidence-based approach. We can look at the success of other, related schemes in these areas that have been successfully led by local authorities. These include the rollout of electric vehicles, with local authorities leading by example in changing their fleets to electricity. District heating is another example where, when you have very strong local buy-in, the success moves forward. What we are asking for here is the ability to inform, shape and enable key aspects to deliver energy decarbonisation.

I believe very firmly in involving local stakeholders from the beginning; they are far more likely to come on board with schemes that might have aspects that they find work against their interests if they understand and are included in the bigger picture. Many people will make compromises when they understand the greater good, and the opportunity has been highlighted over the past year by the dramatic increase in energy prices and the risk of energy scarcity. I think the landscape has changed in this regard. Let us give confidence to local people and communities by developing the framework for the growth of communities and smaller-scale energy schemes. It is regrettable that more progress has not been made so far. The role of Ofgem in this, giving clear methodology and quality standards, is essential and will give the credibility that is needed, as the noble Baroness, Lady Boycott, so eloquently pointed out.

Through the involvement of local communities, we are asking for a more effective and better targeted delivery of national priorities; and we all know that we need more determination to deliver on the ground. I hope we will see some movement in this area and can only echo other comments: if we fail to make progress, this is such wasted potential, and I hope we will hear some positive comments with regard to these amendments.

[Lord Callanan (Con)]

I thank all Members who have contributed, particularly the noble Baronesses, Lady Boycott and Lady Bennett, for Amendments 134 and 135—the noble Lord, Lord Lucas, proposed them but sadly is not in his place. I am grateful to noble Lords who met me and officials recently to discuss this matter and give us a chance to talk through the departmental thinking.

As I said when we met, the Government recognise the role that community and local renewable energy schemes can play in supporting our net-zero targets. But we continue to believe that small-scale, low-carbon electricity generation should be brought forward through competitive, market-based solutions. A key feature of the smart export guarantee regime is to allow suppliers to set both the tariff level and the structure and for suppliers themselves to determine the value of the exported electricity alongside all the associated administrative costs. Any move to introduce a regulated price for exported electricity has the potential to limit the overall scope for innovation and export tariff packages. This would fundamentally undermine the principles of the supported export guarantee policy objective, which looks to encourage a market-driven approach.

Furthermore, the amendments as drafted are unlikely to result in better outcomes for consumers compared with other tariffs that would be available from suppliers. First, there would be initial set-up and ongoing delivery costs associated with the scheme for both Ofgem and the suppliers, which we expect would be material. These costs would be recovered via the service fee charged by suppliers and therefore probably reflected in the local tariff price.

Secondly, small-scale, low-carbon generation will, by its nature, be intermittent and unable to supply local consumers at all times. Suppliers would therefore need to buy additional wholesale energy from other sources—for example, during periods of peak demand—and incur all the associated network and system costs. The local tariff would also be required to have regard to the export price paid to the local generator. This would create a somewhat perverse outcome where higher export prices would benefit the generator but also increase the tariff price.

As a result, there is no guarantee that the local tariff would be lower than the current regulated standard variable tariff. In fact, there is some reason to believe that it would actually be higher.

--- Later in debate ---

Just as I began by complimenting the Government on their leadership, the standards they set and the targets they have put forward, I have to say that if they want to uphold that, they cannot allow any new coal mines, and they must find a way to stop mining which will increase the emissions from the most damaging means of generation. We do not have time to wait while this all works its way through. This is an emergency. When you deal with an emergency, you do not light an ancillary fire. You do not do something which manifestly runs wholly against everything else you have said, and against everything the Minister has said in defending the Government’s policy throughout the passage of the Energy Bill.

[Baroness Blake of Leeds (Lab)]

My Lords, I thank all noble Lords for their very important contributions on the amendments in this group. It is an enormous privilege to follow the noble Lord, Lord Deben, with his experience and expertise in the subject matter before us today. I want to keep my comments brief as we have had a lot of opportunity in different discussions and debates, particularly during the passage of this Bill, to try to get across just how strong the feelings are around the House on these matters.

I pay tribute to the noble Baroness, Lady Sheehan, for her amendment on the burning of methane and other hydrocarbons produced during oil extraction. As we have heard, very distinguished bodies have come out against this. In particular, there is a real concern that not taking notice of the need to address this issue undermines the UK’s commitments made at COP 26 and COP 27 under the global methane pledge. We need to take this seriously. We have heard how important the contribution of methane is towards the UK’s net greenhouse gas emissions. Just to add to the statistics around this, during the last decade the UK has wasted £2.6 billion in lost gas sales due to flaring and venting, and released 45 million tonnes of carbon dioxide into the atmosphere. When you put that into the context—as the noble Baroness, Lady Sheehan, did—of what could have been done with that fuel, it is a lesson that needs to be learned.

I concentrate my comments this afternoon on Amendment 131 in the name of the noble Lord, Lord Teverson, and supported by the noble Baronesses, Lady Sheehan and Lady Boycott, and my noble friend Lord Lennie. As we have heard, this amendment is specifically to prevent the opening of new coal mines in England and is a response to the proposed opening of a new coal mine in Cumbria. I have said before that I am really concerned about the message this coal mine sends out. It undermines totally our claim to be an international leader on climate. One only had to look at the press reports from around the world after the announcement was made to understand just how damaging this is.

I fully support the comments from the noble Lord, Lord Deben, on the planning system. I hope that we can move forward on this, so that local authorities and anyone who has a role in making decisions through the planning system have the necessary tools to stand up and not be concerned about the extortionate costs that would come their way if, after having turned down an application, it was turned over on appeal.

The other area that we have not emphasised enough is this: we cannot even claim that the coal mine in Cumbria would provide secure, long-term jobs. That just is not part of the equation here. As we have heard, it will not benefit British Steel. We are already seeing a significant decline in the coal used by the UK steel industry, including a 19% drop in demand for coking coal to run UK blast furnaces. As the noble Lord, Lord Teverson, said, the future is not coking coal.

I am not sure if anyone has mentioned the rather fanciful claim that this mine would be the first carbon-neutral operation of its kind. How can we stand here and say this seriously and honestly, and with particular regard to the fact that, as we have heard, a high percentage of the coal would be exported and so we would have no control over its use.

I am very disappointed that part of the debate around opposing the mine has ignored the far greater opportunities of investing in new green technologies for the local area. It is a perfect area for so many of the possibilities that are coming our way with real, sustainable jobs.

I repeat that Alok Sharma, a former president of COP, said last December that opening

“a new coalmine would send completely the wrong message and be an own goal”.

Surely we should be doubling onshore wind capacity, tripling solar capacity and quadrupling offshore wind capacity. I hope I have made it clear that on our Benches we support the amendment in the name of the noble Lord, Lord Teverson.

[Lord Callanan (Con)]

I thank all noble Lords for their amendments and contributions.

I will just make an observation first, having listened with great interest to the noble Baroness, Lady Blake. I was actually hoping that the noble Lord, Lord Lennie, would reply to this debate, as a fellow politician from the north-east of England. He will know very well that, in virtually every election that I fought in the region, the Labour Party campaigned against the closing of coal mines. I will be gracious and accept that time moves on, but it was only fairly recently that some of their parliamentary colleagues in the other place were campaigning for the opening of new coal mines and against the closing of old ones. Time moves on in politics but, had you said to me 10 or 15 years ago that I would be standing up in the House of Lords opposite a Labour Party telling me it does not want to see the opening of any coal mines, I would not have believed you.

Energy Bill [HL]

Baroness Blake of Leeds Excerpts

Consideration of Commons amendments
Tuesday 12th September 2023 Lords Chamber

[Baroness Bennett of Manor Castle (GP)]

My Lords, I will speak to Amendment 165A in my name and briefly comment on Amendment 272A in the name of the noble Lord, Lord Teverson, and Amendment 274A in the name of the noble Baroness, Lady Boycott, both of which have the strongest possible Green support.

It is 2023 and we are in a climate emergency. We cannot consider new coal. I am afraid the Minister’s brandishing of heritage railways does not hack it; it is a tiny usage, much as I have no objection to heritage railways. For steel and cement, other nations are moving very quickly away from using coal while we are stuck in the starting gate. On the community energy amendment from the noble Baroness, Lady Boycott, I had the great pleasure formally to move it on Report and we saw hugely strong support not just in your Lordships’ House but all around the country. Tomorrow we will debate the Levelling-up and Regeneration Bill. This is a way to allow communities to take control of their energy supplies and provide the framework to set free huge opportunities up and down the land. It is a no-brainer and I urge your Lordships’ House to vote for both amendments.

Moving chiefly to my Amendment 165A, it is worth revisiting the history of the Bill. Those with a very long memory might think back to 19 July 2022, when it had its Second Reading in your Lordships’ House. That was three Prime Ministers back and I really cannot count how many energy policies we have had from the Government since then. We might be in traditional ping-pong now, but the Government’s positions on so many of the issues in the Energy Bill have bounced back and forward so fast within the Government that it is enough to make any observer dizzy.

One of the last-minute additions was this clause on so-called sustainable aviation fuel. If noble Lords look back to the other place, they will see that the level of debate that occurred around this very significant amendment was really very scant. That is why I have tabled this amendment now, to provide a real opportunity for your Lordships’ House to at least explore the issues and bring out some of the Government’s thinking. I hope we will also hear significant explanations from the other Front Benches on what their thinking is on so-called sustainable aviation fuel. It is often linked with and spoken about as though it is in the same stable as renewable energy, but the fact is, of course, that almost no flights now are powered by sustainable fuel because of supply and cost. Sustainable fuel can be three times as expensive and even for United, the largest consumer of sustainable fuels in the US, last year it comprised less than 1% of its total fuel consumption.

The fact is that so-called sustainable aviation fuels are not a “get out of the limits of this finite planet free card” for the aviation sector. The idea that aviation can keep expanding, or that it should—I shall be coming back to this tomorrow in an amendment to the levelling-up Bill—is, I would say, for the birds: although of course the birds cannot afford the inevitable environmental damage that burning stuff, whatever the stuff is, inflicts.

I can go through some statistics on this. Bain & Company in June published a report assessing the most likely pathways to net zero by 2050 for the aviation sector. The headline was that it can eliminate 70% of emissions from aircraft operations without using electric or hydrogen at scale. Just 5% of emissions reductions come from hydrogen and electric planes in the Bain & Company scenario; the rest is engine efficiency, aircraft efficiency, optimising routes and scaling up so-called sustainable aviation fuels. A 70% reduction is significant, but the Science Based Targets initiative net-zero standard requires a 90% reduction in CO₂ across all scopes by 2050 at the very latest. This report suggests that so-called sustainable aviation fuel can meet a maximum of 60% of global jet fuel demand in 2050 in the best-case scenario.

I think it is worth reflecting very briefly, looking to debates in the other place, that we saw both Labour and Tory MPs going further than this amendment does and calling for government subsidies for the sector. We have to set this in the context of the fact that tax exemptions last year saw the Treasury lose £4.7 billion from the aviation sector: that is calculated by Transport & Environment. That could pay for—gosh—more than 40 new hospitals: does that sound familiar? Or it could cover the cost 10 times over of additional medical staff. It is the equivalent of 1% of the income taxes collected by the Government last year. That is the context.

To come to the detail, my amendment simply addresses subsection (6). It seeks to bring in some systems thinking: an approach that does not look simply at the climate emergency because, as huge and pressing as that is, we are actually in a state where we have exceeded so many other planetary boundaries and we face so many other crises and threats that it is absolutely critical that the Government think in a systemic kind of way. If your Lordships want to think about where things went horribly wrong when we did not do that, Dieselgate is the obvious example. That was a case of corruption and fraud, but behind it was the problem of looking simply at the carbon emissions from diesel and not considering all the other environmental effects.

The current government amendment says that the Secretary of State should look at the contribution to the reduction in greenhouse gases. My amendment keeps that but adds the impact on the food system. Your Lordships’ House often debates the fact that food security is a huge and pressing issue of our age, and if we take land out of use for growing food and turn it to growing stock for aviation fuels, we are creating a potentially huge problem for ourselves.

Proposed new subsection (6)(c) says,

“not negatively impact human, animal or plant health”.

That perhaps comes back to the diesel reference, if we think particularly about human health. Burning stuff produces pollutants—that is just practical reality. However, we must also think about plant health. We often talk about using agricultural waste for these sustainable aviation fuels. That agricultural waste could be going back into the soil to contribute to soil and plant health, bringing us to a situation where we are not depleting our soils and then topping them up with artificial fertilisers, particularly nitrogen produced by the incredibly energy-intensive Haber-Bosch process. This is a systems-thinking, joined-up approach.

Finally, my amendment says,

“not negatively impact the availability of feedstocks for other industrial processes”.

The Minister referred to steel and cement, but all kinds of different, innovative steps are being taken to use all kinds of different materials to replace current fossil fuel production. We need to think about where what we call waste could best go.

I am aware of the desire to move this debate on, so I will not speak much longer, but I have just two final reflections. First, we hear a great deal of talk about waste cooking oil in terms of so-called sustainable fuels. Well, I am afraid that your local chippy is not going to take your private jet flight very far at all—let us be realistic about that. Secondly, my mother’s favourite movie was “The Sound of Music”, in which there is a song that goes:

“Nothing comes from nothing,


Nothing ever could”.

All energy use—all fuel—has environmental and social costs associated with its production and use. We have to think in that systemic, holistic way when we think about how we fuel our sustainable future.

[Baroness Blake of Leeds (Lab)]

My Lords, I will speak to Amendment 187A in my name. The purpose of moving this amendment is straightforward: we have an opportunity to put in place an enforceable plan of action that will deliver the often-mentioned aspirations to deliver energy-efficient homes and properties. I was sure that the Minister would repeat the line that this is unnecessary—and so he did. But I am afraid that the facts tell a different story. The new clause would enable a plan to be in place, working to clear targets to reduce gas supply in homes by 25% and a 10-year programme to retrofit 19 million homes, costed at £6 billion, with local authority and a community base to deliver.

The facts are these. Since 2010, progress to reduce emissions has stalled. The UK is still heavily reliant on fossil fuels for home heating and industry, and has the least energy-efficient housing stock in Europe, according to the IMF. Limited progress on energy-efficiency measures has been made worse by poor public information campaigns and the lack of a long-term plan with clear targets, clear technical explanations and little evidence of a financial and structural plan to go alongside. I do not wish to repeat all the comments that have been made throughout the debates on this Bill. However, we have to acknowledge a lack of grip, of urgency, and of serious explanation of the benefits of determined action.

In terms of tackling emissions and meeting legally binding decarbonisation targets, reducing the need for heat must be a top priority. Benefits include: a reduction in the cost of heating homes—therefore, a very positive help to those suffering from the cost of living crisis; a huge benefit to the health of the population by achieving affordable warmth, potentially saving the NHS £500 million a year; and a major contribution to energy security by reducing our dependence on fossil fuels.

These come on top of the potential of delivering economic benefits, providing skilled jobs and high-wage opportunities. Retrofitting poorly performing homes alone could support 190,000 jobs across all regions. Given the strength of opinion on energy efficiency in so many analyses of progress, I am minded to test the opinion of the House.