Energy Bill [HL]

Lord Ravensdale Excerpts

2nd reading
Tuesday 19th July 2022 Lords Chamber

[Lord Ravensdale (CB)]

My Lords, I declare my interests as a director of Peers for the Planet and as a project director in the energy industry, working for Atkins. I really welcome the Bill. It comes at a time of unprecedented challenge for energy, as many other noble Lords have alluded to. Any modern economy requires copious amounts of energy at a price that people, industry and business can afford; that is the economy side of the energy trilemma. But added to this are the other two sides of the trilemma: sustainable supplies that are secure. When considering alternative energy options, it is essential to consider all aspects of the trilemma and it is the resulting complexity of the modern energy system that makes a controlling mind so vital to delivering it. The noble Lord, Lord Moylan, made an articulate case for the issues in balancing the three sides of that trilemma.

Following on from that, most of all I welcome the establishment in the Bill of the future systems operator to be that controlling mind. I have consistently argued in this House over the last three years for an independent architect to oversee and deliver, on a systems level, the net-zero energy system. I was delighted to listen to Sir Patrick Vallance speak at a briefing organised by Peers for the Planet and the Climate Change APPG last week. He strongly made the point at that briefing about the importance of a systems approach to net zero, stating:

“This is a systems-wide problem; it affects virtually every part of every department, and therefore you need a systems approach”.


The future systems operator is exactly what we need to implement that systems approach and deliver the energy system that we need.

However, there is really an elephant in the room regarding the energy system and the Bill: the build rate of new capacity. The noble Lord, Lord Howell, touched upon that in his powerful contribution. We have a world-leading target of decarbonising our electricity system by 2035 but my concern is about delivery. Atkins has undertaken a calculation of the build rate of new capacity required to hit that 2035 target. This is nothing complex; it looked simply at the total capacity required in the BEIS scenarios for 2035 and divided that by 12.5 years, allowing for an estimate of capacity that will need to be decommissioned over that timeframe. The results are eye-opening, to say the least.

From the BEIS scenarios, a minimum of an average of 12 gigawatts of annual installed capacity is needed every year between now and 2035 to hit the target. The next question is: what have we managed in recent years? In 2019, we managed 2.8 gigawatts; in 2020, we managed 1.1 gigawatts; in 2021, it was 1.6 gigawatts. If we go on like this, it is very hard to see how we are going to meet the 2035 target. A real step-change is required because the upshot is that to replace ageing power plants and ensure enough generation is built to meet the peak demand requirements, the UK needs to build a minimum of 159 gigawatts of new generating assets by 2035. That is the equivalent of building the UK’s entire electricity generation system one and a half times over, in under 13 years. That illustrates the real scale of the challenge.

So I ask the Minister: at what point will the Government publish a clear national plan for achieving that 2035 target and move to a large-scale programme of delivery on a fleet approach for proven technologies such as offshore wind and nuclear generation to speed up the build rate and maintain security of supply?

Continuing on the systems thinking theme, another area I have highlighted previously that needs more attention is the role of local authorities in delivering net zero, building on the remarks of the noble Baroness, Lady Hayman, and the right reverend Prelate the Bishop of Carlisle. Local authorities know their areas best and so will play a key role in areas such as the rollout of clean heat and energy efficiency. Searching through this vast Bill, I was somewhat disappointed to see the word “local” used only 10 times. This is very welcome in the context of heat networks, but we need to do much more.

For example, the Bill could be changed to widen the focus of zoning to cover not only heat networks but also heat pumps and urgent retrofit. The Government already accept that local authorities will be central to decarbonising heat and local area energy planning in particular, but until recently councils have had to competitively tender for funding in these areas. This favours those well-organised councils that have the means to bid for funding, and the result is a patchwork which does not address the overall need. If the Bill could also define clean-heat zones, this would start to address on a systems basis one of the biggest challenges we face in decarbonising our economy. So can the Minister state what plans the Government have to take a wider look at defining the role of local authorities and zoning beyond heat networks to cover heat pumps and urgent retrofit?

I would also like to continue discussions with the Minister on the inclusion of nuclear within the energy sources that are eligible for RTFO—renewable transport fuel obligation—support, placing it on an equal footing with other low-carbon sources. There remains an opportunity here to kick-start the UK hydrogen industry in the near term through Sizewell C’s construction. I look forward to exploring these and other issues in more detail when we return from the Recess.

Energy Bill [HL]

Lord Ravensdale Excerpts

Committee stage
Monday 5th September 2022 Lords Chamber

[Baroness Bloomfield of Hinton Waldrist (Con)]

Before we continue, I remind noble Lords that the Companion asks noble Lords to make their speeches directly relevant to the amendments they are proposing and—please—to keep those comments as short as they possibly can. Thank you.

[Lord Ravensdale (CB)]

My Lords, I shall speak to Amendments 7 and 242. I declare my interests as a project director working for Atkins, which is in the energy industry, and as a director of Peers for the Planet. I thank the noble Baroness, Lady Worthington, who I have worked with to develop these amendments.

Amendment 7 has similar objectives to Amendment 1 in the name of the noble Baroness, Lady Blake, and spoken to by the noble Lord, Lord Lennie. I concur with his comments on the necessity of clearly setting out the purpose of the Bill and legislating for a strategy and policy statement on its implementation. Amendment 7 brings out two specific aspects that are further detailed in Amendment 242. These are the importance of a plan for delivering against the 2035 target to decarbonise our electricity system and for the electrification of energy use in the UK.

The reason that electrification is so important stems from the second law of thermodynamics. As my favourite physicist, Richard Feynman, said in his superb analysis of the “Challenger” disaster in 1986, “Nature cannot be fooled”. Whatever options we come up with for decarbonising our energy system, and whatever laws and policies we make, we run up against fundamental constraints from the laws of thermodynamics. For example, using hydrogen to fuel road transport will always be much less efficient and use far more energy than electrification, no matter what technical advances are made in hydrogen production. Similarly, using electricity to heat homes via a heat pump will always be more efficient than producing hydrogen for the same purpose. This is not to say that hydrogen production should not be pursued as a matter of urgency, as it will be vital in some areas, but its use should be focused on areas that are absolutely necessary. The efficiency gains and the reductions in primary energy use from electrification mean that this is a vital metric to consider as our energy system evolves.

The enabler of all of this is a decarbonised electricity system. We have a world-leading target to decarbonise our electricity system by 2035, but I worry about delivery. Atkins has undertaken a calculation of the rate of new capacity required to hit the 2035 target. This is not anything complex: it simply divides the capacity in the BEIS scenarios by 12 and a half years, allowing for an estimate of the capacity that will be decommissioned over that timeframe.

As I stated at Second Reading, this calculation results in a minimum of an average of 12 gigawatts of annual installed capacity being needed every year between now and 2035 to hit that target, so the next question is, with a baseline of 12 gigawatts, what have we managed in recent years? In 2019 we managed 2.8 gigawatts of new installed capacity. In 2020 we managed 1.1 gigawatts and in 2021 we managed 1.6. If we go on like this, it is very hard to see how we will meet the 2035 target. The upshot is that to replace ageing power plants and ensure that enough generation is built to meet peak demand requirements, the UK needs to build a minimum of 159 gigawatts of new generating capacity by 2035—the equivalent of building the UK’s entire electricity generation system one and a half times over in slightly more than 12 years. It is not only generating capacity but all the grid infrastructure to support it, as well as energy storage and data management.

This says to me that there is a significant risk that the Government will not be able to meet their 2035 target. I work on the coalface, as it were—I am not sure that is the best analogy. The industry has a long way to go to gear up for this pace of delivery, so alongside the 2035 target we urgently need a strategy for delivery. This reflects one of the priority recommendations from the CCC’s 2022 progress report: we need a delivery plan to provide visibility and confidence for private sector investors, to reduce costs and to build up supply chains. There is a key gap here in comparison to other sectors. We have the Heat and Buildings Strategy and the transport decarbonisation plan, but we do not have a plan for electricity decarbonisation, despite it being so important as an enabler for those other plans. I would be grateful if the Minister could, in summing up, state that the Government will bring forward such a delivery plan for electricity system decarbonisation.

Amendment 242 details our approach to legislating for this strategy. The noble Baroness, Lady Worthington, pointed out to me that we already have a toolkit to approach this via the Energy Act 2013—the mechanism of a decarbonisation target range and decarbonisation orders. If we take these existing powers and modify them, we can set a range for carbon intensity of electricity production in the UK each year and targets for electrification of the energy system. The report must also include the expected volumes of installed capacity and energy produced by electricity energy source for each calendar year to 2035. This rigorous approach will deliver the required strategy and plan to give industry and investors a clear road map to 2035, which, lest we forget, is only slightly more than 12 years away.

There is a great opportunity in this Bill for the Government to legislate for a strategy to give industry and investors the confidence they need to reduce costs and build up supply chains for 2035, significantly reducing delivery risk, with efficiency and minimising primary energy consumption at the forefront. I strongly support the Government in their ambitions for 2035 and the target that they have set, but there is much to do in a short time, and I hope the Government will take this opportunity to ensure that there will be a clear plan for delivery to ensure the success of their ambitions.

[Lord West of Spithead (Lab)]

My Lords, I stand to support the rather convoluted, as was stated, Amendment 5 in the name of the noble Lord, Lord Moylan. Sadly, we have shied away from a national energy strategy for some decades. As head of the National Security Forum in 2009, I pushed to produce a national energy strategy but was stopped and shot down in flames by the Cabinet Office—and indeed the Cabinet—as the Government were unwilling to identify all the various things that were needed to achieve that.

Now we are moving slowly towards a policy, but the devil is in the detail and broad, sweeping statements of commitment based on no solid evidence of cost and impact are highly dangerous. The aim of this amendment is to quantify the cost and risk of achievement and to monitor and assess performance as the plans move forward. Too often there is a willingness to move ahead hoping for the best rather than forensically analysing what is, can be and has been achieved and what the true costs are—both financial and in terms of their impact—on other policies and commitments.

I feel particularly strongly about analysing the shortfalls in electricity generated by renewable sources. Our nation has a clear demand for a constant base loading of electrical supply and needs to manage intermittency of supply from wind and solar. I am clear that only nuclear power can ensure that need in a clean way.

I will be very interested to hear the Minister’s views on this requirement to monitor and quantify the measures being enacted.

Energy Bill [HL]

Lord Ravensdale Excerpts

Committee stage
Monday 19th December 2022 Grand Committee

[The Parliamentary Under-Secretary of State, Department for Business, Energy and Industrial Strategy (Lord Callanan) (Con)]

My Lords, the Committee will note the large number of amendments tabled in my name on heat networks. These amendments are needed to ensure that Ofgem can operate effectively as the heat networks regulator. A large proportion of them ensure that Ofgem’s enforcement powers will replicate those that it has as gas and electricity regulator. These amendments also ensure that the Bill reflects the approach to regulation which the Government committed to in their response to the heat networks market framework public consultation. The majority of these amendments are minor and technical in nature. Some are a little more substantial, and I will address those first.

Amendments 162C and 162YYI will ensure that any price cap introduced through regulations in future can apply to non-domestic as well as domestic heat network consumers. They also widen the scope of the regulator’s power to conduct pricing investigations into instances where non-domestic heat network consumers are receiving disproportionately high prices.

The Government are committed to introducing consumer protection rules that ensure that heat network consumers receive a fair price for their heating. Regulations under the Bill will provide Ofgem with powers to investigate and intervene where consumer prices appear disproportionate, compared with heat networks with similar characteristics or compared with alternative and comparable heating systems.

Non-domestic heat network consumers, particularly micro-businesses, can be vulnerable to receiving disproportionately high prices from heat suppliers. We therefore consider it appropriate to make this amendment so that the regulator’s price investigation powers extend to non-domestic consumers, in addition to domestic consumers. The Bill also provides the Secretary of State with powers to introduce various forms of price regulation, including a price cap, should it be necessary to protect consumers while growing and decarbonising the market.

The Government have committed to using any future powers to set price caps cautiously to avoid undermining investment in this nascent sector and putting at risk the supply of heating to consumers. Should a price cap be appropriate in future, we want to ensure that it could apply to both domestic and non-domestic consumers. In particular, we found in our public consultation in 2020 that micro-businesses supplied by heat networks share similar characteristics with domestic consumers. We therefore consider that these two consumer groups should have similar protections. This amendment would enable any future price cap to also apply to non-domestic consumers such as micro-businesses.

Amendments 162YYV to 162YYY serve to ensure that the full extent of heat network regulatory activities performed by Ofgem in Great Britain, the Utility Regulator in Northern Ireland, consumer advocacy bodies and other entities are funded by heat networks and holders of gas or electricity licences. Last year, the Government ran a public consultation on a mechanism for recovering the costs of heat network regulation. The nascent state of the sector and small consumer base means that recovering these costs solely from heat networks would amount to an extra £10 or more on each heat network consumer bill per year. This would be too high and create risks to the competitiveness of the market and, of course, issues of affordability for heat network consumers.

The Government consulted on heat network, gas and electricity regulatory costs being spread evenly across heat network, gas and electricity consumers in Great Britain. The Government have estimated that this approach would amount to less than £2 added to each heat network consumer bill per year, and an additional 10p per gas and electricity consumer bill per year. Most consultation respondents agreed that this approach was the fairest and crucial to supporting the growth of the heat networks sector. The Northern Ireland Executive conducted an equivalent public consultation for cost recovery in Northern Ireland and determined this a desirable approach.

This amendment sets out for transparency purposes the full extent of the regulatory activities in scope of this approach to cost recovery. The amendment also includes Ofgem’s role as a licensing authority under the Heat Networks (Scotland) Act 2021 in the cost-recovery regime. The Scottish Government passed this Act to introduce their own heat networks regulatory framework. By ensuring a funding route for Ofgem to perform this role, the Government are helping to ensure that Scottish heat network consumers receive robust protections and that heat networks regulation is coherent across Great Britain.

The remaining amendments are minor and technical, so I will not detain your Lordships for too long with them. In summary, these amendments, first, ensure that the provisions relating to heat networks regulation are accurate; secondly, allow for regulations and authorisation conditions to be made about the connection of premises to a heat network; and, thirdly, relate to Ofgem and the Utility Regulator in their role as heat networks regulator in Great Britain and Northern Ireland respectively.

I hope, therefore, that noble Lords will agree that these amendments are necessary to enable a fair and consistent heat network market across the United Kingdom. The one non-government amendment in this group is in the name of the noble Baroness, Lady Worthington. I thank her for her thoughtful contributions—actually, I should do that at the end, after she has spoken. Oh, she is not here. I beg to move Amendment 161AA.

[Lord Ravensdale (CB)]

My Lords, first, I declare my interests as a project director working in the energy industry for Atkins and as a director of Peers for the Planet. I will speak to Amendment 162 in the name of the noble Baroness, Lady Worthington, who cannot be here today.

To give some context to this amendment, I welcome paragraph 14(3) of Schedule 15, in that it provides for all the conditions which may be attached to a heat network authorisation. All of this is welcome—in particular, paragraph 14(3)(f) refers to

“conditions about limiting emissions of targeted greenhouse gases in relation to relevant heat networks”.

However, it is noteworthy that the schedule does not include any conditions about the actual heat source for the emissions, and that is what Amendment 162 focuses on. It is a probing amendment, seeking to determine whether the Secretary of State or Ofgem already have the power to control the heat source using the heat networks and whether they are minded to use them.

There are some fuels which it may be in the public interest to restrict using in a heat network. For example, the UK Government are currently establishing carefully controlled trials for hydrogen for heating. Presumably, the Government would not want to be powerless to prevent a heat network provider using green hydrogen for heating if they had concerns about, for example, safety or the cost effectiveness of hydrogen as a power source. If the hydrogen trials are not taken forward, the Government may not want someone to use hydrogen in a heat network without effective oversight from Ofgem.

In another example, it may be appropriate to restrict the use of biomass, which is ostensibly low or zero-carbon. However, the Minister will have heard concerns from the noble Baroness, Lady Boycott, and other Peers last week, and there are concerns about whether the Government would have the powers to restrict biomass for local heat networks to the sustainable practices the Minister outlined in his response to that question. Can the Minister confirm in his summing up whether the Government have powers to restrict the source of heat input as applied to heat networks? If so, where? If not, would he consider taking these powers?

[Baroness Bennett of Manor Castle (GP)]

My Lords, I shall speak chiefly to Amendment 162. tabled by the noble Baroness, Lady Worthington, although I take the opportunity to welcome the government amendment on help for micro-businesses and say that it is great to see that happening. The noble Lord, Lord Ravensdale, has already introduced this very clearly; I shall make just one additional point and apologise to the Committee for my absence last week when a number of amendments that I had either tabled or supported were debated. I was in the Chamber with the genetic technology so-called precision breeding Bill. If we have two environment Bills running in exact parallel, it creates some difficulties. I particularly want to thank the noble Baroness, Lady Worthington, for some excellent support for some of my amendments last week.

On Amendment 162, I want to make the point that it is crucial here that we are talking about local networks; what may be appropriate in one place may be inappropriate in another. I am thinking, for example, of areas where air pollution is an issue and the kind of fuel used will be a particular issue in that area. It may, indeed, be appropriate for the regulator to take action on the basis of local conditions as well as of national polities, in terms of either the nature crisis or the climate emergency.

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[Lord Teverson (LD)]

My Lords, we move on to the zoning regulations. I very much agree with the amendment moved by the noble Lord, Lord Lennie. When I read through this section, I must admit that I found it extremely opaque in many ways. I will come to my own amendments in a minute, but perhaps the Minister can explain a few things to me. Clause 174(2) says:

“A heat network zone is an area in England”.


I presume that means that this is just English legislation, not for the rest of the United Kingdom, but it is very unspecific about what a network zone would be. I had assumed that it would be a single zone or single heating system, but it obviously is not. I am interested to hear from the Minister what a zone is likely to be in practice.

We then have a zone authority. Clause 175(1) states:

“Zones regulations may designate a person to act as the Heat Network Zones Authority”.


Again, as the noble Lord, Lord Lennie, pointed out, we have very vague ideas as to who this should be. I am interested to hear again from the Minister who the authority is expected to be.

Then we move on to zone co-ordinators. Who are they and what exactly do they do in comparison with the zone authority? Of course, in Clause 175(5), we have a list defining local authorities. I was delighted to see the Council of the Isles of Scilly, which I have represented in the past, there—all 2,000 souls are represented in that list. I would be really interested to understand from the Minister how all this works. Clause 175(4) says that the

“Regulations … may make provision for the Authority to require a local authority, or two or more local authorities”,


so it seems to me a very complicated landscape. I would be interested to understand how that jigsaw fits together.

Two of my amendments would change “may” to “must”; I just cannot see how it could remain “may” in those two places. The main thrust of my arguments is in Amendments 165 and 166. They are about making sure that the regulations are in line not only with the strategy and policy statement—which we have referred to many times already regarding the text of the Bill—but with, in particular, local authorities’ net-zero plans. A huge number of local authorities, as I know the noble Baroness, Lady Bennett, has pointed out, now have net-zero objectives and plans to back them up. We should give credit to that and include it in the Bill. My Amendment 166 is very much on the same area of the delivery of heat networks within zones and how they fit in with local net-zero energy systems.

As I said, it would be really useful to everybody to understand how this geography is meant to work. I suppose my question is: is this just too complicated or is there some logical method here that does not get in the way, and does not create a bureaucracy that gets in the way, of these systems?

[Lord Ravensdale (CB)]

My Lords, I again declare my interests as set out in the register. I speak to Amendment 167 in my name, which really builds on the amendments that the noble Lords, Lord Lennie and Lord Teverson, have put forward to better set out the role of local authorities in this picture.

There is a great opportunity here to extend the zoning powers that we have in the Bill beyond heat networks into other areas. Ensuing that the Bill better defines local authority roles is really very applicable to the delivery of heat, because it is local authorities that know best about their housing stock and its condition and how they can deliver clean heat in their areas.

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[Lord Callanan (Con)]

No specific boundary is set out in the proposals. It can vary from authority to authority. It is very unlikely to be a whole region; it is much more likely to be an inner-city area, an industrial estate or something like that. It will very much depend on the local circumstances and what heating sources are available. Crucially, it will depend on local support, which is why local authorities are crucial to this process. Many local authorities around the country are already in discussions and are very keen to get on with these zoning proposals, presumably including Leeds. Although I know that the noble Baroness, Lady Blake, does not speak for Leeds any more, I know that it is one of the pioneers in this area.

[Lord Ravensdale (CB)]

I thank the Minister for his response. He set out the reasons why district heating is particularly well suited to a zoning approach. Could he expand a little on why, for example, heat pumps or urgent retrofits are not suitable for zoning in the same way?

[Lord Callanan (Con)]

They could be, but we do not want to designate a particular technology because it will vary from area to area and locality to locality. It is to be expected that heat pumps will play a part in heat network zoning. That would be the case but we do not want to be particularly specific.

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Moved by

[Lord Ravensdale]

168: After Clause 185, insert the following new Clause—
“PART 7ALocal Area Energy PlansDuty to provide guidance(1) The Secretary of State must publish guidance for local authorities on local area energy planning within 12 months of this Act being passed.(2) The guidance in subsection (1) may include, but is not limited to, guidance on—(a) contributing towards meeting the targets set under—(i) Part 1 of the Climate Change Act 2008 (UK net zero emissions target and budgeting), and(ii) sections 1 to 3 of the Environment Act 2021 (environmental targets);(b) adapting to any current or predicted impacts of climate change identified in the most recent report under section 56 of the Climate Change Act 2008 (report on impact of climate change);(c) the data and assumptions used in creating a local area energy plan;(d) the roles and responsibilities of those involved in creating a local area energy plan;(e) the minimum standards for a local area energy plan.(3) Local authorities must have regard to the guidance produced under subsection (1) when developing local area energy plans.(4) In this section, “local authority” has the meaning given in section 176.”Member's explanatory statement
This amendment provides guidance for local authorities to help them produce Local Area Energy Plans. It aims to widen the roll out of Local Area Energy Plans among local authorities and help better define the role of local authorities in delivering the future energy system.

[Lord Ravensdale (CB)]

My Lords, Amendment 168 in my name would put a duty on the Secretary of State to

“publish guidance for local authorities on local area energy planning”

and clarify some of the criteria that should be included in the guidance. This is based on Energy Systems Catapult’s guidance and includes how local area energy plans can contribute to meeting our net-zero environmental and adaption targets.

As I said on Amendment 167, local authorities will be crucial to delivering our net-zero targets, particularly on decarbonising heat from buildings, yet the Energy Bill makes only limited reference to the vital role of local authorities in heat networks. That is a particular gap in relation to local area energy planning, which is not mentioned in the Bill, and I do not believe the Government have made a firm commitment to create this mechanism.

The Government should ensure that local authorities are given powers and mechanisms to enable local area energy planning, which is a whole-system approach and methodology to discover the locally preferred and most cost-effective means to decarbonise local transport of heat in any given place. Ofgem commissioned the Centre for Sustainable Energy and Energy Systems Catapult to develop the local area energy planning methodology and, under the pilot, local area energy plans were prepared in three areas—Newcastle, Bridgend and Bury in Manchester. Other local authorities are also in the process of developing plans, but these are piecemeal, often without funding and are taking too long.

It is worth giving a bit of context around the pilots. They divided each area into zones suitable for different types of low-carbon heating technologies. The balance of technologies across the three areas shows how different each area can be. For example, the local area energy plan in Newcastle found that roughly half the homes could be heated by a heat network, whereas it was less than 30% in Bury and only 15% in Bridgend. In Bridgend, a far higher proportion of homes would need to be heated with high-temperature heat pumps to save on the extra expense of retrofitting insulation in its poorer-quality housing stock. That illustrates how different areas can be and the benefits of this local area energy planning approach.

As I have said, local authorities have the best view of their local areas and the state of their housing stock. A joined-up, co-ordinated approach to local area energy planning, led by government and providing local authorities with the support they need could, according to the Energy Systems Catapult, save £252 billion between 2025 and 2050 compared with organic, unco-ordinated approaches to energy planning. There is real value in such an approach.

In its independent review of the heat and buildings strategy, the Climate Change Committee said that local area energy planning,

“If done well … will ensure a coordinated approach for rolling out different low-carbon heating solutions in different areas.”


It also said that,

“The government acknowledges the value of Local Area Energy Planning … but is yet to bring forwards strong policy proposals that would set a direction here.”


This is a real opportunity. My amendment is really to explore what plans the Government have to develop the institutional framework to empower and fund local authorities to roll out these plans.

As a final note, I originally considered tabling an amendment that puts a duty on local authorities to prepare a local area energy plan, but we were advised by the LGA that mandating this would be very daunting for some local authorities that may be unable to achieve this without committed government funding and support. I would be grateful if the Minister could expand on the Government’s plans to develop local area energy plans in the future. I beg to move.

[Baroness Bennett of Manor Castle (GP)]

My Lords, it is a pleasure to follow the noble Lord, Lord Ravensdale. I declare my position as a vice-president of the Local Government Association in offering my support for his Amendment 168, which I would have signed had I seen it. He has clearly set out the arguments for this. I just add that this would be a significant step forward for energy democracy, with decisions not being centralised in Westminster but made in local areas, by local people.

I think back to an event I attended with Gina Dowding, who was then the MEP for North West England, which dates the event rather precisely. There was work going on by a wide range of organisations in the north-west, looking at renewables across the region. With this kind of plan, different local authorities would be able to band together in different ways, according to what worked for the geography and the energy supply systems. That would be a flexible and effective way of doing that.

I have one more point to make on Amendment 168. Last month I was in Kyiv, talking to energy managers who had suffered as much of a shock as one could possibly imagine any energy manager having to receive, which was half of their systems being destroyed by vicious Russian attacks directed by people who had actually built the systems, so knew exactly where to hit hardest and worst. The Ukrainians were holding their system together, and one of the things they stressed to me was the importance of decentralised, local systems that were holding up and helping to support the national system because the local system was able to function effectively. So, we know we are in the age of shocks and, in terms of resilience, having that local basis is crucial.

That brings me on to my Amendments 237 and 238, which together form an attempt to deliver the potential of something that we saw flowering a decade ago but was then cut off in its prime, and that is community energy schemes, where community groups come together to provide cheaper, greener power and to distribute the benefits locally. The Government have made us all very familiar with the phrase “world-leading”, but I am afraid that when it comes to community energy, it really is impossible for the Government to claim any kind of leadership in clean, home-produced energy schemes at a local level. What we saw a decade ago was a real explosion of community-owned and run renewable energy generation projects that were driven by the feed-in tariff. Indeed, I recall visiting Berwick solar farm in Sussex with the sadly late Keith Taylor, then MEP for South East England, in 2015. They said, “This is now dead. This has been killed”, by the cutting of the feed-in tariff, which of course entirely disappeared in 2019.

These two amendments reflect what is contained within the Local Electricity Bill, started in the other place. That has the backing of 314 MPs from all the major parties and aims to help community groups sell the electricity they generate to local customers. That Bill is also supported by more than 100 principal authority councils and more than 80 national organisations, including the National Trust, WWF, Greenpeace, Friends of the Earth and CPRE. These two amendments offer a chance to take that Bill forward; this is the obvious opportunity to act now. Noble Lords will note that both amendments have been kindly backed by the noble Baronesses, Lady Boycott and Lady Young of Old Scone, and the noble Lord, Lord Teverson, so it has full cross-party and indeed non-party support, and I believe we will also be hearing other noble Lords speaking in support.

Similar Amendments, Amendments 242F and 242G have, been tabled by the noble Lord, Lord Lennie, and the noble Baroness, Lady Blake of Leeds. I have a list setting out the differences, but in the interests of time, I will leave it to those noble Lords to set out the details of how they differ. They are very much differences of detail, rather than of the main content and intent. The Environmental Audit Committee has looked into community energy and it says that the sector could grow between 12 and 20 times by 2030, powering 2.2 million homes and saving 2.5 million tonnes of CO₂ emissions every year. That could take community renewable energy generation to 10% of the UK’s electricity generation, around 6,000 megawatts. At the moment, however, it is less than 0.5% of total UK electricity generation capacity: 331 megawatts in 2021. It is not, of course, because of the cost of generating, which has fallen very rapidly over the past decade, but is due to insurmountable costs in selling the electricity they generate and providing the operational requirements to become a licensed energy supplier. Initial costs are put at £1 million, which of course is far beyond the scale of most community energy projects.

To make it worse, community energy schemes receive no guaranteed price certainty for the electricity they generate. They knew what they were going to get under the feed-in tariff, but that scheme closed to new applicants in April 2019, at which point many schemes that were already on the drawing board and well advanced just fell apart. It is not that the Government have not been trying to encourage community energy—that is clearly their intention. There was the Licence Lite scheme route to market, but it did not put reasonable limits on costs and there was no obligation on fully licensed energy utilities to partner with community groups. More recently, we saw the smart export guarantee. That also places a requirement on larger suppliers to purchase the power, but with no guaranteed purchase price or length of contract, again making the lack of certainty killing.

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[Lord Callanan (Con)]

As I said, we are supportive of proposals. We accept the target for decarbonising electricity production and we are moving ahead full-scale with our sails erected—which is no doubt a Borisonian term—towards that goal. Community energy will play probably a small role, but it will play a role. Obviously, larger-scale generators will supply the majority of the nation’s electricity.

[Lord Ravensdale (CB)]

My Lords, I thank all noble Lords for participating in this very informative debate. I was very encouraged by what the Minister had to say in response to my Amendment 168 and the work already ongoing in government. I come back to the fragmented nature of local area energy plans: some local authorities have the resources and others perhaps do not. I look forward to fleshing out the detail on that as we go towards Report.

The noble Lord, Lord Teverson, and the noble Baroness, Lady Blake, put it really well. The key theme running through all this is the participation of local authorities and local groups in our energy transition and about defining the part they have to play. We have these big, top-down targets—50 gigawatts of offshore wind by 2030 and 24 gigawatts of nuclear by 2050, as well as heating targets—which are all of course very necessary. But we need that bottom-up view and a better definition of the role of local authorities and local groups in supporting this huge engineering challenge, and I say that as an engineer. It is about stitching together all that local data to better inform how we respond nationally. I look forward to further discussions leading up to Report but, with that, I beg leave to withdraw my amendment.

Amendment 168 withdrawn.

--- Later in debate ---

Moved by

[Lord Ravensdale]

192: Before Clause 198, insert the following new Clause—
“National Energy Demand Reduction Strategy(1) The Secretary of State must, before the end of the period of 12 months beginning with the day on which this Act is passed, publish an Energy Demand Reduction Strategy, to include but not limited to the following—(a) achieving a low-carbon heat target, of 100% of installations of relevant heating appliances being low-carbon by 1 January 2035;(b) achieving an energy-efficiency target, of all UK homes and buildings attaining a minimum EPC C rating by 2028;(c) interim targets relating to the targets in paragraphs (a) and (b), and the development of skills to achieve them, at not less than three-yearly intervals;(d) a programme of public engagement and a single source of advice provided by the Government to raise awareness of and encourage energy demand reduction.(2) The Secretary of State must, in developing the Government’s strategy on reducing energy demand, consult the Climate Change Committee and its sub-committee on adaptation.”Member's explanatory statement
This is a new Clause which requires the Secretary of State to publish a National Energy Demand Reduction Strategy to provide for delivery of low carbon heat and energy efficiency targets for all UK homes and buildings.

[Lord Ravensdale (CB)]

My Lords, I shall speak to Amendment 192 in the name of my noble friend Lady Hayman, which is supported by noble Lords across the House, some of whom cannot be here today, including my noble friend. Amendment 192 is quite simple in that its sole purpose is to require the Government to produce an energy demand reduction strategy. It would require the strategy to be in line with the Climate Change Committee’s recommendation for all buildings to be EPC C by 2028, and in line with the Government’s own non-statutory commitments for all heating appliances to be low carbon by 2035. The strategy would have to include interim targets, including on the development of the necessary skills needed for the strategy to be achieved, and a public engagement element.

Since my noble friend Lady Hayman tabled this amendment at the end of the summer, we have seen some welcome movement from the Government. Last month they announced an £18 million public awareness campaign, with an overall target of reducing energy demand by 15% by 2030. To do this the Chancellor, in his Autumn Statement, announced £6 billion of funding—but not for this Parliament. I believe that while the Exchequer is footing our energy bills to the tune of billions of pounds a year, it would perhaps make sense to bring forward this investment. A new energy efficiency task force was also announced, which will be charged with delivering energy efficiency across the economy to realise that 15% reduction.

The government announcements on demand are most welcome, but what is lacking is that golden thread of a strategy to weave it all together. In that sense, the amendment is highly complementary to what the Government are aiming to achieve with demand reduction. A strategy such as this would link together all the areas which need to coalesce to ensure we can reduce the energy consumption of our buildings: strategic leadership by government, providing certainty to the sector; a plan for how and where efficiency will be achieved; importantly, the jobs and skills which will be required to deliver the energy efficiency improvements; and engaging with the public so that they are fully aware of the necessity of doing this and of the benefits to them that can be realised.

The final strategy would be up to the Government to decide, as is correct, but it could include and outline who will receive government support and through what means; what the expectations will be for those who are able to pay for it but perhaps are not doing so at the moment, because they are waiting to see whether they will receive support from the Government; and what non-financial incentives the Government will use to achieve the overall target. The strategy could also outline in what order improvements to efficiency could or should be made, while it should include provisions for skilling the workforce that will be needed. As I said, the Government have already implemented or are planning to implement things which are included in this amendment, but it would be helpful for the sectors which will carry out the work, for households and building managers and, no doubt, for civil servants to have this all in one place.

I have an example: I went to visit a heat pump manufacturer a few weeks back. It made the point that we have the target of installing 600,000 heat pumps per year by 2028, which is very good, but that the dots need to be joined—for example, having the skills available to install those heat pumps and incentives for households to install them. The dots need to be joined between the production of heat pumps, demand, skills and all those other aspects. That is one of the things this strategy could provide.

Reducing energy consumption in the near term does not require every household to do an urgent retrofit or install a heat pump next year. There are small and relatively cheap improvements, such as installing loft and cavity wall insulation, draught-proofing, thermostatic radiator valves and smart thermostats. It would cost around £1,100 on average to install these in a typical semi-detached house, which would cut energy bills by £273 annually. Under current energy prices, these costs would pay for themselves in just five years. The earlier we take action, the bigger the aggregate savings will be.

I also note that this approach would be popular with the public. Various organisations have come out in favour of a strategy like this. In a recent briefing, UKSIF, E3G and Carbon Tracker stated that improving the efficiency of the UK housing stock could lead to bill savings of at least £500 every year per household, and around £1,000 per year for the least efficient homes—an aggregate annual saving to the economy of £10 billion. Insulated buildings are also less damp and healthier to live in. I beg to move Amendment 192.

[Baroness Young of Old Scone (Lab)]

My Lords, I rise to support Amendment 192 in the name of the noble Baroness, Lady Hayman, which has been so ably introduced by the noble Lord, Lord Ravensdale. The crux of it is that it calls for joined-up policies around energy demand management, low-carbon heat and energy efficiency by requiring a national energy demand reduction strategy.

I have the privilege of sitting on your Lordships’ Environment and Climate Change Select Committee, and our current inquiry, as noble Lords have already heard, is into the boiler upgrade scheme. Indeed, we had an interesting session with the Minister last week. We have been hearing evidence from the UK and internationally, particularly those countries which are further ahead on air and ground-source heat pump adoption than we are. Both national and international witnesses have confirmed the importance of the key elements of this amendment.

The first is joining up policies by having multiple instruments clustered together and working to maximise uptake of grants and loans. Regulatory bars on old technology should be signalled in advance, but not too far in advance. There should be public information campaigns and effective campaigning for the positive promotion of energy demand reduction.

The second feature that comes clearly in this amendment is that low-carbon heat is not enough. Our housing stock is among the worst in western Europe. Low-carbon heat needs to be linked much more closely than it currently is with effective energy efficiency programmes, and both need interlinked targets so that progress can be co-ordinated and measured. The whole issue of rising energy prices has brought this into sharp focus. We expect to see nearly 11 million households in fuel poverty this winter. Many of those households live in houses that typify the UK as having the worst-insulated housing stock in western Europe.

There needs to be huge progress in energy efficiency as part of the mix but I caution an overreliance on EPCs as a means of judging that, because they are very imprecise instruments. In fact, they can have some peculiar outcomes: if you have an air source heat pump installed in your building you will not necessarily get a higher rated EPC as a result. We have to be sure that we are not inadvertently placing a trap for ourselves for buildings, particularly old and heritage buildings, that will never reach EPC band C.

The third element of the integrated strategy the amendment calls for is the issue of skills in installing and maintaining low-carbon technologies, and in installing energy-efficiency measures. Energy-efficiency skills are much more timeworn and easier. Skills for installing low-carbon technologies are more complex and we are only at the beginning of the road. NESTA has estimated that there were around 3,000 heat pump engineers as of July. It projects that we will need around 27,000 heat pump engineers if the Government are to meet that target of 600,000 installations a year by 2028. There has to be a really big investment in skills programmes. I had a figure that I have now lost, but the German Government have put about €28 million towards skills improvement. We need to be in that ballpark.

The fourth thing is public engagement. I commend the Government for, at long last, having lurched into action with their “It All Adds Up” campaign, but that is rather late in the day and very much short term in the face of price rises. It needs to be sustained and not overly to rely on social media and the public being left to seek out digital sources. I am glad that it will contain a couple of TV ads, but you do not get much television advertising for an £18 million budget these days.

The national energy demand reduction strategy that the amendment proposes would be well worth while in bringing these issues together in a co-ordinated way.

--- Later in debate ---

[Lord Callanan (Con)]

I disagree with the noble Lord. I have had many discussions with businesses and companies in this area, and we are providing the policy certainty they need. It is clear what direction the country is going in. We have listened to a lot of the feedback, have set out longer delivery programmes for the various schemes that we fund directly and are giving the certainty that people need. It does not make any difference to the industry, in terms of the policy landscape, to enshrine a target in primary legislation as opposed to it being an aspiration, a target or whatever other language the noble Lord prefers.

[Lord Ravensdale (CB)]

My Lords, I have listened to everything the Minister said in response and, as I said earlier, it is great that the Government are moving strongly on this and all these matters, particularly skills and many other areas. However, there is still a need for a joined-up strategy and for some of these targets to be in statute. We have learned from the green homes grant, for which one of the issues was the lack of the long-term thinking that a strategy would provide.

The real issue here, as noble Lords have powerfully articulated, is that we have picked all the low-hanging fruit—the decarbonisation of our electricity system, and vehicle and transport electrification—and now we have to move much higher up the tree to more difficult matters, such as the decarbonisation of heat. The noble Lord, Lord Foster, powerfully articulated the challenges in that area. We will have many more discussions on this leading to Report but, with that, I beg leave to withdraw the amendment.

Amendment 192 withdrawn.

Energy Bill [HL]

Lord Ravensdale Excerpts

Committee stage
Monday 16th January 2023 Grand Committee

Moved by

[Lord Ravensdale]

213: Clause 203, page 166, line 29, after “storing” insert “gas,”

[Lord Ravensdale (CB)]

My Lords, I rise to move this amendment in place of my noble friend Lady Worthington—who has just arrived, so I will leave it there.

[Baroness Worthington (CB)]

My Lords, I must start with an apology. My train was delayed for 45 minutes and many others were cancelled, so I am just about here on time. I thank my noble friend Lord Ravensdale for stepping in just as we started.

I am delighted to be here to speak to the amendments in this group which relate to the part of the Bill that seeks to take further powers to ensure that we have fuel resilience in our country. Amendments 213 to 219 seek to extend the scope of the Government’s proposals so that we have a more inclusive definition of fuel resilience beyond oil and liquid biofuels that includes gas.

The measures in this clause are a set of broad powers to allow the Government to ensure that economic activity in the United Kingdom is not adversely affected by disruption to core fuel sector activities, reducing the risk of emergencies affecting fuel suppliers. They give powers to the Government to issue directions for the purposes of managing risk, reducing potential adverse impacts and facilitating recovery from disruptions to core fuel sector activities.

The powers given to the Government by the Bill are extremely wide and potentially concerning, but I will come on to that. In essence they allow the Secretary of State to direct any core fuel sector participant to do anything for these purposes. More reasonably, they also allow the Secretary of State to require information and that certain types of incidents be reported. Leaving aside the wide-ranging nature of the powers for now, we have tabled these amendments to inquire why the definition of fuels excludes gas from the resilience proposals. I am sure I will be told that a draft version of the Bill was shared with the BEIS Select Committee, that no reference was made to gas as a core fuel and no complaints were made at that point. However comments from the committee in November 2021 were informed by the fuel shortages of autumn 2021 and since then we have seen a sharp spike in gas prices and some constraints on the supply of gas, which were exacerbated by the invasion of Ukraine. I should note that in 2021 the UK imported around 60% of its gas for use in all sectors. Although we have North Sea gas, we are by no means self-sufficient, so interruptions to fuel supplies raise problems. Gas is the sector where we remain very exposed—but that is certainly not true of biofuels. If we compare the two, the volumes are completely different and it seems odd to include biofuels but exclude gas.

Helen Thomas wrote last week in the Financial Times:

“The Rough offshore gas storage facility, partially reopened … by Centrica”


last year after having been closed for five years,

“has been steadily withdrawing gas … At about 54 per cent full … it is far from the 80 per cent-plus levels on the continent. And European storage capacity … is about 25 per cent of annual consumption compared with less than 1 per cent for the UK”.

That is equivalent to only three days, so we can see how tight some of these margins might be if there are disruptions. That could have left the country very short, especially had this winter’s weather been harsher than it has been.

Rough is not being refilled because the facility is being operated on a merchant basis rather than the strategic one which the Government might perhaps prefer. Whereas Governments in Europe can mandate storage, here, we are relying on Centrica to find a place where future prices make sense to it commercially to take storage into Rough, and it is of course looking for a decent return rather than strategic fuel resilience. The journalist added that no one thinks that storage operated on this basis will provide security of supply, and I tend to agree. I would be interested in the Minister’s thoughts on this question and on what more the Government could and should be doing to include gas in their fuel resilience strategy and indeed in this legislation.

It seems sensible that we would want the same powers, should we need them, to issue directions and to require reporting of incidents and the provision of information. Had we experienced a more severe winter, we could have come seriously unstuck, and I would like to understand how the Government would have intervened to ensure that critical businesses and households were prioritised. That is obviously an issue of some concern to the Government, given that these powers are being taken. Do the Government already have the necessary powers? If so, where are they and how would they work? I would be interested to hear more about that.

I have tabled Amendments 220 and 221 because I am seeking clarification and expressing concern about the wide-ranging nature of the types of financial assistance the Bill will allow. Certain types may be required, but why does the Secretary of State need powers to make grants, effectively, to firms involved in refining, transporting and storing fuels that are commercially very lucrative? We have all seen the headlines about how much money these companies are making, and it seems odd to take such a broad power, which could mean that public money was being spent with no requirement to pay it back to the public purse. It seems unnecessarily broad, providing the equivalent of a grant, and I would like to understand the justification for it. When looking ahead to the transition to net zero, we have described how we need to provide more public money, but it is right to say that investors in the current fossil-fuel-based energy system should have enough resources to ensure that they can meet regulations set by government without the need for further public money. That is a point that needs answering.

This is also arguably a sector that we would expect to go into managed decline as we look to electrify most of the demand being met by the current provision of these fuels, so it may be appropriate for assistance to be given. Transition loans, guarantees or even the Government taking a stake could be required to make the transition happen swiftly and in an orderly fashion, but simply giving out public money with no strings attached seems rather reckless. I would like to understand the specific circumstances and conditions under which a grant would be appropriate. If that cannot be dealt with in detail here, I would be happy to receive a letter outlining a case study that could justify this use of public money, given the economic climate we find ourselves in.

Finally, Amendment 222 is a modest proposal relating to the reporting of such financial assistance to Parliament. I could not see any reference in the Bill to the notification of Parliament in relation to these financial forms of assistance—only in relation to the scrutiny of statutory instruments or guidance. Is it really the Minister’s intention that this assistance would not be made public until BEIS’s accounts are published, which would obviously be after the horse has bolted and we would have to comb through the footnotes to understand what forms of financial assistance had been given under Clause 222? I feel quite strongly that, if it is important enough to have its own separate regime, it should be important enough to brief Parliament and there should be a protocol for notifying us of the intention to use these powers.

I have drafted an amendment that I hope the Minister will accept. If not, I look forward to assurances from the Dispatch Box about how and when Parliament will be notified before the expenditure is committed. With those remarks, I beg to move.

--- Later in debate ---

[Lord Ravensdale (CB)]

My Lords, I shall speak to Amendments 241, 242B and 242H in my name. In so doing, I declare my interests, first as an engineer and project director working for Atkins within the nuclear industry and as a director of Peers for the Planet.

Amendments 241 and 242H both relate to the renewable transport fuel obligation, the RTFO. I shall concentrate my remarks on Amendment 242H, as I believe it is the right amendment of the two to take forward. It aims to widen the scope of the RTFO from renewables to cover all low-carbon sources. I know the Minister will agree that we should, as far as possible, be technology-independent in how we set up subsidy schemes; as long as the source from which the fuel is derived is low-carbon, we should not care about its wider classification. The amendment seeks only to reflect existing government policy.

I note the July 2022 consultation on the related topic of recycled carbon fuels, which was titled Supporting Recycled Carbon Fuels through the Renewable Transport Fuel Obligation. Recycled carbon fuels are not classified as renewable fuels, as they are made from fossil-derived waste: for example, non-recyclable plastic waste or industrial waste gases that would otherwise be landfilled or incinerated. However, RCFs can provide significant carbon savings compared to traditional fossil fuels such as petrol, diesel and kerosene. The consultation says:

“To introduce support for RCFs into the RTFO we will need to amend the Energy Act 2004 and lay secondary legislation to amend the RTFO Order 2007. The measure is expected to be part of the forthcoming Transport Bill.”


The Government have already agreed with the principle of taking this important measure forward and there is a great opportunity for them to get it done now, within the Energy Bill, so that primary legislation is in place to begin allowing the significant carbon savings that can be generated from recycled carbon fuels, the constituents of which would otherwise end up in landfill. Otherwise, if we wait for the transport Bill, we are looking at a significant delay, as I understand that it will not be progressed in this Session—perhaps the Minister will correct me. I am sure he will see the sense in this argument, given the benefits of progressing with these measures now. It would not commit the Government to anything. Obviously, secondary legislation would be needed to enact any of this, but it would remove the blocker that currently exists in primary legislation and allow the Government to progress with these measures when they so choose.

The amendment would also have wider benefits beyond recycled carbon fuels. It would also allow, for example, hydrogen produced from nuclear power to be eligible for RTFO support. There are plans being developed to use nuclear-derived hydrogen to power construction vehicles for Sizewell C build. It could be a key use case for hydrogen in transport and in construction vehicles which need to operate for long periods—24 hours a day—on sites with limited electrical or charging infrastructure.

As with the RCF, much further work would be required to implement this in secondary legislation if the Government chose to, not least on additionality rules. However, it would remove the blocker that exists in primary legislation and open an opportunity for the nuclear industry to begin generating hydrogen. It would also demonstrate the Government’s commitment to technological independence.

The question may arise of how exactly we define low carbon. In the RTFO context, the Government have published detailed sustainability criteria which any eligible fuel must meet. These include requirements to deliver at least a 60% greenhouse gas emissions saving versus fossil fuels. Compliance with the sustainability and carbon reduction criteria would be a straightforward way to define this term in secondary legislation.

To summarise, this is a straightforward amendment that reflects existing government policy. It does not commit the Government to do anything but does remove a blocker that currently exists in the Energy Act 2004 in extending RTFO support to other low carbon sources. It would also allow the Government to progress with their plans for recycled carbon fuels, given the delays with the Transport Bill. Therefore, I hope the Minister will agree that it would be sensible to proceed with Amendment 242H and allow the carbon reductions that will be possible through the use of recycled carbon fuels.

Amendment 242B was originally put forward by the noble Baroness, Lady Neville-Rolfe, and was transferred to me following her move to the Front Bench, so I thank her for originally tabling it. It is also related to an amendment I put forward regarding the Nuclear Energy (Financing) Act. It is a probing amendment designed to highlight a key issue with the financing of nuclear projects going forward, both through the RAB and other investment mechanisms. There are two aspects relating to financing of new nuclear that need to be highlighted here.

First, investors are constrained by ESG criteria that apply to their funds. My concern is that nuclear will not be considered sustainable, or taxonomy aligned, under the green taxonomy, which the Minister assured us last week is progressing at the Treasury. This concern comes from previous positions on nuclear in similar EU schemes, and from the Treasury’s not including nuclear in its green financing framework.

As with the previous group of amendments, this all comes back to technology independence. Nuclear is a low carbon technology, along with many others, and the Government should not be picking winners in the race to net zero but enabling a level playing field. If nuclear is not considered as taxonomy-aligned under the UK green taxonomy, there is a real risk that nuclear projects will not be able to attract capital in sufficient quantity to realise the Government’s ambitions for the sector. ESG alignment is now a key factor in capital raises for pension funds and institutional investors. I would be most grateful if the Minister could again provide some assurance that nuclear will be considered as taxonomy-aligned under the forthcoming green taxonomy.

Secondly, I referred earlier to the UK Government Green Financing Framework, which describes how the UK Government plan to finance expenditures through the issuance of green gilts and the retail green savings bond. Currently, this excludes investment in nuclear, but again I urge the Government to reconsider. The Government need to take the lead here in defining what counts as sustainable within their frameworks. This is so important in leading the markets in the right direction and in allowing these schemes to finance future government investment in nuclear.

[Lord Hollick (Lab)]

I rise to speak to Amendment 242A, which my noble friend has just introduced. In the course of our inquiry into the net zero transformation, the Industry and Regulators Committee, which I chair, took extensive evidence about Ofgem’s remit and whether it should be amended to include a specific requirement to have regard to meeting the UK’s net zero emissions target.

Ofgem’s primary statutory duty is to protect the interests of existing and future consumers in relation to gas and electricity. This objective is to protect those interests taken as a whole, including their interest in the reduction of greenhouse gases and in the security of the supply of gas and electricity. This duty guides Ofgem when it is making decisions and trade-offs in the regulatory framework between the three objectives of decarbonisation, affordability and security of supply.

Many of our witnesses told us that the net zero target should be included explicitly within Ofgem’s strategic duties, not least because Ofgem’s responsibility for setting the price and affordability of energy must take into account the substantial level of costs of the transition to net zero which will have to be borne by consumers.

If there is no explicit reference to net zero, there is a danger that the decisions will be very short-term in nature, focusing on short-term costs for consumers and not the long-term costs of failing to achieve net zero and invest in the infrastructure necessary to achieve that. The Climate Change Committee agreed. It argued:

“Giving Ofgem a net zero responsibility”


will help it to

“think … strategically about the changes that lie ahead so that we can minimise the cost to the consumer in the long run.”

Jonathan Brearley, the CEO of Ofgem,

“said that Ofgem is open-minded about whether it should be given a primary duty to achieve net zero, arguing that ‘I and the board have been very clear that we see net zero as fundamental to our existing duty’ … noting that there may be a benefit to clarifying that.”

The impact of net-zero costs on consumer bills is, ultimately, a decision for the Government, not for regulators. The Government promised a strategy and policy statement setting out priorities for delivering a net-zero energy system to ensure that the supplies are available at the lowest possible cost—that was promised in 2022. They also promised to publish a fairness and affordability proposal by the end of 2022. Neither of those documents has yet been cited, and it is indeed unclear whether the consultations are actually taking place. There will be an opportunity in our debate on Friday on the report from the Industry and Regulators Committee for the Minister to enlighten us on the progress of those two very important pieces of work on strategy and affordability.

Without those two statements from the Government, Ofgem will struggle to reflect net-zero costs in its energy pricing; but there is no doubt that those costs will have to be reflected, and Ofgem should have a clear and explicit duty to do that. That is why the Government should accept the amendment, to make it plain to all parties that Ofgem has a strategic duty to take into account the very considerable short and long-term costs of the transformation of our energy system and challenge the Government should their guidance impose unaffordable or unfair costs on consumers. Perhaps the Government might find such an independent intervention from the statutory regulator a little inconvenient. It would be ironic if the regulator most responsible for regulating the journey to net zero is one of the only regulators which does have a specific responsibility in its remit.

Energy Bill [HL]

Lord Ravensdale Excerpts

Report stage
Tuesday 28th March 2023 Lords Chamber

Moved by

[Lord Ravensdale]

1: Before Clause 1, insert the following new Clause—
“Principal purpose(1) The principal purpose of this Act is—(a) to increase the resilience and reliability of energy systems across the United Kingdom,(b) to support the delivery of the United Kingdom’s climate change commitments,(c) to reform the United Kingdom’s energy system while minimising costs to consumers and protecting them from unfair pricing, and(d) to improve the overall efficiency of the United Kingdom energy system and economy.(2) The Secretary of State must report to Parliament annually on—(a) how the resilience and reliability of energy systems across the United Kingdom are being increased;(b) how the United Kingdom’s climate change commitments in relation to energy are being delivered, including updates on—(i) the decarbonisation of existing electricity usage, and(ii) the electrification of processes in the United Kingdom so that they are powered by electricity rather than other primary energy sources;(c) how costs to consumers are being minimised and how unfair pricing is being avoided.(3) In performing functions under this Act, the Secretary of State and any public authority must have regard to the principal purpose set out in subsection (1).”

[Lord Ravensdale (CB)]

My Lords, the Bill has had a protracted journey through this House. I make it around eight months since Second Reading, and the global energy system and its impact on households has never been far from the top of the headlines over that whole tumultuous period. So although we may not see some of the passions we saw on display in the previous debate on the Public Order Bill, it underscores the vital importance of many of the issues we are going to talk about today. As Vaclav Smil said in his excellent work Energy and Civilisation:

“Energy is the only universal currency: one of its many forms must be transformed to get anything done.”


It is a pleasure to open the debate on Report and I look forward to this really important legislation making its way to the other place and, I hope, on to the statute book very soon.

I thank the noble Baroness, Lady Worthington, for her support of my Amendments 1 and 136 in this group and for her help in developing them. I declare my interests as an engineer and project director with Atkins, working on the energy system, and as a director of Peers for the Planet. Upfront, I thank the Minister and his team for meeting me and for all their engagement on these issues.

I was keen to come back to this issue on Report due to the number of developments in this area since Committee. Without repeating much of what I said then, back in September last year—again, it has been a long journey on the Bill—it is worth coming back to the headline concern I raised and that I want to progress with this amendment. Electrical generation and distribution is at the core of the net-zero energy system, being the enabler for ambitions in so many other areas.

We are not building electrical generating capacity or network capacity anywhere near quickly enough to meet the Government’s aspirations—and not just the 2035 decarbonisation target. Setting it aside for one moment: if we do not manage to vastly increase our generating and network capacity over the coming decade, all the other aspirations, in terms of energy security, decarbonising heating, the uptake of electric vehicles and hydrogen production, will simply not be possible at scale. That is why Amendment 1 places the electrical generating system at the core of what the Bill is trying to achieve by setting out its principal purpose.

What is missing as a first step to give industry direction is a clear delivery plan for how we are going to achieve targets for our power-generating system. Amendment 136 achieves this by requiring this plan to be produced and setting a clear, measurable pathway for what needs to be achieved each year to 2035. The need for such a plan has been set out clearly in two recent reports published since Committee: the NAO report, Decarbonising the Power Sector, and the CCC report, Delivering a Reliable Decarbonised Power System. Both of these starkly highlight the challenge the Government have in meeting that 2035 target. The CCC and previous BEIS analysis state that we need to get to approximately 250 gigawatts of installed capacity by 2035 from a current base of around 108 gigawatts. Imagine the huge complexity and scale of our current energy-generating system. We need to build it all over again, and more, in 12 years. We have not, historically, come close to the build rates that would be needed to achieve that.

If we look at all the risks in terms of achieving our energy security and decarbonisation ambitions, the one that should really be flashing red on the Government’s dashboard is the risk of not achieving sufficient low-carbon generating and network capacity by 2035. But the important point made in the NAO report is that we cannot even make an adequate assessment of that risk, because we do not have a coherent delivery plan to back up the Government’s ambitions. I know that BEIS and now DESNZ have perhaps had one or two distractions in terms of the energy system over the past year, so the position we are in is understandable. But now the Government need to come back to this issue with real urgency.

As the National Audit Office states:

“The longer DESNZ goes without a critical path bringing together different aspects of power decarbonisation, the higher the risk that it does not achieve its ambitions, or it does so at greater than necessary cost to taxpayers and consumers”.


The Government have individual targets for solar, wind and nuclear, but these need to be brought together into a coherent, system-level plan, the delivery of which will see so many attendant benefits for the country in economic growth, energy security, decarbonisation and the health and well-being of the population.

--- Later in debate ---

[Lord Callanan (Con)]

Because the other bodies do not have the responsibility for regulating the energy system. I do not see why that is so difficult for my noble friend to understand.

[Lord Ravensdale (CB)]

My Lords, to sum up my Amendments 1 and 136, the important part of the whole Bill for me is to bring into being the future system operator, which will be a key enabler for much of what we have been talking about today. In the end, it will provide advice to the Government, and it is the responsibility of the DESNZ to own the development of a plan for our future electricity-generating system.

The amendments proposed by the noble Baroness, Lady Hayman, and the noble Lord, Lord Lennie, align with what I am talking about around linking up the duty for Ofgem. They pointed out the links between it and the future system operator, and talked about making sure that it is coherent and that we think more strategically to reduce costs to the consumer in the long term.

Another important point is tackling long-term under- investment in the grid, as brought out by the noble Lord, Lord Teverson, and the noble Baroness, Lady Altmann. Alongside the increase in generating capacity that we require, there is just as much of a challenge in our grid infrastructure and ensuring that the grid connections are there to make use of that.

The Minister gave me some reassurance with the announcements that he said were due later this week on the energy system and on the electricity system in particular. I look forward to that event with great interest and, for now, beg leave to withdraw my amendment.

Amendment 1 withdrawn.

--- Later in debate ---

[Lord Callanan (Con)]

My Lords, in moving Amendment 13, I will also speak to Amendments 58, 63, 75, 78, 79, 95 and 143 in my name.

Turning first to Amendments 58 and 143, I thank the noble Lord, Lord Ravensdale, for bringing forward his original amendment on the classification of nuclear-derived fuels in Committee. While we believe that we should not categorise nuclear-derived fuels as renewable, I have welcomed the constructive discussion with noble Lords since Committee, and, in response to that, the Government are pleased to bring to forward these amendments.

Amendment 58 will enable the renewable transport fuel obligation and the forthcoming sustainable aviation fuel mandate to support two types of low-carbon fuel, helping the UK to decarbonise transport further, thereby achieving, I think, the noble Lord’s objective. First, it will enable the support of recycled carbon fuels. These are produced from otherwise unrecyclable waste plastics or industrial waste gases that cannot be avoided, reused or recycled. Secondly, it extends support to fuels derived from nuclear energy. Both fuel types have the potential to deliver significant carbon savings over traditional fossil fuels and are a vital replacement for sectors that are difficult to decarbonise, such as commercial aviation and heavy goods vehicles. Amendment 143 sets the timing on which the power comes into force at two months after Royal Assent.

I turn now to Amendment 95, which relates to Part 8 on the regulation of energy smart appliances, specifically under Clause 191, which deals with how energy smart regulations will be enforced. It will enable the regulator to agree an enforcement undertaking with an economic actor, where appropriate, and, if required, it will still issue a penalty on a separate non-compliance issue to the same economic actor. The ability to agree an enforcement undertaking with a business is a useful tool for a regulator. It allows it to work with a business to bring it into compliance without the need for potentially harsher penalties. This will be particularly important in the regulation of energy smart appliances, which is a nascent and evolving market at the moment. Should other, unrelated instances of non-compliance arise while an enforcement undertaking is in place, the regulator still has the power to issue a penalty. The amendment will put that ability beyond any doubt by clarifying that the regulator can issue a penalty against a business with which it has agreed an enforcement undertaking, providing that the two relate to separate issues. The amendment will help to enable the implementation of a consistent and fair enforcement regime for the energy smart appliances market.

Amendments 13 and 63 simply take account of the Energy Prices Act 2022, which has been passed since the Bill was introduced.

Amendments 75, 78 and 79 are minor and technical amendments relating to Schedule 16 on heat networks regulation. Amendment 75 corrects an error in relation to installation and maintenance licences for heat networks by removing the reference to Scotland, where the licensing regime will not apply. The licensing regime will apply in England and Wales, and the Northern Ireland Executive will have powers to introduce an equivalent regime. The regime will not apply in Scotland, as the Scottish Government, I am told, will introduce their own regime.

Amendment 78 simply corrects a typographical error in paragraph 40 of Schedule 16, replacing a reference to “a penalty” with “compensation”.

Finally, Part 9 of the schedule provides for regulations introducing a special administration regime for the heat network sector. It provides for the appropriate authority to modify existing legislation relating to the special administration regime for energy companies to allow for the equivalent introduction of an energy regime for heat networks. Amendment 79 provides a definition of the appropriate authority for paragraph 50 of the schedule, to match the definition in paragraph 61 of that schedule. The appropriate authority in this case is defined as the Secretary of State for England and Wales and Scotland, and the Department for the Economy in Northern Ireland. I beg to move.

[Lord Ravensdale (CB)]

My Lords, I shall speak to Amendment 58, to which I have added my name. First, I thank the Minister for his constructive approach, and for listening to my amendments in Committee and responding by introducing this amendment, which addresses all of the points in my Committee amendments. I am most grateful. I must also thank his officials for the work that they have put into drafting and finding an acceptable way forward, and for engaging with me throughout the process. I also thank the noble Baroness, Lady Worthington for her support throughout.

I break down the benefits of this amendment into three broad areas. First, it continues the work that the Government are doing to create a level playing field for low-carbon technologies. We heard the welcome news in the recent Budget Statement that nuclear will be considered as environmentally sustainable, or taxonomy aligned, under the UK green taxonomy. In a similar vein, the renewable transport fuels obligation amendment will allow nuclear to benefit from a subsidy scheme that is already available to renewable operators. This sends a clear message to investors that the Government sit squarely behind nuclear as an environmentally sustainable energy source. It also brings out the important principle of technological independence—to let the market do its job to find the most efficient solutions, but also because for net zero we need to throw the kitchen sink at the problem, if we are going to achieve it.

Secondly, the amendment directly enables a whole range of near-term projects that will help to kick-start the green hydrogen and recycled carbon fuel industries within the UK. With recycled carbon fuels, there are a number of industrial projects being scoped that will be enabled by this amendment—for example, Project Dragon, to use industrial waste gases from Port Talbot to produce ethanol from which recycled carbon fuels, including sustainable aviation fuels, can be derived. By setting strict rules for how to account for emissions, savings of around 70% can be generated when compared with the baseline of using fossil fuels. Those projects, enabled by this amendment, will be an important enabler for decarbonising transport fuels and moving towards a circular economy, saving significant amounts of greenhouse gas emissions in future.

For nuclear, there are near-term plans to produce hydrogen from Sizewell B for use in Sizewell C construction, and also in other nuclear projects, including SMRs and AMRs. Particular economic benefits may be gained through using nuclear power to produce hydrogen—for example, high temperature electrolysis, using heat from the nuclear reaction to produce hydrogen much more efficiently than cold electrolysis. Further down the line, using the heat from high temperature reactors to produce hydrogen directly through the sulfur-iodine cycle has the potential to increase efficiency further beyond traditional electrolysis techniques. If the Government are to meet their ambitious hydrogen production targets, nuclear needs to be part of the picture, which will be enabled by this amendment and help kick- start green, or pink, hydrogen production—I sometimes lose track of the colours—in the UK.

Thirdly, the amendment enables these fuel sources to be eligible for the sustainable aviation fuels, or SAF, mandate. Both recycled carbon fuels and nuclear will have a key role to play here. RCF has the potential to produce large volumes of SAF in the near term; in the longer term, the combination of direct air capture and hydrogen production from nuclear could allow power-to-liquid sustainable aviation fuel to be produced economically.

As I said, I am very grateful to the Minister and his officials for working together to make this important change to the Bill.

[Baroness Worthington (CB)]

I shall speak briefly to Amendment 58, which the noble Lord, Lord Ravensdale, has so eloquently spoken to. I definitely support the nuclear element of this amendment, and I am grateful to the noble Lord for bringing this to our attention, as well as to the Minister for taking it on proactively. However, I have a question around the inclusion of fossil-derived sources of energy in this approach. I am not one to rule things out, and I think that we need to use all the tools available to us, but there is a material difference when you are using a fuel derived from fossil fuels, in that once it is combusted the CO₂—the greenhouse gases—will be readmitted to the atmosphere. Can the Minister say a bit more about how something derived from nuclear electricity, which is intrinsically clean, to create a fuel, is different from the waste derived from a fossil source of energy? I just want clarification on that point.

Energy Bill [HL]

Lord Ravensdale Excerpts

Report stage
Monday 17th April 2023 Lords Chamber

[Lord Whitty (Lab)]

My Lords, I have a small amendment in this group—Amendment 68—which deals with electricity storage. This very comprehensive Bill looks a bit different from the one that we first saw, and I am not absolutely confident that I have inwardly absorbed the implication of every government amendment that we have had in the last few months. But I am pretty sure that one dimension of investment in the system that has not been fully spelled out is that of electricity storage.

We have obviously dealt with it as a way of subsidising and encouraging investment in generation and there are big changes which are welcome, by and large, in relation to carbon capture and storage, and slightly more controversial in relation to hydrogen. But one of the key things about the new system—which will be much more decentralised than previously and dependent on different forms of generated electricity—is that we need some real investment in electricity storage. We need it partly because those who have always opposed some renewables stress that they are variable and there is occasional intermittence. That will happen, but investment in pipes, pylons and wires may not be sufficient to avoid some faults and breakdowns in the system.

We need to be able to call on electricity which is stored in some form to ensure that supplies are continuous. I am not sure why this has not appeared in the strategy. It needs to be somewhere. I attended part of a seminar over at the Institution of Mechanical Engineers a few weeks ago which explained the different technologies that exist for electricity storage. There are obviously some old-fashioned ones such as hydroelectric power, where you keep the water back, but there are many new technologies that could be developed for a significant investment in electricity storage. The common assumption is that it will be batteries in some form or another, but batteries in themselves raise considerable problems. In particular, a significant installation would involve problems of maintenance and of the critical materials needed for large-scale battery storage.

There is the possibility of storage in hydrogen—and that may raise other problems with hydrogen—and there is storage in ammonia and storage in compressed air. Any of these technologies need to be pursued, but we do need some system of storage. The least I would hope for from the Minister today is an acceptance that part of the strategy will be to ensure that we have cutting-edge technology in electricity storage, and an indication of how that will be financed, what the government incentives are and what the regulatory structure will be. If the Government can give me that general assurance, I will be happy.

[Lord Ravensdale (CB)]

My Lords, I declare my interest as a project director and engineer working for Atkins in the nuclear industry. I also chair the cross-party group Legislators for Nuclear.

In Committee, my previous amendments in this area—they were originally put forward by the noble Baroness, Lady Neville-Rolfe, before she joined the Front Bench—aimed to define nuclear as taxonomy-aligned within the UK’s green taxonomy. Naturally, I was delighted to see the Government commit to this in the Spring Budget, pending a consultation,. I shall speak briefly to my resulting Amendment 137.

Following the green taxonomy announcement and progress on the renewable transport fuel obligation, there remains one glaring aberration in the treatment of nuclear in the Government’s financing frameworks: the current exclusion of nuclear from the UK green financing framework, which describes how the UK Government plan to finance expenditures through the issuance of green gilts and the retail green savings bonds. Now that nuclear is due to be specified as taxonomy-aligned, I am sure that the Minister would agree, for consistency if nothing else, that it should also now be eligible under the green financing framework. This would have many benefits in ensuring the availability of vital extra funding for nuclear projects to enable the decarbonisation of our energy system.

I would be grateful if, in summing up, the Minister could state when the Government intend to address this issue.

[Baroness Bennett of Manor Castle (GP)]

My Lords, I will speak briefly to Amendment 68 in the name of the noble Lord, Lord Whitty, to which I have attached my name. I will also make a couple of other comments on this group.

I can probably predict some of what the Minister will say about the amendment from the noble Lord, Lord Whitty. I note, as I am sure all Members of the House have, that, three days ago, the Government announced £30 million for experimental or first-stage renewable storage projects. We have pump thermal, thermal and compressed air, and a number of other schemes. What is really important about this amendment is the context of the report to Parliament in six months. This is something that is absolutely crucial to the renewables transition, and we really need to see democratic oversight of where it is going.

I particularly make the point that this must be a strategy. Instead of one-off projects here and there, we need a whole integrated system. One thing that is really unconsidered is vehicle-to-grid storage. As we have more and more electric cars, if we have innovation in management we can use those cars as storage when people do not need them for transport. This is a way in which we would need much less resources—the Government are themselves saying that we could save £10 billion by 2050 by reducing our need to generate electricity.

I have just a couple of comments to make on the other amendments in the group. It will not surprise anyone in your Lordships’ House to hear that I oppose Amendment 137 in the name of the noble Lord, Lord Ravensdale. However, its very existence is a demonstration of the way in which new nuclear can be a distraction from the renewables investment that is our energy future.

On the amendments in the name of the noble Lord, Lord Teverson, on electrifying and decarbonising oil and gas facilities, I am afraid that the term “greenwash” has to appear at this point. I have an amendment in a later group asking for no new oil, gas or coal. Any reduction in energy use on a new oil rig because it has some solar panels on top of it does not take us anywhere like where we need to go in this climate emergency.

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Moved by

[Lord Ravensdale]

94: After Clause 187, insert the following new Clause—
“PART 7ALocal Area Energy PlansDuty to provide guidance(1) The Secretary of State must publish guidance for local authorities on local area energy planning within 12 months of this Act being passed.(2) The guidance in subsection (1) may include, but is not limited to, guidance on—(a) contributing towards meeting the targets set under—(i) Part 1 of the Climate Change Act 2008 (UK net zero emissions target and budgeting), and(ii) sections 1 to 3 of the Environment Act 2021 (environmental targets);(b) adapting to any current or predicted impacts of climate change identified in the most recent report under section 56 of the Climate Change Act 2008 (report on impact of climate change);(c) the data and assumptions used in creating a local area energy plan;(d) the roles and responsibilities of those involved in creating a local area energy plan;(e) the minimum standards for a local area energy plan.(3) Local authorities must have regard to the guidance produced under subsection (1) when developing local area energy plans.(4) In this section, “local authority” has the meaning given in section 178.”Member's explanatory statement
This amendment provides guidance for local authorities to help them produce Local Area Energy Plans. It aims to widen the roll out of Local Area Energy Plans among local authorities and help better define the role of local authorities in delivering the future energy system.

[Lord Ravensdale (CB)]

My Lords, I declare my interests set out earlier and add my interest as a director of Peers for the Planet. I also thank the noble Baroness, Lady Bennett, for her support on Amendment 94. I will keep my remarks brief, but first I thank the Minister and his Bill team for meeting me and for all of the engagement on this important issue over the last few months.

I feel that one of the key missing pieces in the net-zero puzzle before us is in better defining the role of local authorities within the whole governance structure. We all know that local authorities have a vital role to play, but there is limited definition of this. I think that local area energy plans are at the core of fixing this. Local area energy planning is a data-driven and whole-energy-system evidence-based approach, which sets out to identify the most effective route for a local area to contribute towards meeting the national net-zero target, as well as meeting its local net-zero target. Its proven methodology is a well-trodden path which has been effectively used in a number of other countries.

I wanted to return to this issue on Report as I strongly feel that there is a missed opportunity within the Bill to set out the role of local authorities more clearly. There have been some developments since Committee. In particular, the Skidmore Mission Zero report was published, which recognised the issue and aligns with what I am asking for in this local area energy planning amendment. This was brought out strongly in the report, as one of the 25 key actions for 2025 was for the Government to provide guidance on local area energy planning. The Committee on Climate Change also recognises the need for this.

The amendment does not ask for much; it asks only for guidance to be published, and it does not mandate the approach in any way. It simply asks for the Government to publish guidance for local authorities to use in local area energy planning—this step has already been taken by the devolved Governments in Scotland and Wales. So it will provide much-needed clarity to local authorities on how they should approach energy planning, and it will also send the important signal that the Government are behind the approach to help to increase the rollout of these plans. So I look forward to the Minister’s response, and I hope he can provide me some reassurance on this point. I beg to move.

[Baroness Boycott (CB)]

My Lords, I will speak to Amendments 134 and 135, about community energy. In the midst of an energy crisis, when cheap and clean home-produced energy has never been more vital, as we have heard in this debate, we are far behind where we could be with the amount of small-scale renewable energy, especially community energy schemes, which are simply community-owned and community-run renewable energy projects. Our limited number of schemes has been massively welcomed by politicians of all parties because they provide cheaper and greener power, and they distribute benefits locally, rather than up to the big power companies.

The feed-in tariff briefly created rapid growth in these schemes, but that has dwindled to almost nothing—despite renewable technologies being cheaper than ever. The lack of growth is largely the result of the prohibitive cost that the small-scale generators face. The problem is well recognised, and 318 MPs from all major parties back the Local Electricity Bill, which would enable community energy schemes to sell electricity they generate to their local customers.

The potential is enormous. According to the Environmental Audit Committee, community energy could grow by 12 to 20 times by 2030, power 2.2 million homes and save 2.5 million tonnes of CO² emissions every year. This would take our renewable energy generation from community schemes to almost 10% of our entire needs, and the substantial benefits of enabling this can barely be overstated. However, community energy has seen a trickle of minimal growth, amounting to less than half a per cent.

The problem can be solved without subsidy, and this seems to be the key point. Small-scale renewable energy generators need to receive only a guaranteed fair price for the electricity they contribute to an energy system in desperate need of homegrown energy, as we have heard. Amendment 134 establishes a

“Community and Smaller-scale Electricity Export Guarantee Scheme”.


It would provide a guaranteed income for the electricity from small-scale low-carbon energy generators, with “small” defined as “a capacity below 5MW”. This would mean that communities get properly remunerated for their contribution to the system, and they can therefore go to their banks and raise the funds to expand or establish. This guaranteed price could be set by regulations, revised annually by Ofgem, with the initial contract guaranteed for at least five years—not that long.

Amendment 135 establishes a

“Community and Smaller-scale Electricity Supplier Services Scheme”.


This, again, would allow community schemes that registered under the electricity export guarantee scheme also to sell the electricity they generate locally. No requirement is placed on community schemes to do this, so, if they wish, they could operate simply using the proceeds of the export guarantee. For some, such returns would be sufficient to encourage local people to invest in new energy schemes—such was the case when we had a feed-in tariff.

But, if a community wants, it can sell the electricity it generates directly to households and businesses in its community. It can do so, for example, as an additional incentive for local people to invest or because it believes it can offer a lower tariff to the less well off in the community—this point was made on previous amendments this afternoon. This means that the community, which knows its people and what is going on, can flex its tariffs, and everyone can buy in to the project.

As with the clause created by Amendment 134, this would all be monitored by Ofgem and reported on annually. This is a nationwide campaign backed by a coalition of over 80 organisations—the Church of England, the CPRE, the Energy Saving Trust et cetera; I will not name them all—and 100 councils have already stated their support. Four of the six major distribution network operators—basically, our regional energy grid monopolies: Electricity North West, SP Energy, UK Power and Western Power—are supportive. As has been mentioned before, the Skidmore review supports all such organisations and ideas that will help green renewable energy, so I am completely puzzled as to why Ministers are not falling over themselves to make this thing happen.

In Committee, the Minister, the noble Lord, Lord Callanan, said that the amendments would create a subsidy to community energy schemes. However, we need to be really clear—in saying this, I want to pre-empt a response from the Minister—that the amendments do not establish subsidies for community energy schemes. Renewable energy can stand on its own two feet now; it has been successful in cutting costs over the last two decades and is now completely viable without the need for feed-in tariffs. We just need to set up the right market system for the energy for people to buy it and for people to be responsible for it. I will be completely puzzled if the Minister does not accept that, and I warn him now that I intend to test the opinion of the House later.

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[Lord Callanan (Con)]

I agree with the noble Baroness, and we are supporting a number of community energy partnerships at the moment. As I say, we are not against the idea in principle, but we need to work through the proper policy implications and ensure that some of these very worthwhile schemes are not piggybacking on to the costs that everybody else pays into the system.

[Lord Ravensdale (CB)]

My Lords, I thank the Minister for providing that detail on the department’s approach to local area energy planning and for recognising the ongoing work. With the reassurance that has been provided by the Minister, I beg leave to withdraw my amendment.

Amendment 94 withdrawn.

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[Baroness Young of Old Scone (Lab)]

My Lords, I will not detain the House. I declare an interest as living in an off-gas-grid property. I am sure that the Minister knows what I will ask him.

There is a lacuna in government communications or policy about the off-gas-grid regulations. These were consulted on extensively but so far, unless I have missed it, they have not resulted in an emanation in government policy. We are in a situation where, if you are one of the folk in an off-gas-grid residence, you do not know what to do. Under the system that was consulted on, it was proposed that, after 2026, if your oil boiler broke down you could not replace it with another oil boiler; as yet, we do not know whether that date is still in currency or not. It would be good if the Minister could tell us exactly what the current policy of the Government is and, if it is to change from something that was consulted on, when we would get an announcement.

The alternative, if they do not adopt the proposition from the noble Lord, Lord Berkeley, is that people need to get themselves an air source or ground source heat pump, but that is not a feasible proposition if you are trying to replace your recently defunct oil-filled boiler that has broken down between Christmas and New Year, when you have the grandchildren or your elderly great-granny in residence. Frankly, from the work done by the Environment and Climate Change Select Committee of this House on the boiler upgrade scheme, it was clear that getting an air source or ground source heat pump not only was an expensive proposition but would take some time. For the most part, it would take a number of weeks, and often a number of months, rather than having a nice man from British Gas or the local oil company coming round to give you a replacement on Boxing Day.

Apart from that, there is a debate to be had about the efficacy of air and ground source pumps in some houses, though I must admit that I probably come from the school that says that, providing you get a big enough one, you can heat almost anything—but that then raises major questions about ongoing energy costs.

Although I welcome the Minister’s statement earlier today about the extension of the boiler upgrade scheme term, it is a real pity that it was a complete failure in terms of numbers in the last financial year, and that most of the money that had been allocated had to be sent back to the Treasury. That is a great regret. My question—which my noble friend Lord Berkeley has given me the opportunity to ask yet again—is when we will get some clarity on the off-gas-grid regulations and what that clarity, if I have missed it, might be.

[Lord Ravensdale (CB)]

My Lords, I want to offer a few words of support for the amendment from the noble Lord, Lord Berkeley. It is something that the Government should take very seriously if it is to be used in a very specific and limited way for off-grid properties—the key point being the feedstock availability, which needs to be understood in more detail.

On the link with sustainable aviation fuel that the noble Lord, Lord Berkeley, mentioned, there is potentially an important counter-cyclical benefit here, in that jet fuel is dominant in the summer months and heating oil is dominant in the winter months. They are essentially the same fuel, so there is potentially a good economic fit between those two cases, and the relevant departments—DESNZ and DfT—should work together on that.

I would suggest some potential improvements to the amendment, such as limiting it to those off-grid properties that already use heating oil and specifically stating in the amendment that this is only for recycled fuels, to eliminate the unintended consequences of biofuels being eligible. Overall, however, this is something that the Government should take seriously.

[Lord Teverson (LD)]

My Lords, I certainly echo the question that the noble Baroness asked about the timing of the boiler scheme. There has been a big debate in the past on the use of frying oil, and getting the fiscal measures and the subsidy right so that it can be used as a transport fuel. Those arguments went on for a long time. However, I believe that there needs to be fiscal-incentive neutrality between the different types of renewable fuels, whether they are used within transport or indeed off grid.