Energy Bill [HL]

Baroness Young of Old Scone Excerpts

Report stage
Monday 17th April 2023 Lords Chamber

[Baroness Young of Old Scone (Lab)]

My Lords, I support Amendments 134 and 135, so ably led by the noble Baroness, Lady Boycott. I had hoped that my name would be added to them, but something happened along the way.

It is true that everybody is saying that there is real importance in community energy, but the proof of the pudding has to be in the eating. After that initial burst of schemes that the feed-in tariff encouraged, we have really not seen any major growth and the government measures that have been put in place simply have not worked. The amendments are important for two reasons. First, they would enable improved financial predictability and viability for community energy schemes, because, at the moment, there are a number of hurdles that such schemes have to cross. If financial viability and predictability are not there at the start, they lose heart very rapidly in approaching the other hurdles. The second is the issue that has already been touched on: that is the whole business of community “joie de vivre” around energy generation schemes. A surefire way of not having local schemes is where there is a scenario of “all pain and no gain”—where there is a bit of local environmental disruption and a little adjustment to the view. Local communities very rapidly turn off those schemes if they do not see any value for themselves. That is happening more and more at the moment. Local community generation schemes are not very popular since there is landscape blight and no direct benefit. In fact, the figures show that more solar farms were turned down in 2020 at planning stages than had been turned down in the previous four years.

The presence of a local community scheme may even lead to dialogue locally about increased uptake of energy efficiency measures. People become interested in both energy efficiency and demand-side and supply-side issues. That is exactly the sort of community engagement we need if we are really going to see net zero hit. Indeed, Chris Skidmore in his much-quoted net-zero review urged the Government to produce a community energy strategy and to break through the current regulatory and legislative funding barriers. He supported the provisions of the Local Electricity Bill, which these amendments have largely reproduced.

As has been said, the noble Lord, Lord Callanan, assured us in Committee, in his letter of 22 December and in subsequent meetings that the Government want to see more community energy schemes. We are really asking him what in effect will be done, as, so far, government measures have not worked. To echo the noble Baroness, Lady Boycott, we are not seeking subsidy; we are looking for a fair price varied by government, as advised by Ofgem—an increased price, perhaps, where schemes need to be encouraged and a reduced price, perhaps, if scheme growth is going gangbusters. It is about a guaranteed floor price, similar to the contracts for difference from which other renewable sectors benefit.

I thank Octopus and other major suppliers for tackling some of these issues. The reality is, however, that they are not creating the volumes that are required. It is quite a telling fact that Octopus, through Unity, its subsidiary, is now responsible for one-third of all the community energy sector schemes. If one company, busting a gut, can actually be involved in one-third of the community energy sector, it seems to imply that it is not moving very fast. We are not seeing the volume of schemes being created. Other barriers need to be tackled, particularly access to the grid, lack of early-stage feasibility funding and planning complexities, but to accept these two amendments would go a long way to encouraging the community energy sector and to removing the most fundamental barrier, which is the economic one.

It would also be good if the Minister could tell us what the latest timescales are for the review of the electricity market arrangements, because that is another area where the whole business of how renewable energy competes is going to be fundamental. Can the Minister tell us today—if he is not going to accept these amendments, as I am sure he will not do—what the Government are going to do that will be effective in getting the community energy sector off its knees, where it is at the moment?

[Baroness Meacher (CB)]

My Lords, I will not take the time of the House to repeat comments that have already been made. The noble Baroness, Lady Boycott, and others have made a very powerful case for these amendments. It is ludicrous for us not to be enabling community energy production when this does not involve a subsidy and when it could create additional energy sufficient for something like the 2.2 million homes mentioned by the noble Baroness, Lady Boycott. This is a completely neglected area; it can be resolved as set out in these amendments in a straightforward way. The main thing is that these community energy projects need to be able to sell their energy to big suppliers in the locality—those with more than 150,000 customers was the figure quoted, I think. So there is very strong support for these amendments and I hope the Minister will be able to accept them. I cannot see any reason why not: it is not going to cost the Government anything.

--- Later in debate ---

[Lord Berkeley (Lab)]

Noble Lords will be pleased to know that Amendment 138A in my name is a probing amendment, and I certainly do not intend to divide the House. This issue, which has come to me from a number of people in the south-west, is about the need for parity in the government incentives for heating homes that are off the gas mains. This would require a scheme that mirrors the Renewable Transport Fuel Obligations Order 2007.

I get the impression that the government policy on this is that everyone who is off the gas grid should be able to install a heat pump. When I am not in Scilly, I live in a little village in the middle of Cornwall, where lots of my friends use fuel oil for heating because there is no way that you can put a heat pump in some of these houses. Heat pumps are very good, but, in terms of fairness, about 1.7 million homes—perhaps occupied by 4 million people—are off the gas grid. They all want to decarbonise quicker, but how will they do so? The Government’s statistics show that 20% of off-grid homes are not suitable for heat pumps—again, we quite understand that. There is also the cost of installing them, of about £22,000, which is quite expensive for some people.

I am interested in a recent survey by the Future Ready Fuel campaign, which showed that 90% of people living off the gas grid are concerned about the Government’s current heating proposals, which are treating them unfairly. They would rather a greater choice of low-carbon heating solutions. The amendment asks the Government to investigate this further.

Before I speak about that, and the obvious need for consumer choice in this, it is probably worth explaining what the material—hydrotreated vegetable oil, or HVO—actually is. The easiest way of doing so is to say that it is used vegetable cooking oil, animal fat residue and tall oil—whatever that is—which is a by-product of the manufacture of wood pulp. Most of the time, when we hear about used cooking oil, it is because people have tipped it down the drains and eventually blocked them; it is very nasty for the drainage companies to solve this and take it away.

What surprises me is that the industry data has forecast that, by 2030, the feedstock availability, which is the important resource, is more than enough to meet the transport and non-transport needs, including home heating. The Department for Transport is very keen to use this to get more environmentally friendly airplanes in the sky—we might all have views about that. Production of HVO in the United States is already 10 billion litres and is expected to increase to 22 billion litres by 2025; ditto in Europe, where it is expected to double in the next two years from 5.5 billion litres to 11 billion litres.

This is not suggesting that this is the only low-carbon solution for people who need to heat their homes and who cannot use the existing systems, but it is an important issue for debate. You are telling people that they need to reduce their carbon usage and that the best way is air source or ground source heating, but there is an alternative. I suggest that the Government need to look at this and see whether there is a compelling case to look again at the tariffs. The Minister may say that the Government are doing this already; in which case, I shall say, “Well, that is lovely, but when is the report going to be published?” If they are not, I gently suggest that they should look at it, and I will be happy to facilitate a meeting between Ministers and the group of manufacturers concerned to see how we could take it forward. I beg to move.

[Baroness Young of Old Scone (Lab)]

My Lords, I will not detain the House. I declare an interest as living in an off-gas-grid property. I am sure that the Minister knows what I will ask him.

There is a lacuna in government communications or policy about the off-gas-grid regulations. These were consulted on extensively but so far, unless I have missed it, they have not resulted in an emanation in government policy. We are in a situation where, if you are one of the folk in an off-gas-grid residence, you do not know what to do. Under the system that was consulted on, it was proposed that, after 2026, if your oil boiler broke down you could not replace it with another oil boiler; as yet, we do not know whether that date is still in currency or not. It would be good if the Minister could tell us exactly what the current policy of the Government is and, if it is to change from something that was consulted on, when we would get an announcement.

The alternative, if they do not adopt the proposition from the noble Lord, Lord Berkeley, is that people need to get themselves an air source or ground source heat pump, but that is not a feasible proposition if you are trying to replace your recently defunct oil-filled boiler that has broken down between Christmas and New Year, when you have the grandchildren or your elderly great-granny in residence. Frankly, from the work done by the Environment and Climate Change Select Committee of this House on the boiler upgrade scheme, it was clear that getting an air source or ground source heat pump not only was an expensive proposition but would take some time. For the most part, it would take a number of weeks, and often a number of months, rather than having a nice man from British Gas or the local oil company coming round to give you a replacement on Boxing Day.

Apart from that, there is a debate to be had about the efficacy of air and ground source pumps in some houses, though I must admit that I probably come from the school that says that, providing you get a big enough one, you can heat almost anything—but that then raises major questions about ongoing energy costs.

Although I welcome the Minister’s statement earlier today about the extension of the boiler upgrade scheme term, it is a real pity that it was a complete failure in terms of numbers in the last financial year, and that most of the money that had been allocated had to be sent back to the Treasury. That is a great regret. My question—which my noble friend Lord Berkeley has given me the opportunity to ask yet again—is when we will get some clarity on the off-gas-grid regulations and what that clarity, if I have missed it, might be.

[Lord Ravensdale (CB)]

My Lords, I want to offer a few words of support for the amendment from the noble Lord, Lord Berkeley. It is something that the Government should take very seriously if it is to be used in a very specific and limited way for off-grid properties—the key point being the feedstock availability, which needs to be understood in more detail.

On the link with sustainable aviation fuel that the noble Lord, Lord Berkeley, mentioned, there is potentially an important counter-cyclical benefit here, in that jet fuel is dominant in the summer months and heating oil is dominant in the winter months. They are essentially the same fuel, so there is potentially a good economic fit between those two cases, and the relevant departments—DESNZ and DfT—should work together on that.

I would suggest some potential improvements to the amendment, such as limiting it to those off-grid properties that already use heating oil and specifically stating in the amendment that this is only for recycled fuels, to eliminate the unintended consequences of biofuels being eligible. Overall, however, this is something that the Government should take seriously.