Energy Bill [Lords]

Lord Grayling Excerpts

2nd reading
Tuesday 9th May 2023 Commons Chamber

[Grant Shapps]

The hon. Lady is absolutely right about skills, and the skills gap is very important. I recently had a summit with our French counterparts that was specific to skills in the nuclear sector, where there are very similar issues. We are working with our colleagues in the Department for Work and Pensions, the Ministry of Defence and the Department for Education on exactly the subject of skills that she raises. My hon. Friend the Member for West Aberdeenshire and Kincardine is working actively with them on this Bill, and I know he would be delighted to discuss that with the hon. Lady.

[Chris Grayling (Epsom and Ewell) (Con)]

Will the Secretary of State give way?

[Grant Shapps]

I will just make a small bit of progress, and then I will give way again.

Secondly, we will amend the Bill to deliver on the support package for energy-intensive industries, protecting them from high electricity prices. This will bring prices for UK businesses in line with global competitors, preserving jobs and investment in the strategic foundation industries—steel and chemicals, for example. Bringing down prices will also remove a barrier to those traditional carbon-intensive industries decarbonising, in some cases by switching to electrification.

[Grant Shapps]

I will give way in just a moment. Let me make a little bit more progress.

Thirdly, we will table amendments on hydrogen transport and storage, alongside the hydrogen production measures already in the Bill. Finally, we will propose further amendments related to carbon dioxide storage licensing to help us maximise the extraordinary potential—I talked about it before—under the UK continental shelf, which is so important.

[Chris Grayling]

My right hon. Friend knows my views on sustainable aviation fuel, and I will come back to that should I catch your eye, Madam Deputy Speaker. On the issue of small modular reactors, there is no way that a country such as France would allow a non-French firm to be the backbone of its nuclear industry. We do not want to take such an isolationist view, but it would be a travesty if the work in this field did not bring jobs, expertise and industrial success to this country. Can my right hon. Friend give me an assurance that he will make sure we do not make the mistakes of the last Labour Government, who sold off our nuclear industry, and will he encourage the development of a domestic nuclear industry?

[Grant Shapps]

My right hon. Friend will know that the world’s very first civil nuclear reactor was Calder Hall in Cumbria, and we led the world, but, as he said, we switched off or stopped investing in nuclear power. That was a great shame, because we are now having to work to get back to 25%, which is our objective. He is right in another way as well, because for several decades one company has been responsible for running what are essentially small modular reactors in the nuclear Trident fleet under the water, and successfully refuelling once every 25 years. We have a certain lead in this area, and it is very important that we get on with small modular reactors. That is why we are having a very brief competition, with the results coming by October.

--- Later in debate ---

[Edward Miliband]

Actually, I was talking about onshore wind farms that had not just planning permission and consent—[Interruption.] I will tell the hon. Lady simply. In 2006, Tony Blair changed the policy to be in favour of nuclear. When I left office in 2010, we identified 10 new nuclear sites, and there have been 13 years since then. How many nuclear plants had been built and made operational? Precisely zero. The Secretary of State had to talk about the previous Conservative Government, who left office 25 years ago—that is indeed stuck in the past.

[Chris Grayling]

Given the importance of nuclear and what the right hon. Member has just said, why did the last Labour Government sell off Westinghouse, which was owned by Britain and was the main repository of our nuclear skills?

[Edward Miliband]

The right hon. Member wants to re-litigate the last Labour Government. Let us talk about the future. We want nuclear to move ahead, and actually the Government have had 13 years and failed to do it.

--- Later in debate ---

[Chris Grayling (Epsom and Ewell) (Con)]

It is a pleasure to follow the hon. Member for Weaver Vale (Mike Amesbury), but I have a different view from his. It is worth remembering that this country has reduced its carbon emissions very substantially over the last decade—twice as fast, in fact, as the European Union. It is worth remembering that when we say that we are not making progress. There is an awful lot to do, as we have heard, and we cannot rule out any options, so legislating against a particular technology is not where the Government should be. We have to be technology-neutral. Frankly, we will need all options if we are to get to net zero; we cannot simply rule out one or the other. We will have houses heated in one way and others in another way; we in this House cannot simply take the decision to blanket refuse a particular approach.

There are things that we should encourage. Frankly, I cannot see why we do not put in place robust rules on building solar into every new building—particularly every new commercial building. We can do things that do not close options but take us a step down the road. The Government should be taking such measures, but they probably fall into the pot of the Department for Levelling Up, Housing and Communities rather than that of the Department for Energy Security and Net Zero.

I will focus in particular on an area of energy that has been touched upon only briefly in an intervention: the whole issue of aviation fuel. If we are to achieve net zero, we need an aviation industry that also moves rapidly towards net zero, and that is not an easy task. It is a particularly difficult task for the aviation sector because the technology is not yet there to make significant progress in that direction. But it is getting there, and we have to do what we can to encourage it, because the aviation sector is hugely important to this country. Both sides of the House have agreed in the past that its importance needs to be supported and protected. That was noted in particular when we voted on the expansion of Heathrow airport: the vast majority of Members supported the industry on that night. We have to continue doing so while accepting that the industry has to transform itself. It cannot simply stand outside the plans to deliver net zero; it has to change.

The industry will change—insofar as we can currently see the technological routes—in two different ways. First, hydrogen will play an important part in the future of the aviation industry. The first very short-haul 19-seater passenger planes with hydrogen technology powering them are already being tested, and that is a positive step forward. There will be some electrification of aircraft, but only at the smallest end of the scale. Given the way in which technology is developing, it is realistic to assume that, by the middle of the 2030s, we will start seeing short-haul passenger aircraft—the A320s and A319s, or their equivalents and successors—powered by hydrogen. However, there is very little prospect any time soon of long-haul aircraft being powered by hydrogen or electricity. We will not abandon travel around the world. That would be disastrous, not just economically but for a whole raft of reasons. If we took away long-haul aviation, serious damage would be done to conservation efforts around the world, for example.

We will need what is called sustainable aviation fuel. The benefit of that fuel is that it can, to a significant degree, be produced from waste. By waste, I do not just mean more biowaste; I actually mean municipal waste. Some of the early projects to create sustainable aviation fuel have used municipal waste—black binbag waste from people’s homes. That is a huge opportunity, but we have to support the development of that industry. We live in a world that is increasingly shaped by what is happening in North America, including the United States’ Inflation Reduction Act—a slightly strangely named piece of legislation if ever there was one—and what will now happen in the European Union as a result. I am a strong free marketeer, but we cannot ignore other countries taking a different path and simply allow important industries, such as the one that will emerge to produce sustainable aviation fuel, to go elsewhere. We will have that fuel anyway. The airlines will buy it and use it, and they will fly to other countries, which will have sustainable aviation fuel to put in the jets. We will have to do the same.

[Robert Courts (Witney) (Con)]

My right hon. Friend is making a powerful speech focusing on exactly the right issue. As a former aviation Minister and chair of the all-party parliamentary group on aviation, I know that the aviation industry sees this as vital for its future. He touched on the point that, if we do not make SAF, we will still use it and it will be made elsewhere. Will he touch on the economic opportunities for this country, and will we simply lose them if we do not put into that technology now?

[Chris Grayling]

I am grateful to my hon. Friend for his comments. He is an experienced former aviation Minister and has huge knowledge of this area—he is absolutely right.

This industry is going to happen. Indeed, it is already developing in fledgling form around the world. It will certainly happen in the United States, where huge effort has been put into making it a reality. We have to have that industry here. There is no point seeing yet another industry developing around the world in this new technology and standing to one side and saying, “Well, other people can do it—we will bring it in by tanker.” That would be a betrayal of our aviation industry and a betrayal of the industrial base of this country, and we must not let that happen.

What do we need to do? We need to get this technology —this industry—up and running in the UK with something we have done in a variety of areas. We need a contracts for difference scheme. It is an attainable option, and has been done by Government before. I very much hope that the Government—this Department in partnership with the Department for Transport and the Treasury—will take that road. However, we cannot wait very long. It has to happen soon, and we have to put down a marker that says that we are going in that direction. We need to start doing the work on what a detailed scheme would look like.

The aviation industry is desperate for that to happen. The Minister knows, as do other Departments that have been looking at this—the Department for Transport has been doing so, as has the Treasury—that it does not have to be done at the expense of hydrogen. There are people who say that SAF does not really matter because we are going to do hydrogen, but we need both. We need short-haul planes powered by hydrogen and we need long-haul planes powered by SAF. That is the future of aviation.

I hope that the Minister will be able to give us comfort today, and as the Bill proceeds through the House, that the Government as a whole will deliver that. However, I would put down a marker. If by Report stage we do not have some clear signposts that the Government are going in that direction, I will table an amendment that will mandate them to introduce a contracts for difference scheme in the next 12 months, and I will seek the consent of the House for that. I know that Conservative Members who support my concerns will support such an amendment.

I am lobbing this at the Minister, saying that we need to get on with it, but may I ask him, over the next few weeks, as the Bill goes into Committee, and as he discusses with ministerial colleagues the way forward for the Bill, to seek to make a firm commitment to a contracts for difference scheme for SAF so that we can deliver for this country an industry that will be vital for the future?