Electricity Supplier Obligations (Excluded Electricity) (Amendment) Regulations 2019

Lord Lennie Excerpts

Wednesday 23rd October 2019 Lords Chamber

[Lord Teverson (LD)]

My Lords, I am interested that the Minister did not mention carbon leakage, because that is absolutely the core of what this is about. It is about reducing our own carbon footprint. If industry migrates to China or to south-east Asia, that has no effect in any way on global emissions even though it reduces our carbon footprint. At that point we lose employment and all the advantages of business that he outlined.

There is a completely different and topical approach to this issue. Professor Dieter Helm, in his report earlier this year or at the end of last year to the department, said that one of the things that needs to happen if we are serious about electricity prices, energy prices and a carbon-neutral economy is that we should have external carbon tariffs. On our European position, whether we are inside or outside, it is interesting that the President-elect of the Commission, Ursula von der Leyen, said that external carbon tariffs were a way forward as a core part of her Green Deal package for Europe. Whether we have equivalence when we are outside is another question.

Has the Minister’s department looked at all strategically at this question, rather than fiddling around with which industry, sector, business, conglomerate or corporate should be in this definition? I have no idea why flour milling should be, but it is great that it needs to be. I have no argument with that. I have not come across that industry in this context before. Would moving forward in this external way not solve all these problems at a stroke? I suspect that a lot more might be produced internationally, but it seems the direction of travel.

I am not sure that the Minister mentioned businesses in distress, which are now excluded from this for state aid reasons. I do not necessarily disagree with it, but I want to understand it more. Has that exemption been used in the past? Perhaps we can understand some examples and what effect it had.

[Lord Lennie (Lab)]

The contracts for difference scheme demands that certain high-energy industries pay what is in effect a tax to fund a levy to help subsidise and encourage the generation and production of renewable electricity. Within the scheme, energy-intensive industries, or EIIs, can apply for an exemption from having to pay. This SI adds flour milling to the list of those industries eligible to apply for an exemption, to help the milling industry remain internationally competitive—what you might call flour power.

The SI also seeks to hasten the responsiveness to applicants seeking such exemptions. Where a meter is used for shared purposes either within or between companies, it allows speedier and more accurate removal from the scheme of those activities which do not qualify for such a reduction. It extends EII certificates from the end of March to the end of June each year, giving business more time to report and lessening the chance of a gap between reporting and granting of exemptions

I have some questions. Does the scheme apply to all flour millers and all flour milled, or is it restricted to flour milled for the human food chain only? Graded grains make finer flour, as the phrase goes. Is the scheme just for human-chain flour, or is it for other flour used for animal feed purposes? Is the Minister satisfied that the changes proposed in the scheme will ensure the long-term future of the flour milling industry internationally as well as helping to stabilise food security post Brexit?

The next review of the EII scheme is not due until 2023. Given the Government’s welcome shortening of their climate change targets, should not this review also be brought forward to determine any revisions that may be necessary to the scheme to help meet these obligations?

I understand that the feed-in tariffs scheme closed in April 2018, so why does paragraph 2.3 of the Explanatory Memorandum state that eligible EIIs,

“are also eligible for reductions in the costs of funding two other policies that support renewable electricity generation, namely the Renewables Obligation (RO) (in England and Wales and in Scotland) and the small-scale Feed-In Tariff (FIT) schemes”?

If that scheme has closed, why does the Explanatory Memorandum use an active word, or has the scheme been replaced and renewed in ways that we have not yet heard?

The Government announced a control mechanism for low carbon levies in 2017: in effect, that they would have to prove that they were value for money. Can the Minister provide any up-to-date assessment of that decision?

[Lord Duncan of Springbank]

It has been a remarkably short and sweet debate. Long may such debates continue. I say to the noble Lord, Lord Teverson, that I did mention carbon leakage, as it happens.