Great British Energy Bill

Lord Howell of Guildford Excerpts

2nd reading
Monday 18th November 2024 Lords Chamber

[Lord Howell of Guildford (Con)]

My Lords, I declare my interests in energy-related companies, institutions and organisations, as in the register. I join most heartily in the comments made on the maiden speech we have already heard in this debate, by the noble Baroness, Lady Beckett. She seems to have held an enormous portfolio of high offices over the years, and the way she has swept through the offices of state makes many of us look like part-time politicians. She was Secretary of State for Trade, as the noble Lord just mentioned, Foreign Secretary and—if my memory serves me right, and it serves me wrong more and more nowadays—I think she was leader of her party as well. Anyway, she is a considerable and major figure who we are honoured to have among us as we grapple with the huge new issues sweeping into politics and policy today.

Obviously, I am also looking forward to my amazing noble friend Lord Mackinlay’s maiden speech, which I am sure we will all listen to with enormous interest.

An entirely new politics of energy is taking shape at the moment, at a very rapid rate. I am referring not just to the prospects of President Trump, who, of course, has announced that he will break totally with all the major assumptions on which this Bill and many other energy policies are based, so we will have to think anew on all that. I am talking about the fact that we are heading into yet another era of oil and gas surplus. It all goes up and down in very volatile ways; it always has and will continue to do so.

The new Secretary of State, Mr Miliband, has said that he has, I think, three priorities—he has many, but three in particular. The first is to save the planet; that is the climate change challenge, of course. The second is to create jobs. That is certainly right, because we are heading into a considerably bigger change in world energy than the Industrial Revolution. There will obviously be a huge shift in the patterns of jobs, training and the education behind them.

The Secretary of State’s third concern is lower energy prices. I am very glad to hear that, too, because it makes me uneasy all the time, as I am sure it makes all of your Lordships, that probably 3 million or 4 million families wake up every morning in this United Kingdom of ours in desperation and apprehension about the coming winter and how on earth they are going to pay—or even try to pay—for the necessary energy for putting hot food on the table, heating, cooking, hot water and a comfortable home, which they know they cannot do. The sums still do not add up. Energy cap or no energy cap, they are impossible prices for millions and millions of households in what is supposed to be a mature and rich country in which we look after our citizens. So I am very glad that he puts that as one of his trio. Maybe there are others.

So how will this new body, the Great British Energy company, help tackle all this? The first thing I would add, which has not come up very much in any of our recent energy debates, is that we must be clear about what the real situation is. To get to an all-electric society by 2030, which I think is the Government’s aim—or is it by 2035? I am not quite sure—will require five times more electricity than we are generating now. People say “No, no, that can’t be true”. I was just looking at the briefing from the voice of the energy industry, which says, “Oh, it’s all right. Today, the UK’s electricity grid is powered more by renewable and low-carbon sources of energy than fossil fuel”. Wait a minute; that cannot be right. It sounds right and it may be true at this moment, but, if we are talking not about the electricity grid but about the UK’s economy, that is powered vastly more by fossil fuels than by renewable energies of any kind. This is a complete misapprehension of the reality, which is that renewable energy provides slightly under 10% of the nation’s total energy usage. It is the other 90% that has to be decarbonised if we are to get anywhere near net zero by 2030 or 2035. It is important to start with a realisation of the colossal hill we have to climb to get to a situation where net zero of any kind, even by 2050, is faintly achievable.

Some 27 million households now use about 6 kilowatts of electricity a day. If all gas and oil are illegal and unavailable—just not there—by 2030, each household will need 29 kilowatts, on average. Obviously, some will need much more; some less. This is about 4.5 to 5 times what is currently produced. This nation produces about 65 megawatts of electricity a day, half of which comes from renewables. On good days, all of it comes from renewables but, averaged out over a year, 30 to 40 megawatts come from renewables.

The most sober estimates are that, between now and 2030 or 2035, we will need 200 gigawatts of clean, green energy, plus a back-up system of intermittency, because the wind does not blow all the time and we have not finished redeveloping and rescuing our nuclear industry. The decisions have not yet been made and we have all the problems of storage and hydrogen yet to solve—although they will play their part in in the future and their place will come.

In short, fossil fuels may be fading over the next 20 to 30 years, but in modern economies electricity demand will not fade. On the contrary, it will grow. Although there are mitigations, which I will address in a moment, they will not help the fact that we have to produce vastly greater amounts of electricity. The question is, who will pay?

There are good things in what the Minister and others have said: that this Government are anxious and realise that, being short of money, they will have to rely on the private sector. I would like to hear much more about the private sector, if we are talking about sovereign wealth funds, pension funds with £3 trillion, insurance funds or other international sources of investment. They have the money and the Government have the challenge and the need to finance this colossal energy transition. Somehow, we have to think of new ways to bring these two sides together, possibly as the grandson of the private finance initiatives of the end of the last century—something, at any rate, that faces up to the fact that very large new sums of investment are required.

Will they save the world, as the Energy Secretary wants? Well, we produce about 1% of emissions at present, a tiny little bit. Carbon emissions are rising faster than ever; methane emissions are 80 times as vicious in global warming and are rising faster than ever. Carbon capture and storage will need to capture the carbon that we will still be producing, because obviously will go on burning gas or electricity for many years to come. These schemes are beginning, but they have not got very far and we have not heard much about them.

Meanwhile, the wider world is still dedicated heavily to coal. The Secretary of State wants more jobs. Of course, there will be a lot more green jobs, but many jobs will be lost in the energy transition—thousands in oil and gas and in many other parts of the industry as well, particularly where that industry’s high energy costs undermine our competitiveness and we lose exports.

Lower bills? I just cannot see it. The consumer will have to pay somehow, in some way, for the huge transition. Far from being a world leader, as several people have suggested, we are falling dangerously behind. I will enumerate the real reasons why we are in serious difficulty.

First, the nuclear situation is a mess. Hinkley is turning out to be immensely expensive, years behind on timing, and years over budget. A proposal for Sizewell C as a replication of Hinkley is a very questionable proposition. No private investor will touch Sizewell C with a bargepole. It will cost £20 billion, take 10 years to build, and will not help at all with the move towards net zero.

Secondly, the entire grid needs a remake to accommodate the switching stations bringing our electricity—which has to increase on a great scale—from the North Sea to the market. We can bring it to the coast; it then has to be transmitted to consumers, homes and industry by an entirely new system of pylons. As an example, the Hinkley transmission system, which is being put in now, has taken 10 years to get going. It took seven years of planning argument followed by three years to build.

Thirdly, about 1,000 to 1,500 new pylons will be required. We are told by the national grid that they cannot go underground. I would like to hear a lot more about what Great British Energy can do to change that situation because that will involve years and years of planning as well.

Fourthly, the interconnector system, on which we rely very much, from all the countries around us, as well as from Morocco, is falling behind and not yet under way at the pace that it should be.

Fifthly, according to the Times, we are trying to take the whole thing at breakneck speed, and we all know that in politics the faster you push people without consent, the slower the realisation.

Sixthly, heat pumps are not yet fully efficient, especially below 40 degrees Fahrenheit, and therefore cannot solve the problems of heating domestic homes in the way we want.

Seventhly, this new organisation seems to be part of a sort of political or institutional indigestion. We now have GBE; we already have Great British Nuclear—how they are related I have no idea. We have NESO, which is the operator of the whole system of energy, or is said to be. We have Ofgem, of course, and the national wealth fund, which is deeply involved in this area. We have the UK Infrastructure Bank and many more ministries. All of these have a finger in the energy pie.

The need for co-ordination, and the working out of salaries of every individual, will be colossal. I think that we have an old “socialist Adam” showing through here. It is like the old Neddy system, on which I served many years ago—it is all right as long as we deal with the big boys in the trade unions and the corporations, and the other 99% of enterprises in this nation can go hang. That, I am afraid, will not solve the problem any more than some of these other organisations.

All the world is on fire at the moment, and energy reliability is absolutely essential for a modern industrial nation. This morning, we had Lord Cormack’s memorial service, at which someone reminded us that Lord Cormack would ask, wisely, about new policies: “Is it a plan or is it a story?” Even after listening to the marvellous clarity of the noble Lord, Lord Hunt, I am, frankly, not at all sure which this is. I am sure that the Great British Energy system needs to get its climbing boots on, because the mountains it has to climb are very high and very dangerous. This is the serious situation we face, and which we are only just beginning to address. There is a long, long way to go.