Surplus Carbon Emissions

Debate between Lord Callanan and Lord Lilley

Wednesday 27th March 2024 Lords Chamber

[Lord Callanan (Con)]

The noble Lord makes a good point. A number of schemes around the country are taking advantage of that. Again, they are relatively small-scale; they will not provide the large amount of power that we need, but they are worth investigating. I think there are a number of noble Lords in this House who take advantage of tidal power in their own areas.

[Lord Lilley (Con)]

The advice from the CCC on this issue seems quite rational, but will my noble friend ask it to review the advice it has offered on the total cost of meeting net zero? It refused for over a year to produce its workings, and at great expense tried to resist freedom of information requirements. When it went to the tribunal and it was forced to reveal its workings, they were shown to be flawed in a number of ways and have now been condemned by the Royal Society as wrong. Will the Minister ask it to review them and produce some new estimates?

[Lord Callanan (Con)]

I was not aware of that case, and I thank my noble friend for drawing my attention to it. I will certainly raise it with the Climate Change Committee.

Cleaner Energy Technologies

Debate between Lord Callanan and Lord Lilley

Tuesday 14th March 2023 Lords Chamber

[Lord Callanan (Con)]

It depends on which projects the noble Lord is referring to. He might hear some good news in the near future with regard to the track 1 cluster announcements.

[Lord Lilley (Con)]

Could my noble friend tell the House what the Government’s estimate is of the social cost of carbon?

[Lord Callanan (Con)]

I am not quite sure where the noble Lord is going on that question. Perhaps we should have a more detailed discussion outside the Chamber.

Climate Change: Behaviour Change

Debate between Lord Callanan and Lord Lilley

Thursday 3rd November 2022 Lords Chamber

[Lord Callanan (Con)]

If the noble Baroness wants another example, the Help for Households campaign provides tailored advice on the three cheapest and quickest ways to save energy in your home, No. 1 being to turn the boiler flow temperature down. We are very clear that we are not going to get into telling people what to eat and how to live their lives. We want to provide them with the options to make greener choices.

[Lord Lilley (Con)]

My Lords, may I reassure my noble friend the Minister that the Climate Change Committee does not say that 62% of emissions savings needed for net zero must come from changing behaviour? That would require Stone Age lifestyles. The 62% figure includes savings from carbon capture and storage, and other technologies. In fact, my noble friend Lord Deben’s excellent committee sensibly says that 90% of carbon savings will come from new technologies and just 10% from modest lifestyle changes. Shamefully, the Environment and Climate Change Committee voted to omit that 10% figure from its report, because it would not get a good headline or satisfy the puritans and others who want to make us all adopt frugal lifestyles. Does the Minister agree that being economical with the truth undermines support for sound environmental policies and discredits the committees of your Lordships’ House?

[Lord Callanan (Con)]

My noble friend makes some interesting points and I will certainly have a look at the claims that he makes. I am sure he would not want to mislead the House about the statistics produced, but he makes an important point about the role that technology will play. We have some fantastic and innovative developing businesses in this country providing many of the solutions that we need to overcome these difficult challenges.

Energy Supplies

Debate between Lord Callanan and Lord Lilley

Wednesday 12th October 2022 Lords Chamber

[Lord Callanan (Con)]

The Prime Minister and the Secretary of State have said that local support for fracking projects is very important. It is one of the factors that we will take into account.

[Lord Lilley (Con)]

My Lords, more than a million shale wells have been drilled in North America and elsewhere. There is no record of a single building having been shaken down by the occasional microtremors, nor of a single person being poisoned by allegedly contaminated aquifers. Is not the scaremongering of the anti-frackers as bad as that of the anti-vaxxers? Should it not be treated similarly?

[Lord Callanan (Con)]

The noble Lord makes an important point. A number of scare stories have been circulating, although I would gently point out that many parts of America are much less densely populated than many parts of the UK.

Contracts for Difference (Allocation) and Electricity Market Reform (General) (Amendment) Regulations 2022

Debate between Lord Callanan and Lord Lilley

Monday 13th June 2022 Grand Committee

[The Parliamentary Under-Secretary of State, Department for Business, Energy and Industrial Strategy (Lord Callanan) (Con)]

My Lords, these regulations were laid before the House on 11 May 2022. The contracts for difference scheme is the Government’s flagship renewable energy support scheme. It is designed to offer long-term price stabilisation to low-carbon generators, bringing investment forward at a lower cost of capital and therefore at a lower cost to consumers. The scheme has been very successful in driving substantial deployment of renewables at scale in Great Britain and has made it cheaper to deliver low-carbon generation.

CfD applicants with a capacity of 300 megawatts or more are currently required to present a supply chain statement to the Electricity Market Reform Delivery Body as part of their application. A statement is provided if a developer can demonstrate to the Secretary of State’s satisfaction that the project is likely to make a material contribution to the development of relevant supply chains. The aim of the policy is to increase productivity, competitiveness and capacity in supply chains, promoting innovation and skills in the low-carbon electricity generating sector.

The current policy approach to CfD delivery and supply chain plans needs to be strengthened. This will also support the move to annual CfD allocation rounds, which the Government announced in February. This will ensure that the scheme continues to operate effectively, encourage low-carbon generation and provide confidence to investors and supply chain companies. It will support the delivery of those renewable technologies identified in the Net Zero Strategy and the British Energy Security Strategy that are key to decarbonising the power sector, such as offshore wind, onshore wind and solar.

I will take a moment to talk through what these regulations will do. They will make several amendments to the Contracts for Difference (Allocation) Regulations 2014 and the Electricity Market Reform (General) Regulations 2014. The amendments include changes to contracts for difference delivery and supply chain policy in preparation for the fifth allocation round. These amendments will help to bolster supply chain development in preparation for the next CfD allocation round, planned to open in March 2023, delivering on the ambitions set out in the Net Zero Strategy and the British Energy Security Strategy.

These regulations amend the current non-delivery disincentive exclusion period that applies if a developer fails to sign a CfD contract or the contract is terminated, so that an application cannot be made for the subsequent two applicable allocation rounds. This strengthens the current policy of excluding a site from only one subsequent allocation round. This change will ensure that the NDD exclusion period is aligned with the decision to hold allocation rounds on an annual basis from 2023, ensuring that the NDD remains an adequate incentive to deliver projects.

These regulations also bring alignment with a change introduced to the valuation formula in the CfD allocation framework for allocation round 4. For allocation round 4, the Government introduced changes to the valuation formula to reduce the complexity of the auction and to ensure that the earliest possible date of CfD payments is considered when calculating the impact on the budget. These regulations introduce this technical change, amending the corresponding contracts for difference allocation regulations to reflect the amended formula.

The regulations amend the validity period of a supply chain plan statement so that it is valid for nine, rather than 12, months. This ensures that, in practice, developers continue to submit individual supply chain plans for each CfD allocation round in light of the move to annual auctions. They also amend the requirement to provide a supply chain plan statement so that it applies to all floating offshore wind projects. This allows the Government to support the development of supply chains for the floating offshore wind industry as it approaches significant commercialisation and deployment. We seek to make these amendments now to give certainty to businesses that might be planning to take part in the next CfD scheme, which will open in March 2023.

We are proposing these legislative amendments following a public consultation, which ran from 4 February to 15 March and gave stakeholders the opportunity to scrutinise and test the policy proposals. The consultation generated 41 responses from a range of developers of renewable generating stations, trade associations and bodies, suppliers and public investment bodies. At the same time, officials engaged wider audiences through an online event.

Overall, the policy proposals received wide support. The consultation led to one policy change to the supply chain policy proposals in response to the feedback received. A minor adjustment was made to the proposal to introduce floating offshore wind projects into the supply chain plan process whereby a bespoke, less burdensome process will be required to account for the smaller size of their projects.

In conclusion, the Government have set out a clear vision for how we will transform the production and use of energy, in a decisive shift away from expensive fossil fuels. These regulations, together with annual CfD allocation rounds, will help support an increase in the pace of deployment of the new renewable electricity generation needed to achieve our ambitions while continuing to consider the likely cost to consumers, energy security, et cetera. Subject to the will of Parliament, we intend that these arrangements will come into force on the day after the regulations are made. I beg to move.

[Lord Lilley (Con)]

My Lords, I will ask some questions, because I do not fully understand all this and these SI debates are often a good opportunity to expand one’s knowledge.

First, I would be grateful if the Minister can explain how a shorter life validity of the supply chain plan acts as an incentive, and what it incentivises. What happens after the plan lapses? None of that is obvious to me from the not very helpful Explanatory Memorandum. Are these supply plans published? Can we all see them or are they private documents between the Government and the supplier? Overall, do they help us to estimate what percent of the value added in supply chains is generated within the UK? If so, I would be grateful to know what it is.

Can the Minister also confirm that although the newest offshore fields won the bidding process with low prices, they have not yet activated their contracts so they are able to sell their electricity at the very high prices now prevailing, making what most people might call a windfall profit? That is the sort of thing Governments love to tax but they seem to have got off scot free. I would be grateful to know whether that is the case and to what proportion of wind generation that applies.

I would also like to know what proportion of wind generation comes from the early contracts, which, if I have correctly understood it—that may well not be the case—got a variable price plus a bonus and therefore are getting not merely the current high price but the current high price plus something extra: jolly good for them, but not so good for the consumer. Again, that is something that Governments might like to tax but they do not seem to have done so in this case. I would like to know what proportion of the renewables supply that is. By deduction, that should tell us what proportion of the renewables supply is under CfDs and therefore is not going up with the gas price. It would be very helpful if the Minister could answer that.

If those questions identify an intrinsic problem in the present system, why does this measure not deal with it—unless it does and I have not been able to find it in the not very helpful Explanatory Memorandum? I will be grateful for the Minister’s replies.

Energy Security Strategy

Debate between Lord Callanan and Lord Lilley

Thursday 7th April 2022 Lords Chamber

[Lord Callanan (Con)]

I understand the thrust of the noble Baroness’s question, but we can prioritise a number of different things at the same time. That is why this is a comprehensive strategy. We are rolling out new nuclear, as indeed we should; we are also rolling out additional offshore-wind capacity and additional hydrogen capacity. As I said, onshore wind is also a priority, but it is a priority that we need to act on in cognisance and recognition of the concerns of local communities. With regard to insulation schemes, we are spending something like £6.6 billion over the term of this Parliament on insulation schemes. It would have been good to have gone further, but the Treasury would not support it.

[Lord Lilley (Con)]

My Lords, given that the two forms of domestic energy that can most rapidly come on stream and displace expensive imports are onshore wind and onshore shale gas, why does the Minister not introduce a system where, if a majority of the people in the vicinity of any proposed site to produce onshore wind or onshore gas vote in favour of it in return for cheap electricity or gas, it can go ahead?

[Lord Callanan (Con)]

Both the cases highlighted by my noble friend show the difficulties of proceeding in this environment, because we are a democratic society; we have strict planning rules and we have to try to proceed with these things with care and the support of local communities. I have outlined the position a number of times in relation to onshore wind. With regard to fracking for shale gas, my noble friend will be aware that the Business Secretary commissioned the British Geological Survey to do a further study to see if extraction of shale gas can take place without the unfortunate seismic events that occurred the last time it was tried. We will continue to be guided by the science in this respect.

Energy Storage Capacity

Debate between Lord Callanan and Lord Lilley

Tuesday 5th April 2022 Lords Chamber

[Lord Callanan (Con)]

The noble Lord is correct and, as I said earlier in response to the noble Lord, Lord Oates, we had a call for evidence last year and we will announce our analysis and the results of that shortly.

[Lord Lilley (Con)]

My Lords, could my noble friend confirm that the cost of providing storage for periods when the wind does not blow, which can last for days, will be astronomical? That is particularly true of batteries, since the cost of lithium is 10 times what it was a year ago. We will continue to need gas for quite a considerable while to provide that back-up. Will the Government implement the recommendations of the Dieter Helm report that, when bidding to go on the grid in future, intermittent suppliers should do so in conjunction with the back-up supplies that are needed when theirs are not available as the wind is not blowing?

[Lord Callanan (Con)]

My noble friend’s question deserves a long answer because it is a complicated subject. We need to differentiate between short-term storage, particularly from batteries and elsewhere, which is currently expensive—although prices are coming down—and longer-term storage provided by the likes of pump storage stations such as Dinorwig. That has been around for decades, and there are similar schemes in Scotland too. We need to do all these things. We need to get more offshore wind because it is a very cheap form of power, but it is intermittent, so we also need storage capacity to balance out that intermittency. As the noble Lord, Lord Fox, said, we also need more nuclear for baseload power.

Onshore Wind Bill [HL]

Debate between Lord Callanan and Lord Lilley

3rd reading
Friday 18th March 2022 Lords Chamber

[Lord Lilley (Con)]

My Lords, I congratulate the noble Baroness on her Bill, which I fully support. I have long opposed subsidies for wind, but I am not opposed to wind. As far as onshore wind is concerned, beauty lies in the eye of the beholder and I find windmills quite attractive—although this was not a view universally shared by my constituents.

In the current circumstances we must support the cheapest, most reliable mix of energy we can produce. With high gas prices, clearly wind is more economical. We should support it and not have artificial barriers to its development. But however much wind power we develop, we will need gas to back it up when the wind is not blowing. As well as liberalising the rules on building wind farms on land, I hope we shall liberalise the rules on exploiting gas to go with it.

[The Parliamentary Under-Secretary of State, Department for Business, Energy and Industrial Strategy (Lord Callanan) (Con)]

My Lords, I join in the thanks to the noble Baroness, Lady Hayman, for this Bill to revise national planning guidance on onshore wind. While the Government were not convinced that the Bill is the right course of action, we agree with the importance of increasing onshore wind deployment in order to reach our net-zero targets. As my noble friend Lord Lilley implied, recent events have demonstrated how crucial it is that we build a strong, homegrown renewable energy sector to further reduce our reliance on fossil fuels.

However, that does not alter the Government’s position here. We welcome the Bill and the opportunity to debate this important subject, although we cannot support it. I congratulate the noble Baroness, Lady Hayman, on bringing the Bill to the House and enabling what has been an excellent debate. I thank all noble Lords for their contributions at Second Reading, which allowed for an insightful and important debate on the subject. I also thank my officials for their support during Second Reading, which enabled noble Lords to receive prompt and, I hope, comprehensive answers on matters of interest.

The Government are not convinced that this Bill is the right solution to bring forward more onshore wind deployment in England. We continue to keep English planning policy under careful review to ensure that decisions on onshore wind can be taken that are in keeping with our carbon budgets.

Green Skills

Debate between Lord Callanan and Lord Lilley

Wednesday 9th March 2022 Lords Chamber

[Lord Callanan (Con)]

I thank the noble Lord for his suggestion based on his long experience in government. I will certainly pass on that suggestion to my ministerial colleague, and I am sure we would want to learn lessons from past experiences.

[Lord Lilley (Con)]

My Lords, if my noble friend believes the Government’s strategy when it says that green energy will create more jobs at higher pay than producing an equivalent amount of conventional energy, does that not mean it is wasteful, and that green energy must be more expensive than conventional energy?

[Lord Callanan (Con)]

It is the entire sector, not just the generation of energy; it includes all the retrofitting standards, the upgrading of insulation, new homes built to higher standards and others that have been mentioned. We are confident that there will be a net increase of jobs, but we do have a legally binding commitment to net zero which we need to pursue.

Energy Prices

Debate between Lord Callanan and Lord Lilley

Wednesday 12th January 2022 Lords Chamber

[Lord Callanan (Con)]

Before I answer the noble Lord’s question, I understand that this is his last outing as a member of the Opposition Front Bench. From my point of view, it has been a pleasure sitting opposite him and dealing with his questions and points. I am sure that he will have a lot to contribute to the House from the Back Benches in future, and I certainly wish him well.

Of course, the price cap is a matter for the independent regulator—Ofgem—and we will find out in a couple of weeks’ time what it will be. The Government have already announced £500 million for local authorities to support vulnerable householders across the country with essentials, including utility bills. As I said in response to earlier questions, we are looking at what else we can do.

[Lord Lilley (Con)]

When my noble friend considers the impact of higher energy prices, will he bear in mind the fact that, wherever the cost of meeting net-zero targets has become an electoral issue, with the gilets jaunes in France, the elections in Australia and Canada and the municipal elections in the Netherlands, the party opposing higher taxes on energy has won?

Net-zero Emissions

Debate between Lord Callanan and Lord Lilley

Tuesday 7th December 2021 Lords Chamber

[Lord Callanan (Con)]

The new building regulations for net-zero homes will take effect from 2025, but of course we are not waiting that long to take action. The new Part Z of the building regulations will kick in from next year.

[Lord Lilley (Con)]

My Lords, does my noble friend agree that living standards generally can rise only if we produce more output per head? Conversely, living standards will fall if we need more workers to produce our existing level of output of energy or heating. Yet this strategy says that upgrading our homes and buildings to warm them without using fossil fuels will require 240,000 more workers than at present, who will no longer be able to produce other goods and services. Does my noble friend think that reducing the average living standards of the country is what people voted for?

[Lord Callanan (Con)]

I am sure people did not vote to have their living standards reduced. Indeed, we have an excellent record of both decarbonising and growing the GDP per head of population. We have a very successful record of doing that so far, and I hope we will continue to be able to do so. I remind my noble friend that whatever our individual views on this, we now have a legal obligation to meet net zero.

Climate Change: Global Temperatures

Debate between Lord Callanan and Lord Lilley

Wednesday 27th October 2021 Lords Chamber

[Lord Callanan (Con)]

I refer the noble Lord to the answer that I just gave to the noble Baroness, Lady Jones. Many communities in the United Kingdom rely on air travel for international and internal connectivity. Some parts of our nation are islands, separated by water that trains do not go across. Therefore, it is important to retain connectivity. At the same time, the Chancellor also announced an increase in long-haul air passenger duty.

[Lord Lilley (Con)]

Is not the premise of the noble Baroness’s Question—namely, that global temperatures are rising faster than previously predicted—the reverse of the truth? When the IPCC was established, it forecast that over the ensuing 30 years, now complete, the global temperature would rise by 0.3 degrees per decade. In fact, it has risen by just 0.17 degrees per decade—barely half that amount—and all 39 models used by the IPCC produce estimates higher than reality. Reality is actually quite reassuring.

[Noble Lords]

Oh!

Carbon-neutral Homes

Debate between Lord Callanan and Lord Lilley

Thursday 10th December 2020 Lords Chamber

[Lord Callanan (Con)]

I thank the noble Baroness for drawing my attention to the report, but we already have a digitally led advice service, Simple Energy Advice, which provides tailored advice to homeowners and landlords on energy performance improvements that they can make to their homes. It also signposts further funding and directs them to suitably qualified tradespeople

[Lord Lilley (Con)]

I draw attention to my interests in the register. Carbon-neutral homes will require a massive expansion of carbon-neutral electricity. How confident is my noble friend in the optimistic projections of the future cost of renewables and carbon capture and storage, given that most large projects—from the Channel Tunnel through nuclear electricity to HS2—feature enormous cost overruns?

[Lord Callanan (Con)]

I understand my noble friend’s scepticism on this, but I point him to offshore wind, the cost of which has plummeted over recent years. It is possible that we can meet the standards, but of course we have to be fully aware of the potential for cost overruns in the future.

COP 26

Debate between Lord Callanan and Lord Lilley

Wednesday 18th November 2020 Lords Chamber

[Lord Callanan (Con)]

The noble Baroness makes some valid points, but, as I am sure she is aware, all campaign spend will be released in line with the usual Cabinet Office spend data publications. The idea of the campaign is to work through partnerships where possible, but further support may be needed working with other groups, and we will endeavour to take the campaign forward in as many different areas as possible.

[Lord Lilley (Con)]

My Lords, I refer to my interests in the register. Before your Lordships’ House is submerged in a tsunami of uncosted virtue signalling, can the Minister confirm that zero carbon will cost trillions of pounds? In the privacy of this Chamber, may I raise the politics of this? The further north you go, the cooler it is and the higher people’s heating bills are. People’s incomes are lower, so more is absorbed by energy costs and more jobs depend on energy. If they are less receptive to campaigns telling them to become vegetarians, ride bikes and forgo foreign holidays while being unable to sell their cars in 10 years’ time, will this help retain the blue-wall seats?

[Lord Callanan (Con)]

I thank my noble friend for his question; I know he takes a close interest in these matters. The important thing to do is to convince people across the country that there are an awful lot of jobs riding on this as well, and that pursuing green initiatives, as we are doing with the 10-point plan that was announced today, will enable thousands of jobs to be created in many of the communities that he is talking about.

Clean Growth Fund

Debate between Lord Callanan and Lord Lilley

Wednesday 28th October 2020 Lords Chamber

[Lord Lilley (Con)]

My Lords, I draw attention to my interests in the register. I sincerely hope that the fund will succeed in investing in companies that grow without subsidy, but does my noble friend recall that, in the Government’s Cost of Energy Review, Professor Dieter Helm concluded that the best part of £100 billion spent so far on renewables has been wasted because, as he warned, Governments are not very good at picking winners, but

“losers are very good at picking governments”?

[Lord Callanan (Con)]

That is indeed a good quote and I agree to a certain extent with my noble friend, but this is a commercial investment, run by a commercial fund manager. My noble friend will be pleased to know that the Government are playing no role in the selection of the investments. There are private sector investors alongside us and the fund manager is running the fund on a commercial basis.

Committee on Climate Change: Progress Report

Debate between Lord Callanan and Lord Lilley

Wednesday 1st July 2020 Lords Chamber

[Lord Callanan]

The noble Baroness makes an important point and, as I said to the noble Lord, Lord Oates, we will be setting out our plans, publishing a heat and building strategy in due course. We will take these important points on board.

[Lord Lilley (Con) [V]]

My Lords, I refer to my interests in the register. Does my noble friend agree that this recession is caused by suppressing supply, not by insufficient demand, so we need to rebuild the supply of goods and services as rapidly as possible across the board? If we limit growth, as the CCC advises, to activities complying with green criteria, we will recover less rapidly than otherwise. If we invest in activities which absorb more resources than they produce—that is, those needing subsidy—we will not increase net supply. Will he treat with a pinch of salt demands by the CCC and others, which use the Covid crisis as an excuse to turn the hose of subsidies in their direction?

[Lord Callanan]

As we recover from Covid-19, we certainly want to deliver a UK economy which is cleaner, stronger, more sustainable and more resilient. Covid-19 has been a powerful reminder of the UK’s vulnerability to systemic risks. Fortunately, job creation and a clean, resilient recovery can be mutually reinforcing, and meeting net zero and our other environmental goals can create employment and economic opportunities.