Oral Answers to Questions
Graham Stuart Excerpts(1 year, 2 months ago)
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Paul Maynard (Blackpool North and Cleveleys) (Con)
The Minister for Energy Security and Net Zero (Graham Stuart)
The Government have ambitious plans to tackle methane emissions from oil and gas production. With support from Government and key regulators, industry is on track to end routine flaring and venting prior to 2030, in line with the World Bank’s initiative.
Paul Maynard
While I welcome the Government’s introduction of new oil and gas licences in the North sea as part of a just and graduated transition to more reliance on renewables, the Minister will be aware that methane is a far more warming gas than carbon dioxide. Given that much more can be done, will the Government look at how they can ensure that flaring, venting and leaks are fixed by the new licence holders as and when they occur and, in the context of the North sea transition plan, ensure that the new Affleck oil field is not allowed to flare until 2037, as set out in the permission granted to it? This is all part of how we can reach net zero without it costing my constituents the earth.
Graham Stuart
The North Sea Transition Authority already expects methane emissions to be as low as possible and all new developments to be developed on the basis of zero routine flaring and venting, and that they should be electrified or electrification-ready. Of course, what is required and will help facilitate that is new investment in the North sea facilitated by licences, without which we are unlikely to see the reduction in emissions that we have so successfully driven so far.
Caroline Lucas (Brighton, Pavilion) (Green)
The Minister has not really given any reassurance to the hon. Member for Blackpool North and Cleveleys (Paul Maynard). As we know, methane is a whopping 80 times more powerful than carbon dioxide over a 20-year period, so if the Minister is serious about tackling this issue, will he explain why the Government failed to use the Energy Bill to ban flaring and venting? Why did they whip their own MPs to vote against an amendment that would have outlawed it, and given that the practice has been illegal in Norway since the 1970s, will he finally recognise that this makes a mockery of Ministers’ claims about UK oil and gas being greener?
Graham Stuart
Unusually, the hon. Lady has got her facts wrong: I do not think that amendment was even selected for debate that day. According to the North Sea Transition Authority, flaring was reduced by more than 10% just last year, contributing to a reduction of nearly 50% between 2018 and 2022. As I have said, the North Sea Transition Authority estimates that methane emissions have fallen by more than 40% to fewer than 1 million tonnes of carbon dioxide equivalent—a record low. We have old existing infrastructure and are moving with a maximum of ambition to reduce emissions, and we have a successful track record to date.
Liz Twist (Blaydon) (Lab)
The Minister for Energy Security and Net Zero (Graham Stuart)
I am grateful for the work of the Climate Change Committee, and I pay tribute in particular to the commitment of its outgoing chair, Lord Deben. The Government will respond to the committee’s report in October.
Liz Twist
The latest Climate Change Committee report found that, out of 50 key indicators of Government progress on tackling climate change, just nine were on track. According to Energy UK, even before the disastrous offshore wind auction, the UK was forecast to have the slowest growth in low-carbon electricity generation of the world’s eight largest economies up to 2030. Does the Minister recognise that the Government’s failure has cost every family £180 in higher bills?
Graham Stuart
Our climate leadership is measurable and real. We have reduced emissions by more than any other major economy since 1990. We were the first to legislate for net zero. We have eliminated coal, which as late as 2012 produced nearly 40% of our electricity supply—the legacy of the Labour party—and we have lifted renewables from 7% to 48%. We have cut emissions by more than others, transforming our energy system, and we are leading on this issue internationally and domestically. That is exactly what the Government rely on in fulfilling their aspiration to climate leadership.
Sir Christopher Chope (Christchurch) (Con)
Does my right hon. Friend accept that one consequence of the Climate Change Committee report is to increase our country’s reliance on Chinese technology and raw materials?
Graham Stuart
China has even greater offshore wind capacity than ourselves—it has the largest wind and largest solar capacity in the world—and it has a significant level of production. We recognise that we will need technology from all over the world, including China, if we are to meet our net zero aspirations.
Kerry McCarthy (Bristol East) (Lab)
According to the Climate Change Committee,
“the private sector…is being held back…by weak policy signals, uncertainty, and barriers to investment,”
and perhaps we would not need to be so reliant on China if those issues were addressed. Just last month, UK investors representing £1.5 trillion in assets wrote to the Prime Minister, warning that that could mean the UK missing out on 1.7 million jobs. Will this zombie Government listen to investors and their own advisers, look at the game-changing interventions in the States and bring forward a UK version of the Inflation Reduction Act before it is too late to save British businesses and British jobs?
Graham Stuart
Yet another unfunded spending commitment from the Labour party—the party that left us with less than 7% of our electricity coming from renewables and that left us reliant on coal; a party that wants to nationalise the industry and drive out all those companies that have transformed the North Sea basin, led the world in cutting the cost of offshore wind, and made us the European leader in offshore wind and the global leader in cutting emissions. The Labour party is the biggest enemy of net zero and the biggest enemy of the private investment in this country that will help us get there.
Richard Burgon (Leeds East) (Lab)
Helen Hayes (Dulwich and West Norwood) (Lab)
The Minister for Energy Security and Net Zero (Graham Stuart)
The Government recently announced changes to national planning policy, giving greater flexibility to local authorities to respond to suitable opportunities for onshore wind. The Government also want communities to benefit from hosting onshore wind and have consulted on improving the current system of community benefits for England.
Richard Burgon
The truth is that the Government have failed to properly lift the ban on onshore wind, while bending over backwards to support expensive new oilfields and even giving billions in tax breaks for those polluting projects. That ban has already added hundreds of pounds to people’s bills, undermining the investment we need in the cheapest form of energy, and cost thousands of good green jobs. Will the Minister not admit that the Government’s failure to properly lift the ban on onshore wind will continue to keep bills higher and makes us less energy-secure?
Graham Stuart
More than 15 GW of onshore wind are deployed in the UK. In our allocation round 5 just the other day, we secured 1.7 GW of onshore wind capacity; allocation round 4 secured 1.5 GW. It is extraordinary: an industry—domestic UK oil and gas—has lower emissions than the alternative from abroad and employs 200,000 people, every one of whose jobs is at risk if the Labour party ever gets into power. Labour Members are suggesting that there is a negative fiscal impact, when that industry is expected to contribute £50 billion over the next five years. The Labour party is an enemy of the transition to net zero and of British jobs and prosperity.
Helen Hayes
If the Minister will not accept the argument of my hon. Friend the Member for Leeds East (Richard Burgon) , will he at least listen to industry, which described the recent announcement on onshore wind as a “missed opportunity” to end the ban? RenewableUK said:
“The proposed changes don’t go far enough”
and would not make up for
“eight years of lost progress.”
When will the Minister listen to industry and lift the ban properly so that we can cut bills?
Graham Stuart
On 5 September, the Government announced changes to national planning policy for onshore wind in England, giving greater flexibility to allocate suitable areas and to address the planning impact of onshore wind. I agree with the hon. Lady; I am an enthusiast for more onshore wind where it goes with the grain of communities, and we will continue to pursue that to make sure that we can realise the benefits that come from it.
Dr Alan Whitehead (Southampton, Test) (Lab)
The Minister will know, although he unaccountably did not tell us, that there was precisely no new onshore wind in England in the recent AR5. The Minister claims that the latest compromised wording, which he alluded to, will lift the ban on onshore wind, but he knows really that that is not so and he knows what the industry has been saying about it and why it will not invest for the future. The result is no new onshore wind getting built in the medium-term, higher bills for families and less energy security for the country. Why will his Department not just face down his luddite Back Benchers, introduce fair planning regulations for onshore wind and get the industry restarted across England?
Graham Stuart
As I have just said, we announced changes as recently as 5 September. Like the hon. Gentleman, I look forward to a positive future for onshore wind in England, as well as in the rest of the United Kingdom.
Alicia Kearns (Rutland and Melton) (Con)
Sir Desmond Swayne (New Forest West) (Con)
The Minister for Energy Security and Net Zero (Graham Stuart)
The Government have created an online advice service to help consumers in replacing fossil fuel heating systems, including oil boilers, with a heat pump. We are also providing funding through the boiler upgrade scheme.
Sir Desmond Swayne
Absolutely, Mr Speaker. There is a panic now in Germany as its premature ban on gas-fired boilers approaches. The Minister will want to avoid a similar panic as we approach our own premature ban on oil-fired boilers, won’t he?
Graham Stuart
As ever, I thank my right hon. Friend. We are listening. As the Prime Minister set out, we will reduce our emissions in line with our obligations but do so in a way that recognises the challenges that families face. Off-grid households will be supported through the transition, and we will respond to the consultation in due course.
Richard Foord (Tiverton and Honiton) (LD)
During the summer recess, when I was touring villages, I found in my corner of Devon that some constituents are worried about whether they should replace their oil-fired boiler in the next couple of years with a heat pump or put their faith in hydro-treated vegetable oil. Some have been encouraged by the pilots of so-called HVO as an alternative source to heating oil. What assurances can the Minister offer that it will be a truly sustainable source of fuel and not made from palm oil, which encourages deforestation? Or should we put 100% of our efforts into heat pumps?
Graham Stuart
As the hon. Member doubtless knows, we have conducted a consultation on the use of HVO in heating, and we are determined to ensure that we decarbonise heat in homes, including off-grid homes, in a way that is practical and aligned with minimising any negative impacts on those families.
Stella Creasy (Walthamstow) (Lab/Co-op)
Elliot Colburn (Carshalton and Wallington) (Con)
The Minister for Energy Security and Net Zero (Graham Stuart)
The Environment Agency’s recent consultation on varying the environmental permit for the Beddington energy recovery plant closed on 1 September. The Environment Agency will carefully consider all relevant responses and issue a final decision in due course.
Barry Gardiner (Brent North) (Lab)
In the Select Committee inquiry into preparations for this winter, one of the repeated calls that we have heard from expert witnesses is to support the vulnerable and fuel poor with a social tariff. Will the Minister do that?
Stephen Hammond (Wimbledon) (Con)
Graham Stuart
The zero-emission vehicles mandate supports our commitment to end the sale of new petrol and diesel cars and vans. By setting it many years in advance and giving clear notice to the market, it provides appropriate stimulus to industry in a way that the ultra low emission zone singularly fails to do, as my hon. Friend will have noted.
Wera Hobhouse (Bath) (LD)
The Energy Minister got his facts wrong in his earlier response to the hon. Member for Brighton, Pavilion (Caroline Lucas), so he might want to correct the record. The Liberal Democrat amendment to the Energy Bill to tackle flaring, venting and leaking of methane was selected for a separate vote. It would have reduced methane emissions by 72 %. Why did his Government vote it down?
Graham Stuart
I stand corrected. On that issue, we have infrastructure, some of which dates from the 1970s, and we are moving at the maximum possible speed. It is technologically and economically challenging to make this change, and yet, as I set out earlier, we are already showing significant efforts, and of course we are champions of the methane pledge, which we plan to exceed. When I am at COP28, I will be urging other countries to follow us in agreeing and supporting that World Bank methane pledge.
Tom Randall (Gedling) (Con)
Graham Stuart
My hon. Friend is right to talk about the challenge of bringing all the pieces together to unlock opportunity. The Government will promote the whole hydrogen economy—production, demand, networks and storage—and stimulate private sector investment. In August, the Government published the low-carbon hydrogen agreement, setting out the hydrogen production business model’s terms. We will award contracts for that in quarter 4 of 2023. My colleagues and I are happy to meet my hon. Friend to talk about making sure we get this absolutely right so that we maximise its benefits.
Justin Madders (Ellesmere Port and Neston) (Lab)
Biodiesel producers in my constituency are being undercut by cheap Chinese imports because of the Government’s decision to award them inward processing relief. This is making it difficult for us to support UK industry, so can we have an explanation for why that decision was made?
Dr Caroline Johnson (Sleaford and North Hykeham) (Con)
Writing for The Daily Telegraph last year, our now Prime Minister said:
“On my watch, we will not lose swathes of our best farmland to solar farms.”
Yet the industry has not heard that, and vast swathes of farmland in my constituency, totalling 16 square miles, are open to planning, engulfing whole villages and using the best and most versatile land. Will my right hon. Friend meet me to discuss how he and the Department can ensure that the Prime Minister keeps his very important promise?
Graham Stuart
I can assure my hon. Friend that planning policy and the associated guidance encourage large-scale solar projects to be located on previously developed or lower-value land. Where greenfield sites or high-grade land are used, developers are required to justify using such land and to design their projects to avoid, mitigate and, where necessary, compensate for any impacts. I hear my hon. Friend’s personal testimony, and I will be happy to meet her to discuss this further.
Samantha Dixon (City of Chester) (Lab)
Almost 20% of the housing stock in my constituency dates from before 1919 and is therefore classified as historical. What plan does the Department have to improve skill levels in retrofitting historical residential buildings?
Graham Stuart
My hon. Friend is right. Last year we were dependent on fossil fuels for 77% of our energy. If we import more gas from abroad, it will be in the form of liquefied natural gas, which, according to a report from the North Sea Transition Authority two weeks ago, has four times the production emissions of domestic gas. The Scottish National party, ably supported by the Labour party, wants to threaten 200,000 jobs, £50 billion of tax revenue over the next five years, and the very subsea engineering and technological capability—not to mention the balance sheets—that we need to develop hydrogen, carbon capture, usage and storage, and the rest of the transition. It is madness, and it is the policy of the SNP.
Dame Nia Griffith (Llanelli) (Lab)
Yes, we need increased electric arc capacity to reprocess more scrap steel in the UK, but Trostre tinplate packaging works in my constituency needs a grade of steel that can be produced only by the blast furnace process, until green production technologies are developed. With 23 such projects elsewhere in Europe, will the Secretary of State commit to investing in developing these technologies at Port Talbot, thus reducing emissions and keeping jobs in Port Talbot and Llanelli?
Graham Stuart
I share the hon. Lady’s enthusiasm for keeping those jobs, which is why we are investing hundreds of millions of pounds to ensure that these industries can make that transition. I entirely agree with her on the importance of innovation and making sure it is embedded so that not only do we sustain those industries but so that, through innovation, we can strengthen them in the years ahead.
Alicia Kearns (Rutland and Melton) (Con)
A decade ago, the onshore wind industry committed to a community benefit protocol to provide compensation of £5,000 per MW installed per annum to communities for the duration of a wind scheme. So far, solar developers have refused to do something similar, and surely that is not fair. Does my right hon. Friend agree that compensation schemes must be equal, whether wind or solar is involved?
Graham Stuart
It is perhaps typical of my hon. Friend that not only is she asking a question and championing this issue, but she has scheduled a meeting with me immediately afterwards. I look forward to discussing this with her and making sure that we have the most coherent position possible as to where we are set on rewarding communities that host transmission infrastructure and other parts of our transition. I look forward to having that conversation with her in the coming minutes.
Alison Thewliss (Glasgow Central) (SNP)
My constituent Lee Haywood is on a communal heat network, and he and his neighbours saw their price per kWh double last winter. What protection can the Minister give as we come into the next winter, as residents in Dalmarnock are really worried that prices will again soar in this unregulated area?
Patrick Grady (Glasgow North) (SNP)
Do the Government think the UK is on track to meet the 2050 net zero target? Do the Government think the UK will meet that target? Do the Government even really care?
Graham Stuart
We have, of course, met all our carbon budgets to date. In the progress report, the Climate Change Committee said it had increased confidence in our meeting carbon budget 4 and, yes, this country will meet its net zero targets by 2050. It will do so in line with the advice that we are given, and I am proud of the fact—the hon. Gentleman could share this with his constituents, who may be concerned otherwise—that this country has cut its emissions by more than any other major economy on earth, thanks to the policies of this Government.
Tim Farron (Westmorland and Lonsdale) (LD)
This morning, I received a text from one of the leadership team at one of our local hospices. It said that
“there has been no additional support for our energy costs. Costs have gone up while statutory support hasn’t changed... Hospices UK lobbied for additional support…to no avail… We operate 24/7 and have to keep the heating on—you know what the weather is like in Cumbria in the winter!”
When will the Minister come up with a bespoke support scheme for our vital hospices?
Caroline Lucas
On a point of order, Mr Speaker. In the exchange about the amendment on flaring just now, I do not think I heard the Minister formally withdraw his accusation that I got my facts wrong, and I certainly did not hear him apologise. Given that he has now accepted that he got his facts wrong and my facts were right, I would love him to formally correct the record and perhaps even to apologise as well.
Graham Stuart
Further to that point of order, Mr Speaker. The hon. Lady is quite right to raise this in that way, and I am happy both to withdraw that and to apologise to her for getting my facts wrong on that occasion.
Residential Co-operative Power Production
Graham Stuart Excerpts(1 year, 2 months ago)
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The Minister for Energy Security and Net Zero (Graham Stuart)
I congratulate my hon. Friend the Member for Bridgend (Dr Wallis) on securing this important debate, and thank him for sharing his thoughts during the conversation that we were able to have ahead of it. As we heard in his moving and well-thought-out speech, he has continued to be a champion in this regard. I want to begin by assuring him that the Government recognise the importance of empowering local communities to come together to deliver renewable energy projects for their areas, be that putting solar panels on school roofs, setting up electric vehicle chargers in local communities or developing residential power production using hydro, say, to power a village.
My hon. Friend has raised a concern that people who invest in their own renewable energy are still required to pay the green levies that are part of their energy bills and he made an appeal that they should cease to do so. Levies more than pay for themselves by driving investment in renewables. He mentioned the fact that large-scale renewables have driven down costs enormously over the last decade or so, not least through our contracts for difference scheme, which this Government are very proud of. These levies provide vital support to low-income and vulnerable households and, because of the way they have been used in the system, they have saved consumers money on their energy bills overall over the past 10 years.
Having a fair system relies on everyone being part of it. If consumers anywhere are reliant on the infrastructure that is developed by the whole, there is a strong case that they should contribute to that whole; otherwise, there is a danger of creating a system that is the opposite of what my hon. Friend seeks—namely, a system that is less fair, in which people can buy their way out of a system that is designed to cater for all.
The Government are committed to ensuring that the cost of the UK’s transition to net zero is fair and affordable for all energy consumers and, over the past decade, environmental and social schemes have been instrumental in driving the decarbonisation of the system. It is fair that all consumers should contribute towards the cost of these schemes, as the UK’s transition to abundant low-carbon energy over the coming decades will bring benefits to households and businesses everywhere. Our recent exposure to volatile global gas prices underscores the importance of our plan to build a strong home-grown renewable energy sector in order further to reduce our reliance on fossil fuels, but one that, importantly, ensures that everyone everywhere, whether or not they can invest in their own local renewable energy, is protected and looked after.
Some billpayer-funded schemes are important for tackling fuel poverty by providing financial support or home upgrades to low income and vulnerable households. We do not wish to see a system in which people can withdraw from supporting that. Ofgem, the energy regulator in Great Britain, administers renewable energy and social schemes on behalf of the Government and ensures that policy targets are met in as economical and consumer-friendly a way as possible. A list of the current environmental and social schemes that are funded through those bills can be found on Ofgem’s website.
In response to my hon. Friend’s point about changing the tax rules specifically on bill savings from off-site renewable ownership—he will know what is coming—I have no choice but to comment that taxation is a matter not for me but for the Chancellor. However, I would like to reassure him that we see value in, and support, community energy, including co-operatives that come together to create community energy projects such as Graig Fatha, which he mentioned. They play a role in our efforts to eliminate our contribution to climate change.
The Government offer a range of support to that type of project, perhaps just slightly different in nature to the ones that he has so passionately espoused today. They include the brilliant new £10 million community energy fund. This enables both rural and urban communities across England to access grant funding to develop local renewable energy projects for investment. The community energy fund follows on from the success of the rural community energy fund, which was delivered through our local net zero hubs and has funded several innovative projects. An example is Swaffham Prior in east Cambridgeshire, a pioneering project in a village of around 300 homes. It is one of the first villages in the UK to install a heating network into the existing infrastructure. In order to get more brilliant projects such as Swaffham Prior set up, we are aiming to launch applications to the community energy fund as soon as possible.
I recognise that the community energy fund is open only to communities in England. This is because the devolved nations have their own support schemes for community energy. For instance, the Welsh Government have the Energy Service, which works with both the public sector and community enterprises to reduce energy use, to generate locally owned renewable energy and to reduce carbon emissions. Similarly, the Scottish Government’s community and renewable energy scheme supports communities across Scotland to engage with, participate in and benefit from the energy transition to net zero.
Community energy funding is available alongside UK-wide growth funding, and we encourage community energy groups and residential co-operatives to work closely with their local authority to support the development of community energy projects within these schemes. The UK shared prosperity fund supports interventions that reinforce our commitment to reach net zero, and that includes £2.6 billion of funding for investment in places, including for community infrastructure projects. An example of that is West Devon District Council, which has been among the local areas to benefit from this type of UK growth funding. It received £1.1 million under the shared prosperity fund, which includes provisions to support community energy groups, helping them to bring projects forward and to access funds to support their goals. I entirely share the vision and the aspiration set out by my hon. Friend, and we have measures in place to ensure that can be brought to reality.
Beyond this, Ofgem also supports community energy projects and is now welcoming applications from community interest groups, co-operative societies and community benefit societies to the industry voluntary redress scheme, which is much more helpful than its name suggests. This allows groups to apply for funds to deliver energy-related projects that support energy consumers in vulnerable situations, that support decarbonisation and that benefit people in England, Scotland and Wales.
We also regularly engage with the community energy sector through the community energy contact group. This is our central engagement method to stay in touch with community energy, to hear from the voices of that community and to allow the people involved to feed into Government policy.
I know many Members, including my hon. Friend, will have supported the Local Electricity Bill and the amendments on community energy that were tabled on the Energy Bill. During the passage of the Energy Bill, which I am delighted to say has now completed its Commons stages, the Government carefully considered the amendments that sought to ensure a right to local supply. We set out the reasons why we were unable to accept those amendments and why it was not right to do so, which included ensuring the best outcomes for consumers and the sector overall, but the Government recognise that community energy projects have real benefits for the communities in which they are based and for the nation as a whole, and we are keen to ensure that they deliver value for money for consumers nationally and locally alike.
We have worked closely with many parliamentarians and the community energy sector to develop commitments that will better support the development of this type of energy. These commitments include the launch of the £10 million community energy fund, which I have already mentioned, alongside which we have committed to publishing an annual report and to consulting on the barriers that the sector faces when developing projects, precisely to ensure that we can have more of them. We are working with the sector through the community energy contact group so that we have the most effective routes available and so that we make it as easy for communities to understand the help that is available in the system.
I close by thanking my hon. Friend for securing this important debate and for the manner in which he opened it. I am proud of the wide range of support that the Government offer to community energy groups across the country. This support enables local community groups to come together to deliver renewable energy projects for their area, including in residential co-operatives. I share the vision that my hon. Friend set out, and I look forward to working closely with him, in Wales, Scotland, England and right across the United Kingdom, to see that vision made even more of a reality than it is today.
Question put and agreed to.
Offshore Wind Contracts
Graham Stuart Excerpts(1 year, 2 months ago)
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Edward Miliband (Doncaster North) (Lab) (Urgent Question)
To ask the Secretary of State for Energy Security and Net Zero if she will make a statement on the implications for offshore wind of contracts for difference allocation round 5.
The Minister for Energy Security and Net Zero (Graham Stuart)
The first annual contracts for difference auction—the first that we have ever done—was completed last week and delivered a total of 3.7 GW of renewable electricity, with contracts going to a record number of projects. The auction delivered significant quantities of new solar and onshore wind generation, as well as supporting 11 new tidal stream projects and, for the first time, geothermal projects. It was a competitive auction, set against a backdrop of highly challenging macroeconomic conditions that have impacted the sector globally. Given that this was our first annual round, it was to be expected that it would have a lower capacity than the previous biennial rounds, and, because last year’s round was the first for three years, a higher annual element than that record round.
The Government remain committed to offshore and floating offshore wind projects, and this round provides valuable learning for subsequent auctions. Work has already started on allocation round 6, incorporating the results of the recent round, and we look forward to a strong pipeline of technologies being able to participate. The move to annual auctions means that allocation round 6 will open in just six months’ time, in March 2024, which means that there could be minimal or indeed no delay in the deployment of new capacity through that round.
The Government also remain committed to our target of decarbonising the power system by 2035 and our ambitions for 50 GW of offshore wind, including up to 5 GW of floating offshore wind. Our trajectory for meeting these aims, as well as our legally binding carbon budget 6 targets, is not linear. The outcome for one technology in one auction does not prevent us from reaching those goals.
Edward Miliband
What a load of nonsense. No wonder the Secretary of State is in hiding.
This auction is an energy security disaster for Britain, and an act of economic self- harm on the part of the Government. No new offshore wind projects means that families’ energy bills will £2 billion higher and our energy security will be weakened. Worst of all, this was totally avoidable. Ministers were warned again and again about the impacts of higher inflation—in a letter from RenewableUK in March, and again in July—and offshore wind is so much cheaper than gas that they could have raised the price in the auction and it would still have saved billions of pounds for families, but they refused to listen.
First, will the Minister tell us why the Government ignored those repeated warnings? Secondly, he said on Friday that every country was in the same boat, but that is just wrong. Ireland listened to industry and adjusted its price, and had a successful auction in March 2023. Why did the Government not learn that lesson? Thirdly, is not the terrible truth that this episode reveals a much deeper flaw in their approach? For month after month this summer, they claimed that the answer to our energy crisis was more oil and gas, and this is the result. We will now be more dependent on expensive, insecure fossil fuels. We will be more exposed to the whims of petrostates and dictators. Every wind farm that we fail to build makes us more exposed to dictators like Putin, and he knows it.
Bills higher, security worse, jobs lost, climate failure—the Government have trashed offshore wind, the crown jewels of our energy system, raising bills, just as they trashed onshore wind by banning it, raising bills, and just as they trashed home insulation, raising bills. We have seen 13 years of failed energy policy, and all this fiasco shows is that the Conservatives are, quite simply, a party unfit to govern.
Graham Stuart
I was pleased to see the other day that the rumours of the right hon. Gentleman no longer being in his position were not true. It is perhaps understandable in that context that he is so passionate about this highly successful round that has seen 3.7 GW on an annualised basis. I think that is a record round. He was a member of the previous Labour Government who left this country with 6.7% of its electricity coming from renewables. In the first quarter of this year, 48% of our electricity was from renewables. It was this Government, with our contracts for difference system, who transformed the economics of offshore wind. We have 77 GW of offshore wind in the pipeline—more than enough. We have 7.5—[Interruption.] The right hon. Gentleman understandably, given the weakness of his arguments, wants to heckle at all times, knowing how easy it is to dismantle them. He asks me where that capacity is, and I can tell him that 7.5 GW is currently under construction.
As ever, the right hon. Gentleman fails to be on the side of consumers. We moved to an annualised auction precisely to ensure that we could learn the lessons from each round, add them to our industry insight and ensure that we could move forward. The projects take multiple years to be developed, and none of them has disappeared. I predict that, moving on from the triumph of 3.7 GW of renewables, which came through successfully on Friday, allocation round 6 will be more successful still. We will continue to build our reputation as the country that has cut emissions more than any other major economy and that has transformed our electricity generation. He mentioned insulation—how he has the gall, I do not know. We have moved from 14% of homes being properly insulated when he left power to over 50% by the end of this year.
Selaine Saxby (North Devon) (Con)
I thank the Minister for his engagement with this process, particularly with the new technology of floating offshore wind. Three floating offshore wind projects were due to bid in allocation round 5 but none did, due to the low administrative strike price. As chair of the all-party parliamentary group for the Celtic sea, I have repeatedly been told that these projects are part of our future energy supply. Can he outline what steps he is taking to ensure that these projects will float in allocation round 6 and to give confidence to developers in the region?
Graham Stuart
I thank my hon. Friend, who is an absolute champion of floating wind and the economic opportunities it offers for her area and the rest of the UK. I was delighted to speak to her last week and meet her yesterday, and I pay tribute to her efforts. We have the largest floating wind pipeline in the world, based on confirmed seabed exclusivity arrangements. We have around 25 GW already identified, including through the ScotWind leasing round and innovation and targeted oil and gas—INTOG—processes. As she, as a great champion, knows, the Crown Estate is moving forward with its leasing round 5 for up to 4 GW of capacity in the Celtic sea this year. We have been the world leader on floating energy and we are going to stay the world leader. Thanks to the efforts of my hon. Friend, I know that we will have support across the House.
Dave Doogan (Angus) (SNP)
The Minister failed to point out that 3.7 GW is scarcely half of what was achieved in auction round 5. He also failed to mention, when he was heralding onshore wind, that 90% of that will be found in Scotland. Since 2014, the four auction rounds have yielded 1 GW, 2.5 GW, 5 GW and 7 GW, so a nil return is an utter catastrophe.
The critical need for massive investment in offshore is patently obvious for bills and for the climate, yet this ambition has been thwarted by an incompetent previous Secretary of State and by the Treasury, which knows the price of everything and the value of nothing. Can the Minister assure us that the Department will get round the table with industry as a matter of urgency to try to repair this damage? Industry needs a strike price that reflects the not-mutually-exclusive goals of lower bills, net zero, and jobs and investment in Scotland and elsewhere. Can he confirm whether a recovery group for auction round 5 will be convened by him or the Secretary of State to try to get this catastrophe resolved? And where is she?
Graham Stuart
The hon. Gentleman and his party never fail to trash this country—[Interruption.] He can heckle all he wishes. I will be meeting industry representatives this afternoon and, as I have said, we will be announcing in two months’ time the price ceiling for the next round—[Interruption.] I am getting heckling, not least from His Majesty’s Opposition, who left us in that parlous situation. We are the world leader in so many of these technologies and we are going to continue to be. If the hon. Member for Angus (Dave Doogan) were to recognise the need to attract investment to this country and not talk it down, he might find that Scottish jobs would be even stronger in the pipeline than they are already.
Sir Desmond Swayne (New Forest West) (Con)
If any, how much of the completed wind capacity still requires connection to the national grid?
Graham Stuart
Until wind capacity is constructed, it is not normally connected to the grid. That which has not been connected to the grid will need to be connected to the grid.
Mr Speaker
I call the Chair of the Select Committee on Energy Security and Net Zero.
Angus Brendan MacNeil (Na h-Eileanan an Iar) (Ind)
The boom and bust of this fiasco will inevitably have knock-ons for the supply chain. How concerned is the Minister about that? Also, how concerned is he about projects that were built on CfD securities but have not invoked the contracts and are now literally raking in the windfall of that act?
Graham Stuart
I do not quite follow the second part of the hon. Gentleman’s question, but I am happy to write to him on that topic.
Mr Ian Liddell-Grainger (Bridgwater and West Somerset) (Con)
West Somerset, as the Minister knows, is ideal for offshore wind. I am interested to know why people did not bid in this round. What were their reasons? What can the Government do to learn the lessons of this round so that people like my hon. Friend the Member for North Devon (Selaine Saxby) can make sure that people are bidding in the next round?
Graham Stuart
We typically set out the key auction parameters in November, and those include the ceiling of what we will pay for particular technologies. We do that based on our analysis of supply chain costs, and we also commission external analysis. The most important data of all comes from individual auction rounds, and it is on that basis that we set the price parameters. The industry warned us, as it does every year, that it wants us to pay more. We always have to make a judgment call between making sure that we minimise—[Interruption.] It would be so much easier to give my answer, Mr Speaker, if the right hon. Member for Doncaster North (Edward Miliband) would stop—
Mr Speaker
Order. I think that, as a man who was always happy to heckle from the Back Benches, the Minister deserves a little bit himself.
Graham Stuart
We set the prices, and we immediately learn from each auction. One of the reasons for having an annual auction is that we can quickly adjust and, as I said, projects can then come into the next round with minimal delay.
Lloyd Russell-Moyle (Brighton, Kemptown) (Lab/Co-op)
The wind farm off Brighton has probably become as iconic as the pier itself, but the reality is that the Government’s failure will delay the construction of more of these beautiful installations around our coast. Is this failure not also a failure of the market-based private investment system that this Government are determined to pursue, rather than a publicly owned and co-ordinated building programme that can work alongside private investment so that we no longer have this failure where nobody bids?
Graham Stuart
I thank the hon. Gentleman for revealing the true face of where the Labour party is going. We can go back to the days when we had hardly any renewables, and we can allow Great British Energy, or whatever Labour is going to call its creature, to squeeze out private investment and destroy the most successful renewables market in Europe, and to destroy this Government’s progress on tackling the parlous position left behind by the right hon. Member for Doncaster North and his friends. We will continue to be the world leader in cutting emissions, but not if we move to the state-run, left-wing obsessions of colleagues like the hon. Member for Brighton, Kemptown (Lloyd Russell-Moyle).
Peter Aldous (Waveney) (Con)
Offshore wind plays, and will continue to play, a key strategic role in enhancing energy security, achieving net zero and revitalising coastal communities such as Lowestoft. To get back on track, can my right hon. Friend confirm that the criteria applying to round 6 will take account of current economic realities, that appropriate fiscal measures are being considered ahead of the autumn statement and that specific focus will be given to enhancing local supply chains?
Graham Stuart
I thank my hon. Friend, who has been such a consistent champion not only for the power of renewables to meet our environmental challenges but for the economic benefits that come from them. He is absolutely right that the nature of the CfD system is that it learns from the previous auction round, which is the most real data of all, and uses that learning to inform the next round. That is why I am confident that, just as we had a success with 3.7 GW on Friday, AR6 promises to be more successful still.
Caroline Lucas (Brighton, Pavilion) (Green)
I congratulate the Minister on turning complacency and chutzpah into a new art form. The ineptitude of Tory Ministers means that this latest CfD round saw the smallest auction return since 2015—a failing that was entirely avoidable. How will he ensure that the UK delivers the 35 GW of new offshore wind capacity that is needed in just six years? Why did Ministers yet again fail to heed the warnings from industry and experts in advance?
Graham Stuart
We have to set the parameters based on the best information we have. As I say, one reason for moving to an annual round is to allow us quickly to learn the lessons of each round. We did not get the wind on this occasion, which I regret, and we will put the real-world prices and learnings from that into the next round. That is the system we have, because we are always trying to make sure that we get the parameters right so that we balance the need to generate additional green energy with the cost to the taxpayer. Understandably, given their carelessness with the public finances and with consumers, the Opposition do not seem to care about that. My job is to balance it, ensuring that we get the generation, and we have 77 GW in the pipeline. We are in position and on track to meet our ambitions, which lead Europe—not that we would know that to listen to the hon. Lady.
Cherilyn Mackrory (Truro and Falmouth) (Con)
I thank the Minister for including geothermal projects in allocation round 5, as that is very welcome. However, I echo everything my hon. Friend the Member for North Devon (Selaine Saxby) says about the Celtic sea projects. What will we do differently in round 6? What advice would he give to those in the supply chains, specifically ports, that are trying to submit applications for the FLOWMIS—floating offshore wind manufacturing investment scheme—funding? What conversations has he had about grid capacity, to ensure that all of this eventually runs smoothly?
Graham Stuart
As ever, my hon. Friend is well-informed. We are working on all those fronts. FLOWMIS applications closed just two weeks ago, and we are working flat out to analyse them. I hope that by the end of the year we will have shortlisted to the primary list and those schemes will move forward to due diligence, as we take forward not only our floating wind deployment, but the supply chain in the south-west, Wales, Scotland and around the rest of the UK. We are working on all those fronts and are determined to do that. As she rightly highlights, seeing our first geothermal projects come through the CfD is fantastic, as are the 11 tidal projects. I pay tribute to all colleagues who have worked so hard to promote tidal energy and make sure that we continue to be a world leader in that as well.
Olivia Blake (Sheffield, Hallam) (Lab)
This is an embarrassment for the Government and shows that we are falling further and further behind in the race for green jobs internationally. We have the lowest growth in these industries among the eight biggest economies. Should the Government not be focusing much more on broadening and increasing the capacity of offshore wind, rather than not listening to industry and making fatal errors?
Graham Stuart
If the Labour party is not nationalising or creating some state-owned behemoth, it wants just to hurl money in the direction of business. Our judgment is to balance those things and I am pleased to say that we have been successful; we have the largest offshore wind sector in Europe. This country and this Government, through the CfDs, transformed the economics from the situation we inherited after the right hon. Member for Doncaster North and his colleagues had been in power.
Stephen Crabb (Preseli Pembrokeshire) (Con)
Delivering on the floating offshore wind project in the Celtic sea is vital for our energy security and decarbonisation. Does the Minister agree that we now need to bolster confidence in this emerging industry? There are two things he can do. Does he agree that a successful allocation of FLOWMIS money to the south Wales ports in order to get this industry moving is vital? Does he also agree that we need to ensure that the Crown Estate’s leasing round at the end of the year is done successfully, but with more than 4 GW of visibility, in order to send a strong market signal to the industry to invest?
Graham Stuart
My right hon. Friend is also someone who, through thick and thin, promotes that industry and sees the opportunity it offers Wales. He makes a special bid for the Welsh ports, as I would expect him to do, but he will understand that I can make no comment on that. I entirely agree with him on the importance of the Crown Estate round. Suffice it to say that across Government we have been working flat out, with his and other colleagues’ support, to support the Crown Estate to ensure that we maximise the opportunity in the Celtic sea.
Wera Hobhouse (Bath) (LD)
The Government’s obsession with oil and gas has left us in this mess. The Department has prioritised new oil and gas licences over support for wind power, which flies in the face of our climate change commitments and our responsibilities to UK citizens—our constituents—to keep energy prices low. Oil and gas will always be more expensive than wind energy. When will the Minister fill the gap of 5 GW of offshore wind that we have now missed out on, which would have saved consumers £2 billion a year? I am not talking about the sixth auction round—I am talking about the fifth one, where we have missed out now.
Graham Stuart
The hon. Lady is completely mistaken. We are working flat out both to reduce demand for fossil fuels in this country and to build up our renewables. I would hope she would celebrate the fact that we have the largest offshore wind sector in Europe.
Mick Whitley (Birkenhead) (Lab)
The Government have long been warned that their focus on CfDs as the primary mechanism for financing new renewables risks undermining investor confidence in infrastructure assets with long lifespans but significant up-front capital costs, such as nuclear and tidal range generation. Following the Government’s decision to employ a regulated asset base model to support the development of new nuclear, will the Minister now commit to looking urgently at the optimum financial model for new tidal range projects, which could make a crucial contribution to the future UK energy mix?
Graham Stuart
The CfD scheme is among the most successful, if not the most successful, of its sort in the world. We always look at ways in which we can improve it. We are looking at bringing in non-price factors as we finesse it, but the Opposition party’s idea of some state-run enterprise, squeezing out private investment, would destroy the opportunities going forward. We need at least another £100 billion to be invested by 2030 and if the Labour party ever did threaten to come into power, it would put all that at risk.
Alex Cunningham (Stockton North) (Lab)
On Teesside, we have been promised thousands of jobs in the offshore wind industry, but investors are getting a little nervous as a direct result of Government failures to provide the right business environment. What will the Minister do to get the business environment right to deliver the jobs we have been promised, which are being put in jeopardy by Government failures?
Graham Stuart
We are getting that balance right and we will continue to do so. Making sure that we look after the consumer is always my guiding light, and we balance that with getting the generation we need. We have seen companies such as SeAH investing in Teesside and Sumitomo looking at investing in Scotland—
Graham Stuart
As the hon. Gentleman decries this and talks both the area and the nation down, he then tells me that investors are getting nervous. If he were to champion all the successes we have had instead of decrying them, he might find that he would give investors even more confidence still.
Sammy Wilson (East Antrim) (DUP)
I do not agree with the policy that the Minister pursues. His net zero policy is disastrous and has been costly in terms of electricity prices and future planning. However, I feel some sympathy for him today. He is being criticised by those who have highlighted high energy prices for not offering inflated prices to the wind industry, which claims that producing wind energy is getting cheaper but of course wants higher prices. As it was not offered that, it would not bid in the auction. Is the real reason for this not that for the first time he has refused to allow those who bid to walk away from their CfD agreements, to price electricity at whatever price they want and therefore to have inflated profits? Does that not indicate to him that the wind industry knows it cannot produce electricity cheaply and wants the system balanced in its favour?
Graham Stuart
The right hon. Gentleman and I do not see eye to eye on net zero or on the economic benefits of the wind industry. It does offer cost-effectiveness. It has been amazing to see how as it is scaled, it has been able to bring the price down. It was not obvious when we went out into the North sea that we would be able to bring the price crashing down, yet this country led the world in doing that. If he looks at the numbers, I hope he will find that the whole of this House can agree on one thing: offshore wind is an economic way of producing energy, and one that all of us should support.
Beth Winter (Cynon Valley) (Lab)
Last week, the think-tank Common Wealth made the critical point:
“Reliance on market coordination leaves the transition vulnerable to the demands of private capital”.
It is abundantly clear that private capital cannot deliver what is urgently required to stem the climate crisis. In Wales, the Welsh Government know that, which is why, over the summer, they launched the community-owned renewable energy company, Ynni Cymru. Does the Minister agree that that is what is required, and what action is he taking to address this?
Graham Stuart
I thank the hon. Lady for pulling back the veil on Labour’s real policy, which is that it hates private capital, it hates private investment and it would destroy the phenomenal success of this country in generating that. [Interruption.] The Front Benchers can heckle all they like, but that is what their Back Benchers want. That is the policy that threatens the British people and threatens our path to net zero. We must make sure that people such as the hon. Lady never have power in this country.
Joanna Cherry (Edinburgh South West) (SNP)
Scottish Renewables has said that the results are a major blow to the renewables sector in Scotland and should serve as an indication that urgent reform is needed. Scottish Renewables, not a political party but part of the industry, has also said that these disastrous results are bad for Scotland’s energy supply chain, which desperately needs a steady stream of projects to make its own investments in skilling up and in new technology. Will the Minister acknowledge that his and his Department’s failure to listen to warnings from the industry is holding back Scotland’s renewable sector?
Graham Stuart
I thank the hon. and learned Lady for her question. Industry always asks to be paid more money. Our job is to make the right judgment call on getting the balance right.
Hywel Williams (Arfon) (PC)
I saw in the newspapers yesterday that astronomers have discovered a water-covered planet in a far away galaxy. I have to disappoint these excited scientists that, from his answers today, the Minister appears to have got there before them. [Interruption.] On another planet, yes.
Seriously though, this setback to the Erebus project in south-west Wales is deeply disappointing. It was the first of its kind in Wales and was supposed to pave the way to a developing industry. I hope the Minister can reassure me that he is taking steps to make sure that, in AR6, projects such as Erebus are enabled to compete successfully and to lead the way for this industry in Wales.
Graham Stuart
I thank the hon. Gentleman, not least for his attempt at a gag. I can tell him that what he says is the whole basis of the system—that it learns from each round. The most real economic data that we get is from an auction round. Moving to annual rounds, there will be ebb and flow as the right balance is sought between getting the generation that we require, set against our extremely ambitious deadlines, and not paying too much. That is the balance that we strike. We have 3.7 GW and I imagine that we will do even better next time.
Mr Alistair Carmichael (Orkney and Shetland) (LD)
I feel as if I am almost taking my life in my hands, but I do want to commend the Minister for one small piece of good news in this round, which is in relation to the development of marine renewables. The success of the auction for tidal stream development illustrates what would be possible for wave power if it were to be given the same opportunity in AR6. But for tidal stream, does the Minister agree that what is now needed is the 1 GW target for deployment? Will he work with me and other people in the House with an interest in this and the marine renewables sector itself to deliver that ahead of AR6?
Graham Stuart
May I pay tribute to the right hon. Gentleman? I met him in his constituency when I visited the European Marine Energy Centre and saw for myself some of the projects in the water. I am personally determined to ensure that tidal stream continues to grow. We maintain our global leadership, with a very high percentage UK supply chain as a further positive to it. He tempts me to get ahead of myself on policy, but I cannot do that. However, what we are doing and what our dedicated pot this year did is further strengthen that so that we can get in a position where that might be a realistic policy position to take.
Dame Nia Griffith (Llanelli) (Lab)
Even with a higher price, offshore wind would help to slash bills. When the Minister saw the Irish Government recognise inflation, up the price and proceed to a successful auction, what discussions did he have with the industry and with Treasury colleagues about the price to be set?
Graham Stuart
I thank the hon. Lady for her question, which is a good one. Obviously, we did look at whether intervention, given that prices continue to change after they are set, was the right thing to do. We think that the CfD mechanism—the way that it is operated—is sound and that the best thing to do is to allow that to pass for the year. One reason for having the annual auction was precisely to allow us quickly to adjust, and, as I say, as soon as November, we will be setting the parameters for the next year.
Richard Foord (Tiverton and Honiton) (LD)
Last November, the Government paid up to £700 million to China General Nuclear Corporation to buy out China’s state-owned nuclear power enterprise from Sizewell C, and we spent the best part of 2022 freeing ourselves from our reliance on Russian oil and gas. Given the failure of this Government to sell offshore wind projects in the latest round, can the Minister please comment on how energy independence from authoritarian states was served by this inability to run an auction?
Graham Stuart
We are now running these auctions every year, and every year, we will be seeking to get the generation that we require at the lowest possible cost to the consumer. I make no apology for doing that. The fact that we have the most successful system, not only in Europe, but globally, is something that should be applauded and recognised.
Jonathan Edwards (Carmarthen East and Dinefwr) (Ind)
The Windsor report last month provides a sobering analysis about the scale of new electricity transmission infrastructure required to serve increased renewable generation and consumer demand in a very short space of time. However, as the report finds, there is considerable resistance locally to pylon development, as we are finding out in my constituency. Competence for such development is with the Welsh Government, but will the Minister pull together a working group of Ministers from across the UK and experts to consider the Windsor report, and in particular the advantages of cable ploughing technology, which would underground those cables at a comparable cost to overhead pylons without the visual damage?
Graham Stuart
I thank the hon. Gentleman for his constructive and effective question. He is absolutely right to highlight the challenges of making sure that we have the right transmission and connection infrastructure to facilitate offshore wind. We have to do that in a way that minimises negative impacts on communities, that rewards them for hosting it, and that looks at new technologies and innovations, just as we do in other areas, in order to facilitate that effective connection with minimal negative impact on communities that host.
Jim Shannon (Strangford) (DUP)
In light of the disappointing results of the CfD AR5 auction and given that I am always trying to be constructive in my contributions in this House, will Government revisit the exclusion of Northern Ireland renewable projects from the scheme, especially in light of the significant increase in onshore wind and tidal stream projects supported by the AR5? Northern Ireland is perfectly positioned for onshore wind and tidal stream to make a major contribution to energy security and net zero from AR6 and beyond. Will the Minister commit to enable Northern Ireland to be part of AR6?
Graham Stuart
I suggest that it is the hon. Gentleman and his colleagues who need to commit to facilitating that in Northern Ireland. Energy is devolved and it is up to them to get the devolved Assembly up and running. If they get devolved government going in Northern Ireland, they will unleash these opportunities. It is not for this Department, which is not responsible for energy in Northern Ireland.
Offshore Wind: Public Ownership
Graham Stuart Excerpts(1 year, 2 months ago)
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The Minister for Energy Security and Net Zero (Graham Stuart)
It is a pleasure to serve under your—as ever—sartorially elegant chairmanship, Mr Dowd. I congratulate the hon. Member for East Lothian (Kenny MacAskill) on securing this important debate, and the hon. Members who have taken part in it.
The hon. Gentleman gave a well-constructed, well-researched and thoughtful speech from the particular political perspective from which he hails, and I thank him for it. He will be aware of the important role that offshore wind and other renewables play in delivering secure, domestically generated energy, and the boost that provides for economic growth across the UK. He is right that we must harness the opportunities of offshore wind for Scotland and maximise the benefits for our nations—whether that is Wales, Scotland, England or Northern Ireland.
Where the hon. Gentleman and I differ is on how best to exploit that opportunity from where we start. This Government believe that a state-owned model is not the best approach. I am sure that, if we had allowed some new state company to come in and dominate our offshore wind sector, we would never have seen the 70% reduction in the cost of offshore wind that we have seen over recent years. It was the contracts for difference framework that we created, which allowed companies from all over the world, state or non-state, to come in, that transformed the economics of offshore wind and opened up the potential for not only the UK but the whole world of this important technology in tackling net zero.
The UK market is open to offshore wind investment, whether from state-backed or privately owned developers, and it has been extremely effective. The success of CfD has been in leveraging private capital to support wider public benefits. Our market-friendly approach has transformed the economics, as I said.
The UK encouraged an estimated £50 billion of new investment in low-carbon sectors in 2021 and 2022 alone. We currently have 14.2 GW of installed offshore wind capacity, the most of any nation in Europe. The hon. Gentleman made many references to different countries, but we have more of it than anybody else, and we drove its changing economics by taking a competitive approach rather than a protectionist, state-run approach that would never have delivered such a transformation.
We are committed to our ambition of reaching 50 GW by 2030, including up to 5 GW of floating offshore wind. We have not only the world’s largest operational wind farm project—Hornsea 2 off the Yorkshire coast, which is named after a town in my constituency—but the second, third and fourth largest projects.
Graham Stuart
I will make a little more progress, if I may.
Properly regulated markets that incentivise private capital—or indeed state capital—to invest in the energy system provide the best outcomes for consumers. Market competition is the most effective driver of efficiency, innovation and value. Private ownership of energy assets improves performance and reliability, and offers consumers greater choice and higher standards of products and services.
Our free market approach means that we have a highly competitive offshore wind market, which benefits from the expertise and experience of developers from all over the globe. It has enabled significant decarbonisation of our energy system, with dramatic drops in the cost of renewables. In 2010, when Labour left power, this country had a paltry 6.7% of its electricity coming from renewables. That was shameful. In the first quarter of this year, nearly 48% of our electricity came from renewables. Ten or 11 years ago, nearly 40% of our electricity came from coal. Next year, that will be zero, again because of our market-friendly policies, which would be at risk were His Majesty’s Opposition to have their ideas for state-run energy companies wrecking one of the most successful markets in the world. All over the country people are benefiting from the growth of the sector, and the cheap, secure, low-carbon electricity it produces.
Scotland has already benefited from the opportunities in offshore wind. It is a shame the hon. Member for East Lothian could not bring himself to recognise any of that. With its strong winds and plentiful coastline, it has made a significant contribution towards our offshore wind ambitions: so far, 3 GW is operational or under construction, and more than 40 GW of capacity is in the pipeline. The opportunity is enormous. The Scottish taxpayer already benefits from the Crown Estate Scotland seabed leasing. All net profit from offshore wind leasing rounds and rent is passed on to the Scottish Government for public spending.
We welcomed the recent announcement of a potential £200 million investment in high-voltage direct current manufacturing in the highlands by Sumitomo of Japan, which could create up to 150 jobs. The offshore wind industry has also supported the revitalisation of ports from Wick to Dundee. A huge range of diverse companies in Scotland already benefit from the offshore wind industry’s growth: crane manufacturers, consultants, underwater operations experts, turbine maintenance specialists and more. We know that opportunity will only expand as we grow the industry further.
The UK, as I have said, leads the world in floating offshore wind, a new technology that opens up access to new, deeper areas of seabed. The Hywind Scotland project was the world’s first floating windfarm. Combined with the Kincardine project, also in Scotland, it has given the UK one of the largest amounts of operational floating capacity anywhere in the world, at 80 MW. The UK has the world’s largest floating wind pipeline, with around 25 GW already identified, including through the ScotWind leasing round and INTOG processes. That represents a huge opportunity for the Scottish economy, especially from installation and lifetime maintenance activities, which are best undertaken locally.
I suggest to the hon. Member for East Lothian that, if he is as passionately committed as he suggests to jobs and benefits for Scotland, he should not be sending a message that we want to deter foreign investment, but signalling that we welcome it.
Graham Stuart
I will in a moment, if time allows.
To achieve our deployment ambitions and secure high-quality local jobs, we must continue to build a robust and competitive UK offshore wind supply chain. We are focused on maximising the economic opportunity arising from our transition to clean energy. Our significant strengths, including in wind energy and innovation, mean we have an essential role in building those supply chains, as demonstrated by this Government’s investment to date.
Through the offshore wind manufacturing investment scheme, the UK Government have made available funding to support investment in major port and manufacturing infrastructure. We have seen more than £500 million invested by SeAH Wind and JDR Cable Systems in manufacturing facilities, which will create or safeguard up to 1,200 jobs. I want to see similar investments in Scotland. That is why we continue to work with industry as it develops a long-term industrial growth plan for the sector, following the publication of Tim Pick’s recommendations.
Government backing attracts the private investment needed to deliver net zero. That includes research and development, where we are supporting innovation in floating wind technology through the floating offshore wind demonstration programme. That uses £31 million of Government funding, alongside £30 million from industry, to keep the UK at the cutting edge of offshore wind innovation. We are not stopping there. Just two weeks ago, applications closed for the Government’s floating offshore wind manufacturing investment scheme, which will provide up to £160 million to kick-start investment in port infrastructure projects needed to deliver our floating offshore wind ambitions.
The hon. Member for East Lothian gave a passionate speech effectively opposing the world’s investing in our renewable energy, and in offshore wind in particular. I caution him to think again, send out a more positive line to the world and recognise the huge investment opportunities here.
Kenny MacAskill
Does the Minister recognise that everything that he has said about private sector investment can and does happen in Denmark, but Denmark has taken a 20% stake on behalf of the Danish people, as Norway has done for oil and gas? None of what the Minister has suggested is impossible in Denmark, and it is happening. Does he accept that?
Graham Stuart
Denmark’s situation, size and industrial history are very different from the UK’s. What I am saying is that the UK is a European and, indeed, a world leader. We have decarbonised more than any other major economy on earth, and we believe that it is making us the best possible investment environment. We do not see the advantages of taking the state stakes that the hon. Gentleman suggests.
It remains essential that communities most affected by offshore wind and its associated infrastructure can benefit from its deployment. We recognise, for example, that regional distribution charges particularly impact the north of Scotland. That is why our cross-subsidy scheme provides more than £100 million annually to protect electricity consumers in the far north. It is worth £60 a year to every household in the north of Scotland.
We also want communities and individual families that are not involved directly in the industry to see benefits. That is why we have recently consulted on proposals for community benefits for transmission network infrastructure, including in Scotland, because we are essentially rewiring the whole UK economy as we make this transition. We must do it at speed, but in a way that has community support and in which we recognise the impact on host communities. Developing transmission infrastructure, particularly between Scotland and England, will be key for unlocking the full potential of renewable energy, and offshore wind in particular. It will mean that we can get electricity from where it is generated to where it is needed.
Hon. Members will have seen that the first annual contracts for difference auction completed last week. I am delighted that it delivered a total of 3.7 GW of renewable electricity. Contracts have gone to geothermal projects for the first time. There are record numbers of tidal stream projects, in which Scotland is a major player; I was delighted to visit the European Marine Energy Centre in Orkney and see so much of the significant work going on there. We also saw a doubling of onshore wind from last year’s record auction, and new solar. We hoped that offshore wind would be successful in this round, but we recognise that the challenging macroeconomic pressures felt by the industry around the world impacted its ability to come through the round successfully.
We are reflecting carefully on the results of allocation round 5 so that we make appropriate adjustments for AR6. That is how it works: we get data by trying to understand supply chain costs and commissioning research, but the most valuable data of all is actual behaviour in real auctions. That information will come into adjustments for AR6 to ensure that our evidence base reflects the true market environment. At the same time, value for money for the consumer through a competitive process remains an important feature of the CfD scheme, and I make no apology for always prioritising protecting the consumer. With annual auctions now in place, the allocation round is due to open in about six months, meaning that there is an opportunity to gain a contract with minimal delay to deployment for projects that were not successful this time.
This Government have made real progress in delivering the ambitions set out in the British energy security strategy and our “Powering up Britain” plan. We are committed to achieving our ambition of 50 GW of offshore wind by 2030. It has a vital role to play in delivering a decarbonised power system by 2035, subject to security of supply, and achieving our legally binding 2050 net zero commitments. We need to celebrate what we have done to date and recognise that most of the growth is not in the past, but in the future. The opportunities for Scotland, Wales, Northern Ireland and England are immense, and we should work collectively to ensure that we attract investment and create as many jobs as possible in this country supporting the transformation of our energy system and our spearheading of the global move to net zero, which is so important to us and future generations.
Question put and agreed to.
Energy Charter Treaty: Review of UK Membership
Graham Stuart Excerpts(1 year, 2 months ago)
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The Minister for Energy Security and Net Zero (Graham Stuart)
On 30 August 2023, the UK announced it is reviewing its membership of the energy charter treaty (ECT) and will make a further decision if modernisation has not been adopted by November 2023.
The ECT is a multilateral agreement with 51 contracting parties, covering energy co-operation on trade, investment, transit, and energy efficiency. The ECT was signed in 1994 to promote international co-operation in the energy sector in eastern Europe and central Asia, following the break-up of the Soviet Union, with a particular focus on investment in fossil fuels.
The UK has been a strong advocate for modernising the ECT, recognising that the existing treaty is not aligned with modern energy priorities, international treaty practice and commitments on climate change. The UK and other contracting parties spent two years negotiating a modernised ECT and amendments were agreed in principle on 24 June 2022.
If adopted, the modernised treaty would have a stronger focus on promoting clean, affordable energy, including technologies like carbon capture, utilisation and storage (CCUS), hydrogen and other renewables. Modernised terms would also strengthen the UK Government’s sovereign right to change their energy system to reach net zero.
The decision to adopt the modernised ECT was paused in November 2022. This followed several EU member states, including France, Germany, Spain and the Netherlands announcing plans to withdraw, leading to an impasse on modernisation. In July 2023, the EU Commission called for a co-ordinated EU withdrawal. The EU is seeking a bloc-wide position this autumn, but upcoming European Parliament elections in 2024 raise the prospect of prolonged uncertainty.
The UK’s preference has been to modernise the ECT, but we must now prepare for the possibility that this will not be achieved. The UK is reviewing its membership, recognising its long-standing position that the unmodernised ECT is out of step with modern treaty practice and the UK’s energy priorities. This reflects our unwavering focus on energy security and net zero. The review will conclude by November and will carefully consider the views of stakeholders in business, civil society and Parliament to inform the UK’s approach.
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Draft Electricity Capacity (Amendment) Regulations 2023
Graham Stuart Excerpts(1 year, 4 months ago)
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The Minister for Energy Security and Net Zero (Graham Stuart)
I beg to move,
That the Committee has considered the draft Electricity Capacity (Amendment) Regulations 2023.
It is a great pleasure to serve under your chairmanship, Mr Robertson. The regulations were laid before the House on 12 June. The draft instrument seeks to make technical changes to the capacity market scheme, the Government’s main tool for ensuring security of supply in Great Britain.
As set out in the “Powering Up Britain” paper, which was announced in the House on 30 March, we have bold new commitments to super-charge clean energy and accelerate renewable deployment. In the shorter term, while the future geopolitical context is still uncertain, we recognise that the world is likely to face continued challenges this winter around security of supply, considering Russia’s illegal invasion of Ukraine.
What does the draft instrument do? To ensure that the capacity market continues to function effectively, we regularly make adjustments to the implementing legislation, based on our day-to-day experience of operating the scheme. In that context, the draft instrument makes changes to three electricity capacity regulations to deliver technical improvements that support the functioning of the capacity market.
Graham Stuart
I will make a little more progress first. The capacity market is now well established, with capacity auctions held every year since its inception in 2014. The draft instrument aims to reduce the administrative burden associated with the process, as we believe that it is more appropriate instead to notify the market when the intention is for an auction not to be held, rather than having to announce each year that it will be. The change will not impact the nature of participation in the scheme or announcements regarding the targets for the capacity auction. It simply seeks to change the way in which the announcement is made that confirms whether auctions will be held.
We have also been made aware that the existing transfer route that enables capacity agreements to be terminated in order to participate in the contracts for difference scheme cannot be used in practice, due to interactions between the definitions used in the regulations and the delivery timeframes. The draft instrument seeks to amend the definition of the contracts for difference transfer notice to enable the transfer route to be used. The draft instrument seeks to improve administrative arrangements by extending the timescales associated with the settlement body’s calculation of penalties and issuing of associated invoices for non-delivery.
Alan Brown
I thank the Minister for giving way. Paragraph 7.1 of the explanatory memorandum states that nuclear can form part of the capacity market. Will he explain how nuclear can bid in? We keep getting told that the great thing about nuclear is that it provides baseloads. How does that work in the capacity market auction?
Graham Stuart
As happy as I would be to engage in a wider discussion about nuclear this morning, I think it might be best if I wrote to the hon. Gentleman to set out those specific concerns.
Turning to the Government consultation, the changes in the draft instrument were consulted on at the start of the year and were broadly supported by respondents. We also consulted on a wider range of changes, including to the capacity market rules that set out the detailed provisions for the delivery of the scheme.
As was signalled in the Government response to the consultation, we intend to follow a two-phased approach to reforms to the capacity market. First, we will proceed with technical changes to strengthen the security of supply and ensure better value for money. In the second phase, we intend to undertake further analysis and development before taking a final decision on implementation.
The capacity market continues to support low-carbon technologies, with growing participation of demand-side response and storage technologies. In line with the broad support for greater alignment of the capacity market with net zero, the Government remain committed to introducing an emissions limit reduction for new build and refurbishing plants into the capacity market and exploring options to address barriers to low-carbon technologies to help drive the transition to a net zero power system by 2035, subject to security of supply. Further analysis is required to understand the impact that the proposals will have on energy security.
Through developments to the capacity market and the review of the electricity market arrangements programme, we are confident that the right market signals will be in place to ensure that we meet our 2035 decarbonisation target, subject to security of supply. As has been highlighted, we have also made a number of technical amendments to the capacity market rules, which were laid before the House on 12 July. Rule changes will be introduced to reduce administrative burdens for prospective capacity providers and clarify how auctions are operated for the benefit of participants.
In conclusion, the draft instrument introduces a number of technical provisions necessary to enable the continued efficient operation of the capacity market, so that it can continue to deliver on its objectives. I commend the regulations to the Committee.
Graham Stuart
I thank colleagues for their contributions. As has been said, these are technical and uncontroversial amendments. I will write to the hon. Member for Kilmarnock and Loudoun about his earlier questions. The capacity market is technology-neutral, and all capacity can bid to win agreements to make capacity available when needed. As I also set out, we are going through two phases of changes to improve the capacity market, exactly in line with what he described, in that we want to encourage demand-side response.
To go back to what the hon. Member for Bristol East said about funding, the point of the auction system is to get the capacity we need to be there when we need it, at the lowest possible cost. If we want to have back-up and we cannot guarantee when we will call on it, we need to use that kind of transparent system, which increasingly encourages—as we are seeking to do by changing the system—green and flexible technologies, rather than diesel generators and so on, at the lowest possible cost. That is the aim of the amendments we are making, and I am glad to see agreement across the Committee today.
Question put and agreed to.
Renewable Energy in the East of England
Graham Stuart Excerpts(1 year, 4 months ago)
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The Minister for Energy Security and Net Zero (Graham Stuart)
It is a pleasure to serve under your chairmanship, Mr Twigg, and to conclude this debate, which was so brilliantly set off by my hon. Friend the Member for Waveney (Peter Aldous). As you will recognise, Mr Twigg, it is rare to hear, especially in a short debate such as this, such a wide-ranging, deeply thought-through and comprehensive speech as the one that we have just heard from my hon. Friend. His grasp of the key issues in the energy space is remarkable, and it is grounded not only in his constituency, but in the wider region he represents.
My hon. Friend will be aware of the important role of offshore wind, as he highlighted, and other renewables in delivering secure, domestically generated energy, and of the boost they provide for economic growth, although I am sure he will also allow me to set out the Government’s position. The policies set out in the British energy security strategy and endorsed in the “Powering Up Britain” papers, which I announced to the House on 30 March 2023, include bold new commitments to super-charge clean energy and accelerate renewable deployment. My hon. Friend suggests that we have the opportunity to be a global exemplar. Not to diminish the—for the most part—accurate and properly based challenges he set out, but we already are the global exemplar. We have cut our emissions by more than any other major economy on earth since 1990. We took the position—a rather parlous one, when we think about it—just 13 years ago, when less than 7% of our electricity came from renewables. That is now well over 40%. In some senses, we are a victim of our own success, which has created some of the grid pressures that he rightly highlighted.
Turning to coal, I am the co-chairman of the Powering Past Coal Alliance, an international grouping of countries and organisations committed to ending the use of coal in power production. Nearly 40% of our electricity came from coal as recently as 11 years ago, in 2012. Next year that figure will be zero. We are a global exemplar, although I share my hon. Friend’s frustration when he asked whether—despite all the jobs that have been created and our success in leading—we have harnessed all the economic benefit. Have we embedded the industrial capability that we could have for the long term? If I had a mission in this job, apart from delivering and helping to facilitate this extraordinary transformation, it would be to do so in a way that leads to the long-term, high-paid jobs that my hon. Friend is so right to challenge the Government to work towards.
Wind overtook gas as our largest source of electricity during the first three months of this year, delivering more than a third of our entire electricity supply for the first time. I am proud of that. As my hon. Friend has said, the east of England plays an important role in supporting our offshore wind ambitions. Just last year, our contracts for difference scheme allocated support for a further 7 GW of offshore wind capacity, the majority of it located in the North sea and supported through the east of England. Since 2014, we have more than doubled our solar capacity in east England to more than 2 GW, with a further 1 GW of shovel-ready capacity and 2 GW more in planning.
This Government have driven that change. We have introduced the landmark Energy Bill, which is currently passing through the House, which contains measures to accelerate the rate of deployment of offshore wind farms, reduce the time it takes to get planning consent, and reform environmental regulations to streamline processes, while maintaining protection of the marine environment, but doing so in a more strategically joined-up way—a thread running through my hon. Friend’s excellent speech. He may or may not be aware that the Department for Environment, Food and Rural Affairs is running the marine spatial prioritisation programme, which, on a cross-purposes analysis, aims to optimise the use of our seas and manage competing priorities on the seabed. It is, in conjunction with my Department, leading on exactly the kind of strategic overview that my hon. Friend rightly highlighted.
We recently concluded our consultation on making changes to the national policy planning framework in England—again, as part of pulling together a more strategic approach. When designated, local authorities will be better able to respond to the views of their communities when they wish to host onshore wind infrastructure. Offshore wind developers in East Anglia will also be required to consider co-ordination of their infrastructure before submitting a planning application for any new network infrastructure. My hon. Friend rightly highlighted the project-based, linear approach and the need for a more co-ordinated and coherent one. [Interruption.] I am being given further “refreshment”, which is always marvellous.
Where communities such as those in the east of England host this infrastructure, we want to thank and, to be fair to them, also reward them for doing so, as my hon. Friend said. Our consultation on guidance on community benefits for transmission network infrastructure closed a couple of weeks ago, and I hope to be able to share the results later in the year. We have also just closed our consultation on developing partnerships for communities who wish to host new onshore wind infrastructure in return for lower energy bills. My hon. Friend also picked up on that.
Finally, I want to discuss network infrastructure, which, as my hon. Friend said, is an essential component for driving renewable deployment, and we need to build it more quickly. In Great Britain, around four times as much new transmission network will be needed in the next seven years as was built since 1990. The timescales for delivering transmission network infrastructure are currently 12 to 14 years, often far longer than the time taken to deliver the generation being connected—and we all recognise that having wonderful, new, low-cost, brilliantly planned generation is no good if we cannot get the electrons where they need to go. The lack of network capacity is already a challenge, as around 5% of wind generation is currently curtailed, meaning its output is reduced because there is not enough capacity on the network to transport it. This could increase to between 15% and 20% in the mid-2020s, as wind generation increases further.
In order to accelerate the delivery of network infrastructure, we appointed Nick Winser as the electricity networks commissioner, who is tasked with advising on how we can halve the timeline for delivering new electricity transmission infrastructure. His report will be published imminently, and the Government will respond with an action plan later this year. We will also come forward with a connection plan at the more local level, precisely because of the central importance of sorting out our transmission.
Placing all new infrastructure offshore is not a feasible option, as ultimately the electricity needs to get to where the demand is, which is of course onshore. Therefore, even with offshore cables, infrastructure such as substations are required onshore at landing points. To support faster delivery of transmission and better co-ordination, the holistic network design, or HND, developed by the electricity system operator, sets out a blueprint for the connection of groups of offshore wind projects to the grid—again, picking up on my hon. Friend’s central point about the need for a more strategic and coherent approach, informed, as it will be, by high-level spatial strategies.
This is the first time that connections and transmission reinforcements have been considered together for multiple projects, and it is revolutionising the way that we design our network infrastructure. Considering multiple projects together has allowed opportunities to co-ordinate infrastructure while balancing impacts on the environment, communities, cost to consumers and deliverability of the infrastructure.
Of course, as my hon. Friend has said, concerns have consistently been raised about the proposed infrastructure in East Anglia. I would like to reassure the House that the Department is working closely with developers, transmission operators and National Grid ESO to explore voluntary options to minimise infrastructure where possible, while also recognising that timely delivery of projects in the east of England will be key to achieving the 2030 ambition for offshore wind.
In the limited time that I have left, I will try to briefly review some of the points that my hon. Friend made and consider whether I can make any reasonable response to them. He mentioned the revolution, and that is what is going on; indeed, we need to tell the story to the nation about how we are rewiring this country. If people look around even the most beautiful landscapes, they will see things that they usually do not notice because they are just so used to them—major pieces of industrial infrastructure that were required to create the foundations for the wealthy and successful country that we are. Nevertheless, we will need to rewire things. Even with the best will in the world and strategic planning, co-ordination and minimisation of impacts, as well as a real focus on good design principles, there will be impacts, and we need to let people know that delivering net zero will require them.
My hon. Friend touched on the fact that we have been developer-led, project by project, which is very much changing. He also mentioned the focus on delivery, and on skills and jobs. I co-chair the green jobs delivery group, which is the high-level Government and industry body that is looking to get the information from the engineering specialities that he mentioned, so that information can be shared with the Minister for Skills, Apprenticeships and Higher Education, who also sits on that body, to make sure that education programmes are better aligned with and support the kind of revolution that is required.
My hon. Friend also mentioned the CfD budget. When he talks about that, I think he is probably talking more about the administrative strike price, as we call it in our jargon-world. That is the top level that we will pay, whereas the budget is the amount that we will commission. We always keep that price in mind, and obviously we recognise that there are financing costs, supply chain squeezes and inflation. However, those things are very much taken into account when we design these policies. We cannot always get everything right, but the industry always tells us that we have allowed insufficient funds for this type of work and typically predicts, ultimately, rather less generation coming through than actually occurs. However, we are now operating on an annual basis, so that we can better respond to those issues.
My hon. Friend also talked about hydrogen and the role of the east of England in being able to deliver it, not least in Bacton, Felixstowe and the agriculture sector. Like him, I am very excited about hydrogen. If we can properly harness our unique renewable resources and do things correctly in a co-ordinated fashion, we will not only have low-cost electricity, but we will become a leader, certainly in the European context and perhaps globally, in the production of green hydrogen. Of course, we are also blessed—he did not mention this—with 78 gigatonnes of carbon storage; we have the vast share of Europe’s carbon storage potential, and we can host carbon storage for our neighbours, too.
My hon. Friend is quite right to highlight all the opportunities in these sectors, and he is also right to congratulate people such as Stuart Rimmer at East Coast College and John Best for the internships he has supported. He is also correct that not only do the Government need to get the overall frameworks right, but we need to facilitate and support local authorities, communities and individuals to play their part. If we get this work right, we will not only deal with the environmental challenges, but reinforce our industrial strength, and grow and strengthen the prosperity of this country. That process can be led, to a great extent, from the east of England.
Question put and agreed to.
Oral Answers to Questions
Graham Stuart Excerpts(1 year, 4 months ago)
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Bill Esterson (Sefton Central) (Lab)
The Minister for Energy Security and Net Zero (Graham Stuart)
The Government are investing billions to support the development and deployment of carbon capture, utilisation and storage, hydrogen and other decarbonisation technologies, and have a range of policies supporting industrial decarbonisation, such as the industrial energy transformation fund and local industrial decarbonisation plans.
Bill Esterson
There are 23 clean steel projects across Europe, but none in the UK. Meanwhile, the UK is the only country in the G20 where steel production is falling. Other countries recognise the importance of their domestic steel industries, and they recognise the importance of investing in low-carbon steel. Why do this Government not support our steel?
Graham Stuart
As the hon. Gentleman knows well, this Government do support the UK steel industry. On his broader point, which he mentioned in his original question, UK industrial emissions have fallen 65% since 1990, and we are making significant investments in industrial decarbonisation, not least the £20 billion announced at the end of March, which will contribute to decarbonisation through CCUS and help the steel industry.
Dominic Raab (Esher and Walton) (Con)
Do Ministers agree that the Government’s competition for small modular nuclear reactors will help provide the volume of energy we need for energy-intensive domestic industries and, over the long term, at a lower cost than previous nuclear power stations?
Graham Stuart
I thank my right hon. Friend for his question. There is enormous enthusiasm on the Government side of the House for the potential of nuclear, including small modular reactors. We are determined to see that go forward as quickly as possible, which is why the new organisation, Great British Nuclear, is doing a rapid down selection of technologies this year, precisely in order to unlock the benefits that my right hon. Friend so correctly highlights.
Angus Brendan MacNeil (Na h-Eileanan an Iar) (SNP)
On decarbonisation, many organisations, such as the Institution of Civil Engineers, are asking about the Government’s net zero growth plan, which said:
“The public will play a key role in the transition and therefore we will set out further detail on how Government will increase public engagement on net zero.”
Can the Minister clarify when that detail will be published?
Graham Stuart
I thank the Chair of the Energy Security and Net Zero Committee. He is right that as well as top-down Government policy, we must unlock the huge public desire of people to play their part and make sure we have the right information in place. That will be provided and produced as soon as possible.
Mark Pawsey (Rugby) (Con)
The Minister will welcome measures that many businesses are already undertaking simply because they are the right thing to do, including traditionally carbon-intensive industries, such as cement manufacturing. Cemex in my constituency is investing to use decarbonised raw material and trialling the use of hydrogen in the combustion process, which will significantly reduce the amount of CO2 generated by every tonne of cement manufactured in Rugby?
Graham Stuart
My hon. Friend is right, and he is right to champion those industries that are working so hard to decarbonise already. As my hon. Friend says, we have the net zero hydrogen fund, which will provide up to £240 million by 2025 to support the development and construction of new low-carbon hydrogen production plants, which will be able to assist in cement as well as other industries.
Dame Maria Miller (Basingstoke) (Con)
Stephen Kinnock (Aberavon) (Lab)
The Minister for Energy Security and Net Zero (Graham Stuart)
The Government are committed to placing the UK at the forefront of the floating wind sector. I am delighted to announce that the Crown estate will be providing an update to industry this morning on a 4 GW leasing round in the Celtic sea and has already commissioned the survey work required to support it.
Stephen Kinnock
The development of floating offshore wind in the Celtic sea is a once-in-a-generation opportunity for my Aberavon constituency, for Wales and for the entire United Kingdom. Last week, the Climate Change Committee rightly blasted the Government for failing to deliver on their net zero commitment. I am profoundly concerned that floating offshore wind will be squandered due to the lack of grip and direction that the committee described. When will the Minister be bringing forward an industrial strategy for floating offshore wind, which will ensure that Welsh manufacturing and Welsh jobs are placed at the heart of turbine and substructure fabrication, starting with the vital seabed licensing process.
Graham Stuart
I thank the hon. Gentleman for his question. We are the world leader in floating offshore wind and we are determined to stay there in order to realise the industrial benefits, which he rightly champions, and the opportunities in Wales. The floating wind demonstration programme—[Interruption.] The Labour Front-Bench team really do not like to hear this, do they? The fact that we have cut our emissions more than any other major economy on earth under this Government is what leads those on the Labour Front Bench to sense their own inadequacy, because they know what they left behind. That floating wind demonstration programme is supporting innovation with £31 million of Government funding matched by £30 million from industry.
Mr Philip Hollobone (Kettering) (Con)
Floating offshore wind and all these exciting generation technologies are wonderful, but all of them will come to nought unless we can increase the speed and capacity of the grid connections to get the electricity onshore and to the users who need it. What is the Minister doing to sort out the national grid and to speed up the way in which grid connections are made, because, without this, we will go nowhere?
Graham Stuart
My hon. Friend puts it so well. It is so true: whatever the generation, if we cannot get the electrons where they need to go, we are frustrated. That is why we are determined to speed up the connections. That is why, from the Pick report on offshore wind to the Nick Winser review, this Government, led by the Under-Secretary of State for Energy Security and Net Zero, my hon. Friend the Member for West Aberdeenshire and Kincardine (Andrew Bowie)—this is the first time that this country has had a networks Minister—are absolutely focused, in a laser-like way, on making sure that we speed up and get the delivery of the infrastructure that we need to deliver the green transition.
Alexander Stafford (Rother Valley) (Con)
Sir Christopher Chope (Christchurch) (Con)
The Minister for Energy Security and Net Zero (Graham Stuart)
Population growth is taken into account when setting our decarbonisation goals. Specifically, it is accounted for in our baseline emissions projections, which help determine the effort required to meet our carbon targets.
Sir Christopher Chope
Does my right hon. Friend accept that in 2050, on present Government policies, we will have 25 million more people in this country than there were in 1990, the base date for carbon dioxide emissions? He obviously accepts that a higher population leads to higher global emissions, but can he also say that when it comes to climate change, it would be a good idea for this Government to concentrate on a net migration policy, rather than net zero?
Graham Stuart
As my hon. Friend knows, the Prime Minister is absolutely determined to bring net migration down to sustainable levels. I would also point out to him that the UK does not set decarbonisation targets per capita, because all countries need to reduce emissions in absolute terms. We are determined to play our part in doing that—to move to net zero, but in a pro-growth, pro-business manner.
Kenny MacAskill (East Lothian) (Alba)
It is not simply about empowering future generations, but those that exist. That is why the roll-out of smart metering is important. The latest quarterly statistics claim that 57% of UK households have smart meters, but that masks the fact that only four out of 32 Scottish local authorities are above 50% in the roll-out of smart metering, five are below 30%, and three island councils are below 10%. All those are also the areas with the highest fuel poverty. As we approach March 2024, when radio teleswitching will go off, how will we ensure that people have access to smart metering, enabling them to get off-peak tariffs?
Graham Stuart
The hon. Gentleman is right, both to enthuse about the importance of smart metering and the benefits it can bring—even more so as we move forward in the coming years—and to highlight the importance of ensuring, as ever, that something so important is equitably distributed. I, or colleagues, would be happy to meet him to discuss how we make sure that the issues he has rightly raised are addressed.
Mr Laurence Robertson (Tewkesbury) (Con)
Dr Kieran Mullan (Crewe and Nantwich) (Con)
The Minister for Energy Security and Net Zero (Graham Stuart)
Our “Powering up Britain” plan seizes opportunities from the transition to a decarbonised energy system. Our policies, backed by billions of pounds of Government funding—but more importantly, leveraging in about £100 billion of private investment—will support up to 480,000 jobs in 2030.
Nicola Richards
Enfinium is building a new energy-from-waste facility in my constituency, which will process nearly 400,000 tonnes of waste to generate electricity for more than 95,000 homes and businesses each year. Will the Minister join me in welcoming this investment in renewable energy, and outline how the Government are supporting energy-from-waste facilities across the country?
Graham Stuart
I thank my hon. Friend, and I am delighted to join her in welcoming this new investment, which will be a huge asset to her community as well as having positive national implications. Energy from waste with combined heat and power is supported through pot 1 of the contracts for difference scheme—our auction system. We expect to announce the results of the latest round in early September, and I hope the House will watch that announcement with great interest.
Dr Mullan
What assessment has the Minister made of the role of a tariff support mechanism to encourage short-term private sector investment in deep geothermal to support levelling up?
Graham Stuart
There is no greater champion than—or anyone in this House with half the knowledge of this, as far as I can tell—my hon. Friend in supporting the potential of deep geothermal. When the Prime Minister responded to his report, I know he thanked my hon. Friend for all the work that went into it. I can confirm that geothermal technologies that generate electricity are eligible for the contracts for difference scheme. We are also supporting and encouraging the development of geothermal heating projects through the green heat network fund, which supports the development of low-carbon heat networks. Under the leadership of my hon. Friend, I am confident that geothermal has a positive future.
Emma Hardy (Kingston upon Hull West and Hessle) (Lab)
Private sector businesses in the Humber are ready and willing to invest £15 billion in carbon capture, storage and decarbonisation projects. However, this is being put at risk because, of the eight track 1 carbon capture and storage projects selected, not a single project was approved for the Humber, despite the Humber being the largest carbon emitter in the country and the fact that 80% of the UK’s licensed CO2 storage capacity is accessible from the Humber. When will these businesses get the clarity they need? When the track 1 expansion process is launched, will both Humber pipelines be approved?
Graham Stuart
I thank the hon. Lady for her question, and she is right to be frustrated because of the enormous potential both to decarbonise and to unlock industrial benefits for the area. We are moving as quickly as possible. I have already said that the Viking project and the Scottish cluster are in the favoured position, and the team is moving as quickly as possible this year to provide more certainty and unlock further investment.
Tim Farron (Westmorland and Lonsdale) (LD)
Private sector investment in clean energy is vital, but does the Minister agree that one reason that the United Kingdom, despite having the highest tidal range on planet Earth after Canada, still uses so little of it, is a lack of public sector leadership? Areas such as Morecambe Bay, which could contribute to tidal energy, bringing down people’s bills and protecting us against Putin, are something that we could move forward. Will the Minister agree to meet me and other MPs around the bay, so that we can bring forward plans to get the most out of our tidal energy?
Graham Stuart
I am not an expert in the hon. Gentleman’s history on this topic, but I hope it has been consistently in favour of tidal energy, and therefore different from so many other areas of policy. I share his enthusiasm for the potential of tidal energy. That is why we are the world’s leading nation in the deployment of tidal range, and why tidal power is eligible for the contracts for difference scheme. Notwithstanding so many issues, I would be happy to meet the hon. Gentleman.
Philip Davies (Shipley) (Con)
The Minister for Energy Security and Net Zero (Graham Stuart)
We estimate that the net cost excluding air quality and emissions-saving benefits will be equivalent to about 1% to 2% of GDP in 2050. As my hon. Friend knows, emissions are global, and we all need to play our part. The UK has a part to play in tandem with others, and that is why I will be working with other Ministers at the conference of the parties in Dubai.
Mick Whitley (Birkenhead) (Lab)
Graham Stuart
The hon. Gentleman is right to be frustrated about progress. But as the Secretary of State said, when the right hon. Member for Doncaster North (Edward Miliband), who is chuntering on the Front Bench, was in power, just 14% of homes were decently insulated; by the end of the year, it will be more than 50%. We have set up the energy efficiency taskforce because we want to go further and faster. We are determined to do more. We are spending £12.6 billion over this Parliament and the next, and—
Graham Stuart
I share the hon. Lady’s enthusiasm. We are taking steps to support this technology, and I would be delighted to meet her to discuss it further.
Mr Philip Hollobone (Kettering) (Con)
Graham Stuart
Unfortunately, we do not have public data by constituency and do not yet have the full data for 2022. However, I can tell my hon. Friend that in 2021, north Northamptonshire generated a total of 362 GWh of renewable electricity. The people of Kettering, like their representative, want Kettering to be one of the greenest constituencies in the country.
Olivia Blake (Sheffield, Hallam) (Lab)
Peter Aldous (Waveney) (Con)
Graham Stuart
I could only just hear my hon. Friend’s question, as the shadow Secretary of State made it quite hard to hear. The Government recently completed a call for evidence on this very subject, looking at the introduction of non-price factors in the contracts for difference scheme so that it values things other than just cost deployment. My hon. Friend, like all Members on the Government Front Bench, wants the maximum number of jobs created and retained in this country.
Catherine McKinnell (Newcastle upon Tyne North) (Lab)
Lia Nici (Great Grimsby) (Con)
Will my hon. Friend please outline what his Department is doing to look at the import of green hydrogen feedstock into the UK, to increase the scale and speed of the UK industry and help us achieve our 10 GW capacity by 2020?
Graham Stuart
I am aware of proposals on the shipping and possible piping of hydrogen and the important part that must play. If we are to decarbonise all of British industry, we will need shipping as well as piping. I will be happy to meet my hon. Friend to discuss what further we can do.
Alex Cunningham (Stockton North) (Lab)
I very much welcome the recent progress on developing carbon capture, usage and storage on Teesside. I hope we will see the final confirmation that it will happen and the work will start. That said, local industrialists and investors are concerned that the Department is not now asking BP to build the CO2 collection pipework as originally planned, meaning that it will not go to CF Fertilisers or Kellas or pass by the Alfanar site. Could the Minister provide an update, please?
Graham Stuart
We are moving at top speed to drive forward CCUS. We are in a world-leading position. The opportunity is enormous in the Tees, the Humber and areas in the north-west as we seek to get that right and embed those industries in this country.
George Eustice (Camborne and Redruth) (Con)
The unique geology of Cornwall means that there is huge potential for geothermal energy. There are a number of projects bidding for the current allocation round. Geothermal energy has a competitive strike price, has lithium as a by-product and makes use of mature technology. Will the Secretary of State ensure that those benefits are properly factored into any assessments?
Mark Pawsey (Rugby) (Con)
At a time when the cost of generating electricity is falling thanks to the increasing use of renewables, my constituents do not understand why the price of electricity remains linked to the price of gas. I know that the Government are undertaking a review of electricity market arrangements. When might they expect to see a change?
Graham Stuart
My hon. Friend is quite right to ask that question. We would all like to see gas setting the price of electricity more frequently. That is why we are accelerating the take-up of renewables, which were so pitifully low in quantity when Labour was in power. We need a Conservative Government to keep up progress and lower bills right across the country.
Mr Gregory Campbell (East Londonderry) (DUP)
The Secretary of State outlined the progress being made on small modular nuclear reactors. Can he provide an estimate of how many there might be within 10 years?
Road Fuel Prices
Graham Stuart Excerpts(1 year, 4 months ago)
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Tim Farron (Westmorland and Lonsdale) (LD)
(Urgent Question): To ask the Chancellor of the Exchequer if he will make a statement on road fuel prices.
The Minister for Energy Security and Net Zero (Graham Stuart)
From rural hamlets to coastal communities, it is a properly functioning market that ensures fair prices for motorists, but for that market to function customers need transparent data to find the best price. On that basis, when we saw fuel prices rising last summer we asked the Competition and Markets Authority to investigate whether the market was working for customers as it should. Today, the CMA published its final market study report and I am shocked by its findings: rising fuel retail margins, and clear evidence of a rocket upwards and a feather downwards in the pricing pattern for diesel.
It is completely unacceptable that consumers have been paying more. The financial impact of the 6p per litre increase, just in the fuel margin, from 2019 to 2022, cost customers of the four supermarket fuel retailers £900 million last year alone. Asda’s fuel margin target was three times higher for this year than in 2019 and Morrisons doubled over the same period. It is wrong that in a cost of living crisis drivers do not get a fair deal on fuel and end up being overcharged.
Motorists should not be used as cash cows by the fuel industry. The Government will not stand for it and I know this House will not stand for it. Therefore, we accept the CMA’s recommendations in full. We will create a statutory open data scheme for retail fuel prices and an ongoing road fuel prices monitoring function for the UK market. We will consult on the design of the open data scheme and monitoring function as soon as possible this autumn, but that is not enough. I have asked the CMA to have a voluntary scheme up and running by next month and I fully expect fuel retailers to share accurate, up-to-date road fuel prices. The CMA will also continue to monitor fuel prices.
I demand that fuel retail bosses stop ripping off consumers, by making prices available so that the market can operate as it should. Transparency is vital for competition and to keep prices down.
Tim Farron
I am extremely grateful to the Minister for Energy Security and Net Zero and am delighted to see him, but I am disappointed not to see the Chancellor of the Exchequer. I would have thought that this was something that he cared about.
The problem is that the Government have stood for this over the past year. This morning, right under the Government’s nose, greedy petrol retailers imposed an additional cost of more than £900 million on people filling up their cars. Retailers swiftly passed on price increases in the wholesale market to drivers, and the prices rocketed. Yet when the wholesale prices dropped, prices were lowered only very slowly. I think we could all see that for ourselves. The RAC called this
“nothing short of astounding in a cost-of-living crisis”,
which confirmed that
“supermarkets haven’t been treating drivers fairly at the pumps”.
This affects not just the cost of driving. Higher road fuel prices have a knock-on effect on inflation across the economy, pushing up prices in every sector of our country.
The CMA makes it clear that rural areas still face the highest prices. Where supermarket pumps are fewer and further between, such as in Cumbria and Somerset, fuel retailers are likely to have costs that are higher still. The CMA found that fuel prices in rural places, such as my own in Westmorland and Lonsdale and in Somerton and Frome, are on average 1.2p per litre higher than those in urban areas. Of course, in rural communities with poor public transport links, people have no choice but to drive and the distances to travel are so much greater, affecting, in particular, people who work in the care sector. Once again, rural communities feel taken for granted by this Government.
One solution should be to expand the 5p per litre fuel duty relief scheme to those many isolated parts of Cumbria that are not currently covered by it, so that families in Cumbria are not left at the mercy of the most expensive fuel prices.
Why did the Government fail to stop greedy retailers hitting families with an almost £1 billion excess fuel bill in the first place? Will the Chancellor and the Prime Minister summon those company bosses to Downing Street and press them to return those unfair profits by lowering their prices? Will the Government expand the rural fuel duty relief scheme to more areas, to support communities such as mine that are struggling with the highest petrol prices?
Graham Stuart
I thank the hon. Gentleman for his question. He and the RAC are right to highlight the particular issue in rural communities such as those that he and, indeed, I represent, and the particular pressures on consumers there. He will understand that rural fuel duty relief is a matter for the Chancellor and that what we need is a properly functioning market. That is why we are implementing the findings of the CMA in full and putting in place an interim regime, starting next month.
Iain Stewart (Milton Keynes South) (Con)
Towards the end of last year, the local radio station in Milton Keynes, MKFM, published research showing that, although there was considerable competition in Milton Keynes, petrol and diesel prices were substantially higher across the board than those in equivalent urban areas. I very much welcome the proposal for a real-time fuel price comparator, but will my right hon. Friend assure me that the Government will keep an eye on price differentials between different urban areas and intervene if necessary?
Graham Stuart
As ever, my hon. Friend champions his constituency in this House. I completely agree. That is why the monitoring function is so important in tandem with transparency. We have to make sure that people can see the prices. We know that consumers are prepared to travel but, if they do not know that there is a cheaper price available 2 or 3 miles down the road, they will not access it. That is something that we aim to put right.
Kerry McCarthy (Bristol East) (Lab)
People across Britain are facing the highest mortgage costs in Europe, the highest inflation among advanced economies, and the highest tax burden in 70 years. They are paying the price for 13 years of Conservative failure.
In that context, it is more important than ever for the Competition and Markets Authority to do all it can to help to bring down prices. Effective competition in the interests of consumers must be at the heart of our economy. That is why we firmly support the CMA’s proposals to help to bring down the cost of fuel.
‘Filling up the tank at supermarkets is an essential part of everyday life for families and small businesses across the country, so the fact that the average annual supermarket margins on fuel increased by 6p per litre between 2019 and 2022 is deeply worrying.
I am pleased to see that the Secretary of State has accepted the recommendations from the CMA to stop retailers artificially inflating petrol prices during a cost of living crisis; as he says, transparency is very important. However, given that the then Business Secretary wrote to fuel retailers and the CMA more than a year ago to highlight apparent unfairness in fuel prices, why has it taken so long for the Government to take action on this issue? Motorists did not need a report to tell them that they were being fleeced by fuel retailers; they see it every time they fill up at the pump. Why did the Government need to wait for the CMA to tell them what everyone else knew before they took action?
In Northern Ireland, the Consumer Council published a fuel price checker in September 2020, which has helped to keep fuel costs below those in England. Why have the Government taken almost three years to agree to do the same in England? Once again it is too little, too late from a Government, who have again sat on their hands. I note what the Minister said about an interim voluntary scheme and about consulting as soon as possible, but can he give a clear indication of when the Government will introduce the change in the law that is needed to make this permanent?
Graham Stuart
The hon. Lady is right to highlight the cost of living crisis and the level of taxes. That, of course, is why her party getting into power would be such a disaster for ordinary consumers and motorists throughout the country. We have come through the pandemic and made sure we have kept the country afloat; for instance, the Government supported paying nearly half of everyone’s energy bills through the last winter. A Labour Government would be a threat to markets such as this, which we need to function properly, not in the way they would under Labour.
As for why this has taken so long, the hon. Lady ought to know, having seen the disaster of her £28 billion energy borrowing package, which dematerialised: it was a great announcement, but it did not survive contact with reality.
Several hon. Members rose—
Harriett Baldwin (West Worcestershire) (Con)
When the Chancellor announced that he was cutting fuel duty by 5p a litre, which cost the Exchequer billions of pounds, little did he expect that, as outlined so persuasively today by the CMA, it would feed through immediately into the profits of fuel retailers—although cynical British motorists may not be surprised, because they observed it themselves on a day-to-day basis. I welcome the steps that the Minister has announced, and urge him to act with greater speed in implementing them, but is he as surprised as I am that he has been asked this urgent question by the Liberal Democrats, who voted at their conference to hike fuel duty sharply?
Graham Stuart
I would like to say I was shocked or surprised, but I am not because—as everyone in the House knows, except the tiny number who sit on the Liberal Democrat Bench—hypocrisy is their main method of behaviour. The initial Government cut in fuel duty of 5p per litre represented savings for consumers worth about £2.4 billion. We on the Conservative Benches are on the side of the motorist. We are going to make sure that the market works and motorists are properly served by it.
Alan Brown (Kilmarnock and Loudoun) (SNP)
The Minister says he will not stand for motorists’ being ripped off, but that is exactly what Ministers have done. The Government have been complacent the whole time, following the 5p fuel duty cut.
Why has it taken the CMA so long to establish that motorists are being gouged by 6p per litre compared with 2019? It reported that diesel prices are an astonishing 13p per litre higher this year alone than they should have been. That is symptomatic of the “cost of greed” crisis. Asda received a fine for not complying with the CMA investigation. That shows an astonishing level of arrogance on the part of supermarkets that are ripping off their own customers. It is estimated that we are paying nearly £l billion a year in additional fuel costs due to the lack of competition. How does imposing an initial fine of £30,000 on Asda work as a deterrent when it is making so much money?
I am all for an open data fuel finder scheme, but really, is that it? I already use an app to shop around for cheaper fuel prices, so this open data will not necessarily bring competition in all areas of the UK, and reliance on an app obviously will not help those who are digitally excluded. What are the Government’s actual plans to ensure competition and reduced fuel prices, especially at motorway service stations, which are between 20p to 30p per litre more expensive? When will we see these fuel prices come down?
Graham Stuart
That is the closest I have ever seen the hon. Gentleman come to welcoming a Government response, so I shall take that with me. I do not mean to try your patience any more than I already do, Mr Speaker, but, as I said to the hon. Member for Bristol East (Kerry McCarthy), whether it is major energy packages or shipbuilding, we find that doing the work first leads to better long-term outcomes.
John Redwood (Wokingham) (Con)
Given corporation tax, carbon taxes, the windfall tax, fuel duties and VAT, is not the bulk of the price at the pump, and of other fuels, now tax-based? Will my right hon. Friend remind us of how much is tax and urge the Chancellor to reduce some of those taxes to cut the cost of living?
Graham Stuart
I thank my right hon. Friend for championing the consumer, as he always does. As he will be well aware, tax is a matter for the Chancellor, but the whole House will have heard his passionate call to make sure that taxes are held down to the lowest amount they possibly can be. That is one more reason why we cannot have the Labour party taking control of the country.
Mr Tanmanjeet Singh Dhesi (Slough) (Lab)
In March, the RAC revealed that retailers are making a three times bigger margin on diesel than they were at the beginning of last year, and motorists are seeing absolutely no benefit from the Chancellor’s fuel duty cut. Given the Government’s dither and delay on taking any sort of action, how does the Minister feel when the Government’s flagship policy to help motorists is having little to no impact?
Graham Stuart
We are furious that these price cuts have not been passed on to consumers. That is why we asked the CMA to investigate and to get further into the detail, and it is why we will implement its findings in full.
Laura Farris (Newbury) (Con)
As my right hon. Friend is aware, I have been campaigning on the issue of fuel prices in west Berkshire for about a year and a half. One thing that has been particularly disappointing is the fact that fuel prices in every single neighbouring constituency are 5% to 8% lower. I wrote to the CMA and I am pretty disappointed to read its response today, which tells us a lot.
I welcome the introduction of a real-time fuel price comparator, but such a tool already exists, albeit in a slightly clunky form. I draw the Minister’s attention to the fact that it is not enough just to tell people what the prices are at different pumps in their local area. It must be transparent to consumers whether they are in a general area that has higher or lower prices, so that their MP can make representations on what the supermarkets may be doing in that area and the CMA can intervene properly.
Graham Stuart
My hon. Friend has been assiduous and, as she has shown with her question, focused and detailed in trying to rectify a problem that the CMA has fully displayed today. It is an unusual way round, but I would be happy to meet her to discuss the matter further to make sure we put in place all the right elements, so that this transparency genuinely gets through to the consumer.
Sammy Wilson (East Antrim) (DUP)
There is no doubt that fuel costs are driving up inflation, especially in rural areas. I think the fuel price checker has had a dampening effect in Northern Ireland because the supermarkets are always aware that that they are being looked on. However, does the Minister accept that his Government also have a responsibility? Net zero policies, with all their associated taxes—whether it is the emissions trading scheme, green levies or fuel duties—drive up prices, too. The Government have a role to play in reducing inflation as well as in transparency on supermarket prices.
Graham Stuart
The right hon. Gentleman is drawing the wrong conclusion from the sky-high prices of the past year or two. It is sky-high international fossil fuel prices that caused the enormous squeeze. The faster we can move to cleaner and cheaper sources of energy, the sooner we can ensure that our constituents save money and contribute to dealing with what is an ever more serious threat.
Mark Garnier (Wyre Forest) (Con)
Having brought a ten-minute rule motion on this subject some eight years ago, I am delighted that patience has finally paid off. One issue I was raising at that time was the inequality between the prices in towns and those on motorways, which the Scottish National party spokesman has mentioned. Is my right hon. Friend confident that the measures being brought in today will reduce those 15p or 20p premiums on road fuel prices at motorway service stations compared with normal areas?
Graham Stuart
As so often, my hon. Friend has been ahead of me. The issue he raises is part of the picture; like him, I have observed that the captive market along motorways is subject to higher prices than elsewhere. I hope that can be part of our consideration to make sure we have a system that works at its best for everybody.
Grahame Morris (Easington) (Lab)
May I respectfully point out to the Minister that this is not a town versus country or urban versus rural issue? The RAC has identified that some retailers are grossly profiteering, taking a three times bigger margin than they were at the beginning of last year, particularly on diesel sales. For the avoidance of doubt, will he confirm that the Government scheme he has outlined today will apply to all fuel retailers, not just those at supermarkets?
Graham Stuart
I will write to the hon. Gentleman with the precise details of everybody who will be included. He is right to highlight that this is not just an issue in urban areas. However, in those areas there tends to be more competition and easier transparency than there can be in rural and coastal areas.
Andrew Selous (South West Bedfordshire) (Con)
A couple of weeks ago, I drew the House’s attention to the fact that the same supermarket tanker would unload fuel at 10p a litre cheaper in one place than it would if it came 10 to 15 miles up the road to my constituency. If today’s report does not fix that, it will not have been good enough and the Government will have more work to do. I hope that my right hon. Friend will give me some reassurance on that point.
Graham Stuart
We have to make sure the market works. Transparency is our biggest single weapon, and we need to be doing this in a way that reaches people, be they digitally enabled or not; we are wrestling with those details. Let us look at the alternative to a market-based system—other countries have tried it, as it is a populist measure. It does not work, it leads to a shortage of supply and it ends up creating the very dominance that we seek to ensure is not exploited in systems such as we have seen in this CMA report.
Mr Toby Perkins (Chesterfield) (Lab)
The hon. Member for South West Bedfordshire (Andrew Selous) asked a good and apposite question. In February, I wrote to all the major supermarkets that have outlets in Chesterfield asking them why they were retailing petrol for 10p more a litre there than they were selling it for just 10 miles up the road in Sheffield. They were very transparent and honest about this, saying, “ It’s a market where we think we can make more money out of Chesterfield residents than we do out of Sheffield residents. That’s why we charge you more.” That is despite the fact that there is no additional cost to getting the fuel there. Although I welcome the greater transparency, making it easier for consumers, what they will see in Chesterfield is that they are paying more than they would up the road in Sheffield. Is there anything in what the Minister is announcing today that will empower people in Chesterfield to bring their prices down?
Chris Loder (West Dorset) (Con)
The good people of Bridport and Dorchester in West Dorset have had to pay up to 20p a litre more than those in towns not far away. The Liberal Democrats have been silent about that throughout the entire duration, so it is somewhat hypocritical of them to bring this matter to the House today, particularly given that they voted to increase the price per litre. Although I welcome what the CMA has had to say in its report today, it does not really deal with the issue we are seeing of rigorous yield management by supermarkets with their petrol prices. That is not a matter of competition; that is where they believe they can get more money out of a particular group people or community. I would be very pleased if the Minister would meet me to look at how we can take this forward and grasp that issue.
Ronnie Cowan (Inverclyde) (SNP)
Now that we know that competition on fuel prices has weakened in recent years and that that has led to inflated prices, particularly in my constituency where, despite a campaign for fair prices led by Stuart McMillan MSP, we have been paying over the odds for years, may I seek a guarantee that supermarket food prices are not following the same pattern?
Graham Stuart
Following this report, the CMA has decided to look into the supermarkets and will report back as soon as next month.
Richard Fuller (North East Bedfordshire) (Con)
I thank the CMA for its report and the Government for accepting the recommendations, although I think we are putting too much faith in price transparency to solve the market problem. I was interested to see in the trend profit margins for supermarket retailers and non-supermarket retailers that supermarkets are consistently increasing their margins while non-supermarket retailers are not. Will the Minister follow up with retailers, in the light of this report, to make sure that we check that the margins come down next year and in the following year?
Graham Stuart
I thank my hon. Friend for his typically penetrating question. As I said, one of the recommendations is to maintain a monitoring function, which will help to give us the market intelligence so that if further intervention is required, we will have the data on which to base it.
Liz Saville Roberts (Dwyfor Meirionnydd) (PC)
Patchy public transport contributes to high costs for rural households, as many people have no choice but to use their cars for essential journeys. Despite this, the rural fuel duty relief scheme does not apply to a single area in Wales. Will the Minister commit to pressing the Treasury to reconsider the scheme to take into account access to local public transport networks, as well as providing a guarantee of inclusion for Welsh areas?
Graham Stuart
I thank the right hon. Lady for her question and will ensure that His Majesty’s Treasury is aware of it.
Holly Mumby-Croft (Scunthorpe) (Con)
The good people of Scunthorpe spotted this issue some time ago, so I thank my right hon. Friend for his work on it and the measures he is recommending. Has the similar open-data scheme that has been trialled in Germany resulted in a boost in competitiveness? If so, when does my right hon. Friend think we will start to see the results at the pumps here?
Graham Stuart
I hope from as soon as next month, under a voluntary scheme. My hon. Friend gives me the perfect opportunity to repeat how determined I am to see the companies provide the data so that we have something far less clunky, as it has been called, and far more comprehensive than what we have today, and so that that can lead to the benefits that have been found elsewhere.
Dave Doogan (Angus) (SNP)
I am not certain that the seriousness of the situation that faces rural constituencies is being taken appropriately into account. My Angus constituents live in towns and landward areas that are miles away from supermarket fuels. They pay the highest prices for fuel, they have no public transport to speak of so have to use their cars and vehicles, they pay the highest delivery prices and they are often on the lowest wages. If the Minister thinks that greater transparency over fuel prices is going to help, he is stretching the point. My constituents in Angus know how expensive their fuel is and they know how far they have to travel to get cheaper fuel. This announcement will not fix the situation. We need the Treasury to get its act together and intervene in what is essentially critical national infrastructure, which is what road fuel is.
Graham Stuart
I will take that as a further representation to His Majesty’s Treasury.
Mr Philip Hollobone (Kettering) (Con)
Motorists in and around Kettering have long suspected that petrol and diesel forecourt retailers have been inflating prices well above where they should be. Prices go up far too quickly and come down far too slowly. Given the fact that the petrol and diesel forecourt retailers effectively ignored the letter from the Business Secretary in May 2022, will the Minister assure my constituents that the Competition and Markets Authority will continue to monitor the market closely to ensure that does not happen again?
Graham Stuart
My hon. Friend is quite right. Urging them to behave properly is not enough, which is why we will not only put in place a mandatory system to ensure that the data is there but ensure ongoing monitoring so that, as I said to our hon. Friend the Member for North East Bedfordshire (Richard Fuller), we have the data on which to base further intervention should that be required.
Jim Shannon (Strangford) (DUP)
This is a very welcome announcement, especially in respect of the information on fuel-price competition that will allow drivers to look for fuel at petrol stations that are closer and have better prices, thereby enabling them to save money. On any potential fuel fund offers, there is an older generation—I am probably one of them—who perhaps do not use apps and therefore do not understand how they work; what steps will the Minister take to ensure that they have access to information on fuel funding that is accessible for them and easily understood so that they, too, can take advantage of what is on offer?
Graham Stuart
I thank the hon. Gentleman for his question. I would not want to finish without mentioning that, as of Monday 26 June, unleaded petrol is 143.43p per litre, and that has reduced, on average, by 47.5p from June last year, and diesel is 145.6p per litre, and that has reduced by 53.3p per litre on the previous year. I will write to the hon. Gentleman to make sure that I can properly inform him in answer to his question.
Antony Higginbotham (Burnley) (Con)
This report clearly shows that residents in Burnley and Padiham and our villages have been overcharged for their fuel for too long. Does my right hon. Friend think that the Competition and Markets Authority now needs to relook at the ownership changes at Asda?
Graham Stuart
As the Minister for Energy Security and Net Zero, that perhaps stretches slightly beyond my brief, but, as those on Treasury Bench will have heard my hon. Friend’s question, I am sure that he will be able follow up with others who have direct responsibility.
Rosebank Oilfield: Environmental Impacts
Graham Stuart Excerpts(1 year, 4 months ago)
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The Minister for Energy Security and Net Zero (Graham Stuart)
It is a pleasure to serve under your chairmanship, Mr Robertson. I congratulate the hon. Member for Brighton, Pavilion (Caroline Lucas) on securing this important debate and on bringing us back into the positions in which we often seem to be in this Chamber.
The hon. Lady made reference to the Climate Change Committee. Lord Deben is coming to the end of a distinguished 10 years as chairman of that committee, which was set up in the Climate Change Act 2008 precisely to challenge Government, critique what we do and encourage further ambitious action. It is in no small part thanks to his leadership and his being waspish— I think his friends would say he was often waspish—from beginning to end that Governments have been challenged and driven to do what they should to deliver on climate. It is thanks to the Climate Change Committee and his leadership that this country has cut its emissions by more than any other major economy in the world since 1990. It is partly thanks to him that we have gone from the risible position, left by the Opposition when they left power in 2010, of generating less than 7% of our electricity from renewables to now generating well over 40%. As recently as 2012, nearly 40% of our electricity came from coal, the most polluting of fossil fuels. Next year, it will be 0%.
The hon. Member for Brighton, Pavilion is fully aware, and I am sure she understands, that I cannot comment on the detail of the application for the proposed Rosebank oil and gas development. Development proposals for oilfields under existing licences, such as Rosebank, are a matter for the regulators—the North Sea Transition Authority and the Offshore Petroleum Regulator for Environment and Decommissioning—following their standard regulatory processes. As such, it would be neither appropriate nor helpful for me to engage in a running commentary on a live application ahead of a final decision being reached by both regulators.
What I can say is that, as is normal for such applications, the regulators submit all proposals for extensive scrutiny. That scrutiny includes a detailed environmental impact assessment process and an extensive consultation. Comment is invited on the proposals from a number of statutory nature conservation bodies, and there is an opportunity for members of the public and non-governmental organisations to engage in the decision-making process. Once both regulators have made their final decision about the Rosebank application, that decision, along with a detailed summary of OPRED’s conclusions on its likely environmental impact, will be published on the OPRED website for all to see and critique.
To move away from the specifics of the Rosebank development, I am proud to say that, unlike those of most other countries, the UK’s climate commitments are set in law. Of course, it was this Conservative Government who not only transformed the parlous state that we inherited from the previous Labour Administration, but set in law that we should move to net zero by 2050—we were the first major economy to do so. The UK is unswerving in its determination to meet its climate commitments, and has one of the most ambitious 2030 targets in the world. Between 1990 and 2021, we cut our emissions by 48% while growing the economy by 65%—we decarbonised faster than any other G7 or major economy. As we rapidly transition our energy systems, we are supporting emerging economies to do the same. We are advocating the phase-out of coal power and ending unabated fossil fuel use.
The reality is very different from the picture painted by the hon. Lady and those who intervened on her. This country, the most decarbonised major economy in the world, is more than 75% dependent on fossil fuels for its energy right now; that is the basis of this civilisation. Our aim is to accelerate the reduction in oil and gas use, but we recognise that they are essential to modern life, and will remain so for many years to come, including in the production of cement, steel, plastics, chemicals, medicines and fertilisers. We are a net importer of oil and gas, and a fast-declining producer, so I ask the hon. Lady not to use words such as “expansion”. By supporting new licences, we are moderating the savage decline in domestic production, and that is the right thing to do.
Graham Stuart
I will make a little more progress, and then I will come back to the hon. Lady.
Reducing the decline in domestic production will not increase the use of fossil fuels in the UK. The hon. Lady’s economics seem rather upside down. It is demand that typically drives supply, rather than supply driving demand, although I recognise that there are movements in both directions. Increasing domestic production will avoid the need to substitute British gas with foreign liquified natural gas, which has much higher emission intensity. The effect of the proposal from the hon. Lady and His Majesty’s Opposition would not be that we consume less fossil fuel; it would be that we import more in tankers. There is not the option to have more Norwegian gas. Not producing our own gas would result in generating higher emissions directly. As well as that, to pick up on the economics of this, they say that the proposal will not affect price. There is a global price; it is a global market. Our oil is traded. It goes to refineries and comes back in the form of medicines, plastics and other things that are vital to our modern society. It is an international market and we are net importers. It is important to recognise that there are tens of billions of pounds coming into the Exchequer, especially at the moment with the energy profits levy tax rate at 75%.
We cannot make out that new projects would somehow cost the taxpayer, or be subsidised by the taxpayer. North sea production brings tens of billions of pounds into the UK Exchequer. It makes a material difference to our energy security because we produce it here at home. It also supports hundreds of thousands of jobs, which His Majesty’s Opposition and the Scottish National party have turned their faces against—and for what? Will there be an environmental gain? There will not be. It will not make a difference, by a single barrel of oil, to how much we consume. What it will do is lose hundreds of thousands of jobs, lose tens of billions of pounds for the Exchequer and lead to higher emissions. And it is worth the House recognising this killer point: it will remove the very supply chain that we need for the transition. The Climate Change Committee and every international body looking at this issue say that we need carbon capture, usage and storage, and we need hydrogen. Which companies, capabilities or engineering capacities are going to deliver those? It will be the jobs, people, balance sheets and skills that are vested in the traditional oil and gas companies, all of which are now involved in delivering the transition.
Graham Stuart
I will. Perhaps the hon. Gentleman can explain why Scottish nationalist policies will have a negative effect on the environment and cause the loss of hundreds of thousands of jobs in this country—for what?
Tommy Sheppard
With the greatest of respect, what the Minister says does not make sense. If most of the oil and gas coming out of Rosebank will be exported, how does not doing this lead to an increase in imports?
Graham Stuart
As I say, we are net importers in a global market. Oil and gas is processed in different places. It goes out and it comes back. As net importers, the alternative to using that gas here is that we will have more tankers coming in. As the hon. Gentleman knows, or certainly should, the upstream emissions attached to that are two and a half times higher than the emissions attached to gas, which Scottish workers are producing from British fields to the benefit of every taxpayer and the energy security of this nation.
Caroline Lucas
It is interesting that the only alternative to one set of fossil fuels is another set of fossil fuels. That is exactly what Lord Deben criticised in his report today. If the Government had done what they were meant to do, and actually set out the investment in home insulation schemes and reduced energy demand, we might not be in this position. If they had scaled up much more in the many other technologies that are out there, we would perhaps not be in this position.
I come back to what the CCC said. I expect the Minister to disagree with me, but does he disagree with Lord Deben and the Climate Change Committee? They said:
“Expansion of fossil fuel production is not in line with Net Zero”.
They said that the UK will need “some oil and gas”, but that that does not
“justify the development of new North Sea fields.”
Does the Minister disagree with his colleague?
Graham Stuart
As I said, North sea oil and gas production is declining. It will continue to decline with new licences—
Graham Stuart
It will not be expanding; it will actually be reducing. Throughout that time, even as we bring down our demand—ahead of nearly all other countries—we will still be net importers of oil and gas. It makes no sense, or only in the parallel universe occupied by the bizarre fringes of politics does it make sense for us to import—[Interruption.] It will not make a difference, by a barrel of oil, to our consumption. However, it will make a difference to the balance sheet, the jobs and the capabilities that we need to do the transition.
The hon. Lady is quite right to challenge me on this country’s past record on insulation—on the parlous state of the housing stock, for instance, and energy efficiency. In 2010, when we came into power, just 14% of homes were decently insulated with an energy performance certificate rating of C or above; in other words, 86% were not. That was the legacy from Labour. By the end of this year, it will be 50%; we have moved from 14% to 50%—
Mr Laurence Robertson (in the Chair)
Order. I do not want to bring this very lively debate to a close, but I am afraid I have to.
Motion lapsed (Standing Order No. 10(6)).