Greenhouse Gas Emissions Trading Scheme (Amendment) Order 2026

Baroness McIntosh of Pickering Excerpts

Wednesday 28th January 2026 Grand Committee

[The Minister of State, Department for Energy Security and Net Zero (Lord Whitehead) (Lab)]

My Lords, this order was laid before Parliament on 16 December 2025.

The UK Emissions Trading Scheme, or UK ETS, was established—perhaps I should say “re-established”—under the Climate Change Act 2008 by the Greenhouse Gas Emissions Trading Scheme Order 2020 as a UK-wide greenhouse gas emissions trading scheme, contributing to the UK’s emissions reduction targets and net-zero goal. The scheme is run by the UK ETS Authority, which is a joint body comprising the UK Government and the devolved Governments acting as one. Our aim is to be predictable and responsible guardians of the scheme and its markets.

Under the UK ETS, operators are required to monitor, report on and surrender allowances in respect of their greenhouse gas emissions. Although most allowances are purchased at regularly held auctions, operators in certain sectors at risk of carbon leakage are given a number of allowances for free; there are referred to as “free allocations”. Free allocations reduce the exposure to the carbon price for sectors at risk of carbon leakage and reduce the risk that decarbonisation efforts could be undermined by production and the associated emissions moving to other countries.

Under the UK ETS, an operator is the person or company with control over an installation. Installations are stationary units at which regulated activities take place. Sub-installations represent operations carried out at an installation for which operators that receive free allocation are required to report activity levels for the purposes of the UK ETS.

We have brought forward this statutory instrument to enable important changes and improvements to the scheme. The first change it makes is to enable operators of installations to be able to notify their regulator that they wish their activity data for the 2020 scheme year, or 2020 and 2021 scheme years, to be excluded from the calculation of their historical activity levels for the 2027-30 free allocation period. This is in recognition of the fact that production levels may have been impacted during the Covid-19 pandemic. These operators will be able to notify their regulator during the second stage of the 2027-30 free allocation application, from 1 April 2026 to 30 June 2026, that they wish to exclude their activity data for 2020, or 2020 and 2021.

A legal change to the free allocation regulation is needed because existing legislation would require regulators to calculate historical activity levels using activity data from all five years of the baseline period from 2019 to 2023. So, if amendments are not made, there will be no legal basis for regulators to exclude data from 2020, or 2020 and 2021, from the historical activity level calculation for any applicant. Using activity data for these years could result in historical activity levels that do not reflect normal activity, meaning that operators would receive less free allocation than they would otherwise be entitled to receive.

The second change the instrument makes is to gradually phase out free allocation for sectors covered by the UK carbon border adjustment mechanism—the UK CBAM—starting over the 2027-30 allocation period. This phase-out will be implemented through applying a UK CBAM reduction factor to the calculation of free allocation, and will apply at sub-installation level. To do this, operators will be required to report on which of their sub-installations serve the production of UK CBAM goods. This will enable regulators to apply the UK CBAM reduction factor to the relevant sub-installations.

A legal change is needed as operators currently classify their sub-installations only by a specific benchmark and the corresponding carbon leakage status of that sub-installation. This instrument requires operators also to classify each sub-installation as “UK CBAM” or “not UK CBAM”. Benchmarks are the efficiency standards used to calculate each installation’s free allocation entitlement. Installations closer to their benchmark have a higher proportion of emissions covered by free allocation, rewarding more efficient installations and incentivising decarbonisation.

The third change the instrument makes is to use current benchmarks for the purpose of calculating free allocation for stationary installations for the 2027 scheme year. This instrument also provides for the ability to update the benchmark values used to calculate free allocation for the years 2028, 2029 and 2030 of the 2027-30 allocation period. Maintaining current benchmarks for the 2027 scheme year will allow time for industrial participants to adjust to the changes.

A legal change to the free allocation regulation is necessary because, under existing legislation, there is no provision to update benchmarks during an allocation period. The principal intent is to use the updated ETS phase 4 benchmarks in the 2028, 2029 and 2030 scheme years; this will be decided once the EU benchmark values are available and will be subject to assessment of the impact.

Installations that permanently cease to operate are required to report on their activity in the final year of operation so that free allocation can be recalculated to reflect the cessation of activity. This amendment clarifies that operators must report on their activity levels in instances of permanent cessation or the surrender or revocation of their permit.

These intended changes follow comprehensive engagement and consultation with stakeholders. The UK and devolved Governments carried out consultations that covered the provisions included in this statutory instrument. The free allocation review consultation ran between 18 December 2023 and 11 March 2024, seeking views on proposals to alter the free allocation methodology for UK ETS stationary sectors to better target those most at risk of carbon leakage and ensure that free allocations are fairly distributed. The free allocation review carbon leakage consultation ran between 16 December 2024 and 10 March 2025. It sought views on a draft UK-focused carbon leakage list compiled by applying UK data to the existing carbon leakage list, as well as the trajectory for phasing out free allocations for sectors that will be covered by the UK carbon border adjustment mechanism. The relevant responses to these consultations were summarised in the UK ETS authority’s response.

In conclusion, the changes in the draft order will deliver on commitments made by the UK ETS authority, improve the fairness of the scheme and increase certainty for both regulators and operators. These changes will ensure that free allocation continues to provide meaningful support to UK industry while maintaining the incentive to decarbonise and rewarding efficient installations. The amendments to the UK ETS will support its role as a key pillar of the UK’s climate policy. They demonstrate that we will take action to improve the scheme where necessary. I beg to move.

[Baroness McIntosh of Pickering (Con)]

My Lords, I am grateful to the Minister for so comprehensively outlining the contents of the SI. Once again, I welcome him to the House and his position. We knew each other in the other place over a number of years and I was a great admirer of his during that time. I also welcome my noble friend to his Front Bench position, and I look forward to working with him in that capacity. I congratulate the noble Earl on the Lib Dem Benches for his conversion to a life peerage. We are now equals in that regard.

I will take the opportunity to put a few questions to the Minister. I understand that the year 2026 is a stand-alone year before we proceed to 2027 onwards. Is that of particular significance in regard to the changes that the Minister outlined? I understand from paragraph 11 of the Secondary Legislation Scrutiny Committee’s report that, in response to a number of concerns that were raised, the department

“emphasised that UK industry and wider stakeholders had ‘repeatedly’ called for linking with the EU ETS”.

The committee went to great pains to say:

“According to the DESNZ, linking does not mean re-joining and is expected to reduce costs for UK businesses by giving them access to a larger, more liquid market”,


and it said that it had published the submission.

Perhaps I ought to say that I am a pro-European Conservative, so it would not bother me if we rejoined the EU ETS. I know that I am in a minority of one in the Conservative Party on this point, but I want to put that on the record. It raises the question of why industry will be concerned. As I understand it, the UK ETS is very ambitious and operates with a stricter emissions cap, initially set at 5%, which I understand is higher than that set by the EU ETS. If that is the case, does the Minister agree that there are very strong arguments that the UK industry would wish to follow the EU ETS in this regard?

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[Lord Whitehead (Lab)]

I thank the noble Lord for that correction as far as his status in previous Governments is concerned. I was making a point not about his own distinguished period as an Energy Minister, which I appreciate was much earlier and perhaps in a rather happier energy era than we have today, but about the mangled response from the Conservative Government to the last gas volatility crisis in this country, and what resulted in terms of the money going out of the Exchequer for the attempts to protect domestic consumers and businesses from that spike, since he raised it as one of his concerns about this SI.

I ought to add, by the way, that, in the Government’s industrial strategy—yes, we have an industrial strategy, unlike previous Administrations—we announced additional support for 7,000 energy-intensive firms through the British industrial competitiveness scheme, which will reduce electricity costs by up to £40 per megawatt-hour. Through the British Energy supercharger, the Government are increasing support for the most energy-intensive firms by covering more of the energy network charges they normally have to pay. From 2026, the discount on these charges—namely, legacy costs, capacity market feed-in tariffs and so on—will be discounted by 90% from their present 60% level. That is a substantial boost to industry, as far as prices are concerned, by the direct actions of the Government under these circumstances.

I am conscious that I have spent rather too long addressing what the noble Lord, Lord Moynihan, has perhaps wound me up to talk about more than I might otherwise have done. I have to now address the questions that were put to me by the noble Baroness, Lady McIntosh of Pickering—who I applaud for being, as it were, on the side of these particular measures and ideas from the other side—and the noble Earl, Lord Russell.

I have, to some extent, covered the questions that the noble Baroness put to me. The first allocation period will be extended to 2026 to ensure that the changes implemented from the free allocation review come into force in 2027, to align with the introduction of UK CBAM. On her questions on bills, emissions trading has been a key element of power sector decarbonisation. Therefore, maintaining a strong UK ETS and, dare I say it, aligning it with the much wider market that we can enter into, for the stability of the ETS, will not be a joining of the EU ETS but a linkage of the UK ETS to the EU ETS. The UK ETS will continue. It has been determined following a recent consultation discussion that it will continue until at least 2040.

[Baroness McIntosh of Pickering]

I want to press the Minister. We are being more ambitious under his scheme than under the original scheme, the EU ETS to which the UK originally subscribed. We are going for a stricter emissions cap, initially of 5%, and will probably be more ambitious as we go forward. We also have a shorter timeframe in which to subscribe. We are all being clobbered by this. It impacts on the Government’s growth agenda, as I mentioned, and on the cost of living that my noble friend mentioned from the Front Bench. I am honorary president of the warm homes front, and I know that particularly those living in challenging circumstances in heating their homes and in fuel poverty will find this incredibly difficult.

[Lord Whitehead (Lab)]

The issue is fairly complex because of the benefits and disbenefits that apply from having a really ambitious carbon pricing target. On the one hand, it drives the decarbonisation of home heating, domestic electricity delivery and all sorts of things like that in a low-carbon way, and, arguably, that is a substantial reducer of the price of household bills in the longer term.

[Baroness McIntosh of Pickering (Con)]

If it is going up from £100 to £138 per household, when are we going to see the reduction that we were promised in the general election?

[Lord Whitehead (Lab)]

The Government recently introduced an average reduction of £150 off electricity bills, through placing legacy bills into Exchequer arrangements rather than putting them back to households through obligations. We will continue to look at that on a wider basis. That is a good start for reducing energy bills, as it changes the nature of how the low- carbon economy works.

The noble Lord, Lord Moynihan, asked why we are changing these arrangements in a fairly rushed way. Part of the answer is that, if we are to have a good CBAM in place—after all, it is coming in a year after the EU CBAM—we have to get our skates on. We also have to get our skates on in linking the UK ETS with the EU ETS. The noble Earl, Lord Russell, is aware that, just six months after the linkage arrangements were agreed in principle at the EU-UK summit last April, the November negotiations and discussions started, and they are still under way at the moment. There are a number of answers on timescale and so on that I cannot give right now, but I assure the noble Earl that these are clearly under way and that there is a clear out from those negotiations.

I am conscious that we have spent a long time on this. I will write to the noble Earl and the noble Baroness on the remaining outstanding issues. I hope that I have been able to give a reasonably reassuring position on the need for this SI and the wider context of the underlying direction of all this policy and why this SI leads to a much better and more stable series of arrangements for both the UK ETS and CBAM, as it comes forward.

Drax

Baroness McIntosh of Pickering Excerpts

Wednesday 10th December 2025 Lords Chamber

[Lord Whitehead (Lab)]

There are two points to make in response to the noble Baroness. The report to which she refers talks only circumstantially about old-growth forests and not old-growth forests that are in any way directly sourced by Drax. As regards the new contract for difference for the next four years that the Government have entered into with Drax, the criterion is now 100% sustainability, which obviously excludes old-growth forests.

[Baroness McIntosh of Pickering (Con)]

My Lords, why is Drax sourcing sustainable wood from abroad when we now have a very intensive tree-planting growth policy in this country? Also, Yorkshire farmers would benefit if we were to go back to sourcing fast-growing willow coppice trees and miscanthus and sending them to Drax to use. Why did we stop doing that?

[Lord Whitehead (Lab)]

The noble Baroness will know that Drax is the largest single power producer in the UK and is responsible for about 5% of UK power. That means that it uses an enormous amount of biomass in its process, having converted from coal some while ago. The question, then, is where Drax gets its biomass from, bearing in mind that the amount of biomass that is being grown in this country falls far short of the desideratum in terms of sourcing—particularly in view of the length of time that it has taken to grow that biomass. Therefore, sourcing from abroad appears to make some sense, though not necessarily for the long-term future.

Digital ID

Baroness McIntosh of Pickering Excerpts

Tuesday 14th October 2025 Lords Chamber

[Lord Vallance of Balham (Lab)]

I thank my noble friend for that powerful and informed statement. I am sure that my noble friend’s offer for people to come and visit will be taken up, and I certainly would like to accept that offer myself at some point.

[Baroness McIntosh of Pickering (Con)]

My Lords, I declare my interest as I currently chair the Proof of Age Standards Scheme, which is, as it says on the tin, to prove the ages of young people who want to go out for a drink at night, engage in nighttime activity or go to the cinema. We are seeking to move from a purely physical card to a digital one, so I echo the confusion expressed by the noble Lord, Lord Vaux. Where are we with digital ID? If it is going to be for only one purpose—the right to work—you are excluding from activities those young people who currently are willing to buy either a physical card or a digital card for a very modest sum. They will be excluded from this free scheme because it is only for the right to work.

I can quite see where the Government are coming from, because there is a category of people who cannot prove their identity or their age because they do not drive, so do not have a driving licence, and do not travel so do not have a passport. But there is a bit of confusion at the moment in the Government’s thinking between proof of age, age verification and digital ID. If that could be clarified as soon as possible, it would be extremely helpful.

Infrastructure Planning (Onshore Wind and Solar Generation) Order 2025

Baroness McIntosh of Pickering Excerpts

Tuesday 6th May 2025 Grand Committee

[The Minister of State, Department for Energy Security and Net Zero (Lord Hunt of Kings Heath) (Lab)]

My Lords, this instrument, which was laid before the House on 10 March 2025, is another important step in supporting the deployment of onshore wind and solar, which are critical in achieving the Government’s clean energy superpower mission, including clean power by 2030. An effective planning system is key to unlocking the new infrastructure that our country needs to underpin our energy security and resilience. It is important that planning applications are determined through an appropriate planning route that reflects a project’s size, impact and complexity and in which potential issues are identified and mitigated as necessary.

The nationally significant infrastructure projects—NSIP—regime is governed by the Planning Act 2008, where decisions on development consent are made by the Secretary of State for the Department for Energy Security and Net Zero. The NSIP regime applies to larger projects, with a megawatt threshold determining which energy-generating projects are deemed nationally significant. The NSIP regime provides the largest, most important projects of strategic importance with a single unified approach to seeking development consent, where applications are determined by Ministers balancing local impacts against the wider national benefits. Following submission, an extensive examination period will commence whereby interested parties, including local authorities, people of office and the general public, can make written or oral representations to the examination. This ensures that the voices of communities are heard during the decision-making process.

Until recently, a de facto ban on onshore wind generation in England severely limited deployment. Changes introduced in 2015 saw stringent tests introduced into planning policy alongside the removal of onshore wind generation from the NSIP regime in 2016. These changes set an almost impossible bar to meet, resulting in the pipeline of projects sinking by more than 90%, with only 40 megawatts of onshore wind generation consented and becoming operational in the intervening period.

In July 2024, this Government disapplied those planning policy tests and committed to reintroducing onshore wind into the NSIP regime, reversing the damaging policies of the past decade and placing onshore wind on the same footing as solar, offshore wind and nuclear power stations. As such, through this instrument, onshore wind projects with a generating capacity of more than 100 megawatts in England will be consented under the NSIP regime. The 100-megawatt threshold reflects the advances in turbine technology over the past decade, with modern turbines being larger and more powerful. Reintroducing onshore wind into the NSIP regime will provide an appropriate route for nationally significant projects to seek planning consent where they are of a scale and complexity that can carefully balance local impacts against national benefits and meet the UK’s wider decarbonisation goals. This will provide greater confidence for developers and incentivise bringing forward projects.

Solar has been subject to a 50-megawatt NSIP threshold since it was originally set in the Planning Act 2008. However, much like onshore wind, solar panel technology has seen significant advances in efficiency, enabling a greater megawatt yield per site. Evidence suggests that the 50-megawatt threshold is now causing market distortion. With modern technology, mid-sized generating stations now have a generating capacity greater than 50 megawatts and therefore fall within the NSIP regime. We think this is likely to be disproportionate to their size, scale and impact, and it has resulted in a large amount of ground-mounted solar projects entering the planning system and artificially capping their capacity at just below the 50-megawatt threshold, leading to the potentially inefficient use of sites and grid connections. Therefore, this instrument raises the NSIP threshold from 50 megawatts to 100 megawatts for solar to ensure that mid-sized projects have access to a more proportionate planning route via planning authorities, which should incentivise those projects that would otherwise have capped their capacity to develop to a more optimal and efficient scale.

The Government are also mindful that mid and large-scale solar and onshore wind projects are preparing to enter the planning system and may have already invested and undertaken preparatory steps with the expectation of entering a specific regime. Changing the NSIP at short notice could result in projects entering a different regime than expected, with the potential to increase costs to developers or cause delays.

Therefore, the instrument also makes transitional provisions for onshore wind and solar projects that are already in the planning process when this order comes into force. These provisions will ensure that projects already progressing under one legislative regime will not be required to move to a different regime as a result of the order.

Through consultation, the Government sought views and supporting evidence on reintroducing onshore wind into the NSIP regime at an appropriate threshold and revising the existing threshold for solar. We received a range of responses; most respondents agreed with the proposed approach of reintroducing onshore wind into the NSIP regime, with a majority in favour of a 100-megawatt threshold. While we initially consulted on a 150-megawatt threshold for solar, based on further assessment and analysis of consultation responses, we concluded a 100-megawatt threshold would be more appropriate and better reflect modern technology.

In conclusion, we see this instrument as being another important step in delivering clean power, supporting the deployment of onshore wind and solar and establishing the UK as a clean energy superpower. It supports an effective planning system that will ensure that applications are processed efficiently through the appropriate regime and will avoid distortionary effects on deployment. These measures ultimately aim to support future energy security and resilience alongside our 2030 goals and wider decarbonisation targets. I beg to move.

[Baroness McIntosh of Pickering (Con)]

My Lords, I am grateful to the Minister for setting out the contents and the wishes of the department in this document. Personally, I am very disappointed that we are where we are. I am a veteran of pylon applications; I was fortunate enough to be elected to the Vale of York in 1997, where there was already a long line of pylons going through the heart of the Vale of York to be joined by another, even bigger, line of pylons within a matter of months of my election. We were promised that the original line of pylons would be removed because it was thought that both would not be needed and they are, of course, unsightly.

I prefer the situation we had under the outgoing Conservative Government.There was virtually a moratorium on onshore windfarms for a number of reasons. The Minister is potentially going to see a great deal of discontent from residents and communities along the route of the overhead pylons will inevitably follow, particularly onshore windfarms. To take the example of offshore windfarms, there are three stages to the application process. When there is an application for an offshore windfarm, everyone thinks, “Oh great, that won’t affect me out there at sea”. Then the second stage of the application is for a massive substation to bring the electricity on land. The third, and completely separate, stage of the application is that suddenly—hey presto—we are going to have overhead pylons to feed the electricity into the national grid. How many applications does the Minister think will fall under this new decision-making regime where onshore windfarms will be decided by the Secretary of State? How many lines of pylons does he envisage will follow on from the applications? Will his department come forward and dictate that these overhead wires should be converted to underground wires?

Alternatively, does he accept—he knows that this is a theme I have pursued quite religiously with him over the past few months—that, if an onshore wind farm is built in, say, the north of England, or in Yorkshire more specifically, the electricity generated will serve the local community? It is colder in North Yorkshire than in many parts of the rest of the country, and we have a distinct lack of electric vehicle charging points. If an onshore wind farm will be built, I see absolutely no reason why the electricity generated cannot serve the population living locally.

I regret the statutory instrument in the department’s name that the Government feel is appropriate or necessary. Solar farms of the size that the Minister is talking about—those of 100 megawatts—will take the decision out of local communities. Again, I would be interested to know how many he envisages there will be. His department, DESNZ, will not lead to many des reses. We will not have many desirable residences along the routes of these overhead pylons. In the case of the solar farms, how will the electricity generated—presumably in the gift of the Government—enter the national grid to feed into the hungry south, leaving the rest of us in heat poverty in the north?

With those few remarks, I regret that the statutory instrument was brought before us. If we learn one thing from the massive outage in Spain, Portugal and parts of France last week, it is that we are becoming completely too reliant on very unreliable sources of energy—sunshine and wind—because the sun does not always shine, and the wind does not always blow.

[Baroness Hayman (CB)]

My Lords, I declare my interest as chair of Peers for the Planet. I, too, am a veteran of this debate, but I take a different view from that of the noble Baroness, Lady McIntosh.

In 2020, I first had a Private Member’s Bill on the inequity of how planning applications for onshore wind development were treated compared with all other infrastructure. It was a simple point: the self-imposed moratorium that the previous Government had put on the development of onshore wind was done on a completely blanket basis. They took onshore wind developments out of the normal level playing field of planning applications and treated them as some sort of pariah developments that should not be used. That is completely incorrect. As part of the move towards renewables and safe, clean and cheap power, we should exploit those opportunities.

We all know that the wind does not always blow and that the sun does not always shine. After six years on this topic, I do not need to be told that any more. We all know that we have to have base capacity, that we need variety and that you cannot transition overnight, but that does not take away the argument that there was a basic inequity in how these developments were treated.

I tabled the original Bill that I mentioned. I then had another Bill the next year. We then put in amendments on a number of pieces of legislation that were going through. We even won one of them; the noble Lords, Lord Teverson and Lord Deben, and the then Opposition Front Bench supported an amendment that had remarkably similar language to this statutory instrument. We won it on the Floor of your Lordships’ House, but it was reversed in the House of Commons, so it is an enormous pleasure to welcome this SI as an example of common sense breaking out on the issue of onshore wind developmentand of the benefit and reward of not taking “no” for an answer in politics.

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[Baroness McIntosh of Pickering (Con)]

I think I am right in saying that the seat that my noble friend represented is now represented by a different party from ours. We need the electricity in the north—I cannot speak for Suffolk—and it would be much better to keep that source of energy close to where it is produced, rather than having pylons criss-crossing and destroying the countryside.

[Lord Deben (Con)]

I am quite sure that nobody takes electricity more distantly than they need to if it is going to be used locally. In my constituency—which was indeed one of the seats lost at the last election—the issue is not a question of pylons. The issues were very different and not really to do with this at all. I come back to the point that it is not sensible constantly to refer to things that are not connected with this. I repeat that there is no connection between the outages in Portugal and Spain and the issue before us.

Climate Change: Progress

Baroness McIntosh of Pickering Excerpts

Tuesday 6th May 2025 Lords Chamber

[Lord Hunt of Kings Heath (Lab)]

My Lords, first, on the substantive point that the noble Lord makes about progress, he will know that we are not yet halfway through the national adaptation programme 3. Therefore, the response to the Climate Change Committee, which is due by October, will very much reflect the work in progress in terms of what we need to do to beef up the current plan and implementation and to look forward to the NAP4, which starts in 2028. We are not complacent; we take the committee’s report very seriously, and I pay tribute to the noble Baroness, Lady Brown, and her committee for the work they have done. On the noble Lord’s substantive point on the issue of objectives, I very much accept that that is one of the matters we will be considering over the next few months. Secondly, on flooding, of course the report of the committee and the prediction it has made about the 8 million properties that are at risk of flooding by 2050 is something that no Government could take complacently. He will know that we have already committed £2.65 billion to repair or build flood defences, and of course we will look further into this matter in light of the committee’s report.

[Baroness McIntosh of Pickering (Con)]

Will the Government rule out any new development on functional flood plains, particularly in zone B, which is the most at risk of flooding? If the Minister rules that out, he has a good chance of having more resilient houses in other places. Will the Government undertake not to build on functional flood plains?

[Lord Hunt of Kings Heath (Lab)]

My Lords, I am not going to stand at the Dispatch Box and say that we are going to rule this out completely. The noble Baroness will know that flood-plain building is possible in the UK at the moment. It is a heavily regulated process with significant planning requirements. We will obviously continue to look very carefully at these issues and whether the requirements are sufficient, but we do not think that a blanket ban is appropriate.

Transport Decarbonisation Plan

Baroness McIntosh of Pickering Excerpts

Thursday 24th April 2025 Lords Chamber

[The Earl of Erroll (CB)]

My Lords—

[Baroness McIntosh of Pickering (Con)]

My Lords—

[Viscount Stansgate (Lab)]

My Lords—

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[Lord Hunt of Kings Heath (Lab)]

My Lords, I am very happy to refer the noble Earl’s comments to the department. I repeat that, while in the main battery electric remains the dominant zero-emission technology for cars and vans, we think that hydrogen has a role in relation to heavy goods vehicles. I am certainly happy to refer his point to the department.

[Baroness McIntosh of Pickering (Con)]

My Lords, in his original Answer, the noble Lord referred to rolling out electric vehicles. Will he look at the situation in rural areas, where there is a dearth of electric charging points, with a view to mandating them going forward to ensure that there is a bigger take-up of EV vehicles with access to these charging points in rural areas?

[Lord Hunt of Kings Heath (Lab)]

My Lords, in relation to charge points, the reckoning at 1 April 2025 is that there are over 76,500 public charge points in the UK. There has been considerable progress in the last few months and years. The recent National Audit Office report on the state of the charge point rollout found that we are on track to deliver the 300,000 charge points that we anticipate we will need by 2030. In relation to rurality, there was strong growth in rural areas in 2024, where charge point numbers increased by 45%. I know that the noble Baroness thinks that we need to go further, and I take the point. We are making considerable progress now.

Great British Energy Bill

Baroness McIntosh of Pickering Excerpts

3rd reading
Tuesday 25th February 2025 Lords Chamber

[Baroness Bennett of Manor Castle (GP)]

My Lords, I welcome the government amendment and the way in which the Government have listened to your Lordships’ House on this Bill and overseen considerable improvements. One was the inclusion, finally, of community energy, something your Lordships’ House has been fighting for through two Governments and several energy Bills.

However, an important issue arises at this moment relating to community energy. While the amendment that the Government have put down will help community energy to grow in the medium to long term, the sector faces an urgent short-term problem: the uncertainty of the community energy fund’s future. The fund began in January 2024 and has been very successful and heavily oversubscribed: more than 150 community energy projects have been awarded grants. More than 100 projects are ready to go and are eligible for funding, but they will not receive it because the initial £10 million is expected to run out in May. This is the only substantive mechanism helping community energy to grow, yet it has no future beyond this year.

I make no apologies at all for representing Community Energy here. Its members have asked me to say that we have seen so many times with energy policy over the years a boom-bust cycle of funding and defunding and then funding and defunding again. There is a short-term issue here, although the Government have expressed their support for the long term. So can the Minister give me a clear statement on how the Government will deal with the uncertainty over the community energy fund’s future? Can he assure me that there will be early action to deal with the enthusiasm that the fund has not been able to meet, and clear instructions on that in the statement of strategic priorities for Great British Energy, as required by Clause 5 of the Bill?

[Baroness McIntosh of Pickering (Con)]

My Lords, I take this opportunity to congratulate the Minister on bringing forward the amendment.

I support the words from the noble Baroness, Lady Bennett, and ask the Minister what the current position is on the future of the community energy fund: the Government seem to support it, but we need to know how it will proceed and when it will come into effect. How comprehensive will the review, to which the amendment refers, be? It appears to be limited to finances, but can the Minister confirm that it will also cover sustainable development?

We heard for the first time, I think, on Report about the framework document, of which the noble Lord said at col. 1204 of Hansard that it will become available only after the Bill has received Royal Assent, yet it would seem to go to the very heart of sustainability and environmental protection, which are so key to this Bill. Can the Minister explain, if the framework document will indeed cover these points, because he linked it to the sustainable definition that he was using, as recognised by the UN, why it is not part of the Bill, why we have not had the opportunity to debate it, and what the relationship will be between the framework document and the contents of the amendment that he has just put forward?

[Lord Alton of Liverpool (CB)]

My Lords, I briefly add my remarks to those of the noble Baronesses, Lady McIntosh and Lady Bennett, about the community energy fund. I thank the Minister for responding so positively to my noble friend Lord Vaux by bringing forward this amendment on more general accountability. It is a good step forward, but will he respond on those companies—I gather there are around 150—that would have been eligible for the community energy fund but will not be able to receive funding if the money indeed runs out in May, as is forecast? On that specific point, when the £100 million runs out in May, what will be put in its place?

Energy Bill Relief Scheme and Energy Bills Discount Scheme (Amendment) Regulations 2024

Baroness McIntosh of Pickering Excerpts

Wednesday 12th February 2025 Grand Committee

[The Minister of State, Department for Energy Security and Net Zero (Lord Hunt of Kings Heath) (Lab)]

My Lords, these regulations, which were laid before the House on 16 December 2024, amend two schemes created by the previous Government in response to the energy crisis.

The amendments address an issue that was not considered in the rush to get the schemes into operation but which has now come to the fore as the schemes have been brought to an end. The issue is technical: both the energy bill relief scheme and the energy bills discount scheme, which I shall refer to as EBRS and EBDS respectively, supported non-domestic energy users, including businesses and heat networks. EBRS supported energy bills from October 2022 to March 2023, while EBDS supported bills from April 2023 to March 2024. Both schemes operated on a “claim back” model, meaning that suppliers paid out the discount to their customers before recouping those costs from the department.

Scheme funds were paid out on estimated and actual meter readings. As actual meter readings are received by energy suppliers, they rebill their customers, replacing earlier estimated bills, and the discount paid out by the department becomes settled. The department calls this process “actualisation”. Suppliers then come back to government to recover additional discount they have paid out or to pay back any excess discount resulting from an initial overestimation of the energy. This is right: the intention behind the schemes has always been for government to fund the discount to the consumer and not the energy suppliers.

The regulations require the Secretary of State to determine when a supplier should leave the scheme, based on an assessment that there will be no further material amount owed from the department to a supplier or vice versa. One of the supporting criteria to make that assessment is that a supplier has billed customers on actual meter readings to a threshold of 95% of gas supplied and 97% of electricity supported under the scheme, wherever possible. Once a supplier has left the scheme, it is unable to claim back any further money from the department for discounts that it has paid out on behalf of the schemes.

However, as the regulations currently stand, suppliers are still required to pay out discounts on any newly billed energy supplied during the periods of either scheme, when this situation could arise through no fault of their own; for example, when customers have moved premises and failed to notify the supplier or have been tardy in allowing access to meter readers. This could result in suppliers funding government support without the ability to recoup these costs from the department. This is contrary to the intention of the schemes. As a result, suppliers have been reluctant to leave the schemes, which must come to an end in a timely manner.

The amendments in this statutory instrument remove the obligation on suppliers to provide the discounts to customers, except in instances where the consumer has lost out due to poor practices by their energy supplier. In these instances, we have provided carve-outs to balance the interests of suppliers with the support and protection of consumers.

The first consumer protection is, when a supplier is rebilling a customer, it must still apply the discount for energy which was previously billed before the discount duties, even if the newly calculated additional consumption is exempt. The second protection relates to unbilled customers. When a customer receives a bill that falls within the scheme period, a supplier would be required to pass on the appropriate discount if it has not previously provided that customer with a bill. This is to ensure that the original policy intent of providing consumer support is realised. The third and final consumer protection is when unreasonable delay, or another failure on the part of the energy supplier, has led to the energy not being billed accurately or at all when the discount duties applied. An example might be if the bill was sent unreasonably late after exit from the scheme, rather than before. In those circumstances, the customer should not and will not lose their entitlement to the discount.

There is still an obligation on suppliers to repay the Government any discount they have recovered; for example, if actual consumption was lower than the estimated consumption and a discount is clawed back. Should any dispute arise between suppliers and customers in relation to these carve-outs, the resolution mechanisms would be those normally used in the industry: via a complaint to the Energy Ombudsman, where available; investigation and potential sanction by the regulator; or court action.

The amendment applies to energy suppliers in Great Britain. Separately, the regulations also amend the Energy Prices Act 2022 to allow the devolved Administration in Northern Ireland to make amendments to address this issue in the Northern Ireland scheme. This is because their power to amend their equivalent legislation has expired.

In very limited circumstances, it is possible that a customer could lose out on some entitlement to discount. If a supplier had already exited the schemes and had underestimated a customer’s energy consumption, the customer would not receive the discount on the additional newly billed energy unless the supplier was at fault, as I have just described. Given that the vast majority of energy supported by the schemes is based on actual meter readings, we do not expect many customers to be in this position.

Furthermore, our analysis shows that suppliers tend to slightly overestimate and that customers reduced consumption during the energy crisis, switching off non- critical operations to reduce costs. None of the suppliers that have left the scheme to date, nor any of their customers, has reported this risk materialising. We expect and hope that this amendment will give suppliers confidence to exit the scheme without the risk of ongoing financial liability through no fault of their own.

Energy prices for non-domestic consumers have dropped following record peaks, but of course we recognise that they remain high and pose issues for some businesses. We believe that our mission to deliver clean power by 2030 is the best way to break our dependence on global fossil fuel markets and permanently protect bill payers, including non-domestic consumers. In the short term, the Government are taking action to better protect businesses from being locked into unfair and expensive energy contracts. Last year, the Government launched a consultation on introducing regulation of third-party intermediaries such as energy brokers. This is aimed at enhancing consumer protection, particularly for non-domestic consumers. The consultation has now closed, and a government response will follow in due course.

The Government are also empowering businesses to challenge unfair and poor service from their suppliers. Since December last year, SMEs with fewer than 50 employees or that meet energy consumption or financial thresholds can now access free support to resolve issues with their energy supplier through the Energy Ombudsman service. This expands the service to 99% of British businesses, allowing them to access up to £20,000 in financial awards.

I propose to the Committee that this is a very sensible statutory instrument dealing with some issues that have arisen. It follows on from the previous Government’s decision and is consistent with what they sought to do. I beg to move.

[Baroness McIntosh of Pickering (Con)]

My Lords, I congratulate the Minister on the stamina he has shown over the last 48 hours. I welcome these regulations; had we remained in Government, I am sure that we would have done exactly the same—as was also said in the debate in the House of Commons.

The Minister alluded to the fact that energy prices are still quite high. I understand that within one of these regulations there is provision for an off-grid payment of £150. If that is the case, will his department look favourably on charities, public sector bodies such as schools and hospitals and, as he rightly mentioned, micro-businesses of under 15 employees—or even 50—so that they might remain eligible for that?

The noble Lord referred to unfair, and what I would call sharp, practices that are perhaps still going on. This is only anecdotal, and I cannot prove it, but there was a restaurant not too far from this building which I think partly closed and changed hands because they had an unbelievably high electricity bill in January last year, so I am delighted to hear that the Government have launched this consultation with a third party. It would be interesting to hear more about how those brokers might operate. What provision will be made to ensure that the brokers are reliable and able to operate within this sphere?

With that, I pay tribute to the previous Government for their work and the protection that was given to non-domestic customers, which was very welcome at the time. I recognise that we are still in a period of high energy prices and, with those few questions, I wish the SI a safe passage.

[Lord Offord of Garvel (Con)]

My Lords, I commend the Minister for a pretty spectacular explanation of what is quite a complicated and technical exercise. These schemes were introduced, as was said, between October 2022 and March 2024 and, as we know, they gave much-needed assistance to non-domestic customers. We are dealing now with a small yet significant minority of consumers who have not received their finalised bills, due to ongoing delays in the actualisation process. My understanding is that these delays arise mostly from the use of estimated rather than actual meter readings, but they have created significant complexities for both suppliers and consumers, especially when one of the issues around this is the concept that the supplier can become “off-boarded” when they hit the actualisation thresholds, as mentioned by the Minister, of 95% for billed gas and 97% for billed electricity, which means they are no longer required to apply further discounts.

We agree that this is a legacy issue that needs to be dealt with. Our only issue—I am sure that the department is working on this—is the need to deal with unintended consequences, such as where a supplier is off-boarded but still has unbilled energy due to these administrative delays. The amendment allows for discounts to continue only in cases where a billing failure has occurred, but does that provide sufficient protection to the consumer if the errors are on the supplier’s part, for example?

Further issues might be that the amendment extends the rule limiting discounts on variable price contracts. Discounts can only be reduced, not increased, post off-boarding. Does that sufficiently accommodate fluctuations in wholesale energy prices that suppliers may face? Does it risk creating an imbalance in terms of supplier and consumer rights? Then there is the issue of disputes. While the original scheme allowed for disputes to be referred to the Secretary of State—a horrendous concept—the amendment seeks to close that avenue. I am sure that the department is all over this, but we need to ensure that, in the technicalities of actually making this happen, we get a fair balance between supplier and consumer rights. Otherwise, we support the passage of this SI.

Great British Energy Bill

Baroness McIntosh of Pickering Excerpts

Report stage
Tuesday 11th February 2025 Lords Chamber

[Baroness Hayman (CB)]

My Lords, I will intervene very briefly on this debate, and I declare my interest as chair of Peers for the Planet. I have just a couple of points on the issues that have been raised. First, to follow up on what the noble Lord, Lord Hamilton, said, the idea of ensuring that communities gain the benefits of infrastructure that is near to them applies not only to small modular reactors but to many other things. In particular, the House knows of my concern for onshore wind and an increase in onshore wind developments. We have to do that in a way so the community, first, understands why we are doing it, and secondly, sees some benefit from those projects, whether on an individual or community level.

The other thing—and I of course welcome the government amendment on community energy—is that I very much agree with the spirit of what the noble Lord, Lord Whitty, said. Some of us get very weary trying to inject the same issues of principle into legislation after legislation. Skills and the needs of the workforce, and the way we practically turn aspirations for green growth and green jobs into satisfying, well-paid, sustainable jobs, has to be done through the nitty-gritty of skills training, passporting and making sure that the opportunities are there for transition and for young people. It is enormously important that the Government and GBE do not lose sight of that.

In exactly the same spirit, we have banged on—if that is a parliamentary phrase—about home insulation and energy efficiency on any number of Bills. If I may say so to the noble Earl, Lord Russell, it is probably slightly inelegant to put that in the Bill as a hypothetical for what GBE might want to do, but the spirit of what he is saying, and the fact that this has been such a recurring theme, is absolutely central: it has so many benefits in saving money, saving emissions, increasing health and ensuring that we lift people out of the poverty that is occasioned by the housing in which they live. I hope that the Minister can give us some encouragement that the warm homes strategy, or whatever we are calling it this time—we have called it lots of different things over the years but have not been very successful in delivering it—will be a high priority for the Government.

[Baroness McIntosh of Pickering (Con)]

My Lords, I will speak to Amendment 22, in my name and those of the noble Baronesses, Lady Boycott and Lady Young, and the noble Lord, Lord Teverson. I congratulate the Government on bringing forward their Amendment 8. I imagine that it will find favour with the House rather than Amendment 22, but I will take the opportunity to press the Minister on a couple of aspects, just to give me reassurance that he means more than the warm words that we see expressed in his amendment.

In particular, how do the Government intend to deal with the current uncertainty over the community energy fund’s future? Is the Minister able to give us a guarantee of how that will pan out? Also, does he intend to take, or encourage GB Energy to take, early action to ensure that the fund will be matched by other funds, as I understand needs to be done, and that clear instructions on the above will indeed be set out in the strategic priorities for Great British Energy, as required by Clause 5?

I am not that familiar with community energy schemes, but I have seen how they operate in Denmark—I declare my interest, being half Danish and taking a great interest in Danish matters. I understand that they are so successful in Denmark because there is a system where local citizens, often organised in co-operatives, which again is very Danish—Arla is a co-operative in the milk industry that many here are familiar with—own a significant portion of renewable energy sources, such as wind farms and heat networks. Does the Minister agree that community ownership is part of the success of these schemes and that that is a path down which he would seek to go?

[Lord Fuller (Con)]

My Lords, I will speak briefly to my Amendment 53, which seeks to ensure that the voices of local people are heard when proposals are made or encouraged by GB Energy for renewable energy projects that impact on local areas. This is a group about community involvement and consultation, and how people might have their say. I regret to say that, in so many cases, local people have been airbrushed from the debate, which has been conducted above their heads. We build resentment, scepticism and resistance when local people are denied their say. I speak with authority when I say that the NSIP system is being systematically abused by developers of solar farms, who string together otherwise stand-alone and discrete proposals for small-scale solar and aggregate them together as a device to somehow creep over the threshold. The voices of the local planning authority, locally elected representatives, local people and business are excised from the record.

The NSIP system was designed to allow truly exceptional and impactful infrastructure projects to be considered in the national context. I completely support that principle, but I see in my own area, for example, that one proposal, extending to 1,100 hectares but covering 40 square kilometres and at least a dozen separate landowners some 15 miles apart, has been cobbled together in the crudest and most cynical manner to creep over that 100-megawatt capacity line. It undermines public confidence in our planning system and acts as a recruiting sergeant for conspiracy theorists and their superficial, fundamentalist views. We will all become tainted and tarred by their brush while we deny the public due process and a proper say on these schemes, which should be decided locally but are not.

Later, on Amendments 50 and 52, I will say that solar should not be permitted on the best and most versatile land—grades 1 to 3A. I recognise that other land could be used for large-scale renewables, but we need to exercise care and caution. Even grade 4 or grade 5 land has a value, but that is more likely to include amenity value, outstanding landscape contribution or wider social benefit, perhaps in areas of outstanding natural beauty or other designations. It is for that reason that, for all land—even in cases where land may be at the poorer end of agricultural quality—changes in use to renewables more widely should be consulted on for residents within a 20-mile buffer of the widest proposed land extent. My amendment provides for this stipulation.

It is because the NSIP system is being abused and has fallen into disrepute that I have brought this amendment to repair the damage and indignation that local people rightly feel. We are storing up some terrible problems if the political class structurally sidelines views in an unthinking dash for renewables and fails to consider those wider impacts.

Great British Energy Bill

Baroness McIntosh of Pickering Excerpts

Report stage
Tuesday 11th February 2025 Lords Chamber

I hope that noble Lords will feel that this amendment reflects a lot of the discussions and debate we have had. I beg to move.

[Baroness McIntosh of Pickering (Con)]

My Lords, I shall speak to my Amendment 40. I am rather disappointed that the Minister did not refer to the other amendments in this group.

[Lord Hunt of Kings Heath (Lab)]

With great respect, my Lords, I think the form is that I move my own amendment and then respond to other amendments in the group when I wind up.

[Baroness McIntosh of Pickering (Con)]

I am grateful for that clarification.

I welcome the government amendment in this group. However, I seek a specific assurance from the Minister as to exactly how and when the Government will ensure that the impact of GB Energy’s activities will not harm sustainable development in the United Kingdom. Why I prefer the wording of my amendment to the Minister’s, and why I regret the fact that the framework document will not be available before the passage of the Bill through Parliament, is because the Environment Act 2021 set out very clear environmental standards that have to be followed in subsequent legislation.

Amendment 40 addresses the issue of Great British Energy operating in such a way as to meet the criteria and environmental standards in the Environment Act 2021, which set out clear standards for environment and animal welfare that any project approved by GB Energy should meet. The projects we have discussed during the passage of the Bill potentially risk criss-crossing the countryside, covering the landscape with intrusive miles of pylons and overhead transmission lines, as well as massive solar farms and battery storage plants, the latter also posing a fire risk. Up to 10% of land currently farmed could be taken out of production, with a consequential effect on farming and food security to create a strand of energy which will bring no local benefits whatever but feed energy into the already well-fed National Grid.

I call on the Government to address offshore wind farms in a clear and pragmatic way, with one planning application for any future offshore wind farm taken at the same time as permission to build an onshore substation, to take the electricity generated and, at the same time, any proposal for onward transmission of the energy through overhead power lines and pylons.

Other damaging aspects of offshore wind farms at severe odds with sustainable development are their impact on fishers and fisheries. Wind farms damage marine life and sea mammals, and interfere with fishers going about their business. I am grateful to the National Federation of Fishermen’s Organisations for its briefing, which clearly highlights the threat from offshore renewables, primarily winds but also wave and tidal.

Ten per cent of UK seas will be designated as highly protected marine areas, where fishing will be banned. The worst-case scenario could result in the loss of half of the UK’s fishing waters, some 375,000 square kilometres: Scotland would lose 56% of its fishing waters and England and Wales 36% of theirs. Even if the worst-case assumptions are not realised, 38% of UK waters are likely to be lost, threatening the very existence of UK fishing businesses and causing severe harm to coastal communities.

I feel that the sentiments expressed in Amendment 40 sum up those also expressed in Amendments 47 and 48, in the name of my noble friend Lord Offord, and Amendment 51, in the name of my noble friend Lord Fuller. All I seek this evening is an assurance that farmland and residential properties will be protected from massive solar farms, battery storage plants and the like, and the impact of major substations bringing electricity onshore from these offshore wind farms. The long lines of unwelcome, intrusive overhead lines transmitting the energy to the National Grid should be removed or reduced and spatial rights for fishers should be recognised. I hope that the Minister will look kindly on the assurance that I seek.

[Baroness Hayman (CB)]

My Lords, I have added my name to the new clause proposed in Amendment 38 by the noble Lord, Lord Hunt of Kings Heath. I thank him and his officials for the amount of time and effort that they have put into finding what is a very good resolution to the issues that we raised at earlier stages in the Bill. Obviously, in some ways, I would have preferred my own amendment as it stood in Committee, which would have put into the Bill an obligation on GBE to contribute to the targets under both the Environment Act and the Climate Change Act.

After discussion, I understand why the Minister wants to put in the phrase “Sustainable development” and to have that contribution. That is indeed the model that we adopted as a House during the passage of the Crown Estate Bill. I would not be happy with this amendment, were it not for the assurances that the Minister has just given at the Dispatch Box on what will be included in the framework document, so that we will actually see reference to contribution to achieving targets under both those Acts in the framework document. We will also see a commitment to tackling the issue of adaptation there, because none of us who has observed or experienced the weather—and the results coming out from international institutions—in the last six months will have any doubt that we have challenges already baked in by climate change and biodiversity loss that have to be met, as well as the efforts to stop things getting worse. I am very grateful for those assurances.

In some ways, a commitment to sustainable development may seem more nebulous than tying down to those particular commitments, but I believe it is really important that we acknowledge that there are differing forces—differing demands and aspirations—that have to be taken into account when we make decisions on infrastructure and investment, or whatever it is. Sustainable development, as defined by the UN, is about taking the economic, environmental and social effects of developments into account when decisions are made. Lots of difficult decisions will have to be made and there are lots of balances that have to be struck, whether about pylons or achieving net zero, and whether about growth or biodiversity and nature. We have to be able to walk and chew gum at the same time, and to actually recognise that all those strands have to be taken into account.

If we are going to get through and make the right decisions, frankly, we will have to be, first, very smart, and secondly, very frank with people about how we assess the different pressures and how we have come to individual decisions in individual cases. I have been very impressed by the work of the Crown Estate, looking at its different drivers and objectives and how it brings those into force when it looks at decision-making for investment, and I hope that GBE will be able to do exactly the same. So once again I end by thanking the Minister for the work he has done in bringing this amendment forward.

--- Later in debate ---

Moved by

[Baroness McIntosh of Pickering]

40: After Clause 7, insert the following new Clause—
“Duty of Great British Energy to meet environmental criteriaGreat British Energy must, in the exercise of its functions, and when delivering the objects in section 3 and statement of strategic priorities in section 5 of this Act, take all reasonable steps to contribute to the achievement of environmental targets set under the Environment Act 2021.”

[Baroness McIntosh of Pickering (Con)]

My Lords, I beg to move, and I wish to test the opinion of the House.