Energy Bill [HL]

Baroness Worthington Excerpts

Committee stage
Monday 5th September 2022 Lords Chamber

I am also inclined to support Amendment 6, in the name of my noble friend Lady McIntosh, to establish one “principal objective”: energy security. On Amendment 231, eloquently spoken to by my noble friend Lord Moylan, it is interesting to seek to distinguish and separate carbon and non-carbon sources of electricity and the pricing mechanisms of those two subsectors. I would like to know what the Minister thinks about that and the other amendments in this group.

[Baroness Worthington (CB)]

My Lords, I will speak to Amendment 7, to which I have added my name. I declare my interest as a co-chair of Peers for the Planet. I apologise for not being present at Second Reading; I wrote to the Minister, and I am grateful for his detailed response to some of my points. I will endeavour to be brief, as this is Committee, and will simply explain why we consider that Amendments 7 and 242, together, bridge the divide that is evident between the two sides of the House, as witnessed in this debate.

The noble Lord, Lord Moylan, was absolutely right that you cannot simply declare that you want to win a war; you need to have tactics and a strategy for winning it. Our Amendment 7, complemented by Amendment 242, provides that strategy, which is, as the noble Lord, Lord Ravensdale, eloquently articulated, fundamentally underpinned by physics. Energy is a question of physics and, if we understand that, we will know that we are not struggling towards net zero but in fact doing very well on that path.

The clarity with which I now see industry communicating on this issue is far greater than it has been over the last decade. It is saying: “Electrify everything that can be electrified and use our abundant resources of clean electricity to decarbonise.” That is how you square the three principal objectives of energy policy: affordability, cleanliness, and resilience and security. That pathway is so clear now that the Bill could be hugely enhanced by having this set out at the front.

I support the Government’s intentions. They seek to address the trilemma of those three objectives, which are fundamental to winning this war against climate change and against the energy crisis that we currently face. That very energy crisis is an interesting reason why we are powering towards net zero faster than ever before: it is absolutely clear that the volatility of gas and oil underpins it, and we cannot forget that. What is the Government’s current policy? It is to reduce our reliance on those volatile commodities, which would serve everyone’s needs: it would help us reduce bills and would give the consumer a reliable source of energy.

The Bill has many measures which we will come on to debate that will help us along that path. But it lacks an overarching statement of objective. We now need to revisit the debates we had on the Energy Act 2013 about the need for a decarbonisation target to provide clarity over this direction of travel. We all sat there—many noble Lords here today were there—and had debates on why knowing our way towards that target was needed for investor and stakeholder confidence. It is now very clear that it is needed because, as the noble Lord, Lord Ravensdale, pointed out, simple mathematics shows that we still have a lot of technology that needs to be put into place to become operational, and we need a plan that monitors progress towards that.

Subsequently, we have added an extra dimension to this: electrification. As I said, physics tells us that electrification is fundamentally more efficient; you will get six to seven times more usable energy from an electricity-based system than if you rely on fossil fuels or hydrogen. Six to seven times fewer wind turbines will be needed to provide the same benefit in terms of heat or transport. That should be of interest to everybody; it saves costs and helps make the system more secure.

So I hope that the Minister will look at our amendment carefully. It adds an extra dimension to this Bill, which will give it so much clarity so that everybody will have a clear sense of the path that we are on. As I have said, the UK should be very proud of the efforts it has taken to date. We are not as exposed to the energy crisis as other countries, because of investments we have made over the last two decades and because we have taken seriously this objective of making our system more resilient and fit for the future. There is an international dimension—I am sure we will come on to talk about this in other parts of the Bill—but it is absolutely clear that the thing that we can do best at the moment is continue on the path of decarbonising our electricity system using technologies that locate cheap power on our shores, to rid ourselves of the insecurity and volatility of gas prices and to move forward to an efficient system that converts primary energy into heat, transport and work. If we can do that, we will show the world how it should be done: do not pick winners but instead create a system that is sensible and will provide the right guardrails for capital investment so that money will flow and we will all benefit. I look forward to the Minister’s response to our amendment.

[Lord Teverson (LD)]

My Lords, it is always a great pleasure to follow the noble Baroness, Lady Worthington, and although we do not always agree on absolutely everything, I reckon that I agree with about 99.5% of her speech.

First, I declare my interest as chair and director of Aldustria Ltd, an energy storage company; I will try to avoid too much discussion of that area. On these amendments, I very much thank the noble Lord, Lord Lennie, for having opened our debate today. I very much agree with the principle of what the Opposition Front Bench is trying to achieve here. What this Bill does not have—the noble Lord, Lord Moylan, put it very well indeed—is great focus or coherence. It would be good to start trying to improve that through a type of preamble that puts context, including strategic context, at the beginning of the Bill. I hope that we can refine that more on Report; it may not be perfect, but perhaps we can find a way of doing that between us.

I also agree with the noble Lord, Lord Moylan, about the pricing of electricity and how that works. As he says, our European colleagues are looking at that very strongly now. There must be a better way of doing this; it cannot make sense to the public that we charge and price our main energy sources on the marginal cost of the last producer. Clearly, that does not make sense, and it does not do the reputation of the fossil fuel industry any good either. Yes, they might use their money to give back to shareholders—hopefully they will use it for different types of investment and diversification—but it besmirches the whole sector, and we need to find a way around that.

Where I would disagree very strongly with the noble Lord, Lord Moylan, is around trying to game or look at alternative dates for net zero. It seems to me that in September 1939 the Cabinet probably did not look at whether to declare war on Germany this month or two years later or four years later. We may criticise Neville Chamberlain for all sorts of things in retrospect, but I guess that is not one of them. It was an absolute threat to our future security, and we made a decision. If we think of the costs to this country, and to us and consumers, of our right stand on Ukraine, I guess that we have not done those calculations either—because we know that Putin’s war has to fail and that, for European security and our long-term security, we in the western world need to pursue the tactics that we have.

I thank the noble Baroness, Lady McIntosh of Pickering, for her amendments, particularly in mentioning rural aspects of oil—my own household is on oil, and we are not covered by a price cap—and in particular business. In all the media coverage that we have had on this very real energy crisis over the past months, it is funny how business has very much taken second place to households and consumers. Clearly, households and consumers are ultimately the most important, but business is completely fundamental to our economic performance and being able to solve this crisis in the long term.

I am not absolutely sure about energy from waste plants. Clearly, it does not make sense to export it, but the real challenge there is in starting to raise recycling again, or even AD in terms of other parts of household waste. I was so impressed by the forensic look by the noble Lord, Lord Ravensdale, at investment need and the scale of the challenge, and also at how we need to measure that and put proper planning into how we meet it.

The one other area that I would like to mention comes back to 2013 and the then Energy Bill, mentioned by the noble Baroness, Lady Worthington. At that time, one big thing that we discussed was the energy trilemma of security, cost and decarbonisation. The noble Viscount, Lord Trenchard, brought that back up again. But what this crisis, and the almost a decade between these two Bills, has shown, is that it is no longer a trilemma—they all work in exactly the same direction. Renewables are now cheaper than fossil fuels, as we know—it is why we have the huge price increases that we do. Our security is reinforced by having much more renewable generation on our own seas and our own land—and, as a result, we have lower costs and a decarbonised energy system as well. We have moved on since that time.

We need to have a focus in this Bill, and I support the amendments. We need to move on in this debate, but I am absolutely sure that we will need that coherence when we get to Report.

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[Lord Callanan (Con)]

Yes, it is a complicated area that requires proper and detailed policy analysis, but that work is under way, and we will do so.

Splitting the wholesale market would a necessitate a fundamental and irreversible design of our electricity market arrangements, and without the appropriate consideration of the potential costs and any potential benefits and without sufficient stakeholder input, it could well lead to higher bills for consumers, and it would create an investment hiatus which would jeopardise our ambitions for decarbonising the power sector by 2035—which is exactly the point I was making to my noble friend. So, this is an important issue, but it is one that needs to be looked at thoroughly, properly and professionally. I hope that my noble friend is assured that the issue is being closely examined and will therefore feel able to withdraw his amendment.

[Baroness Worthington (CB)]

My Lords, would the Minister care to comment on the fact that—and this has been mooted as a potential solution in the short term during these unprecedented times where we see such high prices and so many people suffering—there is surely a logic to take a power now, to use it in extremis and then to continue with the longer-term conversation? I think the nation wants to see some action quite quickly and we have an Energy Bill.

[Lord Callanan (Con)]

I do not think it is important to do that at this stage; we have published the consultation, we are closely analysing responses, as the noble Baroness will understand. It is a difficult area, it is a complicated area, there are a number of potential ramifications, and we think it is worthy of consideration. If we took a power now, that might have a very destabilising effect on the market and on the amount of investment that is flowing into many of the sectors, so the Government’s position at the moment is that we do not think that is necessary or desirable.

I reassure noble Lords that the addition of electrification to the Energy Bill is also unnecessary. The net-zero strategy sets out the Government’s view on how electrification can enable cost-effective decarbonisation in transport, in heating and in industry—to that extent, I agree with the noble Baroness, Lady Worthington, and the points that she made—along with our approach to deliver reliable, affordable and low-carbon power. The energy security strategy accelerated, as I am sure the noble Baroness is aware, our ambitions for the deployment of renewables for nuclear and for hydrogen. I can assure noble Lords that the Government will never compromise our security of supply: that remains our primary consideration. But our understanding of what the future energy system will look like and the level of the demand that we will need to meet through electrification will essentially and inevitably evolve over time. So, we are not targeting a particular solution, but we rely on competition to spur investment in the different technologies and new ways of working, and new technologies such as more efficient batteries et cetera are coming onstream every day. We will closely take all these matters under consideration. We take the view that the Government’s role is to ensure the market framework is there and that encourages effective competition and, at the same time, delivers a secure and reliable system.

Finally, let me thank the noble Lords, Lord Howell and Lord Teverson, the noble Viscount, Lord Trenchard, and the noble Baronesses, Lady Jones and Lady Hayman, for their valuable contributions to the debate. I assure my noble friend Lord Howell that we are working internationally with the US, with the EU and with our other partners to produce a secure and reliable energy system together. In response to the noble Viscount, Lord Trenchard, I am sure he will be pleased to hear that through the £385 million advanced nuclear funds, we are providing funding to support research and development for precisely the small modular reactor designs that the noble Viscount wishes to see, and we are progressing plans to build an advanced modular reactor demonstration by the early 2030s at the latest. Therefore, with the reassurances that I have been able to provide, I hope that noble Lords will not press their amendments.

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[Lord Foulkes of Cumnock (Lab Co-op)]

My Lords, it is my responsibility and pleasure to move Amendment 8 and to speak to Amendments 9, 14 and 16 in the unavoidable absence of the noble Baroness, Lady Liddell, who will be with us from Wednesday onwards. She sends her apologies but I am pleased to speak on her behalf, and my own, and to thank the Carbon Capture and Storage Association for its excellent briefing about this issue and the implications involved and the help it has given us with drafting these amendments.

I have two points before I go on to the detail of the amendments. As others have said, the UK has one of the largest potential carbon dioxide storage capacities in Europe. This is a very important issue that we are dealing with today, and it should not be underplayed and underestimated. It extends throughout the whole United Kingdom—Scotland, England, Wales and Northern Ireland. Also, as I understand it, it will support 50,000 jobs—a not insignificant number, given the current situation.

Turning first to Amendments 8 and 9, these deal with the importance of a net-zero principal duty to enable rapid network expansion. If we in the UK are to meet our emission reduction targets, carbon capture and storage will need to be rolled out rapidly across the UK during the rest of this decade. To capture and store 30 million tonnes a year by 2030, as the Net Zero Strategy says, we will need to go from nothing to building significant CO₂ infrastructure in a short space of time. It is therefore vital that the regime set out in the Bill enables initial oversizing of CO₂ pipelines, increasing their size, which will allow for the subsequent rapid network expansion to connect more capture sites to the growing suite of storage sites.

The National Infrastructure Commission’s 2019 regulation review, Strategic Investment and Public Confidence, recommended that the economic regulators’ duties be updated to facilitate long-term investment in networks. It recommended implementing updated duties that will enable network operators to deliver the best results for the public by building and investing in networks that are resilient and fit to deliver net zero while also providing value to current and future users of those networks.

The Government should be commended—it is unusual for me to commend them—for proposing that the duties of the economic regulators include consideration of the needs of existing and future users, but this seems a missed opportunity to include a duty to deliver net zero by 2050, to help the regulators to effectively balance these two equally important factors.

It should be noted, however, that outside the regulators’ core duties, the Bill includes a further requirement for the regulator to support the Secretary of State in having regard to the Climate Change Act 2008, and the new CCUS strategy and policy statement should go some way to addressing this. However, in practice, these mechanisms are not as strong as the regulators’ own duties.

This amendment is therefore essential to give the regulator the necessary powers to make decisions that enable the required strategic anticipatory investment on the network. Ofgem will need to be empowered to make well-justified decisions that balance the interests of current and future transport and storage network users with delivering net zero.

That deals with Amendments 8 and 9. I now come to Amendments 14 and 16, which would ensure that all types of permanent storage are included. Of course, geological storage is not the only type of permanent storage of CO₂. This can also be achieved by types of usage where the carbon dioxide is used in a way that it is chemically bound in a product and not intended to re-enter the atmosphere. As currently written, this clause allows only for geological storage, so this amendment is intended to recognise that there are other methods of permanent storage. However, it is important to qualify in this drafting that only carbon capture and usage where it is intended to be permanent—and therefore subject to monitoring and verification—can qualify for this.

It is worth noting that in other areas of the Bill a wider definition of storage is used, and the question could be asked: why are there different definitions for each clause of the Bill? Perhaps the Minister could explain that in his reply. This amendment aligns with Clause 63(8), where the Bill defines “storage” as

“any storage with a view to the permanent containment of carbon dioxide.”

Would it therefore be possible to have a common definition of storage used throughout the Bill?

I hope that the Minister will give a positive response to these amendments and I beg to move.

[Baroness Worthington (CB)]

My Lords, I will speak very briefly in support of Amendment 14 and reiterate the question of why there may be inconsistent definitions of storage in the Bill.

In my time exploring carbon capture and storage over the years, I have become somewhat cynical about its ability to scale. The sheer cost of it and the presence of alternatives that may be cheaper and more secure mean that its role will be relatively limited. I am sure that it will play a role, but only if we enable it to be pursued in its widest possible senses. It is absolutely the case that you can store large volumes of carbon dioxide underground; we have aquifers and other underground storage facilities that could be used for this, including in the North Sea and on land, and we should explore those where they make sense. However, there are other mechanisms through which you can enable the use of other stored forms of carbon. Novel techniques are coming to market now involving plasma torches, which, applied to natural gas streams, deliver pure streams of hydrogen plus black carbon. That black carbon can then be used as a manufacturing commodity. Therefore, it would be foolish of us not to include that as a potential option. Similarly, CO₂ is used as a binding agent in the production of building materials. In fact, currently the CO₂ has to be bought at an extortionate rate, so using pure waste streams of CO₂ for the production of building materials will again be a permanent form of storage and it should be supported in the Bill. I fully support this amendment.

[Baroness Bennett of Manor Castle (GP)]

My Lords, I want briefly to reinforce the comments that have already been made. I wish to speak particularly in favour of Amendment 9, on the duty to assist in delivering net zero, and to Amendments 14, 15, 16 and 19; as has been argued clearly, having a consistent definition of storage throughout the Bill makes total sense.

Like the noble Baroness, Lady Worthington, I am very sceptical about the claims made about carbon capture and storage. Often, we see it used as a “get out of jail free” card: “We’ve got all the numbers and they don’t add up. We’ll just throw in a figure for carbon capture and storage to allow us to continue as we are”. That is clearly unviable. None the less, it makes a lot of sense to grab carbon emissions wherever they occur and use them in a constructive way.

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We anticipate that those who may wish to off-take carbon dioxide from the network for the purposes of carbon capture and usage are likely to have alternative options available, such as off-taking directly from an emitter. Therefore, it is considered that economic regulation is not currently needed for networks transporting carbon dioxide for non-geological storage or for usage purposes. I hope therefore that I have offered sufficient reassurance to noble Lords on that matter and that they will not press their amendments.

[Baroness Worthington (CB)]

I have a point of clarification. Are the definitions different because regulation over transportation is not needed or is the Minister saying, “We have picked a winner. It is going to be storage through this mechanism and we are not interested in the innovation that is coming through in these other sources of permanent storage.”? If it is the latter, I would find that very hard to understand in a Bill that is seeking to support new technologies.

I think it is the case—the noble Baroness, Lady Bennett, mentioned it—that there is a company in the UK already doing this, with limited support from government. It can scale. It is not a silver bullet by any means but there is not a single operational carbon capture and storage facility in the UK apart from that one, and yet the Bill does not seem interested in supporting it. I would like to understand: if the Government is interested in supporting new technologies, can we make that as broad as possible?

[Lord Callanan (Con)]

The Bill is intended to establish an economic means of support for geological formation. Of course, I commend the company referred to by the noble Baroness, which is managing to find ways of—I hope—permanently storing carbon dioxide in a form other than geological formation; indeed, there are other potential support mechanisms that could be deployed towards that. There is lots of research and development funding through UKRI and there is a whole range of other advanced technologies that we are supporting. In this case, in relation to economic regulation, the market mechanism that we want to set up on CCUS is dedicated principally towards geological long-term storage; we think that is the area that needs support under this system. That would provide the vast majority of storage that we can envisage at the moment but, of course, we are always willing to consider other methods. If this company is proving to be a success, that is great and I would be very happy to look at alternative ways of supporting it.

Energy Bill [HL]

Baroness Worthington Excerpts

Committee stage
Wednesday 7th September 2022 Lords Chamber

[Baroness Bennett of Manor Castle (GP)]

My Lords, I will speak to Amendment 46 in my name. As the noble Baroness, Lady Liddell of Coatdyke, clearly set out, this group of amendments is trying to implement something that the Government themselves have established: the UK Low Carbon Hydrogen Standard: Guidance on Greenhouse Gas Emissions Reporting and Sustainability Criteria, which I believe dates originally to April and was updated in July. I find myself in the unusual position of saying that I want to enforce something that the Government have established. Experts in this area tell me that the conditions set out in these standards are: the greenhouse gas emissions intensity of hydrogen for it to be considered low carbon; the emissions being considered up to the point of production; and, very importantly, the risk mitigation plan for fugitive hydrogen emissions. There is perhaps not much public awareness of the risk of that, but we need to share and understand it. The criteria are set out there.

I am not particularly attached to the way this is done in my amendment; I was simply trying to put Amendment 46 down to say that, for the subsidies to be available, it must meet the Government’s own standard. That seems the simplest way, but I am very happy to be convinced that there are various other ways; other amendments are going in the same direction. I am happy should we still need to get to this on Report to talk to people about what the best way of doing it is, but surely the Government want to enforce their own standards.

[Baroness Worthington (CB)]

My Lords, I will speak to Amendment 47 in my name. I find myself in the unusual position of being more environmentally ambitious than the noble Baroness, Lady Bennett of Manor Castle, in that the standard that my amendment would introduce on hydrogen would be more stringent and would ensure that we are investing in this form of clean energy only if it is truly clean.

It is a not well understood fact that hydrogen actually has a global warming potential which is not insignificant. When released into the atmosphere, it has the effect of inhibiting the breakdown of methane, which we all know is a powerful greenhouse gas. The latest papers to come out that the Government have produced themselves indicate that, over a 100-year timescale, hydrogen has a global warming potential of 11 times that of CO₂. That is over 100 years, but we are probably concerned about the next 20 years, in which case that rises to it having 33 times as powerful a greenhouse gas effect as CO₂.

When it comes to hydrogen, I know it is often touted as the great white hope and the great solution—in fact, we have had adverts plastered all over Westminster telling us that hydrogen is the answer. However, it has to be considered carefully in context. It is very difficult to produce and to transport, and it is very dangerous to have around the house. In fact, studies have shown that it is potentially between three to four times more likely that someone will be injured from a hydrogen explosion in the home compared to natural gas. Already, natural gas has an unhappily high number of accidents and injuries from its use in the home.

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[Viscount Trenchard (Con)]

My Lords, I strongly support Amendment 225, which seeks to introduce a requirement to construct gas storage facilities to hold 25% of forecast consumption by 2025. I understand that past Governments have not believed that the country has any particular need for gas storage facilities, given that we have extracted large amounts of gas from the North Sea. I am sceptical that we will find it possible, or indeed necessary, to reduce our reliance on gas as quickly as the Government’s net-zero policy currently requires.

However, the extreme volatility in the price of natural gas on the international markets means that British consumers are much more exposed to massive and rapid price increases than consumers in countries that maintain much more significant gas storage facilities, such as Germany. Even if the Government accelerate the development and commercial deployment of more new nuclear reactors than they have planned so far, we will still need large amounts of reliable energy that is not subject to intermittency. Increasing gas storage facilities as an urgent priority will mitigate the risks we face today, and I hope that the Minister will support this.

My noble friend Lord Moylan explained why he selected 25% as the proportion of forecast demand each year beyond 2025. My noble friend Lady McIntosh suggested that this should be defined in days—I think it would be 91 days at 25%, as an average, but surely we use much more gas in winter than summer. I doubt that our consumption of gas will steadily decline in the years beyond 2025 but, so far as it does, I am not saying that it is not a good thing. If the Government are correct and reduced demand in 2028 or 2030 is realised, storage facilities holding 25% of forecast demand may hold 30% or 35%. I look forward to hearing the Minister’s thoughts on this very useful amendment.

[Baroness Worthington (CB)]

My Lords, I will briefly speak to this group of amendments. It is clear that the resilience of our energy system is absolutely crucial. As recent events have shown, a non-resilient system poses great threats, in both rising costs and vulnerable people suffering.

I will ask about the best approach to delivering the enhancement of gas storage that I think we all agree on. It seems clear to me that, in Clause 10, the Government are considering making an intervention into energy markets to guarantee a certain volume of fuel supply, because of the perceived worry that investment into these sectors is slowing—quite rightly in my view, because they have a limited lifespan. The fossil fuel industry will have to quickly adapt to a rapidly electrifying energy system in which its product will be less needed. So, in time, we will see a diminishing market, in part because of government policy—and that is completely correct, as we move away from polluting forms of energy. But this opens up the risk that there will be a gap between private sector investment and our needs, as we will still rely on these fuels during the transition. It seems to me that the Government have convinced themselves that an intervention on core fuels for transport is necessary for this reason—the fear that a gap will open.

Has a similar analysis been done on the gas market in light of recent events? Would it not therefore make sense to consider some kind of holistic intervention into the market for energy security purposes, rather than a piecemeal, fuel-by-fuel approach? Does that complement, or supplement, the approach of the noble Lord, Lord Moylan, providing some way through this that we can perhaps discuss during Committee and then come back to on Report?

I support Amendment 240, but would the VAT exemption apply to larger systems, like schools and other buildings, or is it just for personal home use? It seems to be sensible to try to level this up so that people can make use of it.

[Lord Foster of Bath (LD)]

To be absolutely clear, it would apply to all batteries that receive their supply from solar panels.

[Baroness Worthington (CB)]

In which case, I am even more supportive, because it is absolutely clear that installing solar panels is a fast way to reduce demand for fossil fuels and to increase resilience. If it can then be stored, even more resilience will be added to the system. So this would seem to be a very sensible amendment, and I thank the noble Lord for his meticulous detail in spotting this.

[The Earl of Kinnoull (CB)]

My Lords, I rise with my European Affairs Committee hat on. I see these as enabling amendments for the storage of energy. The first Parliamentary Partnership Assembly, which took place in May, had a specific session on energy security. The mood was clear: the 70 politicians—35 from Westminster and 35 from the European Parliament—felt that, in a difficult security environment, energy was a European-level matter and that we should think about it as such. Interestingly, I was at a European security conference on Monday and the exact same theme came through. Yesterday, we were settling the agenda for the second Parliamentary Partnership Assembly, and this theme will be on the agenda again.

Many of the speeches and thinking this evening have been from the United Kingdom view of the world. However, we should be enabling ourselves to consider this from a European perspective. As we might be storing gas for others, such as the Germans, anything in these amendments which would allow a future Secretary of State the flexibility to do that would be a good thing from a European context. Therefore, they would be good from a European affairs point of view.

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[Lord Callanan (Con)]

When my noble friend says “tankers”, I take it she means LNG tankers. I forget the exact figure, but we get 45% from our own domestic capacity and about 3% to 4% through interconnectors, so I guess the rest will be made up from LNG shipments. We have three LNG gasification terminals in the UK. Those figures are off the top of my head; I will correct them if they are not right.

Turning to the amendment in the name of the noble Lord, Lord Foster, I am sure he expects the reply that he is going to get. As he will be well aware, changes to tax policy are considered as part of the Budget process. As Treasury officials are always very keen to tell me whenever I put forward such proposals, they have lots of proposals from people for exemptions from various taxes but not many proposals for how to make up the revenue that would be lost from them. I am sure that the Chancellor will want to take that fully into consideration in the context of the Government’s wider fiscal position. I fully take on board the points that the noble Lord made. The Government keep all taxes under review and always, the Treasury tells me, welcome representations to help inform future decisions on tax policy.

[Baroness Worthington (CB)]

In case there are any Treasury officials listening or, indeed, reading Hansard, I suggest that one form of new tax would be on the trading of fossil fuel commodities. This is a huge source of revenue to the suppliers of fossil fuels into the market, and the commodity trading markets is a very good place to look for taxation revenue.

[Lord Callanan (Con)]

I thank the noble Baroness for her suggestion. The Treasury is not normally shy in coming forward with proposals for extra taxes if it thinks it can get away with it. Of course, we have already imposed the excess profits levy on a number of producers in the UK; indeed, those producers already pay increased rates of corporation tax. We must be careful that we do not disincentivise investment. Putting aside the wider politics of it, which we all understand, I am sure that everybody is aware that we need tens of billions of pounds of investment into existing oil and gas facilities. I welcome the support of the noble Lord, Lord Teverson, for the continued production of UK gas; it is an important transition fuel and I hope he will manage to convince some of his Liberal Democrat colleagues to support us in this. We do need gas in the short term, but many of those same companies are investing many billions of pounds also in offshore wind and other renewable energy infrastructure, so we want to be careful not to disincentive them too much from that. I am sure the Treasury will want to take into account all these helpful considerations as to how it can increase its tax base.

In conclusion, I am grateful to noble Lords for their amendments on these topics. I hope I have been able to provide at least some reassurance to some people on their amendments and that they will therefore feel able not to press them.

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[Baroness Worthington (CB)]

My Lords, I will speak to Amendments 55, 56 and 57 to Clause 66, which are in my name. As has been eloquently expressed by the noble Baroness, Lady Blake of Leeds, we absolutely need to put at the forefront of our attention the need to minimise adding costs to consumers at this time. Please excuse my coarse language, but it feels to me that the Government are in danger of moving from “cutting the green crap” to forcing us to take on crap green. That is essentially what we are doing here.

It is an adding of potentially unlimited expense for a commodity which will play a role—I am not completely against the use of hydrogen for certain applications—but the idea that it will be used at scale for homes is completely ludicrous. It is therefore absolutely right that we limit the levy to the people who will benefit from its use. That will not be consumers and certainly not electricity bills. What we want is cheaper electricity. I am confident that electricity will soften as we get off fossil fuels and rely more on more predictable and stable forms of electricity generation, such as nuclear, offshore wind and a whole panoply of ways of making electricity that we can control more easily than relying on imported gas. Those costs will soften, and we want to keep them cheap because that will enable us to electrify whole other segments of the economy.

So I absolutely support limiting this levy to gas, whether that is by saying it should be gas shippers or removing the reference to electricity, as my Amendment 55 does—I am completely agnostic on that, but the issue is fundamental. I will quote from a briefing that some of us may have received from E.ON, a big provider of energy which quite cleverly split itself into a clean electricity part and a not-so-clean one. The clean part says clearly that “recovering the costs of these new technologies through electricity bills is regressive and difficult to justify considering the soaring cost of living and the potential benefits of these technologies to individual consumers are uncertain. It is damaging that the Bill allows the Government to recover the costs of hydrogen revenue through electricity suppliers and, therefore, electricity consumers.” I fully support that and I have to say that my amendment was tabled before I read the briefing.

I considered striking out the whole levy with a clause stand part debate, but I thought that might be more the approach of the noble Baroness, Lady Bennett, so in Amendment 56 I am simply saying that there should be a sunrise to delay us rushing into adding more costs. The amendment proposes that the regulations should not be brought in until 6 April 2026. Amendment 57 simply states that a financial impact assessment must be made available if and when this levy starts to be added to bills.

My guess is that the use of hydrogen will be limited. It will be very expensive and it is very inefficient, so the costs should not and will not be borne in time. But I am worried that in this Bill we seem to be diverting towards a distraction and risking an illogical transition which will slow us down and add costs unnecessarily. That is damaging to the net-zero cause and to people’s confidence in this transition. We should therefore be very circumspect on this levy provision; we should be narrowing its application and slowing it down. I hope that the Government will consider this, because I am sure they have read the science and understand the physics as well as everybody else. It really ought to be limited.

[Lord Teverson (LD)]

My Lords, I think we are all trying to achieve the same thing here. As the noble Baroness, Lady Blake, said, maybe we need to take this forward as a way to do it. The cost to consumers is absolutely central at the moment, and this is not a short-term thing—it is at least medium term. Later we will come to an amendment which says we should repeal the Nuclear Energy (Financing) Act, which was all about raising costs to consumers in the short term and has nothing to do with nuclear power otherwise.

In my amendment, I am trying to do something very similar to what has already been debated: if we are going to accept this levy—we know levies are always very contentious when implemented in terms of who has to pay for them and who gets the benefits from them, which leads to a lot of argument—it is quite clear that for hydrogen there is only a very limited sector of organisations, people and population who will actually benefit from it. In its own way, my amendment seeks to prevent other consumers who are not benefiting from hydrogen having to pay for that investment.

It is very much in line with other Members’ amendments and it is absolutely fundamental to the messages that we as a Parliament, and the Government, are putting out at the moment to consumers and company users of energy. Let us make sure that, if we have this levy, it is kept to those who benefit from hydrogen rather than those outside who do not.

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[Baroness Worthington (CB)]

I am grateful for the Minister’s response. I have no doubt that hydrogen will have a role to play, but it is more likely to go into fertiliser production or long-distance fuels for shipping and aviation. The provisions being taken here do not allow for it to be applied to the sectors that consume fossil fuels—gas obviously covers fertilised gas. This needs to be thought through in relation to where hydrogen will most likely be needed. It will play a tiny role in decarbonising electricity, if at all, because there are so many other ways of doing it more cheaply and more efficiently.

[Lord Callanan (Con)]

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

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

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

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

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

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Moved by

[Baroness Worthington]

59: Clause 72, page 63, line 36, leave out from second “counterparty” to end of line 38 and insert “and the eligible low carbon hydrogen producer specified in the notification must, in accordance with provision made by revenue support regulations, contract on—”
Member's explanatory statement
This amendment makes the signing of a revenue support contract or contract for difference (CFD) mandatory for a firm which has successfully bid for it.

[Baroness Worthington (CB)]

I shall move Amendment 59 and speak to Amendments 60 and 61, in my name and that of the noble Lord, Lord Howell of Guildford, who sends his apologies. He had a diary clash, but assures me that he is fully supportive of this discussion. In fact, he informed he that he was around when the very first CfDs were used as private contracts, a long time ago, and is very keen that they remain a trusted and respected form of investment, hence he was keen to lend his name.

These are obviously probing amendments, designed to start a discussion about the need to preserve integrity in the CfD mechanism. The UK deserves huge credit for having introduced this mechanism, which is seen as investable and a dependable way of getting large investment into decarbonised infrastructure—something we all need.

It is regrettable that there is now a set of circumstances whereby contracts, once awarded, are not being taken up. The reason they are not being taken up is that market prices are currently so high that if you took on your contract for difference, you would be required to pay back into the fund anything above your strike price. Some of these contracts have been awarded at around £55, £59 or £60 per megawatt hour—market prices are way above that—so people are choosing not to take up the contract and to delay.

Now, I am aware of three wind farms that have currently delayed this for these reasons. It makes perfect sense for them: they are representing shareholder value and possibly could not do otherwise, because of the existence of a loophole, which is that there is no requirement to take up the contract once it is awarded. What we want to try to do is close that loophole and, if possible, do something about it in the current time. Amendments 59, 60 and 61 all seek to do that.

It is important to note that these three wind farms—I do not want to overblow this; it is not everybody—are all in foreign ownership. Ørsted, RWE and EDP Renewables in Spain own these sites. It is public money that they are essentially not giving back, having got this contract. It feels very wrong, at the time of a cost of living crisis, when we need every penny, for hundreds of millions of pounds to be lost to these companies and their shareholders as a result of this loophole in how the contracts are drafted and can then be delayed.

I am sure that the Government are working hard to try to address this too. It strikes me that we have an Energy Bill and can therefore get this right for future contracts, but if we can also do something about current contracts, that would be enormously beneficial. I thank Carbon Brief for helping me understand how many wind farms are involved in this: they are Hornsea Two, Triton Knoll and Moray East, I am told by an article in the Times, just to get that on the record in Hansard. If the Government know differently, and if they can tell us exactly the extent of the problem, that would be super helpful, because we have not been able to find it from official sources. This is, as I say, from research by Carbon Brief. If the noble Lord, Lord Howell, were here, I am sure he would say how keen he is for this to be resolved. I look forward to the Minister’s response.

[Lord Teverson (LD)]

The history of contracts for difference is longer than I thought; I thank the noble Baroness for mentioning that. They became a big thing in the last Energy Act during the coalition Government and have been amazingly successful. I have to admit that I did not realise that this issue was quite so significant, but it is interesting that, given the financial investment required for offshore wind farms and the time they often take to implement and build, this is a case where the risk goes up for the financial investor, as opposed to a low-risk contract for difference. I am therefore also interested to understand from the Minister whether these businesses are just delaying until they see the lay of the land and whether they still have those options, because there is that risk-reward ratio.

I very much support the intention of this amendment, but the energy industry has also talked about contracts for difference being a way forward even in the fossil fuel industry, and a way that we could decouple power prices from gas prices. It may be that the Government are not doing anything in that area, but I am interested to understand whether that is something the department is investigating as a way forward on that decoupling.

Contracts for difference are a fantastic invention. As the Minister said, at the moment they are bringing good money back into the public sector—technically into the counterparty company, but effectively into the public finances. I very much support the motivation of this amendment.

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[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.

Energy Bill [HL]

Baroness Worthington Excerpts

Committee stage
Monday 12th December 2022 Grand Committee

Moved by

[Baroness Worthington]

117: Clause 98, page 90, line 32, leave out “may by regulations” and insert “must by regulations, within 12 months of this Act being passed,”
Member’s explanatory statement
This amendment requires the Secretary of State to make regulations establishing a low-carbon heat scheme within 12 months of the Bill receiving Royal Assent.

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[Baroness Worthington (CB)]

My Lords, I too am glad to be back debating energy. As has been noted, we find ourselves in a completely different sent of extreme weather events today, but I am glad that we have all been able to make it here to resume this important discussion.

Since we last met, emergency legislation has gone through on some of the issues that we raised in Committee and at Second Reading on the need for a short-term response to the energy crisis bearing down upon us. The Bill is very much about long-term measures, so it is right and proper that the Government supplemented that legislation with faster-paced legislation. However, there were many provisions in that rather hurried legislation, which I know has caused concerns in the market, so the Government have to work hard to deliver the right signals to investors and to businesses around the country that the transition will be orderly and consistent and can encourage investment across the piece. I am sure we will come back to debating the net effect of all the Government’s measures on energy in later clauses.

Amendment 117 relates to the setting up of a low-carbon heat scheme. Specifically, the amendment would change the provision that the Secretary of State “may” by regulations make provision for the scheme to “must” and apply urgency to the challenge of bringing forward those regulations by requiring that they are passed within 12 months of the Bill being enacted.

The reasons are self-evident. If we are to solve the problem of our reliance on volatile fossil fuels, which are also contributing to air-quality problems and climate change, we need to get on with the electrification of heat. The scheme would move us along in that direction and give investors confidence that there is a market that they can plan for and invest in. We therefore urge the Minister to reassure us that the regulations will be passed with all due haste and brought in in good time, and I look forward to hearing from him on the timetable within which we might see the regulations.

Amendment 118 seeks to add to the Bill statutory requirements for and deadlines by which we will stop selling the gas-based boilers currently going into properties. I support that in principle, although I imagine that there will be concerns about the specificity going into primary legislation. However, it is essential that we give clarity to the manufacturers of existing boilers that the Government are serious about ending their current dominance.

I receive, as I am sure everyone does, a lot of correspondence about hydrogen-ready boilers. That needs to be unpacked. I do not know what can be done to prevent the mis-selling of that concept, but it is borderline mis-selling because it is very unclear whether hydrogen-ready boilers are even possible. I therefore think it has more to do with the manufacturers preserving the status quo than with their genuinely seeking to be involved in the transition. Lots of technical advisers tell me that simply saying that something is hydrogen-ready is not sufficient and that it is very difficult and complex to achieve, so I have some sympathy with Amendment 118.

Amendment 121 seeks to except hydrogen if it is compliant with the low-carbon hydrogen standard. In previous debates I have made it clear that I do not deem the low-carbon hydrogen standard sufficient. It is a number that has been put out there, but I do not think it takes into account all the effects of hydrogen on the climate specifically. Hydrogen is a greenhouse gas, as we have talked about previously. The global warming potential of hydrogen needs to be taken sufficiently into account when we consider a low-carbon hydrogen standard, and I do not think it has been, so I am a little nervous about us putting the provision in as it stands because I do not consider that standard tight enough.

The Government’s amendments on opening up the opportunity for the regulations to apply to manufacturers seem entirely sensible. We have to decide the right point at which regulation would be most efficient to drive this. The manufacturers may well be the right place for this, or they may not, but having that option seems correct to me.

In Amendment 122, the Opposition Benches seek to include specificity in relation to the heat pump market. Again, I can see the logic of that. I am sure it is probing amendment, more than anything else, to get clarity on the scale of the market that we expect. I doubt that it could survive in primary legislation, but I am sure it is there to try to elicit positive statements so that the heat pump sector can move in this regard.

Amendment 119 concerns cases where it is not possible to fit heat pumps. It is a difficult amendment to legislate on. Very few of the properties where a large enough heat pump or geothermal source can be installed cannot electrify heat. Therefore, I believe that the amendment is not necessary.

I very much look forward to hearing the response to the group. As I have said, it is of primary importance to get moving, and to get investors moving, so that we can start to have a manufacturing sector that is enabled by those regulations as quickly as possible. I beg to move.

[Lord Lennie (Lab)]

My Lords, 95% of UK homes are centrally heated and most CO₂ emissions come from burning fossil fuels, contributing to about 30% of the UK’s total greenhouse emissions, about half of which is from heating our domestic properties. Will gas boilers be banned in 2025? As part of the future homes standard, new homes will be able to install only energy-efficient heating systems and will produce 31% lower emissions compared to the current levels. The standard will come into effect in 2025. The International Energy Agency has also stressed that no new gas boilers should be sold after 2025. The UK’s official climate advisers recommend that all gas boilers should be banned by 2033 to end the UK’s further contribution to climate change. That is the background to the amendments being moved.

We support Amendment 117 tabled by the noble Baroness, Lady Worthington, which adds a bit of the oomph by replacing “may” with “must” in relation to the low-carbon heat scheme. Amendment 119, in my name, would ensure that the Secretary of State, in making a low-carbon heat scheme, must

“provide a plan for low-carbon heating in homes where it is uneconomic or unfeasible to have a heat pump (large, rural, off-grid homes etc.).”

Amendment 121 seeks to allow

“heating appliances that use hydrogen produced to the Low Carbon Hydrogen Standard (blue hydrogen) to be included in low-carbon heat schemes.”

I note what the noble Baroness, Lady Worthington, said about hydrogen in general, but if we are going to have hydrogen, let us have blue hydrogen at this stage.

Amendment 122 states:

“Sub-paragraph (i) seeks to include the Government’s own figures for heat pumps in the Bill. Sub-paragraph (ii) seeks to include the number of heat pumps in the latest figures on recommendations from the CCC. And sub-paragraph (iii) seeks to oblige manufacturers producing gas boilers to turn to minimum 25% production of heat pumps by 2028 to facilitate the clean heat transition.”


Government Amendment 123

“makes it clear that a low-carbon heat target set by virtue of clause 100(1)(c) or (d) may be set, in the case of a manufacturer, by reference to heating appliances of the manufacturer that are supplied or installed, whether by the manufacturer or someone else.”

Government Amendment 124 simply corrects a drafting error.

Amendments 117, 119 and 121 relate to Clause 98 in Chapter 1, on low-carbon heat schemes, of Part 3, on new technology. Clause 98 provides the Secretary of State with powers to set up a regulatory scheme through secondary legislation to encourage the sale and installation of low-carbon heating technologies, such as electric heat pumps. Clause 98(3)(b) allows for this to include, for instance, hybrid heat pump systems that involve both a heat pump and a fossil fuel boiler. This is welcome, but our primary concerns are when and how the powers will be used. Amendment 117, tabled by the noble Baroness, Lady Worthington, requires the scheme to be set up within 12 months of the Bill becoming law, and we agree with that.

Amendment 119 seeks to ensure that the Government are aware that there are a number of homes where heat pumps are not the solution, and to address filling this large gap. There is one fundamental flaw with this clause that Amendment 121 seeks to address: it effectively prohibits the deployment of either hydrogen-ready boilers or boilers that use blue hydrogen under low-carbon heat schemes.

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[Lord Callanan (Con)]

The noble Lord makes a good point. Before he corrected himself, I was about to contradict him and say that a number of energy-from-waste plants are already supplying district heating networks—as he said, there is a particularly big one in south London, which I have visited. It is doing so, because the Government supported it. It received grant money to enable it to do that. There are a number of others around the country, so we already have existing powers and support funds to support heat networks.

We are very supportive of energy-from-waste plants using the waste heat to connect into district heating networks. However, it is a difficult area, because it depends on a number of factors. You have to have the energy-from-waste plant in the first place, and office blocks, apartments, et cetera have to be available to take the waste heat. The noble Lord will know that later in the Bill we will discuss the zoning power for heat networks that local authorities will have, which hopefully will enable them to utilise those powers and take heat networks forward; there are a number that are very keen to do so. I would certainly envisage that a number of energy-from-waste plants—those in inner cities, in particular—will be able to take part in those initiatives.

[Baroness Worthington (CB)]

I thank the Minister for his response. I am somewhat reassured by the timetable that these regulations will be pursued against. I would like to mention that it is not unusual for government to announce things and for there to then be quite a long delay. Energy-efficiency standards reaching EPC C by 2035 was first announced in 2017, but we still have not seen that make it through. If we had, we would be in a far better position now as we face this winter, where we have shortages of gas, and we should have more efficient homes. There is a reason why we are pressing on this timescale.

I support the Government’s amendments as introduced and the Minister’s statement that it is not helpful to expand this particular scheme at the moment any further than it is already defined. It is important to have clarity. The nearest corollary to this legislation is the ZEV mandate, which we will probably discuss in relation to the amendment tabled by the noble Baroness, Lady Randerson. It is better to have clarity of purpose that gives manufacturers and industry time to adapt and build an industry. It is clear in my mind that electrification of heat is probably 90% of the answer, if not the full answer. Therefore, getting it right, keeping it tight and giving confidence for investment would be the fastest way for us to get off volatile, expensive and unhealthy fossil fuels. However, I beg leave to withdraw the amendment.

Amendment 117 withdrawn.

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[Baroness Randerson (LD)]

I decided to table this amendment, because I felt that it was important to draw attention to what I and many in the transport sector see as the lack of leadership from the Government on this issue. It is important to bear in mind that the Government have seemingly very good targets on decarbonising the transport sector, but there is no detail on how we are going to get there. The path ahead is very vague.

Transport is the largest carbon-emitting sector in the UK. It is responsible for a quarter of CO₂ emissions globally. In the UK, the sector has reduced its emissions by only 3% since 1990. That stands in contrast with other sectors. There is a desperate need for leadership, because we are falling behind. The evidence is that we have to be halfway there by 2030 to reach the goals for 2050, but we do not have the plans, the policy or the path set out for us, and it is now a matter of great urgency.

One reason why emissions have not reduced is that although the technology has improved, the number of vehicles on the road has increased, as has the size of cars. Although they are more efficient kilo for kilo, if I can put it that way, they weigh more now and have a greater impact and emit greater amounts of carbon. I want to say briefly that we are talking about this in relation to carbon emissions, but it is, of course, a matter of health. It has a huge impact on our breathing and things like heart attacks, and so on. It is a matter of considerable importance in health.

A great deal is made about the move to electric vehicles, but only 2% of the vehicles on the roads so far are EVs. We are a very long way behind the leaders—countries such as Norway, where up to half of vehicles sold are EVs. My amendment refers specifically to hydrogen, and hydrogen is controversial. Of course, it must be green hydrogen. Even then, green hydrogen has disadvantages, but the advantage of hydrogen is that it provides an early answer to the difficult-to-decarbonise sectors of the transport world—that is, heavy goods vehicles, heavy vehicles generally and, of course, shipping, which is particularly difficult to decarbonise. That is one reason why there is the reference to hydrogen.

The other reason why there is a reference to hydrogen is that, unlike with electricity for vehicles, hydrogen cannot really be installed on a commercial basis unless the Government put in place a set of carrots and sticks to encourage it commercially to be installed. It costs over £1 million to install a hydrogen-fuelling point. It is not the answer for ordinary domestic cars. It could be the answer for fleets of vehicles such as vans, but it is not going to be, unless the Government provide leadership.

I have been raising this issue for the past six years at least, and the Government have said that the market will solve the problem of electric vehicle charging points. To a certain extent, the market has stepped in. Of course, there are huge gaps, but the market has stepped in. The reason it has been able to is that all around us there is electricity—but we do not have hydrogen all around us. I deliberately mention hydrogen in the amendment because the Government need to consider how they are going to lead on this issue.

I finish by saying that the point of the amendment is to open up the matter for discussion and to give the Government the opportunity to consider—and, I hope, to think again about—the urgent need for leadership in setting out a set of steps, a policy or plan. These exist in other countries without Governments taking a huge commercial risk, but simply by providing the incentives to encourage people to choose more environmentally friendly ways of fuelling their vehicles and ensuring that, having chosen a more environmentally friendly vehicle, they can run it efficiently and effectively.

Noble Lords will be well aware that every time we talk about electric vehicles, there is immediately a discussion of the latest crisis that someone has faced in being unable to charge their EV—despite the fact that they are probably running short of electricity outside a house or fuel station that is blazing in electricity. Let us just think about how much more complex the matter is if we are talking about hydrogen.

This is about discussing the difficult issues and encouraging the Government to look ahead and plan—urgently—for what must be achieved. The average life of vehicles on the roads now is 16 years, I believe, and that will probably get longer because we are facing a period of difficulty, austerity and rising prices. This is therefore important, because those decisions made this year about what vehicle to buy—whether you are an individual or as a company—will be with us for decades to come. The Government must lead in the way only Governments can. I beg to move.

[Baroness Worthington (CB)]

My Lords, I shall speak to Amendment 124A, as presented by the noble Baroness, Lady Randerson. I must say that it is seldom that we disagree, because we both share the objectives of a rapid response to the growing climate risk, rapid decarbonisation and increasing the efficiency of our energy systems. I welcome this chance to have a debate about the intersectionality between transport and energy. In fact, and not to pre-empt it, I have an Oral Question later this week about how departments connect on these issues. It is hugely important that the DfT, in particular, teams up with BEIS on planning for our future decarbonised energy systems.

That said, I do not think it will come as any surprise that I am absolutely opposed to the idea of bringing in this set of amendments as currently drafted. My belief is that hydrogen will have a very limited role, for three reasons. First, it is itself a climate change gas and it is very slippery; it is the smallest molecule on the periodic table and it escapes everywhere. I do not wish to have hydrogen all around me—quite the opposite. I want hydrogen in very controlled places, being looked after by industrial chemists; I do not want it in my home or in my vehicle. We just have to look at the explosion of the hydrogen fuelling station in Norway. It is often forgotten but this is a hugely explosive gas. Norway managed to blow one of its fuelling stations and, if Norway can blow things up, anyone can.

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[Lord Whitty (Lab)]

My Lords, much has been said already. I agree with the main thrust of the amendment tabled by the noble Baroness, Lady Randerson, which urges the Government to set out a very clear case for the decarbonisation of the various transport sectors. I do not think that we are there yet, and I do not think that the industry feels that we are there yet. It is important, for the reasons that the noble Baroness has just spelled out, that the transport sector knows which way it is going.

I must partially apologise to and reassure the Committee, because some of my speech was intended for the previous group of amendments. As noble Lords were making such commendable progress this afternoon, I did not get here in time to intervene on the amendment on home heating—an issue where, again, some clarity of decision is needed. Home owners and landlords are now faced with decisions on how to replace their gas boilers: they know they need to get rid of their gas boilers, but quite what they are going to get to replace them with is unclear. Of course, people replace their cars, and even their lorries and buses, rather more frequently than their houses and boilers. It is important, therefore, for the transport industry that there is some clarity on the general direction of government policy for the different sectors of transport.

On this topic, we immediately run up against the issue of hydrogen. I am not quite as sceptical as some of my colleagues, but I am sceptical, because hydrogen has been seen as a “get out of jail” card for almost every sector on their decarbonisation trails. That is not only for heavy industry, to replace the very heavily carbon-fuelled industries such as steel, glass and so forth, with its knock-on effect on the construction industry, et cetera, but for parts of the transport sector and for home heating. It has been seen by some as the solution to the decarbonisation of heavy vehicles, shipping, the train system and even aviation. However, hydrogen is not capable of doing that without safety dangers; and, in any case, it is not capable of doing that because we do not yet have the technology for producing green hydrogen at scale. Therefore, it will come in, if at all, only much further down the line. However, waiting for hydrogen—whether in the form of hydrogen blend for home heating or hydrogen-based vehicles or batteries for the transport sector—is seen as an excuse for not taking other technologies more seriously and urgently than we have done.

The amendment tabled by the noble Baroness, Lady Randerson, would require the Government to do that job for the transport sector. I think that they need to do that for other sectors as well, and that they should not exaggerate either the degree to which hydrogen is the solution or, in particular, the closeness of technological breakthroughs to provide genuinely green hydrogen. It is not going to happen in the kind of timescale that we are talking about. Therefore, the amendment has implications beyond transport, but transport itself needs a clear plan. I hope that the Minister will take up with his transport colleagues the need to work urgently, as the noble Baroness’s amendment urges, to ensure that the transport sector knows where it is going, even if nobody else does.

[Baroness Worthington (CB)]

My Lords, I am sorry to speak a second time—I am not sure whether I am allowed—but may I speak to Amendments 130A and 130B? In my excitement I forgot to speak to them. Those amendments in my name seek to address the carbon removals questions in the Bill.

Amendment 130A is to try to interrogate the Government’s amendments to the definitions of carbon removals, as stated in the Climate Change Act. My amendment would reinstate reference to forestry and other physical activities in the UK. I think this amendment is necessary because we do not want to see definitions used in the Climate Change Act, which are foundational to our understanding of what we need to do to tackle climate change domestically, to somehow allow vague processes such as the purchasing of offsets or some other financial instrument to be eligible for the net-zero accounting. I seek reassurances on that. I also seek reassurances that we acknowledge that forestry and land use need to be referenced alongside mechanical sinks to keep the system holistic and inclusive. So I am probing on those two questions: forestry and land use, and making sure we are talking about physical activity and not financial chicanery or accounting trickery.

I feel quite passionate about Amendment 130B. I am sure the UK will emerge as a world leader in this regard. If we are to become the centre of a market or set of policies that are economy-wide in decarbonising our system, we will have to get to grips with the MRV—the monitoring, reporting and verification of carbon removals—to get to a net-zero position. It is hugely important. When you burn a tonne of fossil fuel the impacts are certain and very low in error bars, but when it comes to the biospheric removal of carbon in particular, there are huge uncertainties and an absolute paucity of data. It really has not been looked at comprehensively enough, especially now that large sums of money may be resting on this approach to reaching net zero.

I urge the Minister and the department to really assess what the UK could do to set some gold-standard regulations regarding carbon removals. Let us start the debate with this Bill, pursue it and continue with it. Given that we are at the forefront of reaching these challenging carbon budgets that we have set ourselves, I have no doubt that carbon removals will have a role to play. But let us do it in a world-class way and not use it as a weasel-word excuse for allowing fossil fuels to continue, without the certainty that those removals are genuine, additional and permanent and can offset the almost permanent damage that we know occurs from the release of fossil fuels. It is hugely important that we do this. I tabled this as an opportunity to spark a debate, and I hope we will come back and consider it in more detail. The UK has a great potential role to play in this area.

[Baroness Sheehan (LD)]

My Lords, as a member of the House of Lords Science and Technology Committee, I took part in the report we produced on batteries. The genie is out of the bottle on domestic EVs. That is going to happen; I think we are well on the road to better and better battery technology.

When the committee examined transport, we heard that batteries are heavy—a battery to power a bus would be very heavy—so there is a role for hydrogen in public transport for return-to-base vehicles where hydrogen does not have to be moved too far. Where there is a limited number of filling stations, that is a model that could work. Shipping and heavy industry, such as cement, are other applications for hydrogen.

My noble friend Lady Randerson mentioned fuel cells. We found in our report that for some reason the Government are not backing research on fuel cells to the extent that they could. Fuel cells would be another potentially sensible source of power for heavy transport vehicles, so I support the basic thrust of my noble friend’s amendment.

Amendments 130A and 130B, tabled by the noble Baroness, Lady Worthington, are really crucial. We are going to have to look at carbon removals, as the noble Baroness, Lady Jones, said earlier. We need to do it in a way that gives confidence against greenwashing, of which there is far too much. The only way to do that is if accounting for carbon is rigorous.

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[Baroness Worthington (CB)]

My Lords, I added my name to the Clause 108 and Clause 109 stand part notices and to Amendment 125 in the name of the noble Lord, Lord Teverson.

We have had wide-ranging debates but, when it comes down to the content of the Bill, the most egregious elements are possibly these two clauses. It seems absolutely incredible that we should require people to enter into a trial for something on which multiple studies have been undertaken already. We are essentially legislating to force people to take part in something we already know the answer to. We know the answer because 32 independent studies of the use of hydrogen in heating—since 2019, so they are relatively recent—by organisations including the IPCC, the IEA, Imperial College, the Potsdam Institute, the University of Manchester, the Wuppertal Institut, Element Energy and the International Council on Clean Transportation, have all found that hydrogen should not play a role in heating buildings. Hydrogen will be hugely inefficient, compared with other clean alternatives and gas, in terms of pure energy efficiency, damaging to health and dangerous. That should be enough evidence for the Government to rule out this unnecessary trial.

I honestly believe that this is a consequence of a huge amount of lobbying coming from the incumbents in the industry, including those who today manufacture gas boilers, produce gas and move gas around in the networks. What they fail to mention is that it is not as simple as just switching over to hydrogen: you have to replace virtually everything to be able to burn hydrogen at high levels. Yes, of course, you can burn very low levels, but who wants low levels? We are talking about a net-zero strategy in the next 25 years; you cannot afford to go through increments of 20% hydrogen and 30% hydrogen—it is simply not credible. It will do exactly what we saw in the co-firing of biomass in coal-fired power stations; it keeps the incumbents going for longer, keeps their investors and shareholders happy, and gives them an answer to the question, “How are you going to make your business compatible with climate change?”. It is a glib answer. It is not a full answer—in fact, it is false—but it is an answer none the less. That is why we are being forced into considering this, even though the evidence is absolutely clear that this is not the answer.

If I were a resident living in one of these poor villages—the villages of the damned, as I like to call them—I would be absolutely up in arms at the prospect of being forced into this egregious position in which I am asked to take this technology, which will be more expensive, less beneficial for my health and more damaging to the climate compared with other alternatives. I fully support the withdrawal of the two clauses; the Bill would be vastly better if we got rid of them. I am very grateful to the noble Baroness for tabling this.

[Lord Teverson (LD)]

My Lords, I particularly support the proposal to take out Clauses 108 and 109. I did not put my name to that, but it seems the obvious solution. As the noble Baroness, Lady Worthington, said, we have all been on the receiving end of massive lobbying by the hydrogen lobby. I will not go into hydrogen extensively, but clearly there are areas where hydrogen will need to work. It will be important in some energy-intensive industries and some long-term transport solutions, but we seem to have overreached in terms of those applications.

For heating, it just cannot make sense to use green hydrogen, which would have to be produced by renewable electricity, as electricity could be used anyway. Scientifically and in terms of the laws of physics and efficiency, it does not make sense. Heating is an important area—as we said, it represents some 40% of UK emissions—so surely it must be electrification directly, geothermal technologies or air source heat pumps, as we have discussed before. That is why I think these clauses not standing part is the best solution. If that is not agreed, I thank the noble Baroness for supporting my amendment; the noble Lord, Lord Lennie, has a similar one. This should not be compulsory and those consumers should be very aware of all the other repercussions.

My second amendment, Amendment 126, is less important. As with previous amendments, it just makes sure that only people who really benefit from these trials should have to pay for them and that those who do not should not. I do not understand how BEIS and the Government have become the victims of the lobbying that takes place.

Finally, perhaps I can cite a gentleman whose work I have been reading, Jan Rosenow. He takes his statistics from BEIS’s Hydrogen Production Costs 2021 and Ofgem’s wholesale market indicators. He is very clear that, depending on how you look at the timescale between now and 2050, hydrogen will cost three to 11 times more than fossil fuel gas at its present levels. Clearly, this is not an acceptable solution or route for decarbonisation.

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[Lord Callanan (Con)]

I will start with Amendments 125 to 127; I thank the noble Lords, Lord Teverson and Lord Lennie, and the noble Baroness, Lady Blake, for their contributions and for promoting them. The amendments relate to Clause 109, which, alongside Clause 108, will ensure the safe and effective delivery of a village-scale hydrogen heating trial. This trial will gather evidence to enable the Government to make strategic decisions on the role of hydrogen in heat decarbonisation. I know that there are very strongly held opinions on whether hydrogen is the correct solution, but we will never know unless we do the appropriate research and trials.

[Baroness Worthington (CB)]

No.

[Baroness Jones of Moulsecoomb (GP)]

That is not true.

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[Lord Callanan (Con)]

There is already a small-scale trial in Fife in Scotland. There are two shortlisted villages, Redcar and Whitby—on the west coast, not Whitby on the east coast. They have been shortlisted for the trial and we will make a decision on the basis of submissions from both communities in the new year.

[Baroness Worthington (CB)]

My Lords, I respond on behalf of the noble Baroness, Lady Jones, on the stand part notice that we have both signed. I thank the Minister for his response. To be honest, because I am so clear that this should not form part of the Bill, I have not gone through all the detailed provisions in these two clauses. The Minister seems to be saying that there is an absolute right of refusal, but my reading of both clauses is that the emphasis is that required information must be provided. There might be protections from financial penalties—that is implied when it talks about protecting consumers—but I cannot see it written down anywhere that the regulations will enshrine the consumers’ right of refusal.

I would be grateful if the Minister would undertake to write to us on this because this seems like a scheme where the fox is being put in charge of the henhouse. The gas transporters are the interlocuters between the poor people living in these villages who are going to be told that this is the great answer to their climate change concerns. Will they provide adequate information about safety? You are at least four times more likely to have an accident with hydrogen; it has been verified.

I take issue with the Minister’s characterisation of this as being a matter of opinion where “some people think this” and “some people think that”. It is not true. This is clear physics and chemistry. It is more likely. You may get slightly more frequent accidents at a lower explosion rate, but that does not reassure me in the slightest. Peer-reviewed scientific studies have taken place and we do not live isolated from the rest of the world. Other countries have tried this. There have been countless trials and there have even been studies in this country. This is not a safe way of proceeding. It needs to be made categorically clear that independent advice should be given to these villages, not advice given by the gas transporters which, of course, have a huge, vested interest in this going ahead.

I am afraid that I am in no way assured by the responses I have received. I certainly would not want to be living in one of these villages. I would not want hydrogen anywhere near my home. I will continue to advocate on that basis. I will not press my objection to this clause at this stage, but I am sure that we will return to this on Report. This is going to get—and needs—a lot more scrutiny. A lot more independence needs putting into the process, and it needs a rethink.

[Lord Callanan (Con)]

Let me just respond to the noble Baroness’s point and reiterate once again that nobody will be forced to take part in these trials. There is extensive information available. As I said, there are campaigns in some communities which want to take part in the trials. At least one MP in one of the areas is campaigning for it, and both council leaders have been contacted by officials and are supportive of it. Obviously, people want reassurance and more information; that will happen.

The noble Baroness’s other point about health and safety is crucial. I actually agree with her that, potentially, hydrogen is dangerous. Natural gas is also potentially dangerous, but we have mitigated the safety concerns of that. We will want to make sure that the HSE is involved in studies as well, and we will not do anything to put anybody at risk or do anything that will prejudice their safety. That goes without saying, and there are extensive studies taking place.

I also have some scepticism about the potential use of hydrogen for home heating, but I believe that we should do the trials to assure ourselves one way or the other where the truth lies, and whether the existing network can be repurposed easily, simply and cheaply for hydrogen. We do not actually know the answers to those questions until we do the studies, and that involves doing a trial to find that out.

With those reassurances, once again, let me reassure noble Lords that nobody will be forced to take part in these trials. Everybody will be provided with the appropriate information, and nobody will suffer any financial loss because of it, but I believe that it is worth pushing ahead with these trials.

[Baroness Worthington (CB)]

Would the Minister point to where in the Bill it states that there is a right to refusal and consumers can object? It should be stated up front in the legislation so that the regulations are clear.

[Lord Callanan (Con)]

I am giving the noble Baroness that assurance now, and it will be in the regulations. I am happy to put it in writing, if she wishes. It is not in the Bill, because that is not the place for secondary regulations. The Bill provides the principles and the powers for the Secretary of State. Of course, when we make the regulations, there will be further potential for that to be discussed both in this House and in the House of Commons, and I am sure that it will be.

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[Lord Callanan (Con)]

I know that the noble Baroness, Lady Jones, has her very passionate views, but there are lots of alternative views out there as well. We are saying that it needs to be properly looked at and studied on the basis of evidence—I know that the Greens are sometimes not big on evidence, but we believe that policy should be properly evidenced and studied. That is why we think that it is important that we should do these trials.

[Baroness Worthington (CB)]

With a Bill of this magnitude, if we are saying that it is a principle that there is a right to refuse, that principle should be in the primary legislation. That is where you put principles—and then the details can be worked out. Nothing in the Bill says that consumers have the right to refuse. I am sure that we are going to revisit this, as it is fundamentally important that principles are enshrined in primary legislation.

[Lord Lennie (Lab)]

Can I briefly support that? The place to put it is under protection of consumers in the Bill. There is a clause entitled “Regulations for protection of consumers”, and the right not to take part in the trial would be one of those protections.

Energy Bill [HL]

Baroness Worthington Excerpts

Committee stage
Monday 16th January 2023 Grand Committee

[Lord Ravensdale (CB)]

My Lords, I rise to move this amendment in place of my noble friend Lady Worthington—who has just arrived, so I will leave it there.

[Baroness Worthington (CB)]

My Lords, I must start with an apology. My train was delayed for 45 minutes and many others were cancelled, so I am just about here on time. I thank my noble friend Lord Ravensdale for stepping in just as we started.

I am delighted to be here to speak to the amendments in this group which relate to the part of the Bill that seeks to take further powers to ensure that we have fuel resilience in our country. Amendments 213 to 219 seek to extend the scope of the Government’s proposals so that we have a more inclusive definition of fuel resilience beyond oil and liquid biofuels that includes gas.

The measures in this clause are a set of broad powers to allow the Government to ensure that economic activity in the United Kingdom is not adversely affected by disruption to core fuel sector activities, reducing the risk of emergencies affecting fuel suppliers. They give powers to the Government to issue directions for the purposes of managing risk, reducing potential adverse impacts and facilitating recovery from disruptions to core fuel sector activities.

The powers given to the Government by the Bill are extremely wide and potentially concerning, but I will come on to that. In essence they allow the Secretary of State to direct any core fuel sector participant to do anything for these purposes. More reasonably, they also allow the Secretary of State to require information and that certain types of incidents be reported. Leaving aside the wide-ranging nature of the powers for now, we have tabled these amendments to inquire why the definition of fuels excludes gas from the resilience proposals. I am sure I will be told that a draft version of the Bill was shared with the BEIS Select Committee, that no reference was made to gas as a core fuel and no complaints were made at that point. However comments from the committee in November 2021 were informed by the fuel shortages of autumn 2021 and since then we have seen a sharp spike in gas prices and some constraints on the supply of gas, which were exacerbated by the invasion of Ukraine. I should note that in 2021 the UK imported around 60% of its gas for use in all sectors. Although we have North Sea gas, we are by no means self-sufficient, so interruptions to fuel supplies raise problems. Gas is the sector where we remain very exposed—but that is certainly not true of biofuels. If we compare the two, the volumes are completely different and it seems odd to include biofuels but exclude gas.

Helen Thomas wrote last week in the Financial Times:

“The Rough offshore gas storage facility, partially reopened … by Centrica”


last year after having been closed for five years,

“has been steadily withdrawing gas … At about 54 per cent full … it is far from the 80 per cent-plus levels on the continent. And European storage capacity … is about 25 per cent of annual consumption compared with less than 1 per cent for the UK”.

That is equivalent to only three days, so we can see how tight some of these margins might be if there are disruptions. That could have left the country very short, especially had this winter’s weather been harsher than it has been.

Rough is not being refilled because the facility is being operated on a merchant basis rather than the strategic one which the Government might perhaps prefer. Whereas Governments in Europe can mandate storage, here, we are relying on Centrica to find a place where future prices make sense to it commercially to take storage into Rough, and it is of course looking for a decent return rather than strategic fuel resilience. The journalist added that no one thinks that storage operated on this basis will provide security of supply, and I tend to agree. I would be interested in the Minister’s thoughts on this question and on what more the Government could and should be doing to include gas in their fuel resilience strategy and indeed in this legislation.

It seems sensible that we would want the same powers, should we need them, to issue directions and to require reporting of incidents and the provision of information. Had we experienced a more severe winter, we could have come seriously unstuck, and I would like to understand how the Government would have intervened to ensure that critical businesses and households were prioritised. That is obviously an issue of some concern to the Government, given that these powers are being taken. Do the Government already have the necessary powers? If so, where are they and how would they work? I would be interested to hear more about that.

I have tabled Amendments 220 and 221 because I am seeking clarification and expressing concern about the wide-ranging nature of the types of financial assistance the Bill will allow. Certain types may be required, but why does the Secretary of State need powers to make grants, effectively, to firms involved in refining, transporting and storing fuels that are commercially very lucrative? We have all seen the headlines about how much money these companies are making, and it seems odd to take such a broad power, which could mean that public money was being spent with no requirement to pay it back to the public purse. It seems unnecessarily broad, providing the equivalent of a grant, and I would like to understand the justification for it. When looking ahead to the transition to net zero, we have described how we need to provide more public money, but it is right to say that investors in the current fossil-fuel-based energy system should have enough resources to ensure that they can meet regulations set by government without the need for further public money. That is a point that needs answering.

This is also arguably a sector that we would expect to go into managed decline as we look to electrify most of the demand being met by the current provision of these fuels, so it may be appropriate for assistance to be given. Transition loans, guarantees or even the Government taking a stake could be required to make the transition happen swiftly and in an orderly fashion, but simply giving out public money with no strings attached seems rather reckless. I would like to understand the specific circumstances and conditions under which a grant would be appropriate. If that cannot be dealt with in detail here, I would be happy to receive a letter outlining a case study that could justify this use of public money, given the economic climate we find ourselves in.

Finally, Amendment 222 is a modest proposal relating to the reporting of such financial assistance to Parliament. I could not see any reference in the Bill to the notification of Parliament in relation to these financial forms of assistance—only in relation to the scrutiny of statutory instruments or guidance. Is it really the Minister’s intention that this assistance would not be made public until BEIS’s accounts are published, which would obviously be after the horse has bolted and we would have to comb through the footnotes to understand what forms of financial assistance had been given under Clause 222? I feel quite strongly that, if it is important enough to have its own separate regime, it should be important enough to brief Parliament and there should be a protocol for notifying us of the intention to use these powers.

I have drafted an amendment that I hope the Minister will accept. If not, I look forward to assurances from the Dispatch Box about how and when Parliament will be notified before the expenditure is committed. With those remarks, I beg to move.

[Lord Lennie (Lab)]

My Lords, we on these Benches are generally supportive of the amendments in the name of the noble Baroness, Lady Worthington, but I would like to ask the Minister about some specifics.

Three key powers are taken under the Bill: the direction-making power, the information power and the financial assistance power. I am particularly interested in the information power. The government fact sheet states:

“The information required from industry will be limited to what is necessary and Government will work with industry to minimise any administrative burden incurred.”


What practical protections will be in place to ensure that this information is limited in this way, and what, in practice, is meant by:

“Government will work with industry to minimise any administrative burden incurred”?

I would welcome a response to those questions. If the Minister cannot answer today, writing will do.

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Given what I have set out I ask the noble Baroness not to press these amendments.

[Baroness Worthington (CB)]

I thank the noble Baroness for her response. I will indeed study her reply in detail; I am grateful for the information provided.

In the recently published net-zero review by Chris Skidmore, there was a statement that we would review the regulatory regime to make sure that it is fit for a net-zero transition. I wonder if some of the points made about how we traditionally define core fuels need perhaps to be thought about in the light of the transition that we are about to go through. It is clear that rising electrification and reducing demand for chemical fuels could cause unexpected consequences and shortages in the future. In fact, if we had had a different set of circumstances this winter, with less wind, more cold snaps and greater demand for gas across the continent—where it has been unusually warm—we could have found ourselves in a situation where we may well have had a very efficient gas transportation network owned by National Grid, but would have been reliant on access to a sufficient source of fuel to be transported through the network.

That is where storage comes in, which is why the focus has been on that rough storage site and what would now appear to be the rather reckless commercial decision not to keep that as part of our infrastructure. That is what I am trying to get at: are we seeing resilience as a holistic system-wide measure? It is clear that these things all interrelate. We cannot take the traditional view that there is a downstream fuel sector that relates just to oil and transportation needs and not consider chemical fuels being used for other vital sources of security and health—heating our homes, keeping ourselves safe and well through the winter months and other needs throughout the year.

I thank the noble Baroness for her response, but I would like to reconsider. Of course, at this stage I will not press those amendments.

On the question of public money, I am somewhat reassured that there “may” be a requirement to make it public that this sort of assistance is being granted, through transparency rules. I will look at them to interpret that “may”, because it is a rather weak word. It would be good if it was a requirement. These are potentially untrivial amounts of money going to a sector which, as has been described, is not short of resources to meet its needs. We need to be very careful in taking these broad powers.

If anything, the noble Baroness has worried me slightly further in saying that this is a non-exhaustive list and that it could happen anyway without these powers. I will give that further consideration and definitely look at the examples of housing and regeneration, but we are talking about a unique sector that is tied to our health, prosperity and security. We need to take a systems approach to resilience—the interconnectedness between all the different fuels and the electricity that will be a growing part of our energy system as it replaces these fuels over time. With thanks again for the response of the noble Baroness, I beg leave to withdraw the amendment.

Amendment 213 withdrawn.

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[Baroness Young of Old Scone (Lab)]

My Lords, I shall speak to the government amendments, the accompanying policy statement and Amendment 242D in the name of the noble Baroness, Lady McIntosh.

There is absolutely a need for a real balance when it comes to the speed of getting both onshore and offshore wind online. There is no point in reaching net zero if behind us is the other threat that the ecosystems on which we all depend have started to collapse. The Environmental Audit Committee in the other place has already said that the planned fourteenfold increase in offshore energy production risks sensitive marine and onshore environments, so we really have to look carefully at how we get the balance between the two drivers. I share the view already put that some of the safeguards in the policy statement need to be toughened up and put in primary legislation, in a Bill.

The amendments give Ministers pretty broad powers. Although I am sure this Minister is wholly trustworthy, Ministers come and go. In common with the noble Baroness, I ask the Minister to support some strengthening of his amendments. First, there should be the clear presumption against development in protected areas, particularly marine protected areas, by avoiding those at all costs for renewable energy developments, rather than relying on shutting the stable door after the horse has gone by providing compensation. The mitigation hierarchy that the noble Baroness, Lady McIntosh, outlined is fundamental to that. Its principles are, first, avoid; if you cannot avoid, then reduce and mitigate impact; and then, only as a very last resort, compensate. That needs to be enshrined in law, and I look forward to the Minister’s response on where the mitigation hierarchy is in legal terms.

There is a message that the Government need to give to developers of offshore and onshore wind and associated infrastructure: that, to be honest, avoiding protected areas, particularly MPAs, means avoiding hassle. If it looks too easy to focus on protected areas as part of the area available without too much hassle because that is all downstream, developers will not make the effort.

The second issue is compensation and making sure that it does not damage the coherence of the marine protected area network. There is an Environment Act target to have 70% of MPAs in a favourable condition by 2042; they will not be in a favourable condition if they have wind farms on them. We need a joining up of government, so that the left hand and the right hand are aware of what each is doing. Distressingly, we see that not happening from time to time in the relationship between BEIS, DLUHC and Defra. Perhaps we can urge the Minister to get the rest of government to walk, talk and chew gum at the same time. We need to make sure that there is a process for measuring the intentions of the compensation, reviewing that periodically and, if it is not working, doing something different.

The third thing that needs to be toughened is the clause—of which I am deeply suspicious—that makes it possible for Ministers to override the protections of the habitats regulations and the Marine and Coastal Access Act. I understand that the Minister will say that the imperative reason of the overriding public interest test will be used and compensation will be available, but that is no substitute for the statutory protections that have revolutionised biodiversity and ecosystem protection over the last 30 years. It would be greatly detrimental and, in my view, the thin edge of the wedge if we saw that diminution happening. We are going to have this argument in bucketloads on the retained EU legislation Bill. The reality is that these pieces of legislation have proved very effective and anything that undermines them would be a backward step. As I have said before, policy statements and ministerial commitments come and go.

Can the Minister tell us how his amendments can be strengthened to give statutory assurances that there will be no weakening of protection for designated marine sites? There is a lot of space and a lot of wind out there at sea; putting wind power sites in areas not long designated for protection—it is comparatively recently that all these marine protected areas have been declared—is not something we should see going forward. Can the Minister assure us that he will consider these concerns and come back with a way forward before Report?

[Baroness Worthington (CB)]

My Lords, I congratulate the Government on bringing forward these amendments to help us to reduce the delays that are often commonplace when it comes to investment in our offshore wind industry, which has been one of the crown jewels of the UK’s energy transition. We can all look back and say that it was a wise group of civil servants and Ministers who understood the sheer potential of that transition to a wind-based economy in the North Sea. Many of the jobs that have shifted from our offshore oil and gas sector in maintaining the oil rigs are now being deployed in the maintenance of this very important part of our new and clean energy system.

It is very rare that I deviate from the noble Baroness, Lady Young, in my belief in preserving the wildlife, countryside and marine environment that we all enjoy—indeed, I started my career in conservation and it is a very deeply felt passion of mine. I therefore have sympathy for the amendment from the noble Baroness, Lady McIntosh of Pickering, but—and this may seem a little heretical, I am afraid—I feel that we must take a systematic and holistic view of this. If we are going to start enshrining mitigation hierarchies in legislation, the very first place that we should apply those is to the fossil fuel industry, which this Bill largely concerns itself with. It would be disproportionate to introduce this merely for offshore wind in this part of the Bill. We should be seeking to avoid and mitigate before we compensate—certainly before we give money out to the oil and gas industry for fuel security reasons. It would be disproportionate to simply apply it to the offshore wind industry which, let us be honest, is part of the solution.

If we care about the marine environment and marine mammals specifically, the damage being wrought on those species and habitats from the existing fossil-fuel-based energy system should be first and foremost in our minds. We have no real evidence for why cetaceans are beaching. The noble Baroness, Lady McIntosh of Pickering, infers that it could be because of wind farms. We do not have evidence of that; what we have evidence of is the build-up of toxic chemicals in these mammals.

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[Baroness Young of Old Scone (Lab)]

I just want to address the Minister on what the noble Baroness has just said. She has made an admirable case for marine protected areas being protected from all sorts of things. The opportunity in front of us is to do that job as the legislation is going through on offshore wind. I absolutely make the case that saying, “Let me be good, but not yet” is not in the interests of marine conservation and some of the hugely important ecosystems that are under threat from all sorts of other things. If we wait for all of them to be addressed before addressing offshore wind, we will wait for ever, and they will be gone.

[Baroness Worthington (CB)]

Since we are having this conversation, it is not a question of putting off these measures but of proportionality and ranking those impacts according to the scale on which they are occurring today, taking into account the positive impacts of offshore wind on no-take zones and the artificial reefs they create, as well as the advances in technology that mean that floating platforms will be more common.

Then there is subsea cabling. The noble Baroness, Lady McIntosh, did not pick up on the fact that the 30% loss she cited is very old data. We do not see those losses now, with modern technology. Subsea cabling will be the future of connections into existing places where there are already reinforced grids, thanks to the closing down of thermal plants. I do not see that we should be unduly raising issues and putting more and more barriers in the way of clean technologies delivering great reductions in emissions, as well as providing energy security and jobs. I support the Government’s amendments and I am sorry that I cannot be more supportive of the amendment proposed by the noble Baroness, Lady McIntosh of Pickering.

[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—

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[Lord Callanan (Con)]

Yes, of course, mitigation avoidance will always come first. It is only as a last resort, if it cannot be avoided or mitigated, that compensation will be looked at as an alternative—only at the very last stage.

[Baroness Worthington (CB)]

Has the Minister considered whether, if the development is actually increasing biodiversity because of the no-take effect, it should get credits, and maybe money back?

[Lord Callanan (Con)]

That is a very interesting point from the noble Baroness, which we will take into account.

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[Lord Lilley (Con)]

I have not read the report, but I will read it. I have read similar reports, and almost all rely on the statistical phenomenon that random events are as likely to be bunched together as they are to be evenly spread; I say that as someone who studied statistics. This results in bunches of things; for example, you will get bunches certain cancers somewhere near Windscale, as it used to be called, yet there are bunches elsewhere not near Windscale but people do not worry about them. I very much doubt that there is any scientific basis—and indeed the authors of the article could not think of any scientific basis—as to why we should relate one thing to another in that case. It is the sort of thing that the anti-vaxxers say when they find a little concern. Obviously we should always be concerned about issues such as vaccination or drilling under pressure, but we should not exploit people’s fears to stop something we do not like for other reasons. I hope that my amendment will be adopted and that it will mean that we actually regulate the shale gas industry on exactly the same basis as we do all other industries which can produce similar environmental impacts.

[Baroness Worthington (CB)]

My Lords, I hesitate to speak on this fascinating group of amendments, because we have had a rather long debate already. However, as it is such an important aspect of energy policy, I hope that the Grand Committee will bear with me as I comment on the group of amendments. If I had more time and had not been overseas recently, I would have added my name to Amendment 222A tabled by the noble Baroness, Lady Sheehan, as it is absolutely critical that we have transparency.

Over a series of years, finance measures have allowed us to walk into quite a huge liability on the public purse in relation to decommissioning the oil and gas facilities that are already there. That should not be ignored; it could be huge and very significant, especially as the nature of the investment in the North Sea shifts away from the majors into much smaller, less stable and less financially competent entities. I fully support the amendment and look forward to hearing from the Minister in detail in his response, because it is very well drafted and concerns an absolutely critical issue.

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[Lord Lilley (Con)]

Will the noble Baroness give way?

[Baroness Worthington (CB)]

I will continue if I may, and perhaps the noble Lord will come back to me on all the reasons. Another reason is that there is a moral dimension to climate change. We should never forget that. It is not about number crunching and bean counting of carbon in one country or another. This is a common-action problem. The whole world needs to move. Arguably, we have had the greatest number of years of unfettered exploitation of fossil fuels of any country on the planet. Therefore, it is high time that we signalled an end to that, to allow those countries that have not had that possibility to potentially increase their revenues from their resources while we signal the direction for the whole planet. That moral leadership is what led to net zero and it is what will lead to us acting on the supply side, because we must do both. We cannot effectively do this by cutting with one side of a pair of scissors. We need to cut with both. It seems ludicrous that the only body in the world that discusses supply-side constraints is OPEC. We are a nation state and we should, as a group of countries, come together to negotiate a much more considered and appropriate mechanism for looking at the supply side.

Finally, there is an absolute imbalance of power in those incumbents currently involved in the extraction of fossil fuels. They do not sit by passively, waiting for demand to be destroyed. I can tell the Committee as a matter of fact that money is being put into disinformation and misinformation campaigns to slow down the demand reduction that we want sped up. I do not disagree that demand is a very good way of doing this, but it is not the only way. We must be clear-sighted and honest with ourselves when we look at this problem from the perspective of a single-member state. What influence can we have on the world? Standing up to these giant companies with huge budgets, massive legal teams and huge sophisticated communication exercises is not easy. If we in the UK took this on, we would have to do so in an international context.

Therefore, I am not putting my name to these amendments. They are not appropriate without that commitment to act on an international basis. Here I am echoing some of the comments made about the non-proliferation treaty. Something must happen on the supply side within the auspices of an international agreement. We can then have an orderly transition in which everyone understands what we are allowed to do and what we are not. The current situation, where coal mines can be approved in the UK in the 21st century—sending people underground to dig out coal that no one wants with high sulphur content—is ludicrous. We as a country should lead on this. We should introduce appropriate policy at this stage, not legislation, which leads us to an international agreement.

I am sorry that I have spoken at length, but I feel strongly that we should take this on as a nation, particularly for that moral reason.

[Lord Lilley (Con)]

I was touched by the concern expressed by the noble Baroness for giving people in the fossil fuel industry certainty about the future. I used to be an analyst in the City, analysing energy and trying to forecast. It was very uncertain. The oil, gas, coal and electricity companies all found it very difficult to forecast. It is now somewhat easier because we have spelled out a path to net zero. They know that there will be a decline. They may think that perhaps it will not as much as that, or a bit more, but they have a better trajectory than ever before. In any case, why is she so worried about people in the fossil fuel industry having certainty, which no one else has? Also, she said that it is a moral issue—that it is about signalling something. In other words, it is virtue signalling.

[Baroness Worthington (CB)]

I dispute that point completely. It is not about virtue-signalling; it is about moral leadership. There is a difference. When the UK stood up and passed legislation on climate change, and took those measures to pass net zero, the rest of the world took notice. We can do the same on this issue, and we will need to. It does not have certainty because it depends on who you talk to in the City. At the moment, many people in the City are saying, “Woohoo!” Everybody is piling on to fossil fuels, with record high profits and huge amounts of money to be made in the short term. That short-termism is going to send us as a society collectively off a cliff. We do not want to see that. What happens in that uncertainty is speculation. A huge amount of trading that goes on with these commodities creates a bubble that all of us then pay for. I do not want to see any more of that; I want it to become a regulated industry that is declining according to an agreed strategy. Otherwise, I have no doubt that they will push us off a cliff; arguably, they already have.

I turn to other amendments in this group. I do not want to get into a debate about fracking but, for the record, I remember being on the Front Bench when we debated fracking regulations in our debates on the energy Bill that introduced them. Why did the industry not spot this at the time? Perhaps it was a clever move by the Lib Dems that it did not spot, although I would find that surprising. There is a host of regulations that have been passed on this issue. I am not averse to us looking at these seismic limits again because nobody wants to hold the Bill back on that basis. However, my contention is that the time has passed and it will be too slow to make a significant contribution to our domestic gas supply. We would be far better off electrifying everything and reducing primary energy demand by at least a third in that process.

That brings me on to Amendment 224, tabled by the noble Lord, Lord Moylan. Surprisingly, I quite like this amendment because it would force us to think about how we could reduce our domestic reliance on gas. Within that timeframe, no fracking is coming online, I am afraid, so the only option left is massively reducing our dependence on gas. That means electrification, not just because it is abundant, clean and cheap but because it is much more efficient. It is an energy-efficiency measure to electrify, taking down primary consumption. I feel confident that, if we were to produce a strategy, we would see a huge amount of electrification being brought on. That may well be what we should be doing; in fact, Amendment 242, which we debated previously, would have asked the Government to do just that. Perhaps there is something here to come back to on Report.

I turn to Amendment 227A; it was not debated but I am sure that we will come on to it. I just want to say that I lend my support to that renaming.

On Amendment 227AA in the name of the noble Baroness, Lady Sheehan, flaring is absolutely ludicrous in the sense that we should not be allowing this resource to be burned without it being captured and brought to market. However, there is something worse than flaring: venting. I want to hear some reassurance on the banning of flaring—it has been banned at times, specifically for wildlife protection reasons as I remember it—because it can lead to venting. That means allowing methane to be released into the atmosphere, which would be far more damaging and much harder to track. I would not want to see this amendment agreed to unless that issue was addressed.

We have had a debate about coal. If we are looking at this Bill holistically—I offer the Minister this thought for free—there is a way through the apparent contradiction around allowing us to exploit in environmentally sensitive ways the continued use of our own fossil resources where that will avoid us bringing in more polluting sources from America, which I think is the case at the moment. What about a climate recovery fund? We have just created a marine recovery fund for the almost non-existent damage that the offshore wind industry creates. What about a climate recovery fund for the very real damage that the continued extraction and burning of fossil fuels causes? Why do we not innovate around that policy? It would be easy to implement it. It could become a condition of all future licensing of fossil fuels in this country. We could work out the price we think should be paid and give the industry an incentive to make CCS work. That is something the Government could look at; I would be happy to meet the Minister to discuss it but I have only just thought of it.

[Baroness McIntosh of Pickering (Con)]

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

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

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

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

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

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

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

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The other bizarre claim to fame is that this would be the first carbon-neutral coal mine in the world. I am sorry but, when you have no control over how the coal produced by it will be used in the end, I am not sure how those, frankly, ludicrous claims could be—

[Baroness Worthington (CB)]

I wanted to say something in my speech, but it went on too long. There is this question of carbon neutrality of fossil fuel extraction, and two things are really important here. First, you have to take into account the embedded carbon within the product, which, it has to be assumed, will be released into the atmosphere, with an almost guaranteed impact now because the concentrations are so high that every additional tonne, which will be there for 1,000 years, will have a certain impact. Attribution science is getting ever better; you can now attach a cost to allowing that to happen, so we should do that.

Secondly, any neutrality that is sought on the back of something that is storing carbon in the biosphere is in no way equivalent to that extraction of something from the lithosphere and allowing it into the atmosphere. I feel very strongly that any claims around carbon neutrality of fossil fuel extraction need to be regulated: we need government standards that state what is and is not allowable. That is not to say that it cannot be done—it can be—but it is the equivalence of impact and the certainty of it that must be matched in any off-set, and it will not be achieved by planting trees or, even worse, saying that you will protect some trees that may or may not be cut down. That is the key to this. You could come up with a climate checkpoint that allows a limited amount of continued licensing, but it has to be done in mindfulness of the full effect of that on the climate.

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[Lord Bruce of Bennachie (LD)]

My Lords, I am grateful to the Minister for that response. As I said, I accept that the Government have been doing quite a lot, but I still believe they can do an awful lot more. I hope that those initiatives yield results.

On the noble Baroness’s intervention, I do not think it is a question of people not knowing how to install heat pumps; it is about people having expectations of heat pumps that do not suit every property. I speak from my own personal concerns. I have a house built in 1910; it is not the most efficient house. I inquired about a heat pump, and was told that if I was lucky I would get an ambient temperature of about 14 degrees, which would cost me about £10,000. I could get the ambient temperature up to 18 or 19 degrees as long as I spent £120,000 on increasing the insulation in the house. But other houses could be upgraded much more cheaply, so I suggest that they should be prioritised.

I am sorry, but I do not think the Scottish Greens are realistic about what they think can be achieved between now and 2025. In places such as Aberdeenshire and the Highlands, they will find a kickback when people are told that they cannot have an oil-fired boiler, there is no gas and we do not have a viable alternative for their property—yet.

[Baroness Worthington (CB)]

I am sorry; I was saying to myself that I would not do this, but I point out that when it comes to energy efficiency, electrification, which is a tried-and-tested way of providing heating to homes, is a fundamentally more efficient way of getting energy. The total primary energy demand of the UK could go down by one-third if we were to electrify our heating and transport, because of the lack of efficiency of anything that is combusted. The combustion inefficiency of engines and boilers cannot be fixed. Electricity is the best vector.

Energy Bill [HL]

Baroness Worthington Excerpts

Report stage
Tuesday 28th March 2023 Lords Chamber

[Lord Ravensdale (CB)]

My Lords, I shall speak to Amendment 58, to which I have added my name. First, I thank the Minister for his constructive approach, and for listening to my amendments in Committee and responding by introducing this amendment, which addresses all of the points in my Committee amendments. I am most grateful. I must also thank his officials for the work that they have put into drafting and finding an acceptable way forward, and for engaging with me throughout the process. I also thank the noble Baroness, Lady Worthington for her support throughout.

I break down the benefits of this amendment into three broad areas. First, it continues the work that the Government are doing to create a level playing field for low-carbon technologies. We heard the welcome news in the recent Budget Statement that nuclear will be considered as environmentally sustainable, or taxonomy aligned, under the UK green taxonomy. In a similar vein, the renewable transport fuels obligation amendment will allow nuclear to benefit from a subsidy scheme that is already available to renewable operators. This sends a clear message to investors that the Government sit squarely behind nuclear as an environmentally sustainable energy source. It also brings out the important principle of technological independence—to let the market do its job to find the most efficient solutions, but also because for net zero we need to throw the kitchen sink at the problem, if we are going to achieve it.

Secondly, the amendment directly enables a whole range of near-term projects that will help to kick-start the green hydrogen and recycled carbon fuel industries within the UK. With recycled carbon fuels, there are a number of industrial projects being scoped that will be enabled by this amendment—for example, Project Dragon, to use industrial waste gases from Port Talbot to produce ethanol from which recycled carbon fuels, including sustainable aviation fuels, can be derived. By setting strict rules for how to account for emissions, savings of around 70% can be generated when compared with the baseline of using fossil fuels. Those projects, enabled by this amendment, will be an important enabler for decarbonising transport fuels and moving towards a circular economy, saving significant amounts of greenhouse gas emissions in future.

For nuclear, there are near-term plans to produce hydrogen from Sizewell B for use in Sizewell C construction, and also in other nuclear projects, including SMRs and AMRs. Particular economic benefits may be gained through using nuclear power to produce hydrogen—for example, high temperature electrolysis, using heat from the nuclear reaction to produce hydrogen much more efficiently than cold electrolysis. Further down the line, using the heat from high temperature reactors to produce hydrogen directly through the sulfur-iodine cycle has the potential to increase efficiency further beyond traditional electrolysis techniques. If the Government are to meet their ambitious hydrogen production targets, nuclear needs to be part of the picture, which will be enabled by this amendment and help kick- start green, or pink, hydrogen production—I sometimes lose track of the colours—in the UK.

Thirdly, the amendment enables these fuel sources to be eligible for the sustainable aviation fuels, or SAF, mandate. Both recycled carbon fuels and nuclear will have a key role to play here. RCF has the potential to produce large volumes of SAF in the near term; in the longer term, the combination of direct air capture and hydrogen production from nuclear could allow power-to-liquid sustainable aviation fuel to be produced economically.

As I said, I am very grateful to the Minister and his officials for working together to make this important change to the Bill.

[Baroness Worthington (CB)]

I shall speak briefly to Amendment 58, which the noble Lord, Lord Ravensdale, has so eloquently spoken to. I definitely support the nuclear element of this amendment, and I am grateful to the noble Lord for bringing this to our attention, as well as to the Minister for taking it on proactively. However, I have a question around the inclusion of fossil-derived sources of energy in this approach. I am not one to rule things out, and I think that we need to use all the tools available to us, but there is a material difference when you are using a fuel derived from fossil fuels, in that once it is combusted the CO₂—the greenhouse gases—will be readmitted to the atmosphere. Can the Minister say a bit more about how something derived from nuclear electricity, which is intrinsically clean, to create a fuel, is different from the waste derived from a fossil source of energy? I just want clarification on that point.

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[Baroness Liddell of Coatdyke (Lab)]

My Lords, I will speak to Amendment 17. I will not take up much of the House’s time, because this is just about consistency.

The Government have defined a UK low-carbon hydrogen standard, which was updated in July this year, and it includes guidance and a calculator tool for hydrogen producers to use for greenhouse gas emissions reporting and sustainability criteria. It has been designed to demonstrate that low-carbon hydrogen production methods can meet a greenhouse gas emissions test and threshold, and this amendment would require the regulations to have regard to that standard when assessing the eligibility of low-carbon hydrogen production. Using the low-carbon hydrogen standard will ensure that there is consistency for the industry and its users, and will provide them with the degree of certainty that they are looking for when developing their projects.

[Baroness Worthington (CB)]

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

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

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

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

[Baroness Blake of Leeds (Lab)]

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

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

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

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Moved by

[Baroness Worthington]

40: After Clause 98, insert the following new Clause—
“Chapter 4ACarbon take back obligationClimate policy for fossil fuel extraction(1) No licence for exploration or extraction of oil, gas, coal or peat (“fossil fuels”) may be granted unless the condition in subsection (2) is met.(2) The condition is that the licensee must agree to produce certification to the economic regulator that the percentage of carbon dioxide which would be emitted when the fossil fuels are extracted and completely oxidised set out in subsection (4) has in each year of operation been captured and disposed of by way of permanent geological storage.(3) The carbon dioxide captured and disposed of under subsection (2) must be either—(a) carbon dioxide removed from the atmosphere, or(b) carbon dioxide that otherwise would have been emitted to the atmosphere under normal business practice.(4) The percentage referred to in subsection (2) is—(a) for years starting from 2025 and ending in 2034, prescribed in regulations;(b) 100 per cent for subsequent years.(5) Where the condition in subsection (2) is not met, the licensee must pay a penalty of £200 per tonne of the carbon dioxide which is not captured.(6) In relation to existing licences for extraction of fossil fuels, no new fossil fuels may be extracted from 2045 without certified evidence that 100 per cent of carbon dioxide emissions which would be emitted when the extracted fossil fuels are extracted and completely combusted are captured and disposed of by way of permanent geological storage.(7) In this section—“emissions” has the meaning set out in section 97 of the Climate Change Act 2008;“permanent geological storage” means storage of carbon dioxide in geological and chemical formations with a view to the permanent containment of carbon dioxide.”Member's explanatory statement
This amendment sets an escalating proportion of carbon dioxide for new fossil fuel extraction licences which must be permanently geologically stored, whilst setting a 2045 requirement for 100% geological storage in relation to existing fossil fuel extraction licences.

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[Baroness Worthington (CB)]

My Lords, Amendment 40 relates to the carbon take-back obligation. We had an excellent debate towards the end of Committee about the question of what government policy is on the supply side of the equation of tackling climate change and environmental impact. On one hand, we had a group of Peers who were talking about the need to increase our extraction of fossil fuels and to move into fracking and other types of exotic extraction. On the other hand, we had an amendment which said, “Absolutely no more—turn off the licensing completely”.

It struck me that there needs to be a path through those two positions. We need to start making this industry responsible for the impact of its product. When we look back, we will wonder how we allowed ourselves to carry on extracting fossil fuels in an unlimited way and putting them into the market without the Government having a policy on that aspect of the problem.

This amendment is designed to introduce a policy that would make the extractors of fossil fuels—the oil, gas and coal producers—responsible for the greenhouse gas impact of their product. A requirement to bury back the greenhouse gases arising from those products would be phased in over time. If the industry cannot find sufficient carbon capture and storage opportunities to permanently store those greenhouse gases, it should be paying a buyout price of £200 per tonne of CO₂, representing what is expected to be the social impact price of carrying on this unlimited extraction.

Should the UK be seeking to do this in what is essentially a global market? The international dimensions are at the core of why we need to do it. At the moment, as individual countries and companies, we all tell ourselves that it is important to extract every last gram, ounce or therm of gas, oil and coal out of our economy because others are going to have not to use theirs. Everyone is incentivised to think that they will be the one burning the last therm and the last tonne. Continuing with that approach is a collective international suicide pact. If every country carries on extracting to the very last atom of carbon left in our oil and gas fields, we will go well beyond 1.5 or 2 degrees. In doing so, we will remain hooked on this commodity. It will remain cheap, affordable and available. We will not make the break from fossil fuels that we know we need to in order to address not just climate change but the security, resilience and efficiency of our energy systems.

It is important that we start the debate about government policy on the continued extraction of fossil fuels in this way. At the moment there is no policy. That is why it falls to the planning inspectors to decide whether we should have a new coal mine and to other regulators to keep exploiting the economic value of the North Sea for oil and gas without reference to its future unsustainability. It is not sustainable now. We need to signal a move and acknowledge that this industry needs to adapt. If it wants to pursue carbon capture and storage, let us oblige it to do so.

I am perfectly happy with the Government supporting the first carbon capture and storage projects to get them started and for cost discovery, but there should not be a continued subsidy of that solution. We should oblige the industry to do it. In making it responsible for the impact of its products, it will discover whether it is cost effective, whether it can be done cheaply and whether carbon capture and storage is real. Let us allow industry to discover that. If we give it the obligation, everyone will move forward together on an equal playing field. We could take the responsibility away from the taxpayer and the bill payer and give it to the industry. Quite frankly, at the moment it has more than enough resources and profits to be able to invest in that and to find the least-cost solutions.

Admittedly, Amendment 40 is a big thing to introduce on Report. I am simply seeking to start a debate about this. I hope that I receive some support and that it will be considered in the other place. I look forward to the Minister’s comments. I beg to move.

[Baroness Sheehan (LD)]

My Lords, I have added my name to Amendment 40 tabled by the noble Baroness, Lady Worthington—I hope I can refer to her as my noble friend. I have done so in solidarity with her and in acknowledgement of her dexterity and expertise in handling the excesses of the oil and gas sector, rather than from a steadfast conviction that the carbon take-back scheme is the deterrent needed to curtail the enthusiasm of the financial markets in their continuing and increasing support for the sector.

I want to find out more about the scheme and to raise some questions posed by it. I get that this novel scheme is cleverly devised, accounting for not just the carbon neutrality of the production of fossil fuels but their deployment, subsequent combustion and release into the atmosphere as greenhouse gases. I support that, but I also have concerns.

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[Lord Callanan (Con)]

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

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

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

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

[Baroness Worthington (CB)]

My Lords, I am grateful to noble Lords who have spoken in this debate, to the noble Baroness, Lady Sheehan, for adding her name, to the noble Baroness, Lady Blake, for her support, and to the Minister for his comments. This is indeed my last outing before I depart after recess. I want to say thank you to everyone who has made me feel so welcome in the 12 years I have been here on and off, intermittently, on different Benches. It has been a privilege and I will genuinely miss it. When things are coming to an end, often you value them even more. Hopefully, I will be back—in the words of Arnold Schwarzenegger.

On the amendment, I am encouraged that this idea is being picked up by the CCUS Council. It seems that it will be difficult for the oil, gas and coal sector to come forward with this as a united voice, but it would definitely be good for it. It would give it clarity and certainty and enable it to take back control of its choices of projects or investments. It would be able to do it from the private sector, knowing that it is obliged to do it, and it would create a market mechanism through which it could operate, which I believe would reduce costs overall to the consumer and to industrial customers. Industry is very good at finding solutions: give it an obligation, get the engineers on it and it will find solutions. It will determine whether the price will come down or whether indeed it will be better for it to pivot fully into a cleaner system based on electricity and clean electricity rather than continuing to take things out of the ground and burn them.

I have some sympathy with the belief that it is probably high time we stopped burning things and moved on, especially as we—Great Britain, the United Kingdom—have grown rich on the back of the industrial revolution that seems to be dragging on. However, we now know that there are alternatives. There is a cleaner, cheaper, more efficient system available to us using electricity wherever it is possible, and where it cannot be used, deriving clean fuels from that electricity. That is the future. The chemical industry and the chemical-based energy system will decline because it will not be able to compete with that manufactured clean alternative. We have to manage that decline and it is incumbent on Governments to help manage it fairly and transition us out of it. This sort of policy would do that, and the industry should embrace it. I hope that the other place will debate it and that a campaign will emerge around it. I look forward to watching that from sunny California, and I wish your Lordships all the best of luck with the end of the Bill. Thank you. I beg leave to withdraw my amendment.

Amendment 40 withdrawn.

Energy Bill [HL]

Baroness Worthington Excerpts

Report stage
Tuesday 28th March 2023 Lords Chamber

[Baroness Sheehan (LD)]

My Lords, I realise that I am a little late arriving for this debate. Having been here from the start of this afternoon’s proceedings, I hope that the House will allow me to make my contribution.

I will speak to Amendments 53, 54 and 57, in the name of my noble friend Lord Teverson. I support Amendment 56 in the names of the noble Lord, Lord Lennie, and the noble Baroness, Lady Blake. I will not bore your Lordships’ House with the details of why my name appears on Amendment 56 in the Marshalled List with a line through it. Suffice it to say, I support the measures in it.

However, I support even more strongly Amendments 53, 54 and 57, which aim to get rid of the hydrogen trials altogether. Although hydrogen has a role in decarbonising our future in many sensible ways, domestic heating is categorically not one of them. I would recommend anyone who is not convinced by that statement to look at the work of the Hydrogen Science Coalition, a group of independent academics, scientists and engineers who give their time voluntarily and have no public or private vested interests. Its briefing is very clear on how it arrives at its conclusion that there is overwhelming evidence against the use of hydrogen for heating homes in the UK and in favour of using heat pumps and district heating networks. Equally, it makes a well-argued case against the provisions of Clause 111 that compel consumers to take part in hydrogen heating trials, not least because the introduction of hydrogen into UK homes will significantly increase the risk of serious explosions and fires, as well as increasing exposure to NOx emissions, which pose a significant public health risk.

To back up its own analysis, it cites the overwhelming techno-economic evidence against the use of hydrogen for heating buildings compared with other sources. There have been 37 independent studies on the use of hydrogen for heating since 2019, by organisations such as the IPCC, the IEA, McKinsey, Imperial College London, the Potsdam Institute, the University of Manchester, the Wuppertal Institute, Element Energy, the International Council on Clean Transportation, the Energy Transitions Commission, et cetera. Every one of these studies has ruled out hydrogen playing a major role in heating buildings because it will be too expensive and inefficient compared to other clean alternatives such as heat pumps and district heating. Too expensive is putting it mildly; it will be six times more expensive than going down the heating networks route.

Chris Skidmore, chair of the net zero review, said in a recent article in the Times that he

“did not think the UK should embrace the idea of repurposing gas networks to run hydrogen boilers, a proposal that is being trialled at a pilot project at homes in Ellesmere Port in Cheshire.”

The House of Lords Environment and Climate Change Committee recently said that hydrogen is

“not a realistic replacement for natural gas”

and is “not a serious option” for heating. A House of Commons Science and Technology Committee report in December 2022 said that hydrogen is likely to play only a limited role in home heating and is not a panacea. Lastly, in a report in January 2022, the International Renewable Energy Agency—IRENA—said that residential heating is the lowest-priority application for hydrogen

“because heat pump solutions and district heating options already exist.”

I apologise for labouring the point but it is important for the people in the trial villages of Ellesmere Port and Teesside. The provisions of the Energy Bill that give gas companies a new power of entry into homes to cut residents off the gas network without their consent are particularly worrying. The bottom line is that the Bill should not be promoting hydrogen heating trials that expose consumers to health and safety risks and excessively high energy costs.

[Baroness Worthington (CB)]

My Lords, I will speak to the amendments in this group but I do not propose to detain the House for long. My views on hydrogen are relatively well known, and we had a good debate in Committee on Clauses 111 and 112. I support the previous speeches and the approaches taken to get the Government to think again about the need for these trials to be included in the Bill.

I welcome government Amendment 55, which would provide for regulations that would make some rules for the trials a “must”, rather than a “may”, which is at least an acceptance that this is a prerequisite. We need clear regulations setting out the rules that must be adopted and followed by anyone involved in these trials. But I do not think that goes far enough, because there are still a number of unaddressed issues. Therefore, I am quite sympathetic to the idea of simply removing this from the Bill and thinking again. I am also sympathetic to the proposal by the noble Lord, Lord Lennie, and the noble Baroness, Lady Blake, who have suggested that the Government ought to undertake a certain number of measures before they embark on a decision about these trials, including involving statutory agencies such as the Environment Agency in the trials, and the Health and Safety Executive on safety issues, so that we can properly assess their environmental impact—so that we actually are using them to trial something.

--- Later in debate ---

I hope that, with the explanations I have been able to provide, the noble Lord, Lord Teverson, and the noble Baroness, Lady Sheehan, will appreciate that the purpose of the trial is to provide important evidence for the strategic decisions that we will need to make on the future of heat decarbonisation. I hope that they have been reassured that these clauses are necessary for the safe and effective delivery of the trial, and will therefore consider withdrawing the amendment.

[Baroness Worthington (CB)]

I want to press on the question of what is being trialled. The Minister mentioned feasibility, benefits and costs, but what about the environmental impacts of this trial? We are talking here about a global warming gas, and a very slippery gas because it is the smallest element—it escapes everywhere. Will the regulations contain measures to monitor the environmental impact of both the NO_x emissions in the home and the greenhouse gas impact of the hydrogen, which will leak when it is distributed that widely? Can that be included in the trial so we can also assess those disbenefits?

Finally, it is true that the only reason really that some houses might not qualify for a heat pump is if they are not very efficient. It is ironic that, for safety reasons, the leakier the house, the more likely it is to then be able to take hydrogen. This precious commodity, which is very expensive to produce and will be very inefficient, is being used in houses which are leaky and being made leakier to be made safer. It seems just so counter to everything we want to achieve on efficiency, resilience and climate change. I hope there will be a trial of the environmental impacts on air quality, climate change and energy efficiency, not just the benefits to the gas industry.

[Lord Callanan (Con)]

I know the noble Baroness has strong views on electrification but let me reassure her that this is precisely the purpose of the trial. We need to use an existing network to find out what happens to hydrogen in an existing network. Clearly, environmental monitoring and checking for leaks and so on is a crucial part of it. It is one of the reasons we need to do it on an existing network in an existing community, to find out what happens outside of theoretical lab experiments where it is very easy to set up a trial with new pipework, new valves and new equipment. I have visited hydrogen demonstration houses up in Gateshead, my home area. It works very well but these are brand new properties, constructed with hydrogen appliances and new pipework. That is not a very good trial as to how it would work in the real world in existing communities. That is why we need to do the trial. The things that the noble Baroness asked about are exactly what we need to be checking and monitoring to judge the effectiveness of any hydrogen experiments in the real world.

I turn to Amendment 56, tabled by the noble Lords, Lord Lennie and Lord Teverson, and the noble Baroness, Lady Sheehan. This amendment covers several aspects which I fully agree are important for the safe and effective delivery of the village trial. However, I assure noble Lords that the evidence that this amendment seeks to gather through a statutory consultation is already being gathered and will be reviewed by the department as part of our assessment process, following the submission of final proposals at the end of this month. As I said, in May 2022, we sent a joint letter with Ofgem to the gas networks setting out an extensive list of requirements that proposals for the trial should meet. This included requirements mentioned in the amendment, such as local support, costs, environmental impact and consumer protections, as well as many other important areas.

After the gas networks submit their proposals for the trial—later this week, as I said—the department will undertake a thorough assessment against the full list of requirements set out in the letter. That process will involve expert input from the various statutory bodies involved, including the Health and Safety Executive and Ofgem. We will publish the result of that assessment later this year, including the relevant evidence to explain our decision, and that will be available to all noble Lords. I reassure the House that we fully understand the importance of conducting the trial properly.

I touched on this earlier but the noble Lord, Lord Teverson, raised the point about local support for the trial. I reiterate that we will go ahead with a trial only in an area where there is strong local support. The gas networks are working closely with local authorities, communities and Members of Parliament as they develop their trial proposals. My officials also meet regularly with the relevant local authorities. Final proposals for the trial will need to contain evidence of strong support from the local community, validated by an independent external source, such as a local council. Again, I am happy to meet the local Members of Parliament.

The networks are extensively consulting local residents to develop an attractive consumer offer tailored to the community. They have opened drop-in centres in both Whitby and Redcar where anyone can engage directly with them and ask questions about what the project means for them, and have held a number of public events.

Safety is of course fundamental, which is the point made by the noble Baroness, Lady Sheehan. Before any community trial can go ahead, the Health and Safety Executive will need to be satisfied that the trial will be run safely. No trial will go ahead until all necessary safety assessments have been successfully carried out. I hope noble Lords will accept my reassurances on that.

If it goes ahead, the trial will start in 2025 and provide vital evidence that will be required to enable the Government to make decisions in 2026 on any potential future role for hydrogen in decarbonising heat. I hope noble Lords will accept that undertaking another formal consultation would duplicate the work that the department and the gas networks are already doing, and could delay important milestones for ultimately meeting net zero.

I agree that the trial must be conducted properly, and I have already spoken about the additional consumer protections that will be in place for the trial. Those protections, which must be met by the gas networks, also mean that the trial must be delivered with minimal disruption to consumers.

I hope I have been able to reassure noble Lords that the department will carefully consider all these factors in coming to a decision on the trial. Importantly, we will be closely examining the evidence and outcomes of the gas networks’ engagement with local authorities and consumers in the trial areas. I hope that, with the reassurances that I have been able to provide, the noble Lord, Lord Teverson, will consider withdrawing his amendment.