Hinkley Point C

Debate between Lord Grantchester and Lord Teverson

Thursday 15th September 2016 Lords Chamber

[Lord Grantchester (Lab)]

I thank the Minister for repeating the Statement in your Lordships’ House today. I also thank her for contacting me this morning to let me know that she would be making this Statement.

I say at the outset that Labour supports the development of new nuclear power as part of the UK’s energy mix, to ensure the country’s energy security, to deliver thousands of high-skilled jobs across the country and to deliver clean energy in compliance with our legal obligations on meeting climate change targets. Labour has always been critical of the strike price being set at £92.50 per megawatt hour; we have called for a price in the mid-£80 per megawatt hour range.

Critically, this investment must be delivered on time and on budget—two features that all Governments seem to be unable to improve on. Being on time is critical, as old energy plant is phased out, leaving a vulnerable period in the nation’s security of supply in the 2020s. The Government’s Statement today makes no mention of amendments on this following the review. This side of the House has argued that any future delays, which have already added five years to the project at a cost of £6 billion, should result in a penalty clause with a taper being applied to the price. While we may all be second-guessing whether the deal will be a good one in relation to future energy pricing, the country’s need for a new low-carbon energy supply coming on stream is well documented. Any cost overruns should be recognised and welcomed as a cost to EDF, and any underruns are to be shared.

Although the price at £92.50 per megawatt hour may well reduce to £89.50 if Sizewell C is built, nevertheless this is above the price agreed in France for Flamanville. It can be stated with a certain amount of confidence that the technical issues around the developments in light water reactors will find innovative solutions. We do not have a particular issue with this.

The Government were right to subject Hinkley Point to review, but the review should have taken place far earlier than at the 11th hour, when the room for renegotiation and manoeuvre is severely limited. This deal will set a precedent and benchmark for the future. Key review dates should also be set along the way to ensure that this project delivers to plan. The quality mark of having received approval from the globally recognised gold standard of the ONR will be much prized.

I am also wondering why the Government are rushing the Statement out today, the last day of this September sitting, with three weeks’ interval before Parliament returns in October.

I learned that, last night, as energy supplies through solar came to an end around sunset, a price hike occurred with an interconnector to the continent also being unavailable pushing pricing up well over £120 per megawatt. Will the Minister ask Ofgem to monitor and investigate price volatility through the winter months to guard against any possibility of manipulation for whatever reason?

On the Statement, I have a few questions that I would be grateful if the Minister could clarify. The review has concluded with a few alterations around the issue of control. The Government will now be able to prevent the sale of EDF’s controlling stake prior to completion. This is being done via an exchange of letters. Will the Minister clarify what is the legal form or basis under which this agreement by exchange of letters is enforceable? What would the implications of non-compliance be? Will the letters be made public? I would be most grateful to understand better the legal context to this agreement.

After completion the Statement refers to the new legal framework under which the Government will be able to intervene in any sale of EDF’s stake. Can the Minister give any further indication what form this intervention may take and how? Will this intervention be limited to ownership issues only?

The Statement continues with reforms to future foreign investment in British critical infrastructure and highlights three elements: namely, a golden share; reports to the Office for Nuclear Regulation regarding changes in ownership; and new processes within government to scrutinise foreign ownership for national security reasons. In the context of comments made by Mrs May on her appointment as the new Prime Minister, the position of foreign control in takeovers of important British companies was identified as a key issue for the new Government. Given her position within the wider business department that now includes energy and climate change, can the Minister clarify what the next steps and milestones will be and whether this scrutiny will be limited to investment in critical infrastructure only? What will be the parliamentary oversight of these new powers?

Regarding future investments, can the Minister clarify whether the contract includes assurances and guarantees that Bradwell and other plants are committed to the same investors? Does this also include commitments that key personnel and skills will be available to British companies throughout the British economy? Can the Minister give precise terms and details of any link between this and any future investments?

On the wider issues regarding the Statement, why have the Government refused in this review to demand a better deal for bill payers, who will be funding this for decades—at a cost of up to £30 billion according to the National Audit Office?

This investment will result in 25,000 high-skilled jobs with possibly 550 apprenticeships, which should be widely welcomed. It is vital that this contract fulfils in delivering high-skilled jobs and key positions within the organisation for British companies. Will the Minister give the House assurances regarding the timetable and transparency over the contract to ensure job security as well as the security of energy supplies that this country so desperately needs?

I am grateful to the Minister for the Statement and look forward to receiving this vital further information.

[Lord Teverson (LD)]

My Lords, I, too, thank the Minister, but I have a different take on the pricing side. Some time ago, we had the resignation of the finance director of EDF. I have looked at the share price since the announcement was made, and it is going down. Does the Minister expect EDF to be solvent by the time this project is due to be delivered? That is a real risk, given the other problems at Flamanville and—I am not brave enough to pronounce the town in Finland—the Finnish nuclear station. Will EDF survive this? What are the contingency plans?

This decision was originally made some three years ago, and we have had this soap opera ever since, but time and technology have moved on. Given the assessments on smart grids, energy storage and the Government’s brave and correct interconnector plan, is this nuclear power station—and fleet of nuclear power stations—necessary? I for one am not against nuclear technology as such, but is this the right technology to go forward? The previous Minister in the House of Commons, the Secretary of State for DECC, Amber Rudd, was very keen on small nuclear reactors. I would be interested to know whether the Minister is still pursuing that area.

I accept and welcome the various measures put in place to protect taxpayers and the public sector against the future costs of decommissioning, but I am concerned about the nuclear waste issue. I cannot see that there has been any movement by the Government in terms of their nuclear waste strategy or where we are going to put even old nuclear waste, let alone new nuclear waste. How can we be sure that the funding that will be put in place for decommissioning will reflect such an undefined nuclear waste strategy for the future?

Now that we have got through this period of constipation on energy decision-making, when can we expect a decision on the Swansea tidal lagoon?

I want to take up another major element in the Statement that is really interesting and that I have debated with the Minister on previous occasions. The Government are saying that they will take a golden share in future nuclear and other critical energy projects. The Minister will not be surprised if I ask her whether the Government have consulted with the Office for National Statistics about this strategy. She is quite right to be sensitive about the issue and wanting to make sure that, in having even slight government control over a company or a project, it does not become part of the public sector and go on to the public sector balance sheet. However, this seems quite incautious in comparison with previous government policy, and it is quite likely that at some point this project, which is worth £18 billion, will be put on to the public balance sheet. If that is the case, surely we should have put our own public money into it, at a more or less zero long-term interest rate, rather than bother with Chinese and French investment because it is going to be on the public sector balance sheet anyway.

I shall leave my questions at that. Again, I thank the Minister for repeating the Statement.

Renewables Obligation Closure Etc. (Amendment) Order 2016

Debate between Lord Grantchester and Lord Teverson

Wednesday 16th March 2016 Lords Chamber

[Lord Teverson (LD)]

My Lords, I will be extremely brief. Perhaps I may reply to the noble Baroness, Lady Byford—whose expertise in all these areas I admire greatly —as well as comment on one of the Minister’s remarks.

First, these Benches absolutely want to reduce renewable tariffs and subsidies as the costs come down. That is a fundamental point. We have a track record of doing that, and that is what we do. However, we are not into executing a particular technology. The way that this has worked is that the Government—interestingly, a Conservative Government—have been moving down the road of choosing technologies. The whole strategy of the energy market reform was to move gradually to a more market-based, less technology-specific situation as time went on—but we are doing the opposite.

We absolutely agree on the levy control framework and lowering costs to the consumer, but what have the Government decided to do? They have decided to invest in the two most expensive low-carbon technologies, offshore wind and nuclear, both of which are hugely more expensive than onshore wind and solar, the technologies that cost the least. So I say to both the Minister and the noble Baroness that if that is what the Government want, they need to change the strategy. They can achieve another strategy at the same time as meeting the carbon emissions target and lowering costs to consumers. That is the way it works—it is arithmetic. So, please, let us go for that.

I return very briefly to the issue of investor confidence. As noble Lords will know, the Select Committee on Energy and Climate Change in the other place recently looked at investor confidence in the energy sector. I hate round numbers, because one often does not believe them, but DECC itself estimates that we need some £100 billion of investment up to 2020, not just in generation but in the distribution system as well. As my noble friend said, to achieve that we need real investor confidence. What was the Select Committee’s conclusion? It said:

“It is clear that the confidence of many investors has been dented by the Government’s actions since the election. The sudden, unexpected nature of many of the announcements has unsettled investors who had been used to receiving more forewarning of policy changes. There is a high risk that a hiatus in new developments has been created, pending further clarity on short- and longer-term policy. The Government removed support for renewables due to concerns about costs for consumers. But they have not set out the evidence base for this conclusion or for other decisions, and engagement with the investment community has been poor”.

That is an all-party conclusion in a report on the Government’s action in this area, and the conclusion is to condemn it. The need for investment is huge. We need to make sure that investment is right and that subsidies are low—and we are absolutely for reducing subsidies—but it has led to a hiatus. We no longer have carbon capture and storage or appear to have nuclear, and as far as I can see we do not have a workable strategy to bring in gas—so we have a huge energy problem. We need those investors but we have thrown away their confidence, and through the decisions we have made on renewable energy, by picking expensive winners, we have ensured higher energy costs for the future.

[Lord Grantchester (Lab)]

My Lords, it is becoming an all too familiar situation on energy policy that once more there is another order before your Lordships’ House that severely limits the UK’s renewables industry, the mishandling of which, once more, has left confidence among investors in the sector further damaged.

The draft instrument today contains severe restrictions on the deployment of solar schemes of 5 megawatts or less under the RO regime. For solar it is another blow on top of the 65% cut to the rate of feed-in tariffs that your Lordships debated barely a month ago. As was said then, in the wake of the Paris agreement on climate change, the Government are sending out a terrible mixed message with another sudden and severe policy change, risking cutting off the sector at its knees rather than supporting its gradual glide path to being subsidy-free.

Today we will join the noble Baroness, Lady Featherstone, in her amendment to the Motion on the order. She is of course correct in her appraisals. Today the Government are not being technology-neutral as regards solar power. Having closed the RO to schemes above 5 megawatts on 31 March 2015, the extension to close the RO to 5 megawatt schemes and below, yet without access to the contracts for difference auction system, means that solar projects above 1 megawatt are now in effect without support, with no route to market.

Infrastructure Planning (Onshore Wind Generating Stations) Order 2016

Debate between Lord Grantchester and Lord Teverson

Monday 8th February 2016 Grand Committee

[Lord Teverson (LD)]

My Lords, I thank the Minister for his brief introduction. I fear that I will show a lot of my own personal ignorance about the subject in my questions because, as he said, it is one part of a jigsaw; the question is how it fits in.

Perhaps I am being naive but I expect the Explanatory Memorandum to be fairly objective. Paragraph 7.1 states:

“Local communities are often opposed to onshore wind farm development, arguing that they have direct noise and detrimental impacts on their communities”.

Yes, it is true to a degree that some are opposed but, on the whole, they are not. It is usually a vociferous number of people who object to them and make planners’ and local councillors’ lives very difficult. It is up to them to stand up to that sort of pressure and make the right decision. That does not represent the majority.

Paragraph 7.3 states:

“Such reviews help to strike the right balance between keeping consumers’ bills as low as possible, while reducing emissions in the most cost effective way and ensuring public acceptability of particular technologies”.

As we know, wind power, as shown by the ROC rates and everything else, is one of the cheapest renewable sources of energy, so I am not sure how that paragraph fits in.

Part 10 of the Explanatory Memorandum concerns the impact. I have not read the impact assessment: I think that there was a problem in that it originally referred to the wrong one, but the memorandum states:

“There is no impact on business, charities … voluntary bodies”,

or,

“the public sector”.

Then what is the point of it? I can see the point, but if there is no impact whatsoever, that is rather strange.

I actually welcome the order in principle. The Minister is absolutely right: local communities should have much more say over their local areas and decisions such as these. Placing them back into the local authority planning process is the right thing to do, so I welcome that.

What I want to understand—this is where my ignorance comes out—is how it interacts with the National Planning Policy Framework, which specifically uses the phrase “a golden thread” of sustainable development: that there should be acceptance that schemes should go ahead if they promote sustainable development. Does that still apply when local authority planning decisions are questioned further up the decision tree on appeal?

Paragraph 97 of the National Planning Policy Framework states:

“To help increase the use and supply of renewable and low carbon energy, local planning authorities should recognise the responsibility on all communities to contribute to energy generation from renewable or low carbon sources”.

Then it goes through a list of bullet points of things they ought to do. How do those obligations on local planning authorities tie in with this secondary legislation and the other areas that the Minister mentioned around it?

The Explanatory Memorandum also says that local authorities’ planners have to take account of neighbourhood plans or local plans. I want to understand whether that is a “both” or an “either/or”, because a lot of local plans have renewable energy and wind farms in them. What happens if this is not included in the neighbourhood plan but is included in a local plan, for instance? I suspect that that will often be the case given that neighbourhood plans still do not cover large proportions of areas that local planning committees take an interest in.

I have a couple of other quick things for the Minister. Five-megawatt wind farms are pretty large, and I would be interested to know how many applications for such wind farms there have been over the last five years or so. I do not need a specific answer but perhaps the Minister could give an idea of the kind of scale we are talking about. Also, are there other areas where local authorities do not have control over less than 30 megawatts? A number of parallels have been made with shale gas—which I am not against—where there is a big push the other way in terms of trying to put pressure on local authorities to give permission or to call the decisions in if they do not. I would be interested to hear how the Minister reconciles the two opposite directions that energy policy seems to be going in at present.

[Lord Grantchester (Lab)]

I thank the Minister for his explanation to the Committee today. The order seems to be primarily technical in that it changes the planning consent process from one where the Secretary of State is included to one where the local planning authorities make the decisions on an application concerning onshore wind-generating stations over 50 megawatts—that is, from the Planning Act 2008 to the Town and Country Planning Act 1990. This is in the context of the Conservative Party’s manifesto for the 2015 election and will make the procedure for consent for stations that generate above 50 megawatts consistent with that governing those that generate less than 50 megawatts. Perhaps to underline the simple policy objective sought here, can the Minister confirm that, apart from changing the ultimate determining authority from the Secretary of State to local planning authorities, no other feature will be affected by this change and that there is no other difference between the two processes for onshore generating stations above and below 50 megawatts?

We are content to support this SI. Indeed, we support the right of local authorities to decide onshore wind power applications so that they can decide on the case made in terms of them supporting jobs, providing energy stability, cutting energy bills and contributing to action to mitigate possible global warming. This change is also reflected in Clause 79 of the Energy Bill, which is currently undergoing scrutiny in the other place. During consideration of the Bill, it has been noted that the Conservative Government judge local authorities effective to rule on onshore wind applications, yet will not allow local authorities to assess applications regarding fracking. We consider that communities should be allowed a pertinent voice in both situations.

Your Lordships’ Secondary Legislation Scrutiny Committee drew attention to the lack of a wider impact assessment on the UK’s generating power. The noble Lord, Lord Teverson, drew attention to the wider impact on the national infrastructure framework. I support him in asking the Minister whether he will report to Parliament six months after the passage of the present Energy Bill to update Parliament on the effect of this SI, especially in relation to the carbon impact and the Energy Bill.

Paris Climate Change Conference

Debate between Lord Grantchester and Lord Teverson

Tuesday 15th December 2015 Lords Chamber

[Lord Grantchester (Lab)]

I thank the Minister for repeating the Statement today. He is quite right to celebrate the agreement’s achievement and the role that all recent UK Governments have played to bring this about.

All Governments have agreed to the common goal to decarbonise their economies within one generation, to limit increases in global temperatures to below 2 degrees and to target 1.5 degrees. All Governments have agreed to achieve net zero emissions before 2050 and the end of the century to cut pollution and curb carbon emissions. All Governments have agreed to review progress and raise ambitions every five years to make sure that the job gets done. Developed nations have agreed to help fund the developing nations’ transition to clean energy with a flow of $100 billion a year beyond 2020.

The commitment achieved by consensus is immense. The Paris conference witnessed the greatest get-together of world leaders, with 50,000 people in attendance and the dedications of scientists, campaign groups and interest organisations in mobilising public support to insist on an agreement being achieved. This historic achievement was won in a forum of one country, one voice; unlike other intergovernment forums dominated by richer countries, as in the G7, G20, OECD and OPEC. China, the US, the EU and India are responsible for 61% of global emissions but other nations have an equal voice at the UNFCCC. The French must be congratulated for facilitating the conference, working tirelessly to resolve disputes.

The Minister is right to highlight the role played by successive UK Governments and the British Parliament. Now that this Government are the first Conservative Government for 18 years, this is not the time to abandon that consensus. It must be recognised that scientists still point to the dangers that even a rise of 2 degrees will bring and the trajectory that the world is on.

This agreement needs to be followed up by outcomes. In this respect, I congratulate the Government on the decision to phase out coal-powered generation by 2025. Last week, the Minister stated that domestic policies do not resonate on an international stage. His Government cannot think that fine words need not be matched by deeds.

In the Energy Bill 2013, the Government refused to set a 2030 decarbonisation target. There has followed a litany of reversals to important schemes designed to put the UK on track to a low-carbon economy. The UK’s commitment to reach renewable energy targets of 15% by 2020 is in jeopardy. PWC estimates that if the renewables contributions from heat and transport remain at their present levels, the UK will need to generate 52% of electricity from renewables to meet that target.

The Government have attacked the cheapest options for achieving these targets, such as onshore wind, meaning that energy bills will increase by more than they need to. The Green Deal efficiency measures have been abandoned. Carbon capture and storage projects in Yorkshire and Scotland have been axed. Polluting diesel generators have been rewarded with 15-year contracts totalling more than £150 million in the latest capacity auctions.

The UK still requires significant investment in low-carbon technologies. Investor confidence is now undermined by continual sharp policy shifts such as are proposed in the latest Energy Bill. Friends of the Earth states:

“It will be outstanding hypocrisy for the government to trumpet the new climate change agreement unless it does a U-turn on energy policy”.

Will these green policy reversals now be reviewed in the context of the commitments given at Paris? Will the Minister ask the independent Committee on Climate Change to review the progress towards and likely achievement of the UK’s renewable generation target, and whether there should be further policy initiatives to get the UK back to achieving 15% of energy from renewables by 2020?

In Paris, the global ambition has been set to reduce temperature rises from 2 degrees to 1.5 degrees. What further measures does the Minister’s department now consider are necessary?

[Lord Teverson (LD)]

My Lords, what a great result for all sides of this House, for the nation and for the international community. I do not think that we can say more strongly than has the Minister how great this result is. After the pessimism—the omnishambles, we could say—of Copenhagen in 2009, this is truly a good and remarkable result. We should certainly congratulate the French Government, and Laurent Fabius in particular, on their stewardship and their achievement at this conference.

The great thing is that those of us who believe that climate change really is one of the greatest issues facing this planet can be positive again, since for the past six years we have been rather on the defensive and pessimistic about outcomes. What we have here is an agreement not just between 196 nations but an agreement particularly that China, the United States, India and Europe have agreed to. That is quite something and it would have been unbelievable just a few years ago.

We also have something else to celebrate. In 2014, the globe’s emissions were roughly the same—they levelled out for the first time during a period when there was global economic growth—and, this year, we hope that there will be something like a 1% reduction in carbon emissions. So we can move forward with confidence that we are achieving something and perhaps prove wrong the pessimists or disbelievers among us, not just through the science but by showing that real-world Governments, including in the developing world, are taking notice that this is a problem that needs to be solved.

I welcome particularly in this agreement the integration between developed and developing nations—there is not the big divide that there was under Kyoto and China’s emissions this year are falling by some 3% to 4%. I welcome, too, that we will have a proper review programme every five years, starting in 2018—we are not waiting for five years until we start that process—and that we realise that, for those island states in the Pacific and elsewhere, the real challenge should be 1.5 degrees and not 2 degrees, difficult though that will be. Those are great achievements and I welcome the Secretary of State’s Statement, and in particular her thanks to previous Secretaries of State—I think of my former right honourable colleague Ed Davey in that regard.

But we have a problem here: we need those nations to move forward on those agendas, and that includes the United Kingdom. While I agree with the Minister entirely that we have had a positive reaction in ridding ourselves of coal emissions within the next 10 years and increased investment in technology around the green agenda, so far this year we have had a reversal of a number of policies that are really important for driving our commitments forward in this area. The House does not have to believe me because the chief executives of companies such as Panasonic, BT, M&S, Tesco, Vodafone, Ikea and many others have written to the Government saying that this policy change has been in the wrong direction and needs to change. Those are real challenges.

We will come to the fifth carbon budget and I hope that the Government will move forward positively when it comes to decisions, unlike with the difficulties that there were— particularly from the Treasury—when we looked at the fourth carbon budget in the past.

On behalf of my Benches, I welcome this agreement. As the Minister said, it is not the end but it is the beginning of reaching a solution to climate change on this planet. It is the most important way of going forward. Of all the policies that are most important for implementing this agreement, perhaps the cheapest and most effective is the one of energy efficiency. The Government’s move away from zero-carbon homes for 2016 and commercial buildings for 2019 was one of the most negative policies that they could have implemented. My challenge to the Minister is to ask the Secretary of State to reverse at least that one policy so that we can start on the road to fulfilling this agreement.