Planning and Infrastructure Bill

Baroness Moyo Excerpts

2nd reading
Wednesday 25th June 2025 Lords Chamber

[Baroness Moyo (Non-Afl)]

My Lords, the cost of energy has been hinted at this afternoon. However, it is one of the most important infrastructure issues that we must address. As disclosed in the register of interests, I serve on the board of directors of a global energy company, Chevron.

Today, the United Kingdom has the most expensive industrial energy electricity costs among developed nations, with British industry paying four times as much as in the United States, according to the IEA. Meanwhile, British households are paying on average 40 cents per kilowatt hour, compared to 18 cents in the United States and just 8 cents in China, according to Statista. This situation could get worse as AI data centres raise demand, constrain electricity grids and put further pressure on energy costs. It seems to me that an ideal planning and infrastructure Bill should invest in fresh capital and critical infrastructure, including transport and housing. This is much in the vein of the Government’s 10-year, £725 billion funding commitment. But Britain must also invest in bringing down its punitive energy costs.

Reducing the cost of energy is the ultimate non-inflationary economic stimulus that this country urgently needs, especially given that this month, the OECD cut the forecast for the UK’s growth from 1.4% to 1.3% for this year, and down to just 1% for 2026. Reducing the cost of energy increases both the profit margin for businesses and disposable income for households, both net goods for the economy. Moreover, lower energy costs ease the financial pressure on public goods such as the National Health Service and local authorities. I welcome the Government’s plans to reduce electricity costs by 20% to 25% from 2027 for electricity-intensive manufacturers. However, this still leaves higher energy costs for the rest of the private sector, the public sector and households.

It is my contention that an effective infrastructure policy should reflect at least three points as it pertains to reducing energy costs. First, for the foreseeable future, the United Kingdom should maximise all sources of energy, including both renewables and conventional energy, in order to bring down energy costs and secure a stronger economic future. This stance would ensure that Britain could regain a key global competitive advantage: energy production. I am pleased to see that, as a small step, the Government are looking to allow new applications in licensed oil and gas fields in the North Sea this autumn.

Secondly, AI, and agentic AI in particular, offers real, tangible promise to bring down the cost of elements of energy production such as exploration, drilling and transmission. Therefore, AI adoption should be the centrepiece of energy policy and infrastructure planning for the 21st century.

Thirdly, there is an opportunity for dematerialisation. Simply put, this is the ability to get more power out of the same unit of energy. For example, in vehicle manufacturing, this would mean using lighter materials in car bodies to reduce fuel consumption and emissions. Currently, businesses and academia are leading innovation in dematerialisation, but it is vital that Governments support science and research in this area. By taking these three steps, we achieve the two goals of lowering energy costs, which catalyses economic growth, and reducing emissions, a key piece of our energy transition ambitions.

Many aspects of the path to energy transition are rooted in assumptions from three or four years ago, yet so much has changed since 2022—our energy security, our economic outlook, and our understanding of what technology can do to reduce energy costs. Britain’s natural resource wealth and the emerging era of technology thankfully allow us to pursue both economic growth and an effective energy transition. I support the direction of this Bill, but there remains considerable scope for the Government to reduce energy costs both through the Bill and through broader policy.