Powering Up Britain

Lord Callanan Excerpts

Wednesday 19th April 2023 Lords Chamber

[Lord Teverson (LD)]

My Lords, I do not in any way disagree with the noble Lord, Lord Lennie, but I have tried to be positive about these reports; a whole suite of reports has come out with this. I spent a little more time on the report entitled Powering up Britain: Energy Security Plan, which I thought may be the document that would get more to the heart of this. I also found the 2030 Strategic Framework for International Climate and Nature Action particularly interesting. These are a long read but have a list of really good stuff. They mention areas that we have debated here such as gas storage, grid connections, carbon capture, energy efficiency and demand management. A few are missing, but it is a very impressive list of subjects that this House has considered during the passage of the Energy Bill, whose Third Reading we await next week. It is a great list, but it is five years too late—something like that.

I have a number of questions for the Minister. Small modular reactors are listed in the energy security plan. When do we expect them to come online? Going back to something we discussed on the Energy Bill, the energy security plan mentions the core responsibility of the future systems operator, or ISOP as we know it. When is it actually going to be established so that it can get on with its work? Those I have spoken to in National Grid ESO are really champing at the bit, because they need to get on with it, as this report says, but it is still not there because of the slowness of the Energy Bill through Parliament.

On Sizewell C, which the report mentions, what lessons have we learned from Hinkley C? There are all sorts of lessons to be learned from budget increases and other issues relating to the building of that. On planning, I am pleased to say that it talks about trying to reduce planning periods, but in the debate on the levelling-up Bill yesterday we discussed how the planning system is core to delivering net zero. In fact, as both the Climate Change Committee and the Chris Skidmore report asked, are the Government going to embed net zero properly into the planning system? As the noble Lord, Lord Lennie, asked, will we really meet not just the COP 26 obligations but the fourth carbon budget, whose period just started, let alone the fifth? I do not believe that these plans really do that.

What impressed me at the end of the energy security plan was a whole long list of timetables. I hope that at DESNZ all the senior officials and the Ministers sit around the table every week and are driven by that plan. I suspect they might not be.

Finally, I am very pleased that the 2030 Strategic Framework for International Climate and Nature Action was published, but this comes back to something the noble Lord, Lord Lennie, said. In the introduction, I read something that really quite excited me, and I thought, “Here we get to the nub of it”. It says:

“Since the publication of the British Energy Security Strategy, our Environmental Improvement Plan and our Net Zero Strategy, the US has taken decisive action in allocating $370 billion for clean energy and manufacturing in its Inflation Reduction Act. And the EU has set out its ambitious plans to grow its green industries through the Green Deal Industrial Plan”.


I then looked on to the next paragraph to find out what we were doing. It went off completely on a different subject. When are we going to understand what our reaction is going to be to those two pieces of legislation in the United States and the EU—our major investment competitors?

[The Parliamentary Under-Secretary of State, Department for Energy Security and Net Zero (Lord Callanan) (Con)]

I thank the noble Lords, Lord Lennie and Lord Teverson, for their comments. I want to thank the noble Lord, Lord Teverson, slightly more than I want to thank the noble Lord, Lord Lennie, because he was slightly more positive, but I thank them both for their comments anyway.

For too long this country has taken cheap, plentiful energy for granted. If the war in Ukraine has shown us anything, it is our decades-long overreliance on fossil fuels. Of course, we have all seen their record prices, but the Government have stepped in to help: we have been paying around half of a typical household’s energy bills this winter, and that support has been extended. Our longer-term challenge now is to bolster our energy resilience as a nation so that never again can we be held hostage by tyrants such as Putin, putting his hand into the pockets of every family and business in this country.

This plan is about setting out a clear path and why we have to diversify our sources of supply. We have to decarbonise them and we have to move toward greater energy independence to secure the cheap, clean energy that Britain needs to prosper in the future. We are making considerable progress along that path, but we all know that we have to do a lot more.

I will move to the specific questions I was asked. The noble Lord, Lord Lennie, asked me about onshore wind. I have a funny feeling that the noble Baroness, Lady Hayman, is going to ask me a similar question, so let me try to pre-empt her. We have included onshore wind in our latest world-leading contracts for difference scheme. We are currently consulting on amending the National Planning Policy Framework so that local authorities can better respond to communities when they wish to host offshore wind infrastructure. A government response will be issued in due course.

The noble Lord, Lord Lennie, also mentioned the US Inflation Reduction Act. Of course, we are well aware of the action taken by international partners to accelerate their own uptake of green technologies. They are getting to the party a bit late, but I am pleased to see that they are finally going in the same direction. We continue to engage with them on this. Although the Act is significant, the race for green tech started decades ago here in the UK, with the rest of the world now playing catch-up, adopting many of the same mechanisms, such as contracts for difference, that we came up with seven or eight years ago.

We will not go toe to toe with our partners in a subsidy race; I have not noticed any commitments from the Labour Party to do this either. Instead, we will double down on our global leadership in clean technologies to tackle climate change, using a range of levers from smart regulation to market frameworks and targeted investments. Noble Lords will also have seen, in the green finance strategy published at the same time as the plan, a lot more information on our very ambitious plans to mobilise considerable amounts of the private investment we will need.

The noble Lord, Lord Lennie, also asked me about our 2030 NDC. We remain firmly committed to delivering our international commitments under the Paris Agreement, including the 2030 NDC. While countries are not due to start reporting to the UNFCCC on progress towards meeting the NDC until 2024, we have already quantified proposals and policies to deliver by 2030 a reduction in emissions of 67% compared to 1990 levels, providing a great majority of the savings required for our NDC target of a 68% reduction by 2030.

The noble Lord asked me about energy efficiency and referred to some vague Labour plan. I would be delighted to see what Labour’s plan in this area actually is. I did see a half-baked press release last week, which was presaging a great announcement, but I do not think that that announcement ever happened. If it did, I certainly did not notice it. What I saw was not a plan at all; it was a wish list, without any numbers attached to it. I will tell the noble Lord exactly what this Government are doing.

When Labour left office in 2010, 14% of UK homes were at EPC level C or above. It is now 47%, and it will be over 50% by the end of next year. The Government are committed to improving the energy performance of homes across the country. I refer again to the new Energy Efficiency Taskforce that we have established to drive improvement. The Chancellor set a target of 15% energy reduction improvements by 2030, for which £6 billion of new funding will be made available from 2025 to 2028, in addition to the £6.6 billion already allocated in this Parliament. This is a key ask from many in the industry, providing long-term funding certainty, supporting the growth of supply chains and ensuring that we scale up delivery over time. In addition, we are still committed to the four-year, £4 billion ECO expansion, and noble Lords will have seen the announcement of the Great British Insulation Scheme and its additional £1 billion of funding.

Moving on, the noble Lord, Lord Teverson, asked me about nuclear and SMRs. I hope that presages that the Liberal Democrats might support us on nuclear in the future. This is well-established technology. We have invested £210 million with Rolls-Royce to develop SMRs in the UK. They are well established and we want to be world leaders in this. Realistically, it will be at least the end of the decade before they are rolled out. This is another world-leading green technology from which the UK can prosper.

[Baroness Hayman (CB)]

My Lords, I declare my interests as set out in the register. The Minister presaged a question about onshore wind, which was one of the things left out of the Powering Up Britain document. He half-answered the question in anticipation, but he said that the consultation results will come “in due course”. Could I tempt him to be a little more specific than that, because we have been making progress very slowly on this issue? It feels rather like a can being kicked down the road and a wasted opportunity.

This document contains aspirations, intentions and objectives that are widely supported around the House. The concerns are about the pace, scale, impetus and coherence of delivery. I want to talk particularly about the issues that we debated in your Lordships’ House on Monday, when amendments to the Energy Bill were passed. None of those amendments in any way ran counter to the objectives set out by the Government. In ending emissions from coal, in making sure that we have a comprehensive energy efficiency policy, in building and encouraging community energy schemes, and in giving Ofgem, the regulator of this sector, a responsibility for implementing net zero, none of them was revolutionary or counter to government policy. All will help with this issue of scale, pace and delivery. My plea to the Minister is that he and colleagues think very carefully, after Third Reading in this House and before the Bill goes to another place, about whether those amendments could assist, rather than in any way impede, the Government in what they are trying to do.

[Lord Callanan (Con)]

As I suspect the noble Baroness knows, I am afraid that I cannot give her a direct answer on the date of the consultation response. That is just the way that government works: the consultation response will come when it comes. Even if it were happening tomorrow, I would not be able to presage it, because it has to go into the Downing Street grid and through all those processes. I will endeavour to let her know as soon as it becomes available.

The amendments to the Energy Bill were of course disappointing. I noticed that there were no big majorities in favour of any of them, but we will look at them closely and respond in due course.

[Baroness Bennett of Manor Castle (GP)]

My Lords, we face a difficult situation, with recess intervening and us now having a short period to interrogate 44 documents, which, as Carbon Brief calculated, comprise 2,840 pages. The timing was unfortunate, although it was forced by the 2022 High Court ruling that the net-zero strategy is unlawful—the deadline was at that point.

I will pick on one specific point. The energy security plan notes that the Government opened in October 2022 a new licensing round for oil and gas projects, and that 115 projects have bid, with the first licences expected to be awarded in the next quarter of this year. There is no mention in the energy security plan of the climate compatibility checkpoint, which was devised and announced by the Government in 2021. This was meant to ensure that any new oil and gas licences would be awarded only if they were in line with the UK’s net-zero goals. Can the Minister tell me if the climate compatibility checkpoint still applies and is being used by the Government?

[Lord Callanan (Con)]

On the two questions from the noble Baroness, first, as usual, she is dead wrong in her statement about the High Court action. It did not rule that the Government’s plans are unlawful; in fact, the High Court clearly made no criticism whatever about the substance of our plans, which are well on track. During the proceedings, the claimants themselves described them as “laudable”. The independent Climate Change Committee described the net-zero strategy as

“an ambitious and comprehensive strategy that marks a significant step forward for UK climate policy”.

The court simply wished to see more detail on our plans. I am pleased to say that the Carbon Budget Delivery Plan, which we published alongside Powering Up Britain, provides that detail and sets out a package of proposals and policies that will enable carbon budgets to be met, ensuring that Britain remains the leader and among the fastest-decarbonising nations in the world.

The answer to the noble Baroness’s question about oil and gas licences is that the climate compatibility checkpoint remains, but I make no apologies about this whatever. During the transition, we still have a requirement for oil and gas in the UK; the only question is whether we get it from British resources or from Saudi Arabia, Qatar, the US or somewhere else. Do we want to be paying British tax and employing British workers or for that money to be exported? That is the question that faces us.

[Baroness Bennett of Manor Castle (GP)]

My Lords, if no one else is going to stand up, I will come back to the Minister on a different, broader and more conceptual point. I am very tempted to respond to the previous answer, but I will not.

The Committee on Climate Change said that we should be shifting from looking at territorial emissions to consumption emissions. The fact is that a great deal of manufacturing has been offshored in recent decades and emissions are currently being counted against other countries on a territorial basis, while we are consuming the goods made from them. Are the Government planning to follow the recommendations of the Committee on Climate Change and move from measuring territorial emissions to consumption emissions?

[Lord Callanan (Con)]

It is a complicated question. We have no plans to. We will measure our emissions on the same basis that everybody else does. Nevertheless, I concede to the noble Baroness that she makes a valid point about carbon leakage and the extent to which we have driven many energy-intensive industries out of the UK and Europe, but we still use the products that many of them produce. These are produced not in Europe and the UK any more but in other parts of the world, often in more carbon-intensive manners.

There is a difficult policy question facing us and the EU: how do you address that if other countries do not have ambitious plans like ours to decarbonise but you still need the products? Do you look at mechanisms such as carbon border adjustment mechanisms, which the EU is looking at? Intrinsically, we are in favour of free trade, so we do not want to go down that avenue. A far better strategy is to try to persuade other countries to adopt similarly ambitious plans to ours.

[Baroness Bennett of Manor Castle (GP)]

My Lords, given the fact that this is a really important issue and I do not see anyone else rising, I will rise once again. The Government have committed to a fully decarbonised electricity power system by 2035. The Committee on Climate Change has said that their plans need urgent reform to achieve that goal. Can the Minister assure me that he is highly confident that we are on track for that 2035 goal for electricity?

--- Later in debate ---

[Lord Callanan (Con)]

Yes, we believe that we are on track. There is a diversity of sources of supply, including our world-leading offshore wind procedures—we have the first, second, third and fourth largest offshore wind farms in the world—and the rollout of new nuclear and solar. All of that will contribute to our ambitious plans to decarbonise our electricity sector by 2035.