Great British Energy Bill

Lord Cameron of Dillington Excerpts

2nd reading
Monday 18th November 2024 Lords Chamber

[Lord Cameron of Dillington (CB)]

My Lords, I am a supporter of Great British Energy, its purpose and the proposed flexible approach inherent in the Bill. We need to quickly adopt the new generating technologies we have available to us. Apart from the drive to net zero, the main reason for my support is based on the issue of energy security. Having long maintained that the food security of our nation is the most important role that any Government have to play, I now think that energy security must come a pretty close second. Our cherished peaceful security from wars, and even worldwide pandemics, seems more precarious now than for most of the past 80 years; thus our ability to import electricity, or the fuel to generate it, must also be more precarious. But, if we invest wisely and we can harness the sources of power we are blessed with—wind, sun and tide—we can creep nearer to that energy security; and investing wisely is precisely what we all hope GBE will do.

One of the features I like about the proposals is that GBE will be taking equity in the businesses it chooses to support, and not just giving loans or grants. In other words, it can enjoy the upside of a successful business, as opposed to shouldering only the downside risks that loans or grants allow. I was pleased to hear that the Government have an expectation that, at some time in the future, GBE will, hopefully, contribute to its own funding. I was also pleased to hear that the Government expect that some of its investments will fail. Frankly, if it invests only in guaranteed successes, it will not be doing its job. So, although it sounds odd, I hope that some of its investments will fail—but not too many.

However, hopefully, GBE’s ownership by government will give the private sector the confidence it needs to invest in this exciting energy transitional arena. I am advised that, for a successful transition of our electricity landscape, we need to attract some £400 billion-worth of capital into power generation in the next 10 years. In that context, £1.6 billion per annum does not sound like very much. However, hopefully—I fear there is a lot of hope here, including from me—GBE’s investments, if well used and specifically targeted to reduce risk to private capital, should pull in some of the outside investment that is so badly needed.

But GBE’s role will need to be not only to use money in a wise and, I would hope, “magnetic” way—magnetic in that it will attract other investments. It must also be an enabler. GBE needs to become a real driver of projects, using all the powers at its disposal to try to help clear away some of the barriers to the production and use of renewable energy. As we all know, one of the biggest barriers lies in our planning system and our judicial review system, which can cause excessive delays, and thus costs, in so many of our infrastructure projects. I am sure all noble Lords will have read about the Lower Thames Crossing, where, before a single spade has been put in the ground, apparently more money has already been spent on planning and reviews than Norway has spent on completing the longest road tunnel in the world.

On this subject, it has always interested me that in France, where they pay over the odds for land compulsorily taken by the state, property owners often fall over themselves to offer their land for a state-run project. Of course, these owners do not object at planning inquiries, nor do they instigate judicial reviews. Maybe there is a lesson there for our Treasury—maybe it saves money in the end.

When it comes to energy projects, GBE must ensure there is generous community involvement. In Denmark, the local community gets 20% of the profits of a local wind farm. We need to do something similar here, and then, hopefully, our communities will be falling over themselves to have a magnificent wind farm on their doorstep—and I do think our modern wind turbines are magnificent.

I will leave others to speak about community energy companies themselves, which need all the support we can give them. However, in terms of speedy delivery of projects, the difficulty arises when dealing with National Grid infrastructure, such as pylons—“the plumbing”, as it was referred to in the debate last Thursday. This infrastructure needs to grow to at least four times its current size to deliver power to everywhere it is needed and receive power from all the generating sources that are going to come along. Some projects are currently being told they will be delayed by 10 years or more for the want of a connection; we really cannot afford such delays.

The problem is that no project could possibly afford to financially involve every community along the whole route of its delivery line. So, what is to be done? First, the National Grid has to work with generators to pull together various projects, particularly North Sea projects, to minimise the number of power lines needed from source to delivery point. Then, I fear, a calculation has to be made by GBE and the National Grid as to the extra costs of burying cables in certain places—these costs are slowly coming down—versus the costs of planning delays and judicial reviews caused by objectors to such essential schemes. But I am afraid that I see this issue remaining the biggest fly in the ointment of our desired speedy energy transition.

I turn briefly to the details of the Bill. With all the talk of flexibility and this new GBE being agile and fleet of foot, it surprised me that it should be specifically forbidden by law from going to the open market to raise some of its own money when needed. Clause 1(4) says it can only

“be wholly owned by the Crown”.

That is a mistake, and we should amend it in Committee. A minimum of 80% Crown investment would suffice to keep it essentially a Crown entity but with some financial flexibility. A small amount of private sector money, when needed, would not go amiss.

I bristled at the total power being given to current and future Secretaries of State. Again and again, the efficiency and success of GBE appears to depend on guidance and control by the Secretary of State. Nowadays, as has been made clear by other speakers, very few Secretaries of State will have the relevant business or entrepreneurial experience and skills that might help them to take good decisions.

Having said that, I am not sure what the right solution is. GBE has to be a company independent of and yet part of government to effectively exert the power it needs, but to involve Parliament in any detailed decision-making role would clearly not be efficient. Parliament seems incapable of moving forward on the restoration of its own infrastructure, so it definitely should not be let loose on the national electricity infrastructure.

Thus I fear that having the Secretary of State report directly to Parliament after having widely consulted, as envisaged in the Bill, is probably the best answer to protecting taxpayers’ money. But—and this is a big but—we definitely need to firm up the consultation and reporting. For a start, Clause 6(3)(b), leaving the Secretary of State to decide who he consults with and how he responds to that consultation, is an unnecessary surrender on the part of the taxpayer. Then, for the only reporting to Parliament in Clause 7 to be what I would describe as the minimal information required by Companies House is totally inadequate. The Secretary of State must present to Parliament his own detailed annual report as to how GBE is progressing with its mandate—both the how and the why. I also like the idea of an independent review being carried out every few years, similar to Section 9 of the UK Infrastructure Bank Act 2023; it is the idea of the noble Lord, Lord Vaux, not mine.

I have just two further points to end with. First, the question of whether SMRs fit under the remit of GB Energy or of GB Nuclear needs to be resolved very quickly, as others have said. These generating units will be vital to our electricity supplies over future decades and we need to get their rollout under way as soon as possible.

Secondly, I have great faith in the future of hydrogen. Apart from gradually helping to heat our homes, hydrogen can be used, free of CO₂ emissions, in the production of steel, the production of which currently creates 8% of the world’s CO₂. More importantly, hydrogen will be critical for the decarbonisation of our road transport system. In the UK, road transport currently contributes some 26% of our greenhouse gas emissions. Noble Lords should know that a hydrogen fuel cell battery can give a car a range of over 1,000 miles. Because of this characteristic, such batteries are really the only serious contender to providing a zero-carbon fuel for our HGV fleet.

I have this theory that our current electric cars, with their low mileage range, heavy weight and high use of rare earth metals, will disappear from the marketplace in coming decades, in the same way as fax machines and video recorders—both miracles of their time—have now both completely disappeared. I believe that hydrogen fuel cell cars have a much brighter long-term future, if we can get the hydrogen.

That brings me to the point of mentioning hydrogen in the context of the Bill. For a start, GBE needs to look favourably on any hydrogen projects that come before it, but I also believe that all wind farms, on land or offshore, and solar parks above a certain output should be obliged by law to have a direct connection to a hydrogen production plant. That way, whenever their power is not needed by the grid—in the middle of the night, say, for wind farms—they can be creating green hydrogen to decarbonise our transport system or as a long-term generating fuel, as the noble Viscount, Lord Stansgate, mentioned. The point is that no more should millions or even billions of pounds be paid to wind farms for not producing electricity. In times of excess production, or when the grid cannot accept their power, they should all be producing green hydrogen as a form of power storage.

As noble Lords will have gathered, I support this Bill. I look forward to working with the Government to improve it in Committee.