Energy Bill [HL]

Lord Lennie Excerpts

Report stage
Tuesday 28th March 2023 Lords Chamber

[Lord Teverson (LD)]

My Lords, perhaps for the purpose of the whole of Report, I should declare my interest at chair of Aldustria Ltd, which is concerned with battery storage.

I liked the speech by the noble Lord, Lord Ravensdale, today, as well as the speeches he gave on the levelling-up Bill debate yesterday evening. There is an important need for an understandable programme that moves us forward—a route map that works, rather than just targets and slogans. Of course, we will have Green Day on Thursday. When the Minister replies, could he give us a few clues as to what will be said then? The House would be all ears and grateful for the advance information. I thought that the net-zero report, commissioned by the Government and produced by his honourable colleague, Chris Skidmore MP, was an excellent document. I hope that the Government can say that we will be moving ahead in a comprehensive way in much of the area under discussion.

I will speak mainly about the three amendments that we have around Ofgem. It is just stark staringly obvious that Ofgem, our regulator for the energy industry, should have a net-zero objective. I cannot see how you can argue against that, for all the reasons that the noble Baronesses, Lady Hayman and Lady Altmann, have gone through so well. If there was one example of that to me, it is that Ofgem has clearly been very effective in its own mind at making decisions for customers of today but has been utterly unable to make decisions for customers of future generations. That area of the grid is now utterly incapable of delivering; whether it is offshore, onshore or developments on the residential side, those connections and that grid are unable to help us to move towards those net-zero objectives. On connection dates, I know one of 2035, which just happens to be the year when the Government’s target is to have finished decarbonising the electricity grid. Clearly we are not going to make that unless we move it forward very quickly, and I have concerns that we will already not be able to meet it.

The Minister and others in his position have said, all the time, “This is not necessary—it is already covered.” However, those examples already given by the noble Baronesses in the debate show that the directions and the objectives that the Government now have are not sufficient, and that this needs to change. We need to change it now, otherwise our decarbonisation of the grid by 2035, let alone net zero by 2050, will be missed. That cannot be allowed; these amendments must be part of the Bill.

[Lord Lennie (Lab)]

My Lords, my thanks to noble Lords who have spoken in the debate: the noble Lords, Lord Ravensdale and Lord Teverson, and the noble Baronesses, Lady Hayman, Lady Altmann and Lady Bennett. I will quickly review what I think they said and set out our amendment.

The noble Lord, Lord Ravensdale, set out the principal purpose for the Bill. Split in four ways, it will: increase energy systems’

“resilience and reliability … support the delivery of the UK’s climate change commitments … reform the UK’s energy system while minimising costs to consumers and protecting them from unfair pricing”,

and improve the overall efficiency of the UK energy system and economy. It also requires an annual report to Parliament on the above. The first three of those points are lifted directly from the opening paragraph of the Explanatory Notes, while the fourth is also an objective of the ISOP simply made wider.

Labour tabled an amendment in Committee, and I will remind noble Lords of its contents. The context of that was, at that time, the cost of living crisis; the energy price cap was going up to £3,549 per year. National Energy Action predicted that the number of UK households in fuel poverty would rise to 8.9 million. Tory leadership candidates at that time were vying for leadership to be Prime Minister but were running away from the issue of net zero; the High Court found that the net-zero climate strategy was inadequate, and the Climate Change Committee found that credible plans existed for only 39% of emissions, citing “major policy failures” and “scant evidence of delivery”. As regards energy security at that time, gas prices were expected to surge to record highs the week after the Nord Stream 1 pipeline was shut down, and European prices had risen by nearly 400% over the past year. The UK relies on gas for about 40% of its power generation, and even more on the coldest days when demand is high and wind generation tends to be low. In 2017, a BEIS report included a scenario for a complete cut-off of Russian gas and found that the UK could see “significant unmet demand” if the cut was prolonged and continental European countries paid whatever was necessary.

However, the Bill is a hotchpotch of things thrown together, lacking an overarching theme to tackle these issues. Our amendments would have set out a purpose for the Act, increasing resilience and reliability; supporting the delivery of UK’s climate change commitments; reforming energy systems; binding the Secretary of State and public authorities to these purposes; requiring the Secretary of State to designate a statement as a strategy and policy statement with regard to the purpose of the Act; and requiring the Secretary of State to review the strategy and policy statement on a five-year basis. That would have forced successive Governments into long-term thinking about the specific purpose, not limiting the impact and ambition of the Bill to what has been tacked together, which simply does not go far enough or tackle the immediate problems.

The amendment from the noble Lord, Lord Teverson, would place gas and electricity markets under a duty to assist in the delivery of net zero, and our amendment would require the Secretary of State to designate a statement giving GEMA a mandate for considering the role of energy in supporting government policy in achieving net zero. The amendment from the noble Baroness, Lady Hayman, would include in Ofgem’s general duties a specific requirement to have regard to meeting the UK’s net-zero emissions.

Briefing from RenewableUK sets out the argument for Ofgem remit reform. It states:

“Ofgem’s remit has not changed since its establishment in 2000, and does not prioritise electricity decarbonisation”—


in line with recent government legislation or stated ambitions. It has only a consideration of greenhouse reduction. It continues:

“As a result, Ofgem has been unable to substantially reform its working practices and regulatory frameworks in response to the 2008 Climate Change Act and the UK’s subsequent net zero ambition, to detriment of renewable energy investment and decarbonisation pace.”


It goes on to say that the Government have an opportunity to reform Ofgem’s remit in the Bill we are addressing today.

There is some key evidence for that. Mike Thompson, the Climate Change Committee’s chief economist, noted the integration of energy with transport and heat, including the potential for

“cars sitting on driveways acting as batteries and putting electricity back into the grid”.

He argued that there is a

“need for real integration and a regulator that can think from a systems perspective”,

suggesting that hydrogen and heat networks should be within Ofgem’s remit.

Jonathan Brearley, chief executive of Ofgem, said:

“Planning the system and setting how it evolves should not really be done by the regulator. The regulator’s job is to make sure that that is done efficiently and effectively by the companies concerned.”


We appreciate that argument.

A number of witnesses told the committee that the net-zero target should be included explicitly within Ofgem’s statutory duties. Dr Hardy said that he would

“put net zero up top”,

balancing out its other duties against the context of

“hitting that legislated carbon target”.

Professor Mitchell said that

“net zero has to be the raison d’être of Ofgem”

and argued that

“delivering on legally enshrined commitments to decarbonise”

should form part of Ofgem’s principal duty.

The committee concluded:

“To ensure that, on an enduring basis, the appropriate focus is given to net zero within its competing priorities, we recommend that Ofgem’s duties should be amended to include explicit reference to having due regard to the net zero target. While Ofgem maintains that net zero considerations already factor into its decision-making, adding net zero explicitly to its statutory duties will serve to make this clear.”


We feel that the UK needs not to be left behind but to show similar ambition in its plans for the future of the electricity industry, including Ofgem’s remit.

[The Parliamentary Under-Secretary of State, Department for Energy Security and Net Zero (Lord Callanan) (Con)]

First, I thank the noble Baroness, Lady Worthington, and the noble Lord, Lord Ravensdale, for bringing forward Amendments 1 and 136 and the noble Lord, Lord Teverson, for his contribution to the debate. As I set out in Committee, although the Government believe these amendments are well intentioned, ultimately, they are unnecessary. First, the Bill has a clear purpose, so I do not think any introductory clauses are necessary. Where appropriate, the Bill already sets out fairly clear objectives and general duties for the Secretary of State and other specified bodies in carrying out their functions under the relevant parts.

Secondly, in regard to an annual report, I assume noble Lords are aware that the Energy Act 2013 introduced the power for the designation of a strategy and policy statement that sets out the Government’s strategic priorities for energy policy, the roles and responsibilities of those implementing such policy, and the policy outcomes that we want to see achieved. We have committed to a second statutory consultation this spring. I therefore believe that an annual report to Parliament would cause unnecessary duplication of the existing strategy and policy statement.

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[Lord Teverson (LD)]

My Lords, I also have great concern about this amendment. It seems to me that, on renewable transport fuels, we have a government amendment, in a group of some 20 amendments or more, that changes the taxonomy in the UK, exactly as was said by the noble Baroness, Lady Bennett, and the definition of a renewable fuel. I do not think that is particularly good practice; it is the wrong way to do this. I hope that the Commons, when this goes down the other end, will debate it rather more, because it requires a lot more thought.

I can get my head around the nuclear bit with hydrogen, which has now been well explained to me. I was trying to understand this amendment, I must admit, before the noble Lord, Lord Ravensdale, spoke, but whether it is renewable or not is a debate to be had. I do not have quite such an issue over that, maybe, but it needs to be debated fully. What I have a problem with is more the carbon side, because what we are talking about is no different from energy from waste. Energy from waste is one of the dirtiest forms of energy that is produced. It has other benefits—it does not produce landfill and all that sort of side—but it is not, in any description, a renewable fuel. So I too have great reservations about this amendment. Clearly I am not going to oppose it here today, but I very much hope that the other end of the building will give this much greater scrutiny and see it as a major decision around the taxonomy of renewable fuels and renewable energy when the Bill reaches there.

[Lord Lennie (Lab)]

My Lords, this amendment would allow two other low-carbon fuels to be supported under the existing and forthcoming renewable transport fuel schemes. As we have heard, these are recycled carbon fuels and nuclear-derived fuels. While the noble Lord has created a degree of happiness with the noble Lord, Lord Ravensdale, some unhappiness still exists around the Chamber. These fuels can provide similar carbon emissions savings to the renewable fuels already considered under these schemes. Furthermore, these fuels are crucial for the production of sustainable aviation fuel, which is imperative to achieving the jet zero strategy and fulfilling the forthcoming sustainable aviation fuel mandate.

I will not speak for long on this, because we want to move on, but this amendment would insert a new clause in Chapter 3 of Part 3 of the Bill, providing for recycled carbon fuel and fuel derived from nuclear energy to be treated as renewable transport fuel. Amendment 74, in the name of my noble friend Lord Whitty, would make it clear that the regulator needs to ensure that consumers of heat networks have equivalent consumer protection to those of other suppliers. The Explanatory Notes say of Clause 166:

“This clause provides that GEMA will be the regulator for heat networks in England, Wales and Scotland. The Secretary of State may introduce regulations to appoint a different regulator by affirmative procedure. The regulator in Northern Ireland will be the Northern Ireland Authority for Utility Regulation (NIAUR) subject to a similar power to make changes by secondary legislation.”


I think that is something we can all agree with.

[Lord Callanan (Con)]

I thank all noble Lords who have taken part in this debate. Before I engage in the detail of the amendments, let me respond to the noble Baroness, Lady Bennett. I am sure I have never said that we should not listen to scientists; of course we should, but we should accept that there are sometimes different scientific opinions. I notice that the noble Baroness is very keen to listen to scientists on some occasions, but the Greens are totally opposed to listening to the vast majority of scientists who say that nuclear should provide an essential way of decarbonising the country’s economy.

By way of example, perhaps she would like to look at the mess her Green friends have got themselves into in Germany by their irrational objections to nuclear policy: they have ended up, now that they are in government, supporting the eradication of villages to open more lignite mines, the dirtiest form of coal production, because they got rid of all their nuclear capacity. Obviously they could not have predicted the gas shortages that would come along, but this is the problem you get yourself into with idealistic policies without any practical effect in the real world. Thankfully, I do not think there is any chance of the noble Baroness or her party being in government in the UK to make similar errors and mistakes.

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[Lord McLoughlin (Con)]

My Lords, on behalf of the committee, I thank the Government for responding favourably to the report. I hope this is something that other departments will follow through in their subsequent considerations.

[Lord Lennie (Lab)]

My Lords, as we have heard, these amendments relate to ensuring that regulations which make provision for a civil penalty must include the provision of a right of appeal to a court or tribunal against the imposition of such a penalty in a number of instances in the Bill, as recommended by the DPRRC. It is good news that the Government have accepted these recommendations. These amendments have been tabled to make changes to the procedure of regulations under several powers, as recommended by the committee, and to clarify that non-statutory documents do not have legislative effect in relation to heat network zoning methodology. We support these amendments.

Amendment 22 agreed.