Energy Bill [HL]

Baroness Worthington Excerpts

Tuesday 12th April 2016 Lords Chamber

[Baroness Liddell of Coatdyke (Lab)]

My Lords, I will not delay the House unduly, and I draw attention to my entry in the Register of Members’ Interests as the new president of the Carbon Capture and Storage Association. I have some very big boots to fill in the shape of the noble Lord, Lord Oxburgh.

I do not want to replay what has happened to development proposals for carbon capture and storage, I say to the Minister only that there are great opportunities with it, but investors and the industry now need reassurance from the Government. There are interesting developments, not least within our regions. The Dutch are increasing their interest in carbon capture and storage. As we come to the closing stages of the Bill, I ask the Minister to regroup on the issue, to give us back some reassurance and to look to the positive opportunities that lie ahead. Britain can lead in this technology, but it will take some commitment from the Government and the industry. The key thing needed at the moment is reassurance to the industry.

[Baroness Worthington (Lab)]

My Lords, I, too, express some concerns about the removal of the amendment in the Commons. Although I have listened to the argument that it would detract from the intention behind the OGA, I seriously hope that the Government will look back at the primary objectives that they have given it and conduct a timely review—I know that that will happen.

Since we last considered the amendment, we have had two important events. The first was referred to by the noble Baroness, Lady Featherstone: the cancellation of the carbon capture and storage project. I do not intend to debate the whys and wherefores of that, but it is clear that there has been a significant dent in investor confidence. People have invested in good faith in this technology knowing that, to meet our long-term climate targets, we need a form of capture and storage for certain sectors of our industry.

The second big event is the signing of the Paris agreement, when the Government and the Secretary of State, Amber Rudd, played an enormous role in making it the success that it was. That states a very clear target for the world: that we must get our anthropogenic sources, our sources of carbon emissions, matched and cancelled by anthropogenic sinks. That largely means capturing and storing carbon and putting it underground. We need to take that Paris equation seriously.

[Viscount Ridley (Con)]

I suggest to the noble Baroness that a third event has happened—we have the early results from the Canadian carbon capture and storage project, which is by far the most advanced in the world. They are very disappointing in terms of the amount of carbon dioxide reduction and the cost that it has taken to achieve it.

[Baroness Worthington]

I note that, but I would just say that we are not Canada and we are very fortunate to have the North Sea as a reserve to use, which I believe would make it more cost efficient if we could do it in a timely fashion—obviously, not wanting to gold-plate anything, but making the best of the resource that we have in this nation. As I said, we need some reassurances from the Government. I am part of the group that the noble Lord, Lord Oxburgh, has now set up, which is looking at the whole issue afresh. We do not want to push carbon capture and storage for its own sake, but only in so far as it gives us options to decarbonise at least cost. I hope that the Minister will be able to say some words of reassurance about that process and the seriousness with which the Government will take the recommendations of that group.

[Lord Howell of Guildford (Con)]

My Lords, I agree that carbon capture is one of the keys to the future of energy and climate policy, because, if it can be done commercially and successfully, it will allow us to continue burning fossil fuels but in ways where the carbon is extracted. This is the case for continuing with fossil fuels, and perhaps slightly undermines the case of those who want to abolish fossil fuels altogether, because the whole point is that you can carry on if you have the technology.

Through your Lordships, I ask the noble Baroness who just spoke from the Liberal Democrat Benches whether they have thought about alternative and cheaper carbon removal technologies. There is carbon capture utilisation, which is developing in all sorts of new areas. It is beginning to look as though it can undermine the vast costs of piping carbon away into the North Sea. As we heard from the Minister, that would set back the problems in the North Sea, which are enormous and one hesitates to add any burdens to them, however important one may think the technology. So if there are cheaper ways of going forward, surely we should be going those ways.

That makes sense of what I understand from my noble friend to be the Government’s strategy, which is that the experimental efforts with carbon capture and storage in its full glory, with piping, transmission, finding places in the North Sea and overcoming all the vast technical and cost problems, can be replaced by something rather more imaginative. We may be moving in the right direction. My question is whether the Liberal Democrats have thought about those alternatives before pressing something which will obviously hurt the oil and gas industry in the North Sea at a time when it is already hurt very considerably.

--- Later in debate ---

[Baroness Quin (Lab)]

My Lords, I would like just very briefly to seek clarification on something that has arisen from our debates. I do not know whether I am alone in not being sure of the implications of what we are discussing here. However, I would like to know from the Minister, or indeed from those who tabled the amendments, how many schemes are affected, where they are, and whether any of the schemes that might be affected by the amendments are ones where the local communities have very much opposed the developments that are taking place.

I feel in something of quandary in approaching these amendments, because I do not want schemes which have a lot of public support, referred to by my noble friends Lord Foulkes of Cumnock and Lord Hain, to be prevented from going ahead, but at the same time I hope that what is proposed would not allow schemes to go ahead in my own county of Northumberland, where a large number of schemes have been introduced against the wishes of local people and local communities. I would not like them to go ahead because of changes that we are considering introducing here via amendments.

The Minister knows that I have a lot of sympathy with the Government’s approach, in that a lot of schemes have been inflicted on local communities in sensitive landscapes and in areas where we are trying to develop tourism. It has been a real issue in Northumberland, which has twice as much onshore wind capacity as any other English county. I would simply like to hear from the Minister and others whether there are implications for Northumberland in what is proposed today.

[Baroness Worthington]

My Lords, I was not intending to speak on this amendment, but, as the noble and learned Lord, Lord Wallace, was kind enough to refer to me, I want to ask a simple question. I want also to pay tribute to the commitment shown by the noble and learned Lord in the detailed way in which he has approached this question and sought to canvass a wide section of views on this clearly still controversial topic.

My question is more about the future. The Government are doing what they wish to do and it is clear that we need to see a pathway towards all renewables standing on their own two feet, supported, one hopes, by a carbon price which makes investment in cleaner technologies a sensible way forward. My question is in relation to another event that has taken place since we last considered this matter, which is the announcement about the auctions of CFDs. I understand that onshore wind will not be eligible for CFDs. I wonder whether there has been representation from Scotland in that decision-making process, since many questions about eligibility for the RO could be alleviated if there was access for Scottish wind farms to a CFD or equivalent that Scotland could determine. That is my question. It is less about the detail looking backwards over this government statement than about the Government saying something reassuring about repatriating an element of energy control to Scotland to enable it to persevere with this industry, which is clearly very important to it.

[The Earl of Lindsay (Con)]

My Lords, I support the amendments in the name of the noble Lord, Lord Foulkes, and of the noble and learned Lord, Lord Wallace of Tankerness. In particular, I want to speak to Amendments 7AA and 7AM in the name of the noble and learned Lord.

As the noble and learned Lord said, there are two important realities that these amendments seek to address. The first is that planning regulations in Scotland, unlike in England, require a set period of pre-engagement. This means that the submission of a major planning application can take place only once a statutory three or more months of consultation have taken place. In Scotland, therefore, between three and six months is added to the equivalent statutory period that applies in England. In effect, the lodging of this proposal of application notice in Scotland is at exactly the same point in the process as the lodging of a planning application in England. In other words, it is the start of the formal planning process either side of the border.

The second reality that the noble and learned Lord’s amendment seeks to address is that projects involving community equity are inherently disadvantaged alongside established developers in terms of the speed with which they can develop their projects, the level of finance that they have available, the time it takes them to get the requisite level of finance and the relative risks they take in getting a project to a particular stage by a particular date. Securing the initial funding for a community stake takes valuable time before the actual planning process can even be initiated.

As a result of these two realities, the Scottish planning regulations and the challenges facing community projects, this Bill would lead to the following scenario. A community-based project could be stopped dead in its tracks despite a significant investment involving a community shareholding having been committed well before 18 June, despite that project having been firmly and formally within the Scottish planning process since well before 18 June and despite all other grace period criteria having been met. Such a scenario would be a regrettable and, I believe, unintended consequence, especially given the importance that the Government attach to the involvement of local communities in, and their support for, onshore renewable projects. As the noble Lord, Lord Foulkes, said, that aspiration was expressed in the Conservative manifesto.

On the concerns expressed by the noble Baroness, Lady Quin, at the same time as such a community project would be stopped dead in its tracks, other cases that were refused planning permission before 18 June by the local planning authority—in other words, they did not have local support—but were subsequently granted on appeal would be able to accredit under the grace periods, while a genuinely community project which is fully committed by 18 June, with full local support and equity ownership, would not. The noble Baroness has therefore raised a very serious concern.

Such a scenario would be addressed by Amendments 7AA and 7AM in the name of the noble and learned Lord, Lord Wallace of Tankerness. They would ensure that community projects that had committed significant financial resources, that had been in the formal planning process well before 18 June and that now had permission and accorded with all the other grace period requirements were given a reasonable grace period to deliver.

Like other Members of this House, I have been grateful to the Minister for his willingness to correspond and engage on the issues relating to this Bill, and I am grateful for the correspondence that I have had with him about the issues behind the amendments. I want to reassure him on two concerns that he raised with me. The first was a concern that, in accepting these amendments, there would be significant additional deployment. This is not the case. Research through RenewableUK data demonstrates that the amendment would lead to an additional deployment of only 45 megawatts, as the noble and learned Lord, Lord Wallace, said. That is less than 0.1%—that is, 1/10th of 1%—of the current annual ROC spend.

My noble friend the Minister also expressed the view that the amendments run counter to policy intent. I can reassure him that they do not. They are about improving in a very precise and limited way the flexibility in how the Bill would apply, especially in Scotland. The amendments are modest in their intent and negligible in their cost and therefore in their impact on the ROC budget, yet, as we have heard from other noble Lords and especially the noble and learned Lord, Lord Wallace, they would deliver significant local benefits.

I hope that the House and especially my noble friend the Minister will support the amendments or at least consider them constructively. They deal with the very lengthy pre-application consultation requirements in the Scottish planning system and with the challenges that community projects face. I will listen carefully to my noble friend’s response, and hope it is a positive one.

--- Later in debate ---

[Baroness Worthington]

My Lords, Amendment 9E is in my name. Our previous debate on this took place in October, before the historic climate agreement in Paris, which, for the first time, saw virtually all countries agreeing to take action together to avert the growing risk of global climate change. The significant breakthrough that made Paris a success was that countries are now individually responsible for coming forward with nationally determined targets and measures, while being guided by an overarching collective goal.

That process places the responsibility on countries to do what they can, with a view to ratcheting up ambition over time. The UK already has its own nationally determined commitments and we have been at the forefront of international leadership on climate change domestically and internationally for well over a decade. Again, I pay tribute to Secretary of State Amber Rudd, who deserves great credit for the role she and her team played in making Paris the success that it was.

Now, as we enter the final stages of this Energy Bill, which we have been considering since last July, the question we face is: how will we as the United Kingdom want to continue in that climate leadership role by demonstrating our commitment to domestic action, leading by example and forging a path that others can follow? We can and must do this, I believe, by reviewing and reforming an important aspect of our ground-breaking Climate Change Act; that is, how we measure progress.

As things stand, how we do this is complicated and unclear, made ever more complex by a decision introduced in secondary legislation and taken after the Bill was agreed that we should use European emissions allowances as the basis for accounting for our emissions in the power and industrial sectors. This is how things work currently but it cannot continue in this way for much longer. We must start counting our actual domestic emissions, guided by a common international goal set at the European and global level.

Our original amendment, agreed to in this House, sought to make this change in primary legislation, but since I have no desire to upset the timetable for setting the fifth carbon budget, which, as the Minister pointed out, we expect to be set before 30 June, and the process is now well under way, I have not retabled the amendment that was agreed in October. Instead, we have proposed what we believe is a constructive way forward and have listened carefully to the comments made by the Minister in the other place, which were constructive and talked about the timing being the main issue of opposition from the Government.

But there still is a fundamental question at stake here: do we wish to meet our carbon budgets in a way that we determine—for example, through policies and measures that we deem appropriate for our circumstances—or are we happy to have half our budgets set for us on the basis of ever-more complex rules agreed in Brussels? At the moment, as our decision to implement a carbon price support policy shows, we are taking our own path. We add an extra £18 to every tonne emitted in the UK and we are pursuing our own policies to decarbonise. Ahead of Paris, the Secretary of State made a historic commitment to phase out coal for power generation in the UK by 2025. She was rightly praised for this commitment because it sends an important signal to investors at home and to other countries struggling to reduce emissions from coal, including Germany and Holland.

Given that this is our chosen option—that we are pursuing leadership and taking our own path—it seems illogical that our carbon budgets should not reflect our own circumstances. Working on the basis of our own accounting would enable us to make sensible decisions about which sectors to move forward on more quickly and which to give more time to; for example, we could provide more of a budget to sectors that are hard to decarbonise, such as heavy goods vehicle transportation or farming, while moving faster on the power sector, where we are currently overdelivering, as the Minister said. There are 36 million tonnes of overdelivery coming from the power sector. We should be able to use that and redistribute it to other sectors, but as things stand that is not possible.

There are very good reasons why our original amendment made sense, but as I listened to the considered words of the Minister in the other place, I concluded she was right not to accept that amendment at this time, as we are only weeks away from publishing the fifth carbon budget. We hope and assume that this number will follow the advice of the CCC and we expect that to help restore some confidence in the industry. But once that is in place, we should then determine how we will meet that ambition and part of that determination should be: what counts towards compliance with that budget? The amendment in my name, in lieu of our original amendment, sets out a process by which the Government can decide how we measure our progress and how we plan to meet our targets, including a deadline of the end of 2017 by which the matter should be resolved in secondary legislation. With the budget and the rules in place, we will then be in a position to develop a long-term plan to comply with those targets and lead by example.

Unfortunately, short-term thinking is endemic in our political system. More attention is paid to fleeting headlines and passing trends on Twitter than to the important details of often complex policy areas, such as energy, which are so necessary to drive investor confidence in growing our economy. Climate change is a long-term crisis that is slowly unfolding on our watch. Record losses in sea ice, massive coral bleaching in the Great Barrier Reef, unexplained spikes in methane emissions—these are the warnings that are going off around us. We owe it to ourselves and to all future generations to do all within our ability to act and to cause others to act to mitigate this crisis.

What we in this Chamber can do, what opposition parties can do and what the Government can do is try to pass good laws that provide sensible, long-term frameworks to drive down emissions in least-cost ways. The Climate Change Act was agreed on that basis and it works, but it is now in need of review. I urge the Minister to consider this amendment carefully and if he feels it is within his power to accept it, I hope he will do so, so that we can embark on a process of proper reflection and review over a reasonable timescale, and then we can make the changes that are needed to repatriate the way we meet our most necessary climate obligations.

[Lord Howell of Guildford]

My Lords, I have only one question about this amendment, and it is aimed at both sides of your Lordships’ House. As my noble friend rightly said, this is an extremely complex matter. I sometimes feel that the noble Baroness, Lady Worthington, is the only living person who fully understands the complexities of it all. It seems to me that if one looks behind the thoughts and motivations, the bottom line is whether additional pressures are put on consumers, on the nation, on industry and on activities of every kind to complete the carbon budgets, what weight we give to absolute, precise completion of the established carbon budgets—or indeed the next one we decide—and what contribution that will make worldwide to combating global warming.

My question is simply to ask why the noble Lord, Lord Grantchester, has tabled this amendment, when in the Climate Change Act, with which the noble Baroness, Lady Worthington, had so much to do, there is a specific provision—Section 10(2)(h)—which warns and advises the Government and Ministers to have account of,

“circumstances at European and international level”.

The intention behind that was quite clear: to establish that if we got very badly out of line with neighbouring countries on our carbon budgets and on the provisions required to keep to them, the matter would be looked at again and, if necessary, changes would be made. My only question is: why are we not doing that now? Electricity costs between German and British steel have got out of alignment. Everyone knows that. We all know that theirs are 40% less and that we are paying £80 per megawatt-hour for steel-making in Britain, of which some £34 may be in additional green charges and levies. I accept that some of those are absolutely necessary, but some obviously take us out of line with our European neighbours, with the devastating results which we have all seen in the last few weeks. These things can be brushed aside, but everyone knows that this is one of the very powerful reasons why we are in some difficulties over the steel industry. I do not think that that can be denied.

[Baroness Worthington]

On that point about the steel industry, one point I was trying to convey is that if we take control of our own carbon budgets then we would decide how to allocate emissions to the steel sector, for example, rather than it being dictated by the EU ETS credits. We could then make our budgets and be more flexible to allow for those sectors that need to retain emissions for longer and push down further on the power sector, which is overdelivering by a substantial margin. We could use that to move that allocation around and protect those industries that we choose to protect for slightly longer.

--- Later in debate ---

[Lord Bourne of Aberystwyth]

My Lords, I thank noble Lords who have participated in the debate on the carbon accounting process and in particular the noble Baroness, Lady Worthington, who I know feels strongly about this issue. She will know that we have spoken about it at some length and probably have a measure of agreement on many of the principles. I will perhaps not go into the details of why we are not able to move forward in some respects, although we feel that her amendment as drafted, requiring regulations on carbon accounting by the end of 2017, is impractical because of the understandable obligations to consult with the devolved Administrations and so on. There are issues with the detail. I will not go into other aspects of it, except to say that we certainly recognise the need to address some of these concerns. There are other issues with carbon accounting that distort, as things stand, such as international aviation and international marine.

Let me address some of the points made by my noble friend Lord Howell. I do not want to get sidetracked on to steel because that issue was addressed yesterday in a Statement. Electricity costs are certainly an issue and a factor, but of course it goes far beyond that, as I am sure that my noble friend would acknowledge. Tata in Port Talbot has a blast furnace, so the electricity costs are less significant there than they would be if it were an arc furnace, which is one of the issues to be looked at. The Government are looking at that in the round to see what we can do there, but again it is not simple. It is not just about altering the carbon accounting rules, as there are issues obviously about state aid, the World Trade Organization and so on. It is a complex issue. I hope that I have been able to cover why we are unable to accept the amendments to the Motion at this time.

[Baroness Worthington]

Before the Minister sits down, could he be a bit clearer about this? We have obviously taken on board the very sensible comments of the Minister of State in the other place, having looked at the debate in detail. We do not wish to pre-empt the outcome of a review but we do think that, taken in the round, this Energy Bill does not seem to be in keeping with its time and place in history. It is many months after Paris, where we committed to trying to get this big issue of the global climate back on track. Can the Minister not just look again at this and precisely give us the reason why?

[Lord Bourne of Aberystwyth]

I think the noble Baroness is aware of the reasons why. I do not want to be provoked into going into some of the discussions we have had, but it is not as if she is unaware of some of the reasons why we cannot progress. I do not want to go into those in any detail except to say—

--- Later in debate ---

Moved by

[Baroness Worthington]

As an amendment to the Motion that this House do agree with the Commons in their Amendment 9, at end insert “, and do propose Amendment 9E in lieu of the words so left out of the Bill”.

9E: Clause 80, insert the following new Clause—
“Review of calculation of net UK carbon account (No. 2)
(1) The Secretary of State must lay before Parliament revised regulations relating to carbon accounting under section 27(3) of the Climate Change Act 2008.
(2) Before laying such regulations the Secretary of State must carry out a review of whether it is appropriate for the calculation of the net UK carbon account for the 2028-2032 budgetary period, and subsequent budgetary periods, to take into account the crediting and debiting of carbon units as a result of the operation of—
(a) the European Union Emissions Trading Scheme, or
(b) any amendment of, or replacement for, that scheme that the Secretary of State considers may have effect for the budgetary periods to which the review relates.
(3) When carrying out the review the Secretary of State must take into account—
(a) advice from the Committee on Climate Change,
(b) any representations made by the other national authorities, (c) scientific knowledge about climate change,
(d) technology relevant to climate change,
(e) economic circumstances,
(f) fiscal circumstances,
(g) social circumstances,
(h) energy policy, and
(i) circumstances at European and international level.
(4) Nothing in subsection (3) is to be read as restricting the matters that the Secretary of State may take into account.
(5) The review must be published, in such manner as the Secretary of State considers appropriate, no later than one year after the passing of this Act.
(6) The Secretary of State must lay the regulations under subsection (1) no later than 31 December 2017.
(7) A statutory instrument containing regulations under subsection (1) may not be made unless a draft of the instrument has been laid before, and approved by a resolution of, each House of Parliament.”

[Baroness Worthington]

My Lords, I beg to move my amendment to the Motion. I would like to test the opinion of the House.