Oral Answers to Questions
Jeff Smith Excerpts(11 months, 1 week ago)
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Jeff Smith (Manchester, Withington) (Lab)
An estimated 6.3 million households are in fuel poverty across the UK. Ofgem has announced that energy debt has reached £2.6 billion. With millions of people facing another difficult winter, the Government promised to consult on a social tariff to help the most vulnerable. Can the Secretary of State provide an update on that consultation?
Claire Coutinho
People mean many different things by a social tariff, but fundamentally it is about providing people with support to help with their bills. Just in the autumn statement, we have increased the national living wage, which is worth £1,800 to people; increased benefits by 6.7%, which is worth £470; and cut national insurance contributions, which is worth £450. Those are all on top of the £900 cost of living support we already have in place.
Contracts for Difference Scheme
Jeff Smith Excerpts(1 year ago)
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Jeff Smith (Manchester, Withington) (Lab)
It is a real pleasure to see you in the Chair, Dame Angela. I congratulate the hon. Member for Strangford (Jim Shannon) on securing the debate, and thank him and other hon. Members who have made such interesting contributions.
The contracts for difference scheme has been an important way of incentivising investment in renewable energy, and has played a key role in making renewable energy the cheapest form of electricity in the UK, and in supporting low-carbon electricity generation. We welcome clean power projects that have been delivered by the scheme and those that will start to generate power over the next couple of years. Labour’s aim is to deliver a cheaper zero-carbon electricity system by 2030: quadrupling offshore wind, aiming for 55 GW by 2030; expanding floating offshore wind, fast-tracking at least 5 GW of capacity; more than tripling solar power to 50 GW; and more than doubling our onshore wind capacity to 35 GW, in addition to ambitious plans for nuclear, carbon capture and storage, hydrogen, and long- term energy storage.
Successful administration of the contracts for difference scheme as part of a wider strategy will be important in achieving that aim. If we are to accelerate towards a clean power system—towards renewables that are cheaper and less volatile than fossil fuels—we need to ramp up that capacity year on year. We particularly need new offshore wind projects to come forward for investment. Offshore wind has been the dominant technology in previous contracts for difference auction rounds, but of course we have heard today the headline news from the recent AR5 round: the failure to attract any offshore wind bids—a major and avoidable failure by the Government.
The Minister has spoken in the House about learning the lessons of the failure of that recent round, and learning from those mistakes, but the truth is that Ministers were repeatedly warned about the impacts of higher inflation and setting an unrealistic strike price. In March 2023, RenewableUK said that
“the budget and parameters set for this year’s CfD auction are currently too low and too tight…We’re calling for the Government to revise the CfD budget so that we can stay on track to deliver on our renewable energy targets, as well as creating tens of thousands of high-quality green tech jobs and attracting billions in private investment in the years ahead”.
Then in July it joined with Energy UK and Scottish Renewables to make this warning:
“The current emphasis on securing renewable capacity at the lowest possible strike price, minimising expenditure rather than maximising benefit, risks creating a less attractive investment environment in the UK. The race to the bottom on strike prices incentivised by the current auction process is at odds with the reality of project costs and investment needs, jeopardising deployment targets.”
The Government had time to adapt, so why did they not heed those warnings?
Because of that missed opportunity, we will now be more dependent on expensive, insecure fossil fuels. No new offshore wind projects mean that families’ energy bills could be £2 billion higher, and our energy security will be weakened. Every wind farm that we fail to build leaves us more exposed to global instability. The Government are squandering the potential for offshore wind, just as they squandered our potential for onshore wind by effectively banning it. All of that results in higher bills, energy insecurity, fewer jobs and climate failure.
I welcome the projects that did come forward through CfD allocation round 5 but, because of the lack of offshore wind bids, the capacity awarded in this round was 7.1 GW less than in AR4—a drop of 66%. Now, the annual capacity expected to be added in 2027 has dropped because of the much lower capacity of bids successful in AR5. Future auction rounds could, in theory, increase the capacity of projects starting in 2027, but that is not likely to come from offshore wind, which has longer lead times. It is a missed opportunity when the offshore wind sector stands ready to deliver.
The Government might blame this failure on offshore wind on supply chain inflation and interest factors outside their control, but the reality is that investors and industry issued warnings all year. A similar auction held by the Spanish Government failed last year, while the Irish Government adjusted their price to account for the warnings and managed to have a successful auction. Offshore wind is so much cheaper than gas that the Government could have raised the price in the auction and it would still have saved billions of pounds for families.
Labour’s plan for a clean-power energy system will cut bills for the long term, while making the most of the opportunities brought about by jobs in the supply chain. We want them to be good jobs, and we want them to stay in Britain. We will allocate a fund of up to £500 million for each of our first five years in government to provide capital grants to incentivise companies developing clean-power technologies to target their investment particularly at the areas that most need it, investing in UK jobs, skills and supply chains—a British jobs bonus so that, as we take on the climate crisis, we also build a fairer, more prosperous country.
That will work by providing an incentive to winning bids in the contracts for difference auction to invest, create jobs and build supply chains in industrial heartlands and coastal communities of the UK, including communities with historical and current ties to fossil fuel production. There will be a clear and transparent incentive for companies to create good jobs in those areas. We hope that the benefits will be particularly felt in Scottish oil and gas communities, coastal communities and the north-east of England. Independent analysis suggests that that policy alone will create up to 65,000 jobs in clean-power industries by 2030.
The British jobs bonus will be separate to the contracts for difference so that the fundamental structure, which has successfully made developers compete on costs, would stay the same. The Government have themselves recognised that, while the contracts for difference scheme has successfully driven down renewable energy deployment costs, which is to be welcomed, it has not supported supply-chain investment in the UK. That could jeopardise energy security and our ability to hit deployment targets, given growing global bottlenecks.
The Government issued their call for evidence on including “non-price factors” in contracts for difference auctions, so can the Minister give us an indication of the action he will take in response to that to address supply-chain issues? And can he say anything on the timescale for the Government’s potential plans to reform CfDs? I again ask him, how does he plan to reach 50 GW of offshore wind capacity by 2030, and how does he plan to recover the progress that we need to make on offshore wind, following the setback of AR5?
It is essential for business and investor confidence that the move to annual CfD auctions does not create a boom-and-bust dynamic, so any suggestion that we can afford a missed year, and can just pick it up again in the next round, is complacency. We cannot afford for the transition to clean power to not be a success. We need that transition quickly to cut bills, boost our energy security, create good jobs and prosperity and tackle the climate crisis.
Green Energy: Ports
Jeff Smith Excerpts(1 year ago)
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Each debate is chaired by an MP from the Panel of Chairs, rather than the Speaker or Deputy Speaker. A Government Minister will give the final speech, and no votes may be called on the debate topic.
This information is provided by Parallel Parliament and does not comprise part of the offical record
Jeff Smith (Manchester, Withington) (Lab)
It is a pleasure to see you in the Chair, Mrs Cummins.
I congratulate the right hon. Member for Preseli Pembrokeshire (Stephen Crabb) on securing the debate and on a very good speech; I agree with most of what he said. It was also good to hear about the consensus and the joint work on the Celtic freeport from my hon. Friend the Member for Aberavon (Stephen Kinnock), and about his ambition for Port Talbot to be at the forefront of the floating offshore wind industry.
I also enjoyed listening to the hon. Members for Dunfermline and West Fife (Douglas Chapman), for Southampton, Itchen (Royston Smith), for Waveney (Peter Aldous), for Cleethorpes (Martin Vickers) and for Moray (Douglas Ross), and it is always good to hear from the hon. Member for Strangford (Jim Shannon) about his commitment to net zero. It is clear that there has been a lot of consensus in the Chamber today. That demonstrates the strong consensus across the House about the importance of the green energy transition, and the good jobs and prosperity that it needs to create—and will create—up and down the country, particularly for port communities and other places with a strong industrial heritage, some of which have suffered economically in recent years, as the right hon. Member for Preseli Pembrokeshire pointed out.
Ports have a key role to play in helping to decarbonise energy generation, transport and industry. Their role as bases for the offshore wind industry and the skilled workforce that many of them have make them pivotal to the UK’s energy transition. Many ports are already playing that role with offshore wind and many more could unlock further power generation from floating offshore wind and—potentially—hydrogen.
Floating offshore wind is an exciting, pioneering technology, which allows us to tap into wind power further out at sea where the winds are stronger and more consistent, but the water is too deep for regular offshore wind facilities. We need to do everything we can to maximise the benefits of this industry. As it stands, there are no port facilities in the country that are fit for the mass deployment of floating offshore wind. Ports need investment and upgrading to be able to manufacture and assemble the components of those turbines and their bases at the required size, which I believe is up to 150 metres. These are huge pieces of kit that we need to be able to manufacture and assemble in the UK.
Crucially for ports, we also need new wind projects—both standard offshore and floating—to come forward for investment. That is another reason why the Government’s completely avoidable failure on offshore wind in the recent contracts for difference round was so disappointing, with no offshore wind or floating offshore bids. No new offshore wind projects means £2 billion more on families’ energy bills and means our energy security will be weakened.
Ministers were repeatedly warned about the impacts of higher inflation and setting an unrealistic strike price, but they did not act. Because of that missed opportunity, we will now be more dependent on expensive and polluting fossil fuels. Every wind farm that we fail to build leaves us more exposed to the whims of petrostates and dictators such as Putin. The Government are squandering our potential for offshore wind power, just as they squandered our potential for onshore wind by effectively banning it for so long. All this has resulted in higher bills, energy insecurity, fewer jobs and climate failure. Britain’s port communities and the rest of Britain deserve better.
That is why the next Labour Government will drive forward offshore and floating wind through major investments to our ports, providing £1.8 billion over five years to ensure that we can construct, manufacture, deploy and maintain offshore wind and marine renewables from UK harbours. This would be the biggest investment in our ports for decades, benefiting communities in Wales, Scotland and across the UK.
We will establish a national wealth fund. This will be a new strategic body to ensure that when public money is spent on building British businesses, the British people will benefit from the long-term return that those investments produce. That will ensure that the whole country benefits from the wealth and talent that are created in our nation, so that with every investment, jobs and economic benefits flow into our communities and the British people benefit from the return on those investments.
A Labour Government will invest to drive forward projects that are necessary to the energy transition and our industrial future, crowding in further private investment in crucial infrastructure. GB Energy will be able to de-risk new energy technologies, helping to speed up and scale up development in areas such as green hydrogen and floating offshore wind. With a target to achieve clean power by 2030, and making, buying and selling more in Britain, GB Energy will overturn the stagnation and offshoring of British jobs and manufacturing that have been caused by the neglect of the British wind power industry.
Industry is calling out for more support and more certainty so that it can make the long-term decisions to develop infrastructure and ensure that we have the critical capacity necessary to deliver our ambition for clean power. Industry will get that with Labour. The current Government are progressing FLOWMIS—the floating offshore wind manufacturing investment scheme—with up to £160 million of grant funding for port infrastructure, which is small change really, in relation to manufacturing facilities, and which will be inadequate without serious strategic investment in our nation’s ports, so that they are big enough and advanced enough for the most cutting-edge technologies. Compare that with Labour’s £1.8 billion commitment. Like others here, we want to see the money reaching ports, where it can make the most difference to jobs and power generation.
Will the Minister confirm when the awards will be made? Will it be enough to reach 5 GW of capacity by 2030? Owing to the Government’s handling of contracts for difference, we are understandably sceptical. On that point, will he outline his plans to recover the progress that we need to make on offshore wind, following the massive setback of CfD 5? Expanding offshore and delivering strategic port upgrades will be crucial for a renaissance of green jobs and opportunity in those communities. We want those port communities to be successful. Labour is committed to delivering that. I look forward to hearing from the Minister.
Oral Answers to Questions
Jeff Smith Excerpts(1 year, 1 month ago)
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Jeff Smith (Manchester, Withington) (Lab)
According to analysis by the Resolution Foundation, more than a third of British households face higher bills from the end of this month because of higher standing charges and the demise of the energy bills support scheme, and the people who use the least energy, and those in the poorest households, are disproportionately worse off. At the same time, the windfall tax has massive loopholes costing billions. Would not closing those loopholes and extending more help to people during the cost of living crisis be the right thing to do?
The Parliamentary Under-Secretary of State for Energy Security and Net Zero (Amanda Solloway)
The hon. Gentleman will be aware that the Government are raising a 75% energy profits levy, and he will also be aware that standing charges are a matter for Ofgem. Let me reiterate, however, that we are mindful of the cost of living crisis and have been providing support with the warm home discount, the £900 cost of living payment, and a raft of other measures to support people through this crisis.
Oral Answers to Questions
Jeff Smith Excerpts(1 year, 5 months ago)
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Andrew Bowie
This Government are determined to face up to the challenges that we have. We have moved forward at such pace, having inherited a disgraceful situation in terms of how much renewable electricity was being produced under the last Labour Government. That is why the grid is facing such challenges today and why we have commissioned Nick Winser to produce a review in the summer to see how we can move much faster to achieve our goals. I would welcome the hon. Gentleman and the Labour party being more supportive, talking up this country and our success in developing renewable electricity, and working with us to tackle the challenges that he so rightly brings to the Floor of the House today.
Jeff Smith (Manchester, Withington) (Lab)
The Minister for Energy Security and Net Zero (Graham Stuart)
The Government do not subsidise fossil fuels exploration, and support international efforts to eradicate inefficient fossil fuel subsidies and deliver net zero objectives. In addition, since 2021 no Government support has been provided to the sector overseas, including from UK Export Finance.
Jeff Smith
Really? At COP26 the UK signed up to a pledge to eliminate inefficient fossil fuel subsidies, but now the windfall tax has a super deduction loophole worth £11 billion to oil and gas companies—a benefit enjoyed by no other industry. That money could pay to insulate 4 million homes or build renewable power for millions of homes. This will not reduce bills, and it will drive a coach and horses through our climate commitments. Is it not a terrible way to spend public money as well as breaking our climate obligations?
Graham Stuart
Only for Labour Members—and perhaps some other people on the Opposition side of the House—is it possible to have a 75% tax on the sector, with the levy alone bringing in £25.9 billion between 2022-23 and 2027-28, and then talk about subsidy. Tens of billions of pounds come from the oil and gas sector in this country, and it provides energy security, keeps the lights on and keeps people warm. If the hon. Gentleman’s party were in power, it would cut off domestic supply, weaken energy security and slow down our transition. In every way, they get it wrong.
Oral Answers to Questions
Jeff Smith Excerpts(1 year, 6 months ago)
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Richard Burgon (Leeds East) (Lab)
Jeff Smith (Manchester, Withington) (Lab)
Graham Stuart
I cannot comment on any specific measure, but what I can say is—the hon. Gentleman should recognise this—that we will be using oil and gas for decades to come as we move to net zero. It is estimated that we will require about a quarter of the gas we use today in 2050, and bringing it in from abroad in liquified natural gas tankers will simply mean much higher emissions than gas produced here, so it makes no sense. New licences will only go to slow the very fast decline we already have in North sea production; it will not see production overall increase. Even with continued exploration and development, oil and gas production is expected to decline in this country by 7% a year.
Jeff Smith
There are 23 clean steel projects across Europe, but none in the UK. Forty electric battery factories in Europe are planned to open by 2030, but only one is set for the UK. All the Government offered on their “green day” was weak re-announcements on carbon capture and storage and nuclear, and no new funding for decarbonising industry. British businesses are crying out for more support, so why are the Government failing in their duty to help industry to decarbonise?
Graham Stuart
I share the hon. Gentleman’s enthusiasm for the greening of British steel, as it is at the base of UK manufacture. I am sure he welcomed the “Powering up Britain” proposals, which I presented to the House just before the recess. Our plans for £20 billion of investment in carbon capture and pushing forward with the £240 million fund for hydrogen are exactly the measures we need to decarbonise British industry, and we are global leaders in that respect.
Oral Answers to Questions
Jeff Smith Excerpts(1 year, 8 months ago)
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Grant Shapps
My hon. Friend will be interested to hear that the Jet Zero Council, which I helped to co-establish, has already taken place since the departmental change. Indeed, on the first day in this job, I co-chaired the Jet Zero Council. We want to get to guilt-free flying that includes widescale use of sustainable aviation fuel.
Jeff Smith (Manchester, Withington) (Lab)
Grant Shapps
As I was trying to explain earlier, it is a work in progress. We will make sure that those who suffered are recompensed. What happened was indeed a scandal. I could not have acted faster in this job to fix it and I described the three different parts of activity I undertook, which brought it under control.