Great British Energy Bill

Lord Howell of Guildford Excerpts

Committee stage
Wednesday 22nd January 2025 Grand Committee

[Lord Hamilton of Epsom (Con)]

I should like first to speak to my noble friend Lord Fuller’s Amendment 113, on tidal energy. I ask the Minister what the position is on the Severn because, in theory, the Severn bore has immense capacity to generate electricity, going upstream and downstream. It always strikes me that if we are looking for tidal energy, the Severn bore offers better opportunities than almost anything else. I am told that when people looked at this, they found big problems with flooding land further upstream, which would have led to enormous compensation claims from farmers and so forth. I should be grateful if the Minister filled us in on the Government’s thinking on the Severn, because it strikes me that if we could create tidal energy there, that would be very beneficial to the country as a whole.

Amendments 111 and 112 address environmental considerations. We have seen in the newspapers today that the Government are bringing forth a Bill that will say that in future, environmental considerations will not be taken into account in quite the same way in respect of building projects. Can the Minister update us on the Government’s thinking on that Bill, when it is likely to appear and what it is likely to say? We are all interested in this issue. Will it read directly across to energy projects, as it does for construction projects? We have heard from the Prime Minister about this wonderful tunnel they have been building on the HS2 line to preserve bats, which is costing £100 million. Then, we heard that it was not going to preserve the bats after all, and they were all going to die somehow. We want to be updated on the Government’s thinking on that. We get all these remarks from the Prime Minister, but they are significant in terms of the environmental concerns associated with construction projects. What I really want to know from the Minister is whether this is going to read straight across to energy projects in the same way and make it easier to get other construction projects going, such as housing. I should be grateful if he filled us in on that when he sums up.

[Lord Howell of Guildford (Con)]

My Lords, I declare an interest as an adviser to a company deeply involved in the energy transition, particularly in some of the switching station construction, which, obviously, is the land-based part of the vast increase in electricity from wind pylons that is planned—necessary, in fact, for us to begin to get anywhere near the clean electricity volumes we require for the modern economy.

We all heard President Trump making some ambitious statements yesterday. He was very strong on the fact that vast investment would be required in clean electricity—indeed, electricity of all kinds, in his case—to cope with the great new data systems that he has persuaded private industry to co-operate with the state in building. I think he said it would be $500 billion, or £300 billion; whatever the figure was, it was enormous, and the amount of electricity will be colossal. Running the data centres that will be required, which we are trying to build here as well, can drain entire systems of electricity. The demand is vast. This relatively small area, worth £8.4 billion—he calls it “peanuts”, and it seems nothing compared with these figures—will be part of this, and it will obviously have a very large footprint: a major environmental impact.

My noble friend Lord Hamilton spoke about tidal power and the Thames Barrier. To give a little history—I am sorry, but it is relevant to where we are now—he will remember, because I know he has a crystal-clear memory, that, 40 years ago when he was my Parliamentary Private Secretary in the Department of Energy, the first folder on my desk on day 1 of moving into the job was a gigantic report on the Severn barrage. The conclusion was that it would not work and would have a huge environmental impact on nature and the surroundings, rather on the scale of the idea that has now been floated down at Hinkley—that some kind of marshland development should be promoted, which will also have an enormous impact and is causing a lot of protest. So, this is not a new question. We have been talking about barrages and tidal energy and its capacities, and the undoubted impact it can have in specific areas on a rather small scale, for at least 40 years, and we will no doubt be talking for the next 40 years.

In a specific situation it makes sense but, generally, as part of the huge electricity supply that we are now contemplating, as NESO told us only yesterday, we are now moving towards the base camp, to use its language—to this colossal increase in clean electricity by 2030. Just as we are at that point, we can now see that these small additions help, but they will not be part of the central solution.

My noble friend Lord Fuller raised a number of very interesting questions. He also made a general point which is relevant to this amendment as well as others: where are we on new thinking about public purposes harnessing private money? It is an old and obvious question. It is particularly obvious now, when the modern state has vast amounts invested and huge duties to fulfil. In fact, some of them are too vast for the state to cope with in its present form. It has no money, or, rather, it is underwater in debt, as the entire nation is—indeed, the entire world is—and it is hesitant to raise more by taxation and therefore has to look to the poor old consumer and the taxpayer for anything it can raise.

The private sector has the money. The sovereign wealth funds, pension funds and investment pools around the world have vast amounts of money and are looking for places to invest it, but they cannot find them. Somewhere in between those two—the Government having all the demands and the private sector having all the money—there has to be a reinvention of the co-operation between the state and the private sector, which the ideologists in our various parties will not like at all, but that is where we are going. We had a try with the private finance initiative, which was invented by the Conservative Party and taken up with some enthusiasm by Labour, now in government again, and then it ran into difficulties.

I believe that there used to be a unit in the Cabinet Office looking at this whole new area—I hope it is still there somewhere—of having new kinds of co-operation in the digital age between the Government, or the state, and private sources of money. I would quite like to know from the Minister whether that unit is still operating and, I hope, having some very new ideas, and not just in this area. The same problem arises in a vast range of areas.

As to the impact on the environment, which this amendment so rightly focuses on, something of this kind has got to be included in the Bill. It would be a dishonest Bill if it did not have something addressing these issues. I mentioned the switching stations; I am not quite sure how many new ones we will require between now and 2030. I think that two have just been started. I have a figure of 13 switching stations around the coast of this country. Whether they will be built in time, I very much doubt but, if they are, I would like to know what sort of impact they will have on the environment.

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[Earl Russell (LD)]

I am sorry, but I am just a little confused which amendment the noble Lord is speaking to. This is obviously not Second Reading and we are not making general speeches. Could he help me with which amendment he is speaking to?

[Lord Howell of Guildford (Con)]

I had actually finished but I spoke repeatedly to the environment amendment. I mentioned it six or seven times. I am not sure what the noble Earl’s motive is. I thought that ought to be clear. Is it not clear?

[Lord Hamilton of Epsom (Con)]

Can we just return to the Severn barrage? I agree that, 40 years ago, my noble friend was looking at this and that I was looking over his shoulder at the time. The concerns about putting in a barrage on the Severn were mainly about flooding a whole mass of land further upstream. This was in the days when farmers were expected to grow food. It is rather changed now; we expect our farmers to have immense environmental concerns and, in many cases, the whole grant system is skewed towards people having nature reserves on their farms rather than producing food. Surely, if a lot of this land got flooded that would be incredibly encouraging for people who want to encourage wading birds and all the rest of it. I am sure there would be enormous environmental benefits, rather than a downturn in the prosperity of the land which then got flooded by the barrage.

--- Later in debate ---

[Lord Howell of Guildford (Con)]

My Lords, I have one question, prompted by my noble friend’s proposed amendment, about a major solar-based renewable project that was mentioned in White Papers under the previous Government; I think the former Secretary of State under the Conservative Government called it a project of central significance to the whole transition and net-zero aspiration.

It was in Morocco. They were planning, with financial support—a subsidy—from the Moroccan and British Governments, a colossal solar-based system to transmit electricity under the Bay of Biscay via a special new kind of transmission cord now being developed in Scotland. It would have delivered a final amount of 3.6 gigawatts of electric power into the British system. Going forward, that would remain a considerable contribution to our clean electricity of the future. Is the project still part of the scene under the new Government? If it is, will GB Energy have any role in it, because it is a very important factor in our overall energy needs?

[Lord Petitgas (Con)]

My Lords, I will make a link between Amendments 118, 118A and 130.

On Amendment 130, it will be interesting to see whether we get the results, but my impression is that, in this country, there is not a single net-zero or renewable project that is not subsidised by the Government in some way. In fact, that is one reason why there has been so much private capital: with the electricity price being run off the marginal cost of gas turbines and the marginal cost of renewable energy—particularly from wind farms—being zero, in effect, there is no way not to make money in that business.

This raises a question around the subsidisation of the whole system, including whether GBE should pile in further when it is already subsidised. It also raises the question of whether we need GBE, because we already have private capital in the system. In fact, we probably have more wind energy than anybody else in the G7. We have said this before. There is a lot of private capital coming into this industry.

The real question is less about GBE and more about what level of subsidisation we are prepared to put in. This may explain why we have the highest energy costs in the G7—double those of the US. This morning, my noble friend Lord Howell talked about Stargate and the announcement made by the US. We will find it very difficult to compete—let alone not having the money, our energy costs are double those of the US—if we want to run LLMs and supercomputers.