Energy Bill [HL]

Baroness Bloomfield of Hinton Waldrist Excerpts

Committee stage
Monday 5th September 2022 Lords Chamber

To conclude, in speaking to Amendment 6, I support a great deal of what is in the Bill, but I feel that it is silent on many points and should go further in securing our energy supply, which I understood was its original focus. I hope my noble friend will put my mind at rest in this regard.

[Baroness Bloomfield of Hinton Waldrist (Con)]

Before we continue, I remind noble Lords that the Companion asks noble Lords to make their speeches directly relevant to the amendments they are proposing and—please—to keep those comments as short as they possibly can. Thank you.

[Lord Ravensdale (CB)]

My Lords, I shall speak to Amendments 7 and 242. I declare my interests as a project director working for Atkins, which is in the energy industry, and as a director of Peers for the Planet. I thank the noble Baroness, Lady Worthington, who I have worked with to develop these amendments.

Amendment 7 has similar objectives to Amendment 1 in the name of the noble Baroness, Lady Blake, and spoken to by the noble Lord, Lord Lennie. I concur with his comments on the necessity of clearly setting out the purpose of the Bill and legislating for a strategy and policy statement on its implementation. Amendment 7 brings out two specific aspects that are further detailed in Amendment 242. These are the importance of a plan for delivering against the 2035 target to decarbonise our electricity system and for the electrification of energy use in the UK.

The reason that electrification is so important stems from the second law of thermodynamics. As my favourite physicist, Richard Feynman, said in his superb analysis of the “Challenger” disaster in 1986, “Nature cannot be fooled”. Whatever options we come up with for decarbonising our energy system, and whatever laws and policies we make, we run up against fundamental constraints from the laws of thermodynamics. For example, using hydrogen to fuel road transport will always be much less efficient and use far more energy than electrification, no matter what technical advances are made in hydrogen production. Similarly, using electricity to heat homes via a heat pump will always be more efficient than producing hydrogen for the same purpose. This is not to say that hydrogen production should not be pursued as a matter of urgency, as it will be vital in some areas, but its use should be focused on areas that are absolutely necessary. The efficiency gains and the reductions in primary energy use from electrification mean that this is a vital metric to consider as our energy system evolves.

The enabler of all of this is a decarbonised electricity system. We have a world-leading target to decarbonise our electricity system by 2035, but I worry about delivery. Atkins has undertaken a calculation of the rate of new capacity required to hit the 2035 target. This is not anything complex: it simply divides the capacity in the BEIS scenarios by 12 and a half years, allowing for an estimate of the capacity that will be decommissioned over that timeframe.

As I stated at Second Reading, this calculation results in a minimum of an average of 12 gigawatts of annual installed capacity being needed every year between now and 2035 to hit that target, so the next question is, with a baseline of 12 gigawatts, what have we managed in recent years? In 2019 we managed 2.8 gigawatts of new installed capacity. In 2020 we managed 1.1 gigawatts and in 2021 we managed 1.6. If we go on like this, it is very hard to see how we will meet the 2035 target. The upshot is that to replace ageing power plants and ensure that enough generation is built to meet peak demand requirements, the UK needs to build a minimum of 159 gigawatts of new generating capacity by 2035—the equivalent of building the UK’s entire electricity generation system one and a half times over in slightly more than 12 years. It is not only generating capacity but all the grid infrastructure to support it, as well as energy storage and data management.

This says to me that there is a significant risk that the Government will not be able to meet their 2035 target. I work on the coalface, as it were—I am not sure that is the best analogy. The industry has a long way to go to gear up for this pace of delivery, so alongside the 2035 target we urgently need a strategy for delivery. This reflects one of the priority recommendations from the CCC’s 2022 progress report: we need a delivery plan to provide visibility and confidence for private sector investors, to reduce costs and to build up supply chains. There is a key gap here in comparison to other sectors. We have the Heat and Buildings Strategy and the transport decarbonisation plan, but we do not have a plan for electricity decarbonisation, despite it being so important as an enabler for those other plans. I would be grateful if the Minister could, in summing up, state that the Government will bring forward such a delivery plan for electricity system decarbonisation.

Amendment 242 details our approach to legislating for this strategy. The noble Baroness, Lady Worthington, pointed out to me that we already have a toolkit to approach this via the Energy Act 2013—the mechanism of a decarbonisation target range and decarbonisation orders. If we take these existing powers and modify them, we can set a range for carbon intensity of electricity production in the UK each year and targets for electrification of the energy system. The report must also include the expected volumes of installed capacity and energy produced by electricity energy source for each calendar year to 2035. This rigorous approach will deliver the required strategy and plan to give industry and investors a clear road map to 2035, which, lest we forget, is only slightly more than 12 years away.

There is a great opportunity in this Bill for the Government to legislate for a strategy to give industry and investors the confidence they need to reduce costs and build up supply chains for 2035, significantly reducing delivery risk, with efficiency and minimising primary energy consumption at the forefront. I strongly support the Government in their ambitions for 2035 and the target that they have set, but there is much to do in a short time, and I hope the Government will take this opportunity to ensure that there will be a clear plan for delivery to ensure the success of their ambitions.

Energy Bill [HL]

Baroness Bloomfield of Hinton Waldrist Excerpts

Committee stage
Wednesday 7th September 2022 Lords Chamber

[Lord Teverson (LD)]

My Lords, I am slightly sympathetic to the Government on certain of these amendments in certain ways; I expect the Minister will not immediately accept them. First, I re-emphasise my interests in energy storage, as declared in the register. I welcome the noble Baroness, Lady Liddell, back into the conversation. She and the noble Lord, Lord Foulkes, are quite a powerful duo and I am just thankful that they are not both here together—it might be just a little too much, but we might get some movement from the Government if they were.

On carbon use, I have no disagreement with the amendment; it would be positive to include it. In a way, I follow the Minister’s hesitation from Monday in saying that if we have carbon use, we have to make very sure that that use is long-term rather than short-term. I am not sure we have got to that point yet in the amendment. I will say that one obvious area where we should be doing this is in building and construction, where we use wood rather than concrete and steel. Many other economies and housing markets across Europe and other parts of the world use those technologies: they are there, they are strong and they capture the carbon in wood for probably a century or more—however long these buildings last. I would be interested in the Minister’s—maybe positive—response about how we can make sure that that carbon use sequesters the carbon for a long period.

As for the idea of air capture, I very much agree with the spirit of the noble Lord, Lord Howell. What concerns me, though, is exactly the point that the noble Baroness, Lady Jones of Moulsecoomb, made. Not in this Chamber, clearly, and not among the Members present, but problem with air capture of carbon is that it gives a free ticket out for climate sceptics who say, “Don’t worry about any of this stuff because technology is going to solve it. We don’t have to worry about energy efficiency and renewables because technology will find a way forward”. I very much hope that it will, and there are good signs of that, but the other thing about it—which is why it is not the priority on the scale, if you like—is that it will take out 0.4% of the atmosphere that you have to process. Whereas, if you, as a power station, are using carbon capture, that concentration is hugely greater, so it is a much more efficient process to deal with in the first place. Again, my heart is there in terms of future-proofing, but to me it sends out dangerous signals to the market.

The much bigger issue, which seems to have been forgotten since COP 26, is methane. That is the gas that we need to get out of the atmosphere quickly and effectively. Ever since COP 26, where the Government were very supportive of initiatives to take methane out, science has shown that methane emissions globally are much higher than we expected and very little action has taken place on that since. I see that as a priority, but I will be very interested in the Minister’s response.

[Baroness Bloomfield of Hinton Waldrist (Con)]

My Lords, I too welcome the noble Baroness, Lady Liddell, back to these Benches. I look forward to any parties hosted by her and the noble Lord, Lord Foulkes, in future—they sound great fun.

I first turn to Amendment 39 in the names of the noble Lord, Lord Lennie, and the noble Baroness, Lady Blake, which seeks explicitly to include the use of carbon dioxide, given that the Bill refers to carbon capture, usage and storage, or CCUS. The carbon capture revenue support contracts are intended to support the deployment of carbon capture technologies in industrial and commercial activities where there is no viable alternative to achieve deep decarbonisation.

The Bill allows for carbon capture revenue support contracts to be entered into with eligible carbon capture entities. Broadly, a carbon capture entity is a person who carries on activities of capturing carbon dioxide that has been produced by commercial or industrial activities with a view to the storage of carbon dioxide—that is, storage with a view to the permanent containment of carbon dioxide. It is important to emphasise that the provisions in the Bill may therefore allow for support of a broad range of carbon capture applications, including those carbon capture entities that utilise the carbon dioxide resulting in the storage of carbon dioxide with a view to its permanent containment. Decisions as to which carbon capture entities are eligible for support are to be made on a case-by-case basis. Prioritising support for carbon storage is considered essential to help deliver our decarbonisation targets.

I turn now to Amendment 49 in the names of the noble Baroness, Lady Liddell, and the noble Lord, Lord Foulkes, which seeks to ensure that techniques such as direct air carbon capture and storage are included in scope of carbon capture revenue support contracts. I thank my noble friend Lord Howell of Guildford for his remarks in this regard. As part of the Net Zero Strategy published last year, the Government set out an ambition to deploy at least 5 megatonnes of carbon dioxide emissions per year of engineered greenhouse gas removal methods, such as direct air capture, by 2030.

We recognise that greenhouse gas removal technologies, commonly referred to as GGRs, such as direct air carbon capture and storage, are considered important for making progress towards net zero. That is why in July we published a GGR business model consultation that sets out the Government’s initial views on the design of a business model to attract private investment and enable engineered GGR projects to deploy at scale from the mid-to-late 2020s. The consultation is due to close on 27 September. How direct air carbon capture and storage might be supported by any such business model is still subject to ongoing policy development and consideration. Once we have further developed the policy thinking on this, we can then consider what the appropriate mechanics might be and whether there are any available. We are exploring how early GGR projects could be connected also to the transport and storage network in CCUS clusters and will publish further information in due course.

The questions of the noble Viscount, Lord Hanworth, on carbon-neutral air fuels are not directly covered by my speaking notes, so I shall write to him with more details in due course. It overlaps with another department, so I will write to him and copy it to all Members of the Committee.

I hope that on the basis of my reassurances noble Lords will not press their amendments.

[Lord Lennie (Lab)]

I thank the Minister for her response. First, on what my noble friend Lady Liddell had to say, it is what she did not say about what happened at the party that we want to know. If she gets the opportunity, perhaps she could enlighten us more.

In response to the noble Lord, Lord Teverson, I say that we certainly do not intend direct air capture to be a way of screening climate change sceptics; rather, it is an acceleration of addressing our climate needs. However, I understand that there will be sceptics who would hide behind it.

The Minister’s response to my amendment seemed to be that the Government would take things on a case-by-case basis as and when they arise and make a judgment on the inclusion or not of carbon usage. She said that DAC was under consideration for the future. Well, the point of the amendment is to try to future-proof this piece of legislation for the mid to long term and I would have thought that including it would be quite within the Bill’s remit. With those comments, I beg leave to withdraw my amendment.

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[Lord Callanan (Con)]

Moved formally. No! I will speak to it.

[Baroness Bloomfield of Hinton Waldrist (Con)]

That was my fault.

[Lord Callanan (Con)]

You just can’t get the Whips to support you properly nowadays, can you?

[Baroness Bloomfield of Hinton Waldrist (Con)]

Thanks.

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[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.

[Baroness Bennett of Manor Castle (GP)]

I am not a lawyer, and nor is the Minister, so I will understand if she wants to write to me. However, my understanding is that, if the Bill says that it complies with the UK low-carbon hydrogen standard, and then that standard was updated, the legal binding would be updated. Maybe we need wording to say that it complies with the UK low-carbon hydrogen standard as presently exists and is updated in the future. I am not sure what the wording should be, but surely if you have a standard that is being updated, saying in the Bill that you will meet that standard does not mean that the 2022 figures are fixed in stone.

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[Baroness Bloomfield of Hinton Waldrist (Con)]

I need to take that question back to the department and then write to the noble Baroness.

[Baroness Liddell of Coatdyke (Lab)]

I thank the Minister very much for that very full response. The noble Baroness, Lady Worthington, raised some interesting points that I was not aware of. It would be useful to explore those further as we get towards Report. However, I am content to beg leave to withdraw my amendment.

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[Lord Lennie (Lab)]

My Lords, we are also very supportive of contracts for difference and of this attempt to ensure that contracts entered into are adhered to. I was not quite sure whether the noble Baroness, Lady Worthington, had the total number of these failures to enter the contracts, other than the three she cited, which is probably enough. Maybe the Minister could help with that if she does not have that information.

The only thing that concerns me is that, although I cannot think of what it could be, there might be some reasonable exemption for not signing up. However, apart from that, it seems to me entirely sensible to tighten this obligation.

[Baroness Bloomfield of Hinton Waldrist (Con)]

I thank the noble Baroness, Lady Worthington, and the noble Lord, Lord Howell, for their amendments. I say at the outset that the CfD model will remain an important tool in the armoury of financing options to encourage investment in green energy, although I understand that the point of these amendments is to preserve its integrity.

Amendment 61 seeks to make the signing of a contract for difference—known as a CfD—mandatory for a renewable electricity project that has successfully bid for one in a competitive CfD allocation round. I point out, however, that the Energy Act 2013 already contains, in Section 14(2)(d), powers very similar in effect to the amendment. Section 14(1) of the 2013 Act provides for a CfD counterparty, acting in accordance with provisions made by regulations, to offer to contract with an eligible CfD generator. Section 14(2) of the Act allows for regulations to be made that make further provision about an offer to contract, including, at Section 14(2)(d), provision about what is to happen if the eligible generator does not enter into a CfD as a result of a contract offer. Successful applicants for a renewable electricity CfD are expected to enter into a contract with the Low Carbon Contracts Company if offered one following a CfD auction. Those who do not are excluded under Regulation 14 of the Contracts for Difference (Allocation) Regulations 2014, as amended, from submitting an application at the same site for a specified number of future CfD allocation rounds—an “excluded site”. The 2014 regulations were made under the powers in Section 14 of the Energy Act 2013.

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[Lord Teverson (LD)]

I hope I am not pre-empting the noble Baroness, but are the Government then going to use those powers?

[Baroness Bloomfield of Hinton Waldrist (Con)]

In law, the Government have the power to use them. I am afraid I am not able to comment on what action we might take on the three specific cases which the noble Baroness, Lady Worthington, mentioned, but as I said, I will take that back to the department and write to noble Lords to set out whatever action is being proposed.

[Lord Lennie (Lab)]

Does the Minister know of any further cases, other than the three that have been cited? What total caseload are we talking about?

[Baroness Bloomfield of Hinton Waldrist (Con)]

My briefing suggests that only three small projects totalling 41 megawatts have refused to sign a CfD contract, but that does not sound like a big enough totality to incorporate three large wind farms. I am afraid I do not have any further details on that at this moment.

Amendments 59 and 60 similarly seek to make the signing of a revenue support contract mandatory for a firm which has successfully bid for it through an allocation process put in place under Clauses 68 to 74. Clause 72 provides for a hydrogen production counterparty and carbon capture counterparty, acting in accordance with provision made by regulations, to offer to contract with an eligible low-carbon hydrogen producer or eligible carbon capture entity respectively in specified circumstances. Clause 72(3) provides the Secretary of State with a power to make further provision in regulations about an offer to contract made under this clause. Subsection 3(d) sets out that this may include provision about

“what is to happen if the eligible low carbon hydrogen producer or eligible carbon capture entity does not enter into such a contract as a result of the offer.”

As I have explained, a similar power in the Energy Act 2013 has been exercised to introduce the non-delivery disincentive for the CfD regime, which has been very effective in discouraging non-compliance across the four CfD allocation rounds.

We are considering how to evolve our approach towards more competitive allocation processes under Clauses 68 to 74 for the industrial carbon capture business models. Work is under way to develop the possible design of a more competitive allocation process for the hydrogen business model, including the offer to contract process. I therefore ask the noble Baroness and the noble Lord not to press Amendments 59 and 60, but again thank them for helping to test the robustness of the Government’s decarbonisation ambitions.

I hope I have been able to reassure noble Lords and that, with the offer to write with further details on the wind farms, they feel able to withdraw their amendment.

[Baroness Worthington (CB)]

I thank the Minister for her reply. I have not been clear enough; it is entirely my fault. These are not non-delivery instances. These are instances in which a wind farm is completed, has a CfD and then delays the actual mechanic of the strike price by a certain number of months or years. In doing so, they are ensuring that they can sell at merchant value now and then take up the strike price when the prices fall. Essentially, they have de-risked completely, so that we are carrying all the downside risk and they are taking all the upside risk. That is not how a CfD works. Three of them are doing this, so my fear is that this has almost become quite a clever standard practice. If it persists, this is hundreds of millions of pounds that could be coming back. It completely undermines the integrity of the whole process. So it is not the non-delivery or refusal to sign—I understand that all those provisions are there—it is the delaying out. There is nothing government or the LCCC can use to compel them to take it up at the point of signing. It is on that that I would love to receive a note.

We are obviously going to come back to this. It is all in the interests of getting value for money, keeping up the reputation of this sector and making it as full of integrity as we can. I will withdraw the amendment, but I look forward to continuing the conversation.

[Lord Teverson (LD)]

This is something that I suspect we all hold the same view on. Could the Minister write to us to clarify the situation before Report? That would be very useful. It seems to me that we are all on the same side on this.

[Baroness Bloomfield of Hinton Waldrist (Con)]

I am happy to agree to that.

Amendment 59 withdrawn.

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[Lord Callanan (Con)]

Moved formally.

[Baroness Bloomfield of Hinton Waldrist (Con)]

No.

[Lord Callanan (Con)]

I am one group ahead.

Energy Bill [HL]

Baroness Bloomfield of Hinton Waldrist Excerpts

Committee stage
Monday 12th December 2022 Grand Committee

Moved by

[Baroness Bloomfield of Hinton Waldrist]

105: Clause 86, page 78, line 12, at end insert—
“(b) whether to make a certification under subsection (3)(b).”Member's explanatory statement
This amendment requires the Secretary of State to consult with the Oil and Gas Authority before making a certification of the kind mentioned in Lord Callanan’s amendment at line 78, line 37.

[Baroness Bloomfield of Hinton Waldrist (Con)]

My Lords, Amendments 105 to 109 amend Clause 86 on the availability of change of use relief for pipelines. Clause 86 mirrors Clause 85, the principal difference being that its application is to pipelines rather than to installations. As such, these amendments also mirror those covered in the previous group.

As was the case for Amendment 97, Amendment 106 makes clear what conditions must be satisfied for a pipeline that has already been designated as eligible for change of use relief by the Secretary of State to qualify for change of use relief. To recap, the first is that the Secretary of State has issued a carbon capture and storage-related abandonment notice, under Section 29 of the Petroleum Act 1998, on a person for that pipeline. The second is that the trigger event has been satisfied.

Amendment 107 describes the trigger event that must occur for the relief to take effect, in the same way as Amendment 98 did for Clause 85. First, a decommissioning fund must have been established for the relevant asset. Secondly, an appropriate amount must have been paid into this fund to reflect the decommissioning liability that the previous owner is being relieved of. The amendment would also give the Secretary of State a power to make regulations on the required amount that must be paid into the decommissioning fund, and who may make such a payment, in order to qualify for change of use relief.

As was the case for Clause 85, the Secretary of State must also approve that the amount being paid into the fund in relation to pipelines is sufficient. In the same way as Amendment 96 does, Amendment 105 imposes a requirement on the Secretary of State to consult the Oil and Gas Authority before certifying that the amount is sufficient.

Amendments 108 and 109 make consequential changes to definitions and cross-references in response to previously proposed amendments.

Amendments 110 and 111 make changes to Clause 87. Amendment 110 updates the heading to reflect better the content of that section. Amendment 111 proposes to omit a subsection of Section 105 of the Energy Act 2008. This subsection is no longer necessary as a result of the simplified mechanism proposed in this Bill for designating an asset as eligible for change of use relief.

The repurposing of pipelines, alongside installations, has the potential to deliver great benefits in the deployment of carbon capture, usage and storage. These can be environmental through greater resource efficiency and the reduction in disturbing sea beds. There are also economic benefits in reducing capital expenditure and potentially speeding up the deployment of CCUS.

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[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.

[Lord Teverson (LD)]

I thank the Minister for that very useful answer. Let me get that correct: the funds are being held by the commercial companies that are putting this money aside. Is that ring-fenced? If they go bankrupt, is that lost? How does it work?

[Baroness Bloomfield of Hinton Waldrist (Con)]

It could be a commercial company. It depends who gets the contract for the funds. Then they will be invested.

[Lord Lennie (Lab)]

Are the funds held in escrow so that they cannot be used for anything else, or can they be used as part of the normal purposes?

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[Baroness Bloomfield of Hinton Waldrist (Con)]

I do not think we have a detailed enough answer, so perhaps we should follow up in writing.

[Lord Teverson (LD)]

I have a concern about this area and I think it is important that this is clarified.

[Baroness Bloomfield of Hinton Waldrist (Con)]

We will clarify that point in writing before the next stage.

Amendment 105 agreed.

Moved by

[Baroness Bloomfield of Hinton Waldrist]

106: Clause 86, page 78, line 13, leave out subsections (6) and (7) and insert—
“(6) For subsection (2) substitute—“(2) An eligible carbon storage network pipeline qualifies for change of use relief if—(a) the Secretary of State has given a CCS-related abandonment programme notice to a person in relation to the abandonment of the pipeline, and(b) the trigger event has occurred in relation to the pipeline.(2A) In subsection (2) “CCS-related abandonment programme notice” means an abandonment programme notice under section 29 of the 1998 Act given at a time when the pipeline is used, or is to be used wholly or mainly—(a) for the purpose of disposing of carbon dioxide by way of geological storage, or(b) as a licensable means of transportation.””Member's explanatory statement
This amendment changes the conditions for change of use relief under section 30B of the Energy Act 2008.

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Moved by

[Baroness Bloomfield of Hinton Waldrist]

110: Clause 87, page 80, line 3, leave out “information” and insert “supplementary”
Member's explanatory statement
This amendment is consequential on Lord Callanan’s amendment of Clause 87 at page 80, line 30.

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[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 Bloomfield of Hinton Waldrist Excerpts

Committee stage
Monday 19th December 2022 Grand Committee

Moved by

[Baroness Bloomfield of Hinton Waldrist]

169: Clause 186, page 154, line 18, leave out from “future” to end and insert “flow of electricity into or out of itself”
Member's explanatory statement
This amendment amends the reference to electrical energy in the definition of “energy smart appliance” that applies for the purposes of Part 8.

[Baroness Bloomfield of Hinton Waldrist (Con)]

My Lords, I beg to move Amendment 169 standing in the name of the Minister, my noble friend Lord Callanan, and will also speak to Amendments 170 to 172. This group of amendments considers the definitions set out in Chapter 1 under Clause 186 on “Energy smart appliances and load control”. Clause 186 sets out a number of definitions that are used in other clauses of the Bill relating to load control. These include permitting the creation of new licensable activities, the modification of licence conditions and industry codes for load control purposes, and the making of regulations for energy smart appliances.

Amendments 169 to 171 have two combined effects. First, by removing the reference to the “use, discharge and storage” of electricity, the definition broadens the potential scope of appliances captured. This is because the definition is now agnostic to the way in which the appliance interacts with electricity. Instead, we are now concerned only that there is a flow of electricity into or out of the appliance which can be controlled by a load control signal. The original formulation does not clearly capture local generation of electricity by an appliance—for example, solar panels—and we wish to capture this.

For the purposes of licensing load control, the relevant factor is the sending of a load control signal to an energy smart appliance, regardless of whether that signal is then received by the appliance. Therefore, the amendments make it clearer that the signal needs only to be sent to an energy smart appliance, not necessarily received, to be regarded as a load control signal.

Amendment 172 clarifies that a load control signal may not only be a signal that directly affects electricity usage by an appliance but one that affects the electricity flow into or out of an appliance, based on additional information that is available to the appliance. This means that the improved definition also captures a signal which can configure a device to change electricity usage, depending on additional information available to the appliance. For example, an appliance could be configured to increase its electricity usage if the price of electricity drops below a certain level.

I hope the Committee will agree that these are important amendments that deliver additional clarity in the definitions used.

[Lord Lennie (Lab)]

My Lords, we welcome the clarification.

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Moved by

[Baroness Bloomfield of Hinton Waldrist]

170: Clause 186, page 154, line 24, after “sent” insert “via a relevant electronic communications network to an energy smart appliance”
Member’s explanatory statement
This amendment, together with the amendment in the name of Lord Callanan at page 154, line 25, amends the definition of “load control signal” that applies for the purposes of Part 8 so that it includes a digital communication sent to an energy smart appliance even if the communication is not received by the appliance.

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Moved by

[Baroness Bloomfield of Hinton Waldrist]

173: Clause 187, page 155, line 6, after “cleaning” insert “tableware”
Member's explanatory statement
This amendment, together with the other amendment in the name of Lord Callanan at page 155, line 6, amends the list of purposes of energy smart appliances about which regulations may be made so that it includes appliances for cleaning tableware and washing or drying textiles but not other cleaning appliances.

[Baroness Bloomfield of Hinton Waldrist (Con)]

My Lords, in moving Amendment 173, I will also speak to Amendments 174 to 176, 178 to 180 and 182 in the name of the Minister, my noble friend Lord Callanan.

Amendments 173 to 176 provide clarification and consistency to the definitions of the appliances to which the energy smart regulations will apply. These definitions focus on the purpose of an appliance. Amendments 173 and 174 ensure that energy smart regulations can be made only for cleaning appliances that are most appropriate for demand-side flexibility. This includes, for example, a dishwasher or a washing machine. Amendment 175 allows battery storage to be captured in a manner consistent with the definition of electricity storage in Clause 162. Amendments 176 and 182 clarify that the regulations capture heat pumps, which are essential to the Government’s policy objectives for decarbonising heat.

Next, Amendments 178 and 179 indicate that the Secretary of State may make provision about the recall of non-compliant appliances and may issue guidance about the prohibitions and requirements imposed by these regulations. These amendments therefore provide further safeguards to address serious cases of non-compliance and will support industry to comply with its obligations, aided by guidance.

Lastly, Amendment 180 makes a minor amendment to ensure that the regulations cover additional methods other than ordinary selling for making energy smart appliances available to consumers, such as hire purchase agreements.

Energy smart appliances will play an essential part in the transition to a smarter energy system, enabling consumers to save money on bills and contributing to cost-effective decarbonisation. These amendments provide important clarifications on the scope of these regulations and make certain that they can be implemented effectively in a way that maximises the benefits of smart functionality for consumers and the electricity group.

I will respond to the non-government amendments in this group when we have heard noble Lords’ contributions. I beg to move.

[Baroness Randerson (LD)]

My little Amendment 177 seems to have intruded on this group of government amendments. I tabled it because I was concerned about the practical implications of the Government’s reliance on smart regulations and smart appliances. I am certainly not arguing with the technology but I am seeking to tease out exactly how this will impact on us and the people of Britain as ordinary consumers.

If you read Clause 187, you will see that it is very dictatorial and centralised in its approach. Yet if you look at paragraph 438 of the Explanatory Notes you will see that, in practice, the Government’s intentions are going to be carried out by retailers and manufacturers, and they will face penalties if they do not get it right. My concern is that one size does not fit all. For example, the noble Baroness just mentioned washing machines and so on, but my example would be electric vehicles. We are told to charge electric vehicles at times when electricity usage is low, and we are promised that this will become an automatic default position. The Government are relying on smart usage, in effect, to expand limited national grid capacity. At the weekend, when I was reading some background material, I noticed that there are only two regions where there is currently said to be any level of surplus national grid capacity. The rest of the country is in a very stretched position.

I have been asking these questions for some years. I have been asking how a reliance on telling people when they can wash their clothes or charge their cars will impact on consumers and the way we use our gadgets and run our daily lives. There is a current experiment, not using smart technology but with a voluntary agreement, to get people to opt in to using their washing machines, dishwashers and so on at low-demand periods, with a financial incentive to do that. That is great if it is convenient for these people and they are opting in to do it. I am pleased that the experiment is taking place, as I am sure it will produce some useful information, but I want to float past everyone a couple of potential issues.

First, I do not want to bore noble Lords for long with the details of my domestic life but I have solar panels and an electric car. I want to use my washing machine and dishwasher and charge my electric vehicle when the sun is out; sometimes, that is at a time of peak demand. I am saving myself money, which I regard as a good thing, but, more importantly, I am limiting the amount I draw down from the grid because my solar panels provide my electricity. I am minimising my call on the grid. There are lots of people like me with solar panels; let us hope that there are heaps more in the coming months and years. This issue needs to be taken into account.

Secondly, more importantly, there is a host of people whose working patterns require them to charge their cars and do their washing at peak times. A care worker working nights has to fit their domestic life around those daily patterns, which might be peak demand times. This is not just about just care workers; it is about health workers, district nurses or anyone working on shifts—the police, firefighters and taxi drivers. We want taxi drivers to drive electric vehicles but they are going to run out of electricity half way through the day; they must be enabled to carry on their work.

We have all, I am sure, experienced a situation where we have had to take our phone or laptop to the technical experts because it is doing something strange, behaving in a way that is beyond our understanding. We are normally told that it is the factory settings or an automatic download. I am now aware that, because they are so automated, electric vehicles adopt patterns that one might not necessarily understand fully because they have downloaded a new program and so on. As the technology becomes more sophisticated, in reality, consumers will find it more difficult to understand what it is doing, why and to override it when they need to.

My big question is that any reliance on smart charging and smart usage must be able to be adapted for that large body of people for whom it is not convenient. In days of high energy prices, most of us can probably be relied on to know what is best for us financially and, therefore, what draws least from the grid. I am concerned that the way in which this is expressed allows no latitude, judgment or option for consumers to make that decision for themselves.

--- Later in debate ---

The other area that gives me grounds for concern—the noble Baroness, Lady Randerson, also highlighted this—is all the equality considerations in this discussion. Who would be disadvantaged by some of these proposals? Has equality screening been done with regard to the impact on people with disabilities, people with different work patterns—as we have heard—families with young children and those who have older relatives living with them? In my view, it would not be appropriate to come up with a two-tier system that brings benefits to some but excludes others by its very nature.

[Baroness Bloomfield of Hinton Waldrist (Con)]

I thank the noble Lord, Lord Teverson, and the noble Baronesses, Lady Randerson and Lady Blake, for their contributions. I was going to cover enforcement in group 7, but I have now catapulted some of those remarks back into this group so that we can cover that at the same time.

Turning first to Amendment 177, tabled by the noble Baroness, Lady Randerson, the Government have published both the smart systems and flexibility plan of 2021 and the July 2022 public consultation on developing a smart and secure electricity system. Both documents set out how consumers can provide flexibility to the system and reduce their energy bills via the deployment and use of energy smart technologies and flexibility services. Consumer interests and considerations are at their heart. However, we believe that this amendment would place an unreasonable and inappropriate expectation that regulations could determine or pre-empt how and when consumers choose to use those smart technologies and appliances. It is unnecessary as the Energy Bill is already clear on the importance of protecting and providing benefit to consumers.

First, Clause 187 already allows for regulations to be made which impose requirements on energy smart appliances—in particular, to ensure that the appliance can operate in response to load control signals; to ensure the protection of end-users; and to impose technical requirements, including the requirement to display or provide information about the appliance. Secondly, in taking these primary powers, the Government are also clear that energy smart appliances should always benefit consumers in line with their preferences and choices. The detail of how appliances may be operated is for manufacturers and product designers, and for consumers when they make their product choices. No one will be forced to use their appliances at particular times, and consumers should decide how they want to utilise smart functionality to best meet their individual needs and lifestyles.

The noble Baroness referenced EV charge points. The Government anticipate implementing these measures in a phased approach over several years, recognising the EV charge point sector is already working hard to implement existing regulations. We will work collaboratively with industry as our policy develops, building and learning from the experience of the EV charge point regulations to deliver necessary protections for the energy system and for consumers. To reiterate, consumers will remain in control. This legislation is aimed at facilitating exactly the sorts of exemplary behaviours the noble Baroness is referring to. So, while I welcome the intention of her amendment, I hope she recognises that the Bill sufficiently commits future regulations to maximising the benefits of smart energy technology to deliver the best outcomes for consumers and the wider system.

Turning to Amendment 181, tabled by the noble Lord, Lord Teverson, the Government have already set out how consumers could reduce their bills and be rewarded for the value they provide by using smart appliances in a flexible way. I refer noble Lords again to the smart systems and flexibility plan and the public consultation on developing a smart and secure electricity system. However, this amendment would place an impractical and inappropriate expectation on the Secretary of State to make a statement on exactly how individual consumers can derive maximum value from their smart appliances.

This value is highly variable, depending on how flexible consumers can be with their energy use, their location and the type of smart service and appliances they wish to use. Manufacturers and flexibility service providers will be best placed to inform consumers about the best available benefits and value from their products and services. So, while I welcome the intention of the noble Lord’s amendment, I hope that he can recognise the impracticality of his suggestion and appreciate the wider government actions in train to maximise the benefits of smart energy technology for consumers and the wider system.

The noble Lord also spoke about security, a concern also raised by the noble Baroness, Lady Blake. Regulations made under these enabling powers will ensure that smart devices in scope are secure by design, and that economic operators that play a critical role in delivering load control services to consumers are meeting minimum standards of cybersecurity and data privacy. BEIS is working very closely with the National Cyber Security Centre as well as industry experts to implement measures we intend to take to achieve this. So I beg to move the amendments in the name of my noble friend Lord Callanan and ask noble Lords to withdraw their amendments.

Amendment 173 agreed.

Moved by

[Baroness Bloomfield of Hinton Waldrist]

174: Clause 187, page 155, line 6, at end insert—
“(ba) washing or drying textiles;”Member’s explanatory statement
See the explanatory statement to the other amendment in the name of Lord Callanan at page 155, line 6.

--- Later in debate ---

Moved by

[Baroness Bloomfield of Hinton Waldrist]

178: Clause 187, page 155, line 30, at end insert—
“(ca) make provision about the recall of appliances to prevent, or in response to, non-compliance with the regulations;”Member’s explanatory statement
This amendment enables energy smart regulations to make provision about the recall of appliances.

--- Later in debate ---

Moved by

[Baroness Bloomfield of Hinton Waldrist]

182: Clause 188, page 156, line 24, at end insert—
“(3A) The reference in subsection (3)(b)(ii) to electrical heating appliances includes a reference to heat pumps.”Member’s explanatory statement
This amendment glosses the definition of “relevant appliance” so as to clarify that heat pumps without the energy smart function, or that are not compatible with the energy smart function of another appliance, are relevant appliances about which provision by virtue of Clause 187(4)(c) may be made.

--- Later in debate ---

Moved by

[Baroness Bloomfield of Hinton Waldrist]

183: Clause 189, page 156, line 41, at end insert—
“(iii) take specified steps to remedy non-compliance;”Member’s explanatory statement
This amendment enables energy smart regulations to make provision about steps that must be taken to remedy non-compliance (without an enforcement authority imposing a requirement under provision made by virtue of Clause 189(5)).

[Baroness Bloomfield of Hinton Waldrist (Con)]

My Lords, this group of amendments seeks to strengthen the enforcement powers of the energy smart regulations. This would enable an enforcement authority to investigate and take action swiftly and effectively against non-compliance, and to provide support to industry to comply with their obligations. First, these amendments enable the regulations to place obligations on economic actors to take steps to remedy non-compliance, and to provide evidence of their compliance to an enforcement authority.

Secondly, the amendments allow an enforcement authority to test and make test purchases to assess and to ensure that appliances comply with the regulations. This is an essential requirement, given the necessarily technical requirements the Government will impose to protect consumers and the energy system. If severe non-compliance is identified, Amendment 186 grants a power to an enforcement authority to issue a recall notice to withdraw appliances from the market, if necessary.

Thirdly, Amendment 187 permits an enforcement authority to accept enforcement undertakings. This allows authorities to work constructively with industry to ensure appliances are brought into compliance with regulations, without the need for costly corrective enforcement action being taken.

Finally, Amendment 188 allows an enforcement authority to issue guidance about the enforcement of the regulations and how any authority would exercise its role. This will support industry to comply with their obligations. The market for these appliances is expected to grow rapidly and will play an essential part in the transition to a smarter energy system. These appliances will help consumers save money on bills and contribute to cost-efficient decarbonisation. I hope noble Lords will agree that this is an important group of amendments to enable an appropriate and proportionate enforcement regime to develop, which is consistent and compatible with existing product safety legislation. I beg to move.

[Lord Teverson (LD)]

My Lords, I just want to probe the Minister so that I understand how this works in practice. What are the Government enforcing? Is it an operating system? Is it the design of a chip? Is it the company that makes them? Will they be type-approved in the UK? Will there be compatibility across different domains? All producers of white goods are international, I think. Will we have our own standards here? I am trying to understand how this will work practically. I absolutely agree with the Minister that this is a key area.

Enforcement authorities are mentioned in the Bill. I just want to understand who they are. Are they the thought police? The Minister mentioned an organisation—the UK cyber headquarters or whatever—so is it that? Is it the Department of Trade, as we would have understood it? Is it the police? Who are those enforcement agencies and how will they work?

I have one last request for clarification. Clause 189(2)(f) refers to

“conferring functions, including functions involving the exercise of a discretion.”

I cannot work out what that means so I would be pleased to understand it.

[Baroness Bloomfield of Hinton Waldrist (Con)]

I agree that the language in that particular paragraph is quite legalistic. I might need to come back to the noble Lord on that one unless I can get an instant answer.

As I have said, the detailed enforcement regime will be set out in legislation. The enforcement powers underpinning these regulations will provide an appropriate toolkit to allow an enforcement authority to work with industry to ensure that appliances are both compliant with the future regulations and proportionate to the risks that non-compliant devices could pose to consumers and the grid. The Government have aligned the enforcement powers underpinning the regulations with other product regulations that have similar enforcement powers, such as the Electrical Equipment (Safety) Regulations 2016 and the Electric Vehicles (Smart Charge Points) Regulations 2021.

We are in conversation with regulators on our measures. We are confident that we will have the right knowledge and expertise to resource and regulate this market as it develops. I think that is probably as far as I can go at this stage.

Amendment 183 agreed.

Moved by

[Baroness Bloomfield of Hinton Waldrist]

184: Clause 189, page 156, line 41, at end insert—
“(ba) requiring persons to supply evidence of their compliance to enforcement authorities;”Member's explanatory statement
This amendment enables energy smart regulations to make provision requiring persons to supply evidence of their compliance to enforcement authorities.

--- Later in debate ---

Moved by

[Baroness Bloomfield of Hinton Waldrist]

189: Clause 192, page 159, line 12, at end insert—
“(1A) Energy smart regulations may make provision about the sharing of information between an enforcement authority and the GEMA for the purposes of their functions in relation to energy smart appliances and load control.”Member's explanatory statement
This amendment enables energy smart regulations to make provision to facilitate information sharing between any enforcement authority designated under the regulations and the Gas and Electricity Markets Authority (and vice versa).

[Baroness Bloomfield of Hinton Waldrist (Con)]

My Lords, the Government have tabled two amendments relating to the licensing of load control. The activity of load control here refers to the control of electricity flow to an energy smart appliance by a load controller.

The first of these amendments, to Clause 192, will ensure that the information-sharing between enforcement authorities for energy smart appliance regulations and load-control licensing is explicitly provided for in legislation. The energy smart appliance regime and the load control regime may be regulated by different authorities, so it is imperative that they are able to communicate effectively and share information where necessary. The second of these amendments also relates to the effective delivery of the load control licensing regime. It relates to Schedule 16 and ensures that the provision for consequential amendments to be made to existing legislation, in practice to support the amending of licence conditions, also applies to Acts of the Scottish Parliament or instruments made under them.

In practice, it is unlikely that amendments will be required to Acts of the Scottish Parliament or instruments made under them. However, the load control market is a nascent market. We cannot rule out the possibility that future categories of licence could interact with devolved matters in Scotland. This amendment will ensure that that scenario is provided for, should it ever be needed; should this scenario arise, the Government would of course work with the Scottish Government and adhere to the appropriate processes.

These two amendments will help to provide clarification and explicit provision to support the effective delivery of a load-control licensing system. I beg to move.

Amendment 189 agreed.

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Moved by

[Baroness Bloomfield of Hinton Waldrist]

190: Clause 196, page 162, line 23, leave out subsection (8)
Member's explanatory statement
This amendment omits a provision that is superseded by new Clause (Section (Modifications of licences etc): supplementary).

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Moved by

[Baroness Bloomfield of Hinton Waldrist]

191: Schedule 16, page 315, line 11, after “enactment” insert “, including any enactment comprised in, or an instrument made under, an Act of the Scottish Parliament”
Member's explanatory statement
This amendment enables provision made by regulations under section 56FBA of the Electricity Act 1989 (inserted by the Bill) to include amendments to Acts of the Scottish Parliament and Scottish Statutory Instruments (which are not within the meaning of “enactment” given by the Interpretation Act 1978).

Energy Bill [HL]

Baroness Bloomfield of Hinton Waldrist Excerpts

Committee stage
Monday 16th January 2023 Grand Committee

[Baroness Bloomfield of Hinton Waldrist (Con)]

I thank the noble Baroness, Lady Worthington, for her amendments. I start by reminding noble Lords that this part of the Bill was published in draft and scrutinised by the BEIS Select Committee.

Amendments 213 to 219 seek to include gas under the definitions of core fuels and core fuel sector activity. These measures broadly seek to address threats to the security of fuel supply by introducing powers to ensure fuel supply resilience for the core fuel sector. They capture companies involved in oil-based products, which include heating oil, liquefied petroleum gas and gas oil, also known as red diesel.

I understand the reasoning for gas to be included in these definitions, given that it is utilised for heating and cooking in homes as well as fuelling power stations that provide electricity and contribute to overall energy security. Some forms of gas are, however, already included in this measure, such as liquefied petroleum gases—propane and butane.

I believe that my noble friend the Minister has previously written to the noble Baroness to highlight that the way gas is transported, handled and stored is different from oil, which operates under a separate regulatory regime. For the benefit of your Lordships’ House: gas is transported and handled across the country through a network of pressurised pipelines that connect gas terminals to the distribution network, and this infrastructure is owned by the national grid. I also highlight that the measures in the Bill are limited to the resilience and continued operation of the core fuel sector, which we traditionally refer to as the downstream oil sector.

The inclusion of gas generally would significantly widen the scope of this part and bring a wide range of stakeholders who are already heavily regulated into the scope of the Bill. The level of regulation and resilience in place for the gas industry is significantly higher than that of the oil sector and I caution against adding further regulation to the sector of the kind outlined by these amendments.

I assure the noble Baroness that the gas system is resilient and we have a highly diverse source of gas supply in Great Britain to rely on. It includes pipelines from the UK and Norwegian continental shelves, interconnection with the European continent and three liquefied natural gas—LNG—terminals, providing Great Britain with one of the largest LNG import infrastructures in Europe. I am sure the noble Baroness is aware that last summer the UK was responsible for providing a significant amount of natural gas to mainland Europe through this land bridge.

National Grid Gas has robust, long-standing emergency procedures in place for the extremely unlikely event of an emergency on the gas network. The Government continue to work closely with Ofgem, National Grid Gas and other key industry organisations to monitor the gas supply horizon and prepare for the winter. The overarching aim is that fuel supply is maintained as we transition to a net-zero economy, and I assure noble Lords that the department is also exploring the longer-term options for gas storage and other clean energy, such as hydrogen.

I turn now to Amendments 220, 221 and 222, which relate to the financial assistance measures under Clause 222. It is important to highlight that the Government currently have no dedicated powers to enable spending for the purpose of core fuel resilience. I must emphasise that existing spending powers are limited in terms of their application. Current powers do not apply to providing financial assistance for the purpose of improving or maintaining the resilience of the core fuel sector.

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[Lord Teverson (LD)]

My Lords, before I start, as we may talk about energy storage later, I declare my interest as a director of Aldustria Limited, which is into energy storage. I am also chair of the Cornwall and Isles of Scilly Local Nature Partnership.

First, I congratulate the Government on the Chris Skidmore report that has just come out. It is one of the best reports sponsored by the Government, and I look forward to hearing their reaction to its recommendations. There is some really good stuff in there that must be applauded.

Generally, I welcome these amendments. We know that we have to decarbonise our energy and, in particular, our electricity system; the Government have committed to do so completely by 2035. To do that, we have to make sure that we can deliver. Probably pretty well everybody agrees that methods of implementation, planning and getting wind farms into the gestation period all need to happen quicker, but we also know that there is a biodiversity crisis.

I say to the noble Baroness, Lady Worthington, that I deal a lot with the Wildlife Trusts, and it is about nature recovery, not stopping stuff. No other organisation is more into pointing out that we have been in retreat, we continue to retreat and that we need to reverse that—and the ways of doing so, primarily through agriculture but also, in the marine environment, various other ways as well.

I get a bit involved in the Celtic Sea development, which, I am pleased to say, the Minister mentioned. Down in the south-west we have been saying that there needs to be a holistic look at the effects of that programme on the environment—marine and terrestrially, where it comes on board—and that the research needs to be done in advance. That should quicken it, in that it is done in one whole system rather than by individual planning applications for individual farms or floating facilities, and so on. Through that, there is not necessarily a conflict between the two.

I very much support the exposition of the noble Baroness, Lady McIntosh, about the hierarchy, because I am certain that, as we know from onshore and things we have talked about before, off-setting as we knew it is an excuse, mainly for developers—I declare that I have a developer role. It is sometimes too easy to push the problem somewhere else and not confront it where you are actually causing the damage. One of the problems is enforcement and making sure that those things actually happen.

As I said, I generally welcome these amendments and trying to speed up the process, which is necessary, but, like the noble Baroness, Lady Young, I am concerned that we need to make sure that the powers given under these amendments are restricted to environmental improvement, in that they do not detract from that. I am particularly interested in how this compensation might work. The mitigation hierarchy absolutely needs to be put in primary legislation, but I want to understand from the Minister whether it is the Government’s intent that mitigation elsewhere should be a last resort. That is the fundamental question, and I would be very interested to hear the answer.

On the voluntary marine recovery fund, the idea of a voluntary fund seems very strange to me. What does it mean? I would like to understand from the Minister whether it means that, ultimately, it is voluntary. Is it voluntary for a developer that cannot do mitigation as we would all wish to contribute to this fund, or is it, at that point, compulsory? I do not get it. If it is voluntary, I am heavily concerned.

In addition, who will manage it in England? I understand well and I agree that it should be farmed out to the devolved authorities, but who will be the manager of that fund? I assume that it would involve rather large amounts of money, so how it is managed will be particularly important.

I also understand, although I do not think it is in the amendments, that there will be offshore wind environmental standards; I think that is in part of the briefing. I presume that these will have to be done by Defra. Defra is absolutely useless at doing environmental standards anything like on time. It has the whole of the EU repeal legislation Bill to do; I think the Defra Minister, Richard—

[Baroness Bloomfield of Hinton Waldrist (Con)]

Benyon.

[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.

--- Later in debate ---

[Lord Lennie (Lab)]

Perhaps it is something like that.

The Government state that the best means to manage hazardous nuclear waste in the long term is in GDF undersea burial sites. Can the Minister tell us how they have concluded that that is the best possible means? Clearly we have plenty of it and we will have plenty more. We support nuclear power and nuclear generation as part of the overall mix of energy fuels to supply the UK—there is no question about that. However, dealing with hazardous waste is an important matter that we would like some information about.

[Baroness Bloomfield of Hinton Waldrist (Con)]

I thank the noble Baroness, Lady Bennett of Manor Castle, for the opportunity to debate and discuss Clause 230.

This clause relates to geological disposal facilities. We have spoken about this often in the Chamber during Questions. GDFs are highly engineered facilities capable of isolating and containing radioactive waste within multiple protective barriers deep underground, so that no harmful quantities of radioactivity ever reach the surface environment.

The Government consider a GDF to be essential to the successful decommissioning of the UK’s civil nuclear legacy and our new-build nuclear power programme which will support the UK Government’s net-zero ambitions and their energy security strategy. The process to find a site for a GDF is under way, and it is therefore vital that we have a clear legal framework to ensure that such a site will be licensed and subject to oversight by the Office for Nuclear Regulation—the ONR.

On the noble Baroness’s point about disturbance, there is no evidence that any disturbances were caused by the specific seismic studies undertaken on behalf of Nuclear Waste Services. We have not seen any, and none has been drawn to our attention, but if the noble Baroness has other information, obviously we would be very grateful if we could see it.

Clause 230 makes clear that certain nuclear sites, including a GDF once prescribed in regulations, located wholly or partly in or under the territorial sea adjacent to the UK require a licence and are regulated by the ONR. In answer to the noble Lord, Lord Teverson, I have no idea why it says “wholly or partly”; I take his point that it is a long way off to get to “partly in our territorial waters”. However, presumably that is a drafting necessity.

The GDF siting process is a consent-based approach which requires a willing community to be a partner in the project’s development. Four areas have entered the siting process: three areas in West Cumbria—in Copeland and Allerdale—and one in Theddlethorpe in Lincolnshire. This clause is intended to provide clarity to parties with an interest in the GDF process that a GDF in their community, whether located deep below the land surface or deep below the seabed, will be safe, secure and appropriately regulated by the ONR. I would like to be clear: no part of a GDF will be in the sea itself, nor will radioactive waste be dumped in the sea. That is banned by international conventions, including the London convention and protocol. Whether a GDF is built in the geological formations deep below the land surface or deep below the seabed, it will be accessed from facilities on land, and the waste will be isolated deep underground within multiple barriers to ensure no harmful quantities of radioactivity reach the surface environment.

I thank noble Lords for their contributions, I hope this has assured the noble Baroness of the Government’s intentions for this clause, and I hope she will feel able not to oppose that this clause stand part of the Bill.

[Baroness Bennett of Manor Castle (GP)]

I raised the question of whether the Government are aware of or concerned about any unlicensed, unregulated nuclear sites, which the Explanatory Memorandum seems to suggest might be a reason for this.

[Baroness Bloomfield of Hinton Waldrist (Con)]

My officials say that that is not a concern to us. If we establish that it is otherwise, then of course we will let the Committee know.

Clause 230 agreed.

--- Later in debate ---

Moved by

[Baroness Bloomfield of Hinton Waldrist]

227B: After Clause 237, insert the following new Clause—
“Chapter 3Relevant nuclear pension schemesCivil nuclear industry: amendment of relevant nuclear pension schemes(1) The Secretary of State may by regulations make provision requiring a designated person to amend the provisions of a relevant nuclear pension scheme in respect of which the person is designated—(a) for the purpose of making scheme-specific changes;(b) for the purpose of making changes that relate to any scheme-specific changes;(c) for the purpose of making contribution rate adjustments.(2) “Scheme-specific changes”, in relation to a relevant nuclear pension scheme, are changes that—(a) relate to defined benefits for members of the scheme, and(b) are in connection with one or more of the matters mentioned in subsection (3).(3) Those matters are—(a) securing that the structure under which the defined benefits in question accrue is a career average revalued earnings structure (in particular where it would otherwise be a final salary structure);(b) providing for other changes to the amounts of such of those defined benefits as are payable in respect of members of the scheme;(c) providing for revaluations of pensionable earnings, or of benefits in deferment or pensions in payment, to be by reference to the consumer prices index (and not the retail prices index) but not involving imposing a cap on any revaluation or revaluation rate;(d) setting percentage rates, for contributions to the scheme by members of the scheme, that are higher than they would otherwise be; (e) setting periods for which contributions to the scheme by members of the scheme are required to be made that are longer than they would otherwise be.(4) Amendments made by virtue of subsection (1)(b) may include amendments relating to benefits provided under the scheme other than defined benefits.(5) “Contribution rate adjustments” means such adjustments—(a) to the rates of contributions to the scheme by its members in respect of defined benefits, or(b) to the salary bands to which such contribution rates apply, as are considered appropriate by the designated person (acting on actuarial advice) to ensure that the average contribution rate for members of the scheme in respect of defined benefits is as close as reasonably practicable to 8.2%.(6) Where a person is required by regulations under this section to amend the provisions of a relevant nuclear pension scheme, the amendments may be made—(a) free from any consent requirements set out in the scheme, and(b) notwithstanding provision made by or under any other Act of Parliament, or any rule of law, that would otherwise prevent or limit, or impose conditions on, the making of the amendments.(7) Amendments made by virtue of subsection (1)(a)—(a) must not relate to service prior to the date on which the amendments are made;(b) may be made in the case of a particular scheme on one occasion only.(8) Nothing in this section limits any power that a designated person has to amend a relevant nuclear pension scheme.(9) A person may not be designated in relation to a relevant nuclear pension scheme unless it appears to the Secretary of State that the person has the power to amend the scheme.(10) In this section, “designated” means designated by regulations under this section.”Member's explanatory statement
This new Clause is the first Clause in a new Chapter of Part 12 of the Bill (also containing the other new Clauses inserted after Clause 237 by amendments in Lord Callanan’s name). This new Clause enables regulations to be made requiring persons with responsibility for pension schemes for public sector employees in the nuclear sector to amend those schemes in line with wider changes to public sector pensions.

[Baroness Bloomfield of Hinton Waldrist (Con)]

I turn now to the amendments in the name of my noble friend the Minister. The 2011 report by the noble Lord, Lord Hutton of Furness, started the Government on the road to the reform of public sector pensions. While the Public Service Pensions Act 2013 made a large number of reforms, it did not cover all public sector bodies, including those within the Nuclear Decommissioning Authority group. A proposed bespoke career average revalued earnings scheme was, following statutory consultation with affected NDA employees and a ballot of union members, formally accepted by the trade unions. The bespoke scheme is in line with the rest of the public sector. The reformed scheme still offers excellent benefits to its members. Notably, indeed unusually for other reformed schemes, it still includes provision for members to retire at their current retirement age. For nearly all, this will be 60.

The complicated nature of the pension schemes in the context of the statutory framework which applies to pension benefits across the NDA estate means, however, that specific legislation is needed to implement the new scheme. Amendment 227B provides the Secretary of State with the power to make secondary legislation designating a person who will be required to amend the provisions of a nuclear pension scheme.

[Lord Lennie (Lab)]

My Lords, I think we are out of order.

[Baroness Hayman (CB)]

For the assistance of the Committee, I point out that the numbering of the groups that we were given last night and was up to date was changed when we came to the paper that we received today, but no indication was given of that. Therefore, I believe that this is now the correct order.

[Baroness Bloomfield of Hinton Waldrist (Con)]

We are on the fifth group, with government Amendment 227B on pensions. I turn to Amendment 227C. The amendment that I just spoke to uses the phrase “relevant nuclear pension scheme” to describe the types of schemes that a designated person could be required to amend by virtue of that amendment. This amendment explains what is meant by that phrase. New subsections (1) and (2) provide that a relevant pension scheme is one run by, or on behalf of, the NDA under Section 8 of the Energy Act 2004, or one which provides pensions or other benefits to persons who are, or were, performing similar public functions. The new clause also clarifies that the UK Atomic Energy Authority pension schemes and pension schemes that benefit persons specified in Public Service Pension Scheme Act 2013 are not relevant pension schemes.

I turn to Amendment 227D. In order to implement the proposed pension reforms, the NDA and, in the case of the MEG-ESPS, Magnox Limited, will need information from others. Amendment 227D gives a person who has been required to amend a relevant nuclear pension scheme the power to require persons holding any information they might reasonably require to provide such information. Examples of information that they may need but which they might not otherwise be able to obtain include the number of members in a pension scheme and the salaries and ages of those members. Data protection legislation may still prevent the information from being shared; however, this amendment specifies that in making that assessment the requirement to disclose imposed by this clause must be taken into account. This amendment also provides that disclosure does not constitute a breach of confidence or a breach of any other restriction on the disclosure of information.

--- Later in debate ---

[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.

Amendment 227B agreed.

Energy Bill [HL]

Baroness Bloomfield of Hinton Waldrist Excerpts

Report stage
Tuesday 28th March 2023 Lords Chamber

Moved by

[Baroness Bloomfield of Hinton Waldrist]

22: Clause 67, page 59, line 29, at end insert—
“(4A) Provision made by virtue of subsection (3)(d) for the imposition of a financial penalty must include provision for a right of appeal against the imposition of the penalty.”Member's explanatory statement
This amendment requires regulations under Clause 67(3)(d) (functions of hydrogen levy administrator) that make provision for the imposition of financial penalties to include provision for a right of appeal.

[Baroness Bloomfield of Hinton Waldrist (Con)]

My Lords, I rise to speak to the amendments standing in the name of my noble friend, which address recommendations made by the Delegated Powers and Regulatory Reform Committee on the Energy Bill. We are grateful to the committee for its detailed scrutiny of the provisions in the Bill. The committee provided a range of comments and recommendations which the Government have carefully considered. The Minister was pleased to confirm in his response to the committee that the Government have accepted nine recommendations. He also provided further clarification, as requested, in response to the majority of the committee’s other comments. These amendments address the recommendations the Government have accepted, and I hope they will be welcomed by noble Lords.

Turning first to Amendments 22, 34, 48, 49, 50, 51, 52, 55, 64, 76, 77, 92, 93, 99 to 103, 105 and 106, the committee highlighted that certain clauses of the Bill confer powers to make provision for the imposition of civil penalties without mandating a requirement for the regulations to provide for a right of appeal. While it was absolutely the Government’s intention that regulations under such clauses would provide for a right to appeal, we have taken on board the committee’s comments.

These amendments clarify this point and ensure that regulations made under these clauses, which make provision for a civil or financial penalty, must also include provision for a right of appeal to a court or tribunal against the imposition of such a penalty. The committee’s recommendations referred to three specific instances in the Bill. To ensure consistency across the Bill, we have tabled similar amendments to a number of other clauses which make provision for a civil or financial penalty.

Amendments 73, 80 to 90, 96, 107 to 123 and 139 to 142 address the committee’s recommendations relating to changing the procedure to which regulations made under powers in the Bill are subject. The Government agree with the committee on the importance of parliamentary scrutiny. As such, we have tabled amendments to address the committee’s recommendations relating to changing the parliamentary procedure. These amendments will facilitate detailed scrutiny of the powers, when used.

Amendment 91 responds to the committee’s recommendation regarding subsections (3) and (4) of Clause 180, on heat network zoning. The committee had concerns that these provisions would confer powers allowing non-statutory documents to make requirements in relation to the methodology for identifying areas as potential heat network zones. We welcome the committee’s comments, and this amendment will ensure that any non-statutory documents do not have legislative effect. The amendment omits from Clause 180 subsection (3), which provides for the heat network zones authority to publish documents elaborating on one or more aspects of the zoning methodology. It also omits from the same clause subsection (4), which provides that regulations may require the authority and zone co-ordinators to comply with any requirements set out in these documents.

I reiterate my thanks to the Delegated Powers and Regulatory Reform Committee for its engagement and reports on the Bill, and I hope its members will be pleased with the amendments discussed today. I beg to move Amendment 22.

[Lord McLoughlin (Con)]

My Lords, on behalf of the committee, I thank the Government for responding favourably to the report. I hope this is something that other departments will follow through in their subsequent considerations.

Energy Bill [HL]

Baroness Bloomfield of Hinton Waldrist Excerpts

Report stage
Tuesday 28th March 2023 Lords Chamber

[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.

[Lord Foster of Bath (LD)]

My Lords, the time is late; I shall be very quick indeed. I was well aware, of course, of the work that has been done looking at the package of arrangements around solar panels and their batteries. I really wanted to use it as a peg on which to hang the wider issue of all forms of lithium batteries, in particular. I am pleased to hear about the 2018 established group. It would be very helpful if we could see some of the output of that. I am grateful, too, to hear that there are going to be new standards, but the truth is very simple: you can have all the standards you like, and the products may be okay, but if they are not used appropriately and not decommissioned appropriately, then real problems exist, and that is what is happening. There are a huge number of fires in our landfill sites because people are not doing what they are meant to do in disposing of batteries. We have to find a way forward. That is why I wanted a report. I am disappointed that the Minister is not prepared to go further, but at this stage I beg leave to withdraw the amendment.

Energy Bill [HL]

Baroness Bloomfield of Hinton Waldrist Excerpts

Report stage
Monday 17th April 2023 Lords Chamber

[Lord Lennie (Lab)]

My Lords, this group of amendments from the noble Lord, Lord Teverson, my noble friend Lord Whitty and the noble Baroness, Lady Bennett, consider the circumstances of some of the vulnerable customers in the energy market, and the actions the Government might take to protect them from the vagaries of the market. Such actions range from a social tariff through to inhibiting the exploitation of current prepayment meter customers and a prohibition on the installation of prepayment meters unless specifically requested by a customer. These amendments would collectively offer protection for these customers, who are often regarded as problems by billing companies.

As was said by the noble Lord, Lord Teverson, Ofgem recently announced a stop to companies forcing their way into premises to fit prepayment meters. This practice was commonplace and saw such customers paying more in energy costs as companies passed on the costs associated with the fitting and maintenance of prepayment meters. The ban was originally due to last until the end of March and has now been made indefinite.

The call for a social tariff has been advocated by Citizens Advice and is supported by the Social Market Foundation. It comes in a report that follows a long period of consultation with industry leaders, civil society and the general public. Last year, National Energy Action also argued for a social tariff for low-income households, highlighting the double bind of energy costs and rising bills coupled with paying more due to the poverty premium. A targeted social tariff would limit the impact of these circumstances, as well as help accelerate a fair transition towards net zero. I repeat the question asked by my noble friend Lord Whitty: are the Government able to give an indication that they might review the current tariff structure with a view to making it fairer, in favour of vulnerable customers, including prepayment meter customers?

[Baroness Bloomfield of Hinton Waldrist (Con)]

My Lords, this group covers amendments tabled regarding support and protections for the most vulnerable energy consumers. First, I thank the noble Lords, Lord Whitty and Lord Teverson, and the noble Baroness, Lady Bennett of Manor Castle, for their amendment to introduce a social tariff for vulnerable energy customers.

I am all too aware of the context for the noble Lords’ amendments, as energy bills have dramatically increased for all households over the past 18 months. This, coupled with the wider cost of living, has put the budgets of vulnerable households under considerable pressure. Noble Lords will be aware that the Chancellor set out in the Autumn Statement that the Government would work with consumer groups and industry to explore the best approach for consumer protection from April 2024. He also said that the Government would assess options, including a social tariff. These discussions are already well under way and are ongoing.

As set out in Powering Up Britain: Energy Security Plan, the Government have committed to consult this summer on options to provide better targeted support for those who need it most. In addition, the Chancellor announced in the Spring Budget that the energy price guarantee will be extended at £2,500 for an additional three months to the end of June 2023. This is in addition to the expanded warm home discount scheme, which has been extended until 2026 and which provides £475 million in support per year in 2020 prices.

The amendments tabled by the noble Lord, Lord Teverson, and the noble Baroness, Lady Bennett of Manor Castle, relate to the smart prepayment meter rollout and the restriction of the use of prepayment meters. The Government want to see the highest possible levels of smart meter coverage across the country, including for prepayment. Energy suppliers are each being set annual minimum installation targets and large suppliers are required to publish their performance against those targets, broken down by credit and prepayment.

This amendment would go further, effectively mandating the replacement of legacy prepayment meters by the end of 2025. This would present significant logistical challenges, including the need for energy suppliers to obtain warrants to enter consumers’ homes. I think we can all agree that that would not be a satisfactory outcome. Prioritising the replacement of legacy prepayment meters may have the unintended consequence of creating disincentives for suppliers to install smart meters for vulnerable credit customers. Data from Ofgem indicates that around 70% of those with disabilities pay by direct debit and may therefore benefit from the automated readings which smart meters deliver.

I understand the sentiment that lies behind the noble Lord’s calls for measures aimed at ending self-disconnections, such as a social tariff. However, his amendment is not the way to achieve this. The best way is through the work under way to explore the best approach for consumer protection, which I outlined earlier.

Regarding the noble Lord’s second amendment, the Government agree that the recent findings in the Times in relation to customers of British Gas having prepayment meters forcibly installed were both shocking and unacceptable. It is critical that our most vulnerable energy users are protected, and that is why the Government acted quickly to tackle this issue of inappropriate prepayment meter use. The Secretary of State wrote to energy suppliers insisting they revise their practices and improve their action to support vulnerable households.

Following that, all domestic energy suppliers have agreed to cease the forced installation of prepayment meters, and the remote switching of smart meters to prepayment mode, while Ofgem and industry agree and implement a code of practice to improve consumer safeguards. Ofgem will then start a formal statutory consultation process to modify suppliers’ licence conditions in line with the code, which will allow Ofgem to use its full enforcement powers to enforce compliance with the code.

I am pleased that the Chancellor has acted through the Budget to remove the premium paid by prepayment meter customers. That will happen from July initially, through the energy price guarantee, with Ofgem bringing forward options for longer-term solutions to be implemented by April 2024.

Prepayment meters can continue to play an important role in the market. They are a useful tool for some customers to prevent debt building up, and a complete ban on prepayment meters would likely see a move to using debt enforcement via the courts and bailiffs, which is not a desirable outcome. However, it is important that the rules around their use are sufficient and properly enforced. That is why Ofgem is undertaking a review to consider how prepayment meters are handled across the market. The Government will continue to review progress to ensure that these processes lead to positive changes for vulnerable consumers.

Amendment 74 tabled by the noble Lord, Lord Whitty, relates to protecting heat network consumers. Robust consumer protection rules are of paramount importance, which is the primary reason that the Government are regulating the heat network sector. Schedule 16 provides for regulations to make the regulator’s principal objective to protect the interests of existing and future heat network consumers. That mirrors Ofgem’s principal objectives regarding existing and future gas and electricity consumers.

I would like to provide more detail on what that principal objective will mean in practice. It will ensure that the regulator prioritises enforcing rules that ensure that heat network consumers receive fair prices and reliable supplies of heat. The regulator will have powers to investigate and intervene where prices appear unfair or are significantly higher than comparable heating systems. The regulator will also introduce heat supply standards of performance, including adequate compensation for consumers who experience outages. That will ensure that heat network consumers receive comparable standards to gas and electricity consumers.

We are introducing these measures through secondary legislation and authorisation conditions, as with gas and electricity consumer protections, to ensure that rules can be updated more easily as the market matures and decarbonises. The Government will consult on the specific consumer standards that need to be met, and I encourage the noble Lord to consider that consultation once it is published later this year.

I hope that noble Lords are reassured by this explanation and feel able not to press their amendments.

[Lord Whitty (Lab)]

My Lords, I thank the noble Baroness for that considered reply and the recognition in her remarks that there is still a serious problem. She referred to Ofgem coming up with something in relation to the way in which prepayment meters operate. In this new era, with a new structure following the Bill, it would be useful if Ofgem and the Government looked at the totality of structures for all forms of supply of energy, and particularly at the impact on more vulnerable consumers—Ofgem would need to take the lead, I guess. I hope the issues that I raised on the structure of tariffs in relation to the priority service register and the impact on vulnerable consumers would be included. I am watching this space. The noble Baroness has moved some way towards recognising that there is an issue.

I refrained from commenting in detail on heat networks because my voice was going. There is a problem. I very much welcome the fact that this is one bit of consumer protection in the Bill; it has been extended to the users of district heating. District heating has been convenient and is usually quite cheap but is now faced with real problems. I hope that the consultation will cover it.

--- Later in debate ---

[Lord Lennie (Lab)]

My Lords, I will briefly thank my noble friend Lord Berkeley for this amendment, which is asking the Government to introduce renewable liquid heating fuel obligations that mirror the renewable transport fuel obligations as a choice available for decarbonising heating. I do not know—perhaps the Government know—whether there is any reason why they cannot accept this proposal, given that these fuels can be produced and distributed using industrial facilities that seem to already exist, and in turn using local raw materials, making it possible to diversify the energy base of the country in order to keep moving forward and achieve energy independence. Would it work? If so, why not give it the go-ahead?

[Baroness Bloomfield of Hinton Waldrist (Con)]

My Lords, I too thank the noble Lord, Lord Berkeley, for his amendment, and the noble Baroness, Lady Young, and the noble Lords, Lord Ravensdale and Lord Teverson, for their contributions to this debate. Decarbonising buildings off the gas grid—and I should perhaps declare an interest in that I, too, live in a house that is off the gas grid—using fossil-fuel heating is a key priority for the Government, as they use some of the most polluting fuels. Action on these buildings will help us to reduce our dependence on imported oil and protect consumers from high and volatile energy prices, while keeping us on track for net zero.

In 2021, we consulted on a policy of phasing out the installation of fossil-fuel heating systems in homes, businesses and public buildings in England off the gas grid during the 2020s. We will issue the government responses to these consultations in due course, setting out our plans regarding these policies. I am afraid that I cannot be more specific than that on the timing.

The noble Lord’s amendment seeks to impose new obligations on heating fuel suppliers, to encourage the supply and use of renewable liquid heating fuels. I appreciate his intent to increase the role of renewable liquid fuels in heating to help with the transition to clean heat off the gas grid. However, a number of questions must be answered before we can make decisions on what role renewable liquid heating fuels should play in the future heating mix and develop the policy framework which would support such a role. As he will be aware, sustainable biomass is a limited resource. We will need to prioritise its use in sectors that have the fewest options for decarbonisation and the most potential for emissions reductions. Indeed, the Climate Change Committee argues that the use of biofuels in heat should be minimised as far as possible to enable best use of biomass across the whole economy. Overcommitting in heating risks having effects in other sectors, such as transport, or driving up the prices paid for these fuels. The forthcoming biomass strategy will review the amount of sustainable biomass available to the UK and will then consider how this resource could be best used across the economy to achieve net zero. Policy decisions on the role of renewable liquid fuels will need to reflect this strategy.