Non-Domestic Alternative Fuel Payment Application Scheme Pass-through Requirement Regulations 2023

Lord Teverson Excerpts

Tuesday 16th May 2023 Grand Committee

[Baroness McIntosh of Pickering (Con)]

My Lords, I thank my noble friend and the department for bringing this measure forward—it is deeply appreciated among businesses. Do we know what the duration of the support will be in this regard?

I take this opportunity to thank the department for bringing forward the impact assessment as part of this, because we are very quick to criticise departments when they do not include such assessments. On this occasion, however, it is very thorough and greatly appreciated. I have learned a new term—counterfactual. I am not quite sure what it means, but we are told that the option of this support is being considered against a “counterfactual of doing nothing”. I do not know whether this is yet another Americanism that has crept into the English language.

I shall just press my noble friend on one point. He has been quite clear about how the intermediaries are responsible for identifying the end-user, yet on page 4 of the 36th report, printed on 10 May by the Joint Committee on Statutory Instruments, it is clearly stated that the committee wishes to report defective drafting in Regulation 5. This refers to the fact, stated in paragraph 3.2 of the report, that there is

“no mechanism in the Regulations for enforcing these requirements. This reflects an approach adopted in previous instruments dealing with the pass-through of scheme benefits by intermediaries”.

How does my noble friend and the department respond to that charge against them?

That is the only question that I have. I wholeheartedly welcome the regulations before us this afternoon. It is extremely important that the support is given, particularly in areas such as rural areas which are off grid.

I know I said that that was the only comment that I had, but I have one last question. On the £150 going to the smaller users, does that mean that the civil action can be pursued through the small claims court, which obviously would not significantly add to their costs, if they had to bring such a claim to which my noble friend referred? I thank my noble friend and the department for bringing forward the statutory instrument before us today.

[Lord Teverson (LD)]

I thank the Minister for a very familiar speech. Obviously, in principle, we very much support the statutory instrument. What struck me about it, if I am honest, is that when it arrived in my inbox I thought, “I thought we’d done all this”. If you look at the graph on the impact assessment—like the noble Baroness, Lady McIntosh, I welcome it—the big heist in energy prices was in June last year, so we are a long way through from that, by almost one year. Maybe I have misunderstood something, but it seems to have taken a huge amount of time. I realise that the statutory instrument came into effect in April, but it seems an awfully long time has been taken in managing to get this amount of money. It may not be large, but it is important to non-domestic users.

I would be interested to understand from the Minister how well the pass-through mechanism has worked to date on the other scheme. Have there been complaints and have there been any court procedures for people to claim their 2% on their proportion of the original amount of money? Have there been complaints to the department, or has the Minister found that the scheme has worked fairly well so far, as I would hope?

I would also be interested to understand the number of businesses that the department expects should benefit from this scheme. That may be in the impact assessment— I tried to find it there, but I could not, and my apologies if that is so.

I want to come back to the area of enforcement. The Joint Committee was strong on this and rightly so. Big amounts of money may not be involved here but whoever wrote this statutory instrument, as with the previous one on pass-through, must have had their tongue well in their cheek when they said that people could go through a civil claim and get 2% on the money outstanding, given that, at most, it is a fraction of £150. This is still an invitation for people to say, “What the heck? I’m not going to bother with this bureaucracy and I’m not going to do it”. For a country that takes the rule of law seriously, it is a principle that when one has a statutory obligation, there is a method of enforcement if that is ignored. It may not be used but it should be there.

I therefore should be interested to hear from the Minister on those areas, particularly on how successful the existing pass-through arrangements have been to date.

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[Lord Callanan (Con)]

I thank my noble friend Lady McIntosh, and the noble Lords, Lord Teverson and Lord Lennie, for their comments.

This instrument is necessary to ensure the proper delivery of the non-domestic alternative fuel payment scheme by allowing support to reach those who need it. The scheme is already in place and delivering much-needed support to non-domestic consumers across the UK. The scheme supports a wide range of businesses and other non-domestic consumers that are not connected to the gas grid. As I said, it is delivering a payment of £150, thereby helping businesses and organisations that rely on alternative fuels to meet their eligible costs. Most eligible customers should have already received their £150 payment by the end of March as a credit from their electricity suppliers. Where these payments were received by an intermediary, the pass-through regulations that we previously made ensure that they passed it on to the end users in a just and reasonable way. Although a relatively small proportion of businesses and organisations are entitled to a top-up payment, these payments are also important in ensuring that those consumers are not left behind and receive support comparable to those received by consumers on the gas grid and who have benefited from other schemes.

We opened an application service for the top-up payment on 20 March, and we are processing payments as quickly as possible. In addition to the top-up payment, we provided a route for customers to apply for the basic £150 payment in the limited circumstances where it was not possible for them to receive it through an electricity supplier. These regulations ensure that in all these circumstances, where a payment is made following an application, end-users benefit from the requirement that intermediaries pass on that support in a just and reasonable way. It is a case of extending the safeguards already in place for the earlier part of the scheme to payments made following an application.

On the specific points made in the debate, the noble Baroness, Lady McIntosh, asked about the duration of the support and the latest report from the JCSI. We are providing one-off payments to eligible businesses and organisations to ensure comparable support to that received by on-grid customers who have benefited from the energy bill relief scheme, and we are in the process of issuing payments to applicants. In response to the noble Baroness’s point about the JCSI’s comments on enforcement, also raised by the noble Lord, Lord Teverson, our view remains, as the noble Lord, Lord Lennie, correctly predicted, that there is little value in establishing a formal enforcement mechanism. However, we believe that it is important to include a provision on pass-through of information, as most intermediaries will comply with this.

The noble Lord, Lord Teverson, asked how successful the existing pass-through arrangements have been. We are not aware of any significant issues in the delivery of this scheme or the pass-through arrangements. Nevertheless, the scheme remains in progress, and we will continue to keep it under review and respond to any issues as they arise. As the scheme is still in progress, we are not yet in a position to say precisely how many businesses will benefit, but we believe that around 400,000 end-users will receive some level of payment under the scheme. That is a considerable amount of support.

[Lord Teverson (LD)]

I am grateful to the Minister for that. To clarify, is that the number of businesses that will benefit from this pass-through, as opposed to the scheme altogether?

[Lord Callanan (Con)]

No; that is the scheme altogether.

Energy Bill [HL]

Lord Teverson Excerpts

3rd reading
Monday 24th April 2023 Lords Chamber

[Lord Lennie (Lab)]

My Lords, this huge Bill leaves the House in far better shape than when it arrived. A combination of Labour, the Liberal Democrats, other parties, individuals and, most importantly, Cross-Benchers have secured measures that should see ISOP’s independence assured, community energy export markets develop, warmer homes and an efficiency plan to achieve that, the Gas and Electricity Markets Authority strengthened, and the ceasing of any further coal mining in this country—thanks to the noble Lord, Lord Teverson. It is to be hoped that the Government will support these changes in the other place and will not bring this Bill back for ping-pong. The range of supporters across the House should be sufficient to convince the Minister to back the changes to the Bill made by this House.

In the meantime, my thanks go to the Minister—remarkably, he has stayed the course while his Government have changed leadership three times and his Secretary of State twice since we began in September 2022—and his advisers from BEIS, and subsequently DESNZ, who have continually briefed and been available to answer questions and clarify intentions as we wended our way through this tome of a Bill.

My appreciation goes to my noble friend Lady Blake for her continuing support and to the noble Lord, Lord Teverson, on the Liberal Democrat Benches, with whom it has been a pleasure to work on the Bill. My thanks are also due to a number of Back-Benchers and Cross-Benchers, mainly drawn from the Peers for the Planet group, particularly including the noble Lord, Lord Ravensdale, the noble Baronesses, Lady Hayman, Lady Boycott, Lady Bennett and Lady Worthington—sadly temporarily departed from this House—and my noble friend Lord Whitty. Thanks also go to the House staff and the doorkeepers for arrangements during delays in advancement of the progress of the Bill, which were not of their making, and for keeping the quick-quick-slow dance rhythm to the Energy Bill.

My biggest thanks go to the remarkable Milton Brown in Labour’s legislative team of advisers for always being up to date with the progress of the Bill, for his liaison with the other place and for his political briefings and judgment, which allowed my noble friend Lady Blake and me to keep focused on this Bill over a long period. We wish it well on the next stage of its journey.

[Lord Teverson (LD)]

My Lords, one of the things that strikes me most about the passage of the Bill through this House is that it is has been the opposition parties saying to the Government, “Get on with it. We actually need this Bill through to give the powers that we need to meet decarbonisation and modernise the energy production system in this country”. I agree with the noble Lord, Lord Lennie, that the amendments that have been made by this House are absolutely in line with the Government’s decarbonisation objectives. I hope that the Commons, as well as the Government themselves, will consider them as positive rather than negative.

I will not go through the long list of other Peers named by the noble Lord, Lord Lennie. What I will do is to say a great deal of thanks to Peers for the Planet for its work in the House, to the noble Lord, Lord Lennie, and to the noble Baroness, Lady Blake, whom I have enjoyed working with very much indeed. From our own offices, I thank Sarah Pughe and Sarah Dobson.

We look forward very much to not having to play ping-pong on this Bill. Maybe that is too much to hope for but I thank the Ministers, the noble Lord, Lord Callanan, and the noble Baroness, Lady Bloomfield, for their co-operation during the passage of the Bill. I also thank their teams. I look forward most of all to the Bill being implemented, so that the country as a whole can move ahead in its aims and objectives.

[Baroness McIntosh of Pickering (Con)]

My Lords, I congratulate my noble friend on steering such a major Bill through. I am mindful of the fact that it was originally going to be an energy security Bill. I know that I and a number of noble Lords focused on the environmental aspects, particularly the mitigation hierarchy. I welcome the fact that this is to be enshrined in the levelling-up Bill, and look forward to pursuing it further on that Bill with my noble friend on the Front Bench.

I ask my noble friend to be mindful of the fact that the Scandinavian countries, led by Denmark, have raised a flag about Russian vessels masquerading as fisheries vessels. These are, it is assumed, purposefully undertaking spying operations, particularly to look at the underground cables and the major offshore wind farm operations, notably operated by Denmark. I understand that we are to have a major operation where a lot of this work will co-ordinate around the Dogger Bank, so I urge him to be mindful of the security risk associated with such a major area of the North Sea, where we are extremely vulnerable to such operations by Russian and other forces which may not be so conducive to our energy security as we might wish.

Powering Up Britain

Lord Teverson Excerpts

Wednesday 19th April 2023 Lords Chamber

[Lord Teverson (LD)]

My Lords, I do not in any way disagree with the noble Lord, Lord Lennie, but I have tried to be positive about these reports; a whole suite of reports has come out with this. I spent a little more time on the report entitled Powering up Britain: Energy Security Plan, which I thought may be the document that would get more to the heart of this. I also found the 2030 Strategic Framework for International Climate and Nature Action particularly interesting. These are a long read but have a list of really good stuff. They mention areas that we have debated here such as gas storage, grid connections, carbon capture, energy efficiency and demand management. A few are missing, but it is a very impressive list of subjects that this House has considered during the passage of the Energy Bill, whose Third Reading we await next week. It is a great list, but it is five years too late—something like that.

I have a number of questions for the Minister. Small modular reactors are listed in the energy security plan. When do we expect them to come online? Going back to something we discussed on the Energy Bill, the energy security plan mentions the core responsibility of the future systems operator, or ISOP as we know it. When is it actually going to be established so that it can get on with its work? Those I have spoken to in National Grid ESO are really champing at the bit, because they need to get on with it, as this report says, but it is still not there because of the slowness of the Energy Bill through Parliament.

On Sizewell C, which the report mentions, what lessons have we learned from Hinkley C? There are all sorts of lessons to be learned from budget increases and other issues relating to the building of that. On planning, I am pleased to say that it talks about trying to reduce planning periods, but in the debate on the levelling-up Bill yesterday we discussed how the planning system is core to delivering net zero. In fact, as both the Climate Change Committee and the Chris Skidmore report asked, are the Government going to embed net zero properly into the planning system? As the noble Lord, Lord Lennie, asked, will we really meet not just the COP 26 obligations but the fourth carbon budget, whose period just started, let alone the fifth? I do not believe that these plans really do that.

What impressed me at the end of the energy security plan was a whole long list of timetables. I hope that at DESNZ all the senior officials and the Ministers sit around the table every week and are driven by that plan. I suspect they might not be.

Finally, I am very pleased that the 2030 Strategic Framework for International Climate and Nature Action was published, but this comes back to something the noble Lord, Lord Lennie, said. In the introduction, I read something that really quite excited me, and I thought, “Here we get to the nub of it”. It says:

“Since the publication of the British Energy Security Strategy, our Environmental Improvement Plan and our Net Zero Strategy, the US has taken decisive action in allocating $370 billion for clean energy and manufacturing in its Inflation Reduction Act. And the EU has set out its ambitious plans to grow its green industries through the Green Deal Industrial Plan”.


I then looked on to the next paragraph to find out what we were doing. It went off completely on a different subject. When are we going to understand what our reaction is going to be to those two pieces of legislation in the United States and the EU—our major investment competitors?

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

I thank the noble Lords, Lord Lennie and Lord Teverson, for their comments. I want to thank the noble Lord, Lord Teverson, slightly more than I want to thank the noble Lord, Lord Lennie, because he was slightly more positive, but I thank them both for their comments anyway.

For too long this country has taken cheap, plentiful energy for granted. If the war in Ukraine has shown us anything, it is our decades-long overreliance on fossil fuels. Of course, we have all seen their record prices, but the Government have stepped in to help: we have been paying around half of a typical household’s energy bills this winter, and that support has been extended. Our longer-term challenge now is to bolster our energy resilience as a nation so that never again can we be held hostage by tyrants such as Putin, putting his hand into the pockets of every family and business in this country.

This plan is about setting out a clear path and why we have to diversify our sources of supply. We have to decarbonise them and we have to move toward greater energy independence to secure the cheap, clean energy that Britain needs to prosper in the future. We are making considerable progress along that path, but we all know that we have to do a lot more.

I will move to the specific questions I was asked. The noble Lord, Lord Lennie, asked me about onshore wind. I have a funny feeling that the noble Baroness, Lady Hayman, is going to ask me a similar question, so let me try to pre-empt her. We have included onshore wind in our latest world-leading contracts for difference scheme. We are currently consulting on amending the National Planning Policy Framework so that local authorities can better respond to communities when they wish to host offshore wind infrastructure. A government response will be issued in due course.

The noble Lord, Lord Lennie, also mentioned the US Inflation Reduction Act. Of course, we are well aware of the action taken by international partners to accelerate their own uptake of green technologies. They are getting to the party a bit late, but I am pleased to see that they are finally going in the same direction. We continue to engage with them on this. Although the Act is significant, the race for green tech started decades ago here in the UK, with the rest of the world now playing catch-up, adopting many of the same mechanisms, such as contracts for difference, that we came up with seven or eight years ago.

We will not go toe to toe with our partners in a subsidy race; I have not noticed any commitments from the Labour Party to do this either. Instead, we will double down on our global leadership in clean technologies to tackle climate change, using a range of levers from smart regulation to market frameworks and targeted investments. Noble Lords will also have seen, in the green finance strategy published at the same time as the plan, a lot more information on our very ambitious plans to mobilise considerable amounts of the private investment we will need.

The noble Lord, Lord Lennie, also asked me about our 2030 NDC. We remain firmly committed to delivering our international commitments under the Paris Agreement, including the 2030 NDC. While countries are not due to start reporting to the UNFCCC on progress towards meeting the NDC until 2024, we have already quantified proposals and policies to deliver by 2030 a reduction in emissions of 67% compared to 1990 levels, providing a great majority of the savings required for our NDC target of a 68% reduction by 2030.

The noble Lord asked me about energy efficiency and referred to some vague Labour plan. I would be delighted to see what Labour’s plan in this area actually is. I did see a half-baked press release last week, which was presaging a great announcement, but I do not think that that announcement ever happened. If it did, I certainly did not notice it. What I saw was not a plan at all; it was a wish list, without any numbers attached to it. I will tell the noble Lord exactly what this Government are doing.

When Labour left office in 2010, 14% of UK homes were at EPC level C or above. It is now 47%, and it will be over 50% by the end of next year. The Government are committed to improving the energy performance of homes across the country. I refer again to the new Energy Efficiency Taskforce that we have established to drive improvement. The Chancellor set a target of 15% energy reduction improvements by 2030, for which £6 billion of new funding will be made available from 2025 to 2028, in addition to the £6.6 billion already allocated in this Parliament. This is a key ask from many in the industry, providing long-term funding certainty, supporting the growth of supply chains and ensuring that we scale up delivery over time. In addition, we are still committed to the four-year, £4 billion ECO expansion, and noble Lords will have seen the announcement of the Great British Insulation Scheme and its additional £1 billion of funding.

Moving on, the noble Lord, Lord Teverson, asked me about nuclear and SMRs. I hope that presages that the Liberal Democrats might support us on nuclear in the future. This is well-established technology. We have invested £210 million with Rolls-Royce to develop SMRs in the UK. They are well established and we want to be world leaders in this. Realistically, it will be at least the end of the decade before they are rolled out. This is another world-leading green technology from which the UK can prosper.

Energy Bill [HL]

Lord Teverson Excerpts

Report stage
Monday 17th April 2023 Lords Chamber

Moved by

[Lord Teverson]

59: Clause 116, page 102, line 17, at end insert—
“(1A) The person designated under subsection (1) must be a public body with no other roles or interests in the energy sector.”Member’s explanatory statement
This amendment ensures that the ISOP is a public body, not an individual or a private company, and has no conflicting interests.

[Lord Teverson (LD)]

My Lords, Amendment 59 is about the independent systems operator and planner, which we know as the future system operator. I have three amendments in this group—Amendments 59, 61 and 62—and I shall briefly speak to all of them. It is a big gap in the Bill as written at the moment that the so-called independent systems operator and planner is not actually independent in any way, which is why this amendment is down. I also very much support the amendment in the name of the noble Lord, Lord Lennie. For the ISOP to be independent, I believe it is fundamental that it needs to have an independent revenue stream. That is why my Amendment 61 would enable it to raise its own money; it should not come through Ofgem. We all know that the person who pays the piper calls the tune, and the future system operator needs to be independent of Ofgem. Lastly, Amendment 59 would ensure that the ISOP is a public body. I beg to move.

[Lord Lennie (Lab)]

My Lords, my understanding is that the Minister will confirm the Government’s support for an independent ISOP, as suggested by the noble Lord, Lord Teverson, and this being the case, we know no longer need to divide the House on our amendments. So, rather than listening to me putting forward the argument in favour of achieving this, I think we would be better served to listen to the Minister in his reasoning for an independent ISOP: I thank him for his time over the weekend, when we reached this position.

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

Let me first thank all noble Lords for their amendments, and I thank the noble Lord, Lord Lennie, for the time he gave to discussing this matter. As always, there were valuable contributions from all parts of the House.

On the details of the amendments, Amendment 60, tabled by the noble Lord, Lord Lennie, and the noble Baroness, Lady Blake, seeks to establish an industry-led advisory board for the ISOP. In the original consultation, the respondents strongly indicated that the body should be independent of energy sector interests, and I think that is a view shared by the Opposition. The Government therefore remain concerned that inserting in legislation a formal oversight role, as is being suggested, will place decision-making back in the hands of the energy sector and go against the reasons and mechanism for creating an independent ISOP in the first place. This could make the ISOP risk-averse or unwilling to take action that is potentially challenging to market participants but could be on the side of consumers, even if that action might be beneficial to the system itself.

We are therefore concerned that, rather than enhancing independence, members of such an advisory board would likely hold various energy sector conflicts. There are many ways this could crystallise, including resistance to systemic reform, more strident advice in favour of compensation for energy sector participants, or incumbent bias, for instance seeking to frustrate new market entrants which could stifle the innovation that I think everyone, in all parts of the House, is agreed that we need to reach net zero.

Establishing an industry-led advisory board for the ISOP would be similar to establishing one for, for instance, the Climate Change Committee—an organisation which, in our view, also needs to remain independent of industry interests. I hope noble Lords would agree that we need genuine, independent, expert thinking, rather than vested interests. Thankfully, this amendment is not required to ensure board independence; the Government intend to require that a number of sufficiently independent directors—or SIDs, to use the acronym—sit on the ISOP’s board. A SID is a board member who meets certain criteria to ensure that, as well as being skilled, knowledgeable and experienced, they are impartial, with restrictions including on certain shareholdings in the energy industry. Requirements in the ISOP’s licence will set a minimum number of SIDs to ensure that the ISOP’s board has strong representation from those outside the ISOP and is unconflicted by the interests of the energy industry.

To ensure effective scrutiny of the appointment of the ISOP’s chair, we are also asking the Office of the Commissioner for Public Appointments and the new departmental Select Committee, once established, to conduct pre-appointment scrutiny. Energy sector experts will have opportunities to input to the ISOP’s work, of course. For instance, the system operator’s business plan submissions, assessed by Ofgem, will continue to be open to consultation with market participants, including members of the specific industry forums mentioned in this amendment. Finally, through its price control process, Ofgem will ensure that the FSO is fully resourced to fulfil its objectives and obligations, including the funding of its statutory duties towards consumers, energy security and net zero.

Turning to Amendments 59 and 62, tabled by the noble Lord, Lord Teverson, again we agree with the sentiment of the noble Lord’s amendments, and the Government remain resolute that the ISOP shall be an independent public body. We continue to act to make this so. However, it is critical that the ISOP remains a dynamic organisation capable of adapting and evolving to the future conditions of the energy sector. I therefore hope the noble Lord will agree with me that it is preferable not to constrain the ISOP pre-emptively in legislation at this fairly early stage but to maintain some flexibility. With the rapid deployment expected in the energy sector, reasonable circumstances may arise in which the ISOP is well placed to take on some future energy sector role or interest.

Regarding the specifics of Amendment 62, I believe there are already significant controls and limits upon the Secretary of State in acting as the sole shareholder. These will include limits in the framework agreement, which we will of course make public. These controls will ensure that the ISOP’s operational independence is protected.

Legislating for the ISOP to “be independent” does not, in my view, appear to offer a material benefit beyond the controls already established in Part 4 of the Bill and the framework documents, but it risks preventing the intended corporate composition of the ISOP, thereby undermining its effectiveness.

Finally, on Amendment 61, also tabled by the noble Lord, Lord Teverson, the Government agree that it will be important to ensure that the ISOP is fully resourced to fulfil the objectives and obligations set out in its licence. In our view, the most effective funding mechanism to achieve this and realise our vision for an independent ISOP is for it to be funded by consumers through price control arrangements, much like the current gas and electricity system operators are today.

Levies placed on licensed bodies can be expected to filter through to consumers. However, we are concerned that the requirement to establish an audit board risks duplication with the current well-understood and transparent regulatory model established under Ofgem. Without a price control process run by the regulator, there is also a risk of poor consumer value for money. As with other regulated bodies in this sector, the ISOP will have the operational freedom it needs to manage and organise itself to effectively deliver its roles and objectives. We also intend the ISOP to sit outside the regime of Cabinet Office controls on spending, which bodies funded by taxes and levies are required to operate under.

With the explanations and reassurances that I have been able to provide, I hope that noble Lords will agree not to press their amendments.

[Lord Teverson (LD)]

My Lords, I am very encouraged by the Minister’s response on the control of the board and the ISOP. I am disappointed about the funding flows, but I guess that it will work out as it works out. I think that is unfortunate, but I have no intention of pressing the matter. I beg leave to withdraw my amendment.

Amendment 59 withdrawn.

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Moved by

[Lord Teverson]

65: Clause 159, page 131, line 23, at end insert—
“(1A) Those standard conditions must contain provision by which the holder of the MPI licence will contract with the relevant transmission licensee for the connection of offshore distribution networks, generating stations or offshore installations to the multi-purpose interconnector.”Member’s explanatory statement
This amendment seeks to clarify whether the regime for MPI licences will operate in a similar way to the Offshore Electricity Transmission regime in that generation and demand users will have contracts with the system operator, who will in turn enter into back-to-back arrangements with the MPI licensee.

[Lord Teverson (LD)]

My Lords, I will be brief on this group, but I believe these are important issues which we did not reach in Committee. I speak first to Amendments 65, 66 and 67 on multipurpose connectors.

Multipurpose connectors are intended to provide links between the electricity transmission systems in the UK and other jurisdictions while simultaneously connecting new offshore generation, such as offshore wind—a key part of our energy strategy—and demand, such as oil and gas installations. Ofgem is bringing together an interim regulatory framework, but I believe that there is a lack of flexibility. There is a potential difficulty in the existing interconnector/offshore transmission operator licensee being able to carry out its functions as an MPI—that is, a multipurpose connector—licensee. These amendments aim to clarify the situation.

Amendments 125 and 129 in this group are about the decarbonisation of offshore oil and gas installations. In the North Sea Transition Deal, published in March 2021, the UK Government committed to reduce greenhouse gas emissions from North Sea oil and gas activities by 50% from 2018 levels by 2030—I very much welcome these targets—and, of course, to achieve net zero for the basin by 2050. The electrification of offshore production facilities is the route to achieving this. It is generally agreed that that is the way to do it.

The annual volume of carbon dioxide-equivalent greenhouse gas emissions produced by offshore oil and gas installations is some 10 million tonnes, which is roughly a tenth of the total emissions from UK energy supply. It is far from insignificant, but there is a narrowing window of opportunity to achieve these targets due to the life of these installations and the constant decommissioning programme. They just stop being economic in terms of those investments. We need action now, but there are a number of obstacles: uncertainty around how offshore networks will be treated by regulators, questions around the offshore transmission owner and well-known issues around connections to the UK grid—hence these amendments.

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In light of the reassurances that I have been able to provide, I hope that the noble Lord, Lord Teverson, will withdraw his amendment, and that other noble Lords will feel able to not move theirs.

[Lord Teverson (LD)]

My Lords, I thank the Minister for his long and detailed response to my amendments. One always knows in this House that you are in big trouble when Ministers start talking about unintended consequences of amendments, so I accept that. Having said that, I am mortified that we cannot, at this stage, change the name of the Oil and Gas Authority; just a promise of a Third Reading amendment would have made my day, but there we are. It is obviously far too difficult. But I take encouragement from the Minister; I think he suggested that that is a work in progress and will happen at some time. In the meantime, I beg leave to withdraw my amendment.

Amendment 65 withdrawn.

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That is all I am asking. I suspect that the Minister does not want to incorporate it in the Bill but it would be nice if he could give me an indication that, together with the regulator, the Government are at least thinking of better ways to ensure a more socially just structure of tariffs in this country. I beg to move.

[Lord Teverson (LD)]

My Lords, I was pleased to add my name to the amendment from the noble Lord, Lord Whitty. There is no easy answer to the question of a social tariff—all solutions to fuel poverty have downsides—but the industry feels that this is the direction of movement and consumer groups agree, so I will be interested to hear the Minister’s response. I have also tabled two amendments in this group: Amendments 70 and 71 about prepayment meters. This is a particularly important area to me. I will not take up the House’s time by going through the arguments again, but I would be interested to hear from the Minister where the Government stand now on prepayment meters and self-disconnection.

[Baroness Bennett of Manor Castle (GP)]

My Lords, I have attached my name to a number of amendments in this group in the names of the noble Lords, Lord Whitty and Lord Teverson. The arguments on prepayment meters put by the noble Lord, Lord Teverson, are very clear; we have seen that all over the media.

The noble Lord, Lord Whitty, referred to the fact that this is a long-term issue, but it is worth highlighting that, since we debated this in Committee, the Government’s own figures have come out. They show that the fuel poverty level in the UK increased to 13.4% over the course of 2022 and predict that it will reach 14.4% by 2024.

Of course, these figures use the highly questioned government definition of fuel poverty, which does not allow for anyone living in a home above D classification to be classed as fuel poor even if they simply cannot afford to heat that home. According to the National Energy Action definition of fuel poverty—households spending more than 10% of their income after housing costs on energy bills—there were 7.39 million households in that condition in 2022, and the NEA estimates that this year, after April, 8.4 million people will be in households in fuel poverty.

These measures would be highly targeted to address the poorest. They are simply common sense, enabling people to live and be healthy in our society.

--- Later in debate ---

[Baroness Meacher (CB)]

My Lords, I will not take the time of the House to repeat comments that have already been made. The noble Baroness, Lady Boycott, and others have made a very powerful case for these amendments. It is ludicrous for us not to be enabling community energy production when this does not involve a subsidy and when it could create additional energy sufficient for something like the 2.2 million homes mentioned by the noble Baroness, Lady Boycott. This is a completely neglected area; it can be resolved as set out in these amendments in a straightforward way. The main thing is that these community energy projects need to be able to sell their energy to big suppliers in the locality—those with more than 150,000 customers was the figure quoted, I think. So there is very strong support for these amendments and I hope the Minister will be able to accept them. I cannot see any reason why not: it is not going to cost the Government anything.

[Lord Teverson (LD)]

My Lords, from these Benches I welcome particularly the amendments in the name of the noble Baroness, Lady Boycott. I will not detain the House except to say that it is quite clear that community schemes have not operated effectively for many years. I should declare that I am an insignificant shareholder in a local community scheme in my own home area, which was set up under the feed-in tariffs. The schemes as put forward are not a kind of feed-in tariff regime: they are really looking for stability of price and are not around subsidy. I just say to the Minister that the Government’s overall target is decarbonisation of the grid by 2035: let communities play a big part in that, because one thing that is really important here is that community schemes allow for communities, individuals, households, families and small businesses to participate in the decarbonisation of our economy and net zero. They can be a part of it and that is why these amendments are so important.

On the amendment in the name of the noble Lord, Lord Ravensdale, it is indeed very important that local authorities are involved and are movers in this area. All I can say is that I have to learn from him: he has the ear of the Government and the Minister far more than I do, and perhaps I could have some lessons afterwards about how to be successful in getting amendments into Bills.

[Baroness Blake of Leeds (Lab)]

My Lords, I declare my interest as a vice-president of the Local Government Association. It will come as no surprise to Members of the House that I support all these amendments, particularly Amendment 94 in the name of the noble Lord, Lord Ravensdale. Going by my personal experience, not giving a broader role to local authorities is such a missed opportunity and I cannot understand why these amendments would not be supported, particularly since it is, in all honesty, such a mild request: better definition of local authorities’ role; and asking for guidance, which is a perpetual demand from local authorities, I have to say, in trying to move things forward. As we know, other key reports and reviews have recognised just how important it is to get local buy-in and to get local stakeholders involved.

I turn to the amendments in the name of the noble Baroness, Lady Boycott, and signed by others. It is essential that we bring these elements together. What we are talking about, without repeating the technical issues that have been raised so powerfully today, is that we need to aim to have a framework that will support the growth of community and smaller-scale energy schemes and also provide regular reporting so that everyone knows how things are progressing. I have to say that all we are asking for is the following of an evidence-based approach. We can look at the success of other, related schemes in these areas that have been successfully led by local authorities. These include the rollout of electric vehicles, with local authorities leading by example in changing their fleets to electricity. District heating is another example where, when you have very strong local buy-in, the success moves forward. What we are asking for here is the ability to inform, shape and enable key aspects to deliver energy decarbonisation.

I believe very firmly in involving local stakeholders from the beginning; they are far more likely to come on board with schemes that might have aspects that they find work against their interests if they understand and are included in the bigger picture. Many people will make compromises when they understand the greater good, and the opportunity has been highlighted over the past year by the dramatic increase in energy prices and the risk of energy scarcity. I think the landscape has changed in this regard. Let us give confidence to local people and communities by developing the framework for the growth of communities and smaller-scale energy schemes. It is regrettable that more progress has not been made so far. The role of Ofgem in this, giving clear methodology and quality standards, is essential and will give the credibility that is needed, as the noble Baroness, Lady Boycott, so eloquently pointed out.

Through the involvement of local communities, we are asking for a more effective and better targeted delivery of national priorities; and we all know that we need more determination to deliver on the ground. I hope we will see some movement in this area and can only echo other comments: if we fail to make progress, this is such wasted potential, and I hope we will hear some positive comments with regard to these amendments.

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[Baroness Bennett of Manor Castle (GP)]

My Lords, it is a pleasure to follow the noble Baroness, Lady Sheehan, and to offer the strongest possible Green support for her Amendment 124, which would prohibit the flaring and venting of hydrocarbons other than in an emergency. The case has already been very powerfully made, but I will add that this has been a recommendation of the Commons Environmental Audit Committee and what is known as the Skidmore report—the Mission Zero independent review. It is something that other nations are well in advance of us on—a point that forms something of a theme for my remarks.

I also support for Amendment 131, which we have not heard fully set out yet, on no new coal mines. It has broad cross-party and non-party support, and it is obvious that we cannot have new coal.

I shall speak chiefly to my Amendment 138B, which goes further. Very simply, it would prohibit new oil, gas and coal extraction. I tabled a similar amendment in Committee and will not go over the same ground, but I want to briefly make three points. First, in May 2021, the International Energy Agency—not known as a group of radial greenies—called clearly for no new oil, gas or coal. Therefore, my amendment would deliver what the International Energy Agency said had to be done in 2021. We are now in 2023.

Since we were in Committee, we have seen increasing momentum behind the fossil fuel non-proliferation treaty, one element of which is no new oil, gas or coal. Six Pacific nations have issued a joint call to the world to say that this has to happen. The Prime Minister of Vanuatu said that polluting industries would not break from their “business as usual” behaviour without being forced. He said that we had to “explicitly stop the expansion” of production.

We often hear about the Government’s desire to be world-leading. It is actually this week, on 19 April, that the state of California is considering a resolution to formally endorse the fossil fuel non-proliferation treaty, which would deliver no new oil, gas or coal. It is going to have a Senate hearing on 19 April, introduced by the Senate Majority Whip, Senator Lena Gonzalez, and co-sponsored by the Indigenous Environmental Network. If the Government really want to be world-leading, they are going to have to catch up.

[Lord Teverson (LD)]

My Lords, I commend the noble Baroness, Lady McIntosh of Pickering, for emphasising the mitigation hierarchy in her amendment and for her speech. It is something that is really important to take notice of offshore. I was pleased to add my name to the amendment of my noble friend Lady Sheehan, and I have great sympathy with the amendment from the noble Baroness, Lady Bennett. However, I will speak primarily to Amendment 131.

I guess that if this Bill had come before this House three years ago, I would not have even contemplated putting an amendment down about no more coal, because it would have been totally and absolutely obvious that it would be a really stupid thing for any nation—let alone the United Kingdom—to do. However, we are in the situation where we have the Government saying that a coalmine in Cumbria should actually go ahead. I put this amendment down because I now wonder, if we have one, what else could happen. It is not specifically about Cumbria, but Cumbria is important.

Let us look at Cumbria for a moment. First, the issue does not revolve just around the production of coking coal for steel. That is estimated to be only 15% of production. The other 85% is expected to be exported. Of course, once that coal leaves our shores, we have absolutely no control over it; it is a commercial decision. We have no control over what that coal is used for, and almost certainly it is going to be used for energy and power generation. Even if we take that 15%, which is supposedly for coking coal, we have a situation where the UK steel industry is actually moving away from carbon-intensive methods into green steel. At the moment, we are some way behind our friends and colleagues in the European Union, in that they have some 38 green steel plants under plan and 10 operating at the moment, all mainly green hydrogen produced by electrolysis. The one proposed in the UK is blue hydrogen with carbon capture and storage, but that is the future. The future is not steel produced by coking coal.

So, in a way, the Cumbria mine project should be unacceptable to us, yet Michael Gove, who I had huge respect for when he was Defra Secretary of State and who introduced a huge number of important environmental improvements and plans that are still echoing beyond his tenure in that role, in December last year—only five months ago—approved the plan for that coal mine. Rather cynically, he approved it up to 2049, one year before we have to have net zero in the United Kingdom.

One of the main reasons I have tabled this amendment, apart from the fact that I would not have thought it even possible that the United Kingdom would contemplate opening a new coal mine, is our international reputation. Of course, as Members will remember, we were the president of COP 26. We had a very successful conference in Glasgow and most of us—all of us, probably—congratulated Alok Sharma on the work he did as president of COP 26. During that conference, the UK Government put out a press release about their own success. This was in November 2021, only some 18 months ago, and it heralds:

“The end of coal—the single biggest contributor to climate change—is in sight thanks to the UK securing a 190-strong coalition of countries and organisations at COP26, with countries such as Indonesia, South Korea, Poland, Vietnam, and Chile announcing clear commitments to phase out coal power”.


The end of coal; that is the message.

The BEIS Minister at the time, someone called Kwasi Kwarteng—noble Lords may have heard of him—said:

“Today marks a milestone moment in our global effort to tackle climate change as nations from all corners of the world unite in Glasgow to declare that coal has no part to play in our future power generation. Spearheaded by the UK’s COP26 Presidency, today’s ambitious commitments made by our international partners demonstrate that the end of coal is in sight. The world is moving in the right direction, standing ready to seal coal’s fate and embrace the environmental and economic benefits of building a future that is powered by clean energy”.


I applaud that statement. It is strong, determined and absolutely to the point. Yet we are about to have a coal mine that will produce coal not just for an outdated steel technology but to be used for power generation.

I am very proud of Britain’s reputation on climate change. On my Benches and others we have criticised many aspects, but we have shown, over coalition Governments, Labour Governments and even the present Conservative Government, that we have moved forward—further, in many ways, than our fellow G7 countries. That is why it is absolutely wrong that we should trash that reputation by one decision to open a new UK coal mine. Who knows? If that happens once, it can happen again. That is why this amendment is so important.

[Lord Deben (Con)]

My Lords, first, I have to say to the last speaker that I did not like that word “even”; this Government have introduced the highest targets of any country in the world. They have led the world in the most remarkable way and we should thank them for it—but that makes the argument against coal mines even stronger.

The Climate Change Committee is very careful not to overstep its mark. Its job is to advise on alternative methods and on the aims that we need to set the targets. Very rarely does it say that a particular measure is unacceptable. Indeed, in dealing with the question of new oil and gas, we have been very clear that the Government have to take into account the geopolitical position: you cannot just talk about the whole issue of the environment, because we are at war in Ukraine. We have a country determined to squeeze freedom out of Europe. We are concerned in all sorts of areas and we have to make very difficult decisions, so I hope my noble friend will remember how careful the Climate Change Committee has been in looking at these issues.

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Moved by

[Lord Teverson]

131: After Clause 264, insert the following new Clause—
“Prohibition of new coal mines(1) Within six months of the day on which this Act is passed, the Secretary of State must by regulations prohibit the opening of new coal mines and the licensing of new coal mines by the Coal Authority or its successors.(2) Regulations under this section are subject to the affirmative procedure.”Member's explanatory statement
This amendment will prevent the opening of new coal mines in England.

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[Lord Teverson (LD)]

My Lords, I will just say to the noble Lord, Lord Deben—whose speech I very much appreciated—that, in the first group on the levelling-up Bill tomorrow, I have an amendment to include “net zero” in the planning organisation.

I wish to test the opinion of the House on Amendment 131.

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[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.

[Lord Lennie (Lab)]

My Lords, I will briefly thank my noble friend Lord Berkeley for this amendment, which is asking the Government to introduce renewable liquid heating fuel obligations that mirror the renewable transport fuel obligations as a choice available for decarbonising heating. I do not know—perhaps the Government know—whether there is any reason why they cannot accept this proposal, given that these fuels can be produced and distributed using industrial facilities that seem to already exist, and in turn using local raw materials, making it possible to diversify the energy base of the country in order to keep moving forward and achieve energy independence. Would it work? If so, why not give it the go-ahead?

Energy Bill [HL]

Lord Teverson Excerpts

Report stage
Tuesday 28th March 2023 Lords Chamber

Moved by

[Lord Teverson]

53: Leave out Clause 111
Member’s explanatory statement
This amendment, along with the amendment in the name of Lord Teverson to leave out Clause 112, would remove the Hydrogen Grid Conversion Trials from the bill.

[Lord Teverson (LD)]

My Lords, the intention of my amendment is quite stark and seeks to take out those provisions which allow the so-called hydrogen village experiments to take place. Why? Primarily to save British taxpayers a huge amount of money on something which is clearly, as one would colloquially say, a white elephant. Even if we had the trials—which I suspect might not happen anyway for various reasons—the lessons from those would show us that this should not be rolled out.

In order to have clean hydrogen, it has to be produced by electrolysis. There are other ways of producing hydrogen, as we know, and there are all the different colours, but at the end of the day we have to use electrolysis in the long term to produce hydrogen that is seen as a renewable fuel. The cost of that hydrogen is estimated by scientists to be something like five times the cost of the electricity used to generate an equivalent amount of heat through an efficient heat pump—it is five times more expensive. Even if we talk about economies of scale, there is no way that that cost is going to come down; in fact, it would come down only in relation to the cost of renewable electricity itself, which is its source of energy.

I suggest that we scrap this plan because clearly science says that this is not the way to use hydrogen for heating. I am a great fan of hydrogen, as I am sure most people in this House are, and it needs to be used for certain applications for which it is very difficult to use other renewable resources. We know what those are: they include a number of industrial processes and heavy transport, and it may be used for trains in certain areas and for heavy goods vehicles for some while. It is important that we use hydrogen for those purposes. It can never ever be used as a grid gas as methane is at the present.

Let me give an example of what perhaps is an even better way of achieving what we are doing. Down in my own neck of the woods, in Cornwall, we have a scheme financed by the fag end of ERDF funding. A village called Stithians has put in ground source heat pumps as a street utility, much as you would with a gas grid. I suspect that this is far more economical, and it is also liked by the residents. There have been demands for other streets in the village to have the same application.

This is in contrast to the towns in these experimental areas. As I judge it—my postbag says this to some degree, although I hear it from others as well—there is a mounting resistance to these trials going ahead. There is no great trust in hydrogen as a domestic fuel because of its properties—its ability to escape and its high flammability. These amendments take out Clauses 111 and 112, so that we can stop these trials and use hydrogen far more effectively. The money saved can also be used more effectively for decarbonisation in other areas as well. There is consumer resistance.

Assuming that the Minister is not going to accept this amendment, I have tabled another amendment arising from conversations with people involved in these trials. Many people want to opt out of them, and I fully sympathise with that. In Committee, the Minister said that households could opt out. What would the compensation be in such a case? Will the Government ensure that households can keep gas or methane, as at present? Can they guarantee this? If not, will they provide other forms of heating appliances, either electrical or an alternative form of heat and energy? Can they guarantee that there will not be forced entry into homes to make sure that the conversion takes place? I will be interested to hear from the Minister the alternatives to participating in the trial, as will people in the trial villages.

I cannot see that these trials will go ahead. There is considerable consumer resistance, and all the science genuinely says that this cannot work on a larger scale. Even if the trials do go ahead, there is no way that hydrogen is going to replace methane in the national grid or in large local heating systems. This can be done in far better ways, and the Bill allows for that. Let us call a halt to this now, save money, ease local concern and concentrate hydrogen in the areas where it can contribute and is important for our transition to a net-zero economy. I beg to move.

[Baroness Sheehan (LD)]

My Lords, I realise that I am a little late arriving for this debate. Having been here from the start of this afternoon’s proceedings, I hope that the House will allow me to make my contribution.

I will speak to Amendments 53, 54 and 57, in the name of my noble friend Lord Teverson. I support Amendment 56 in the names of the noble Lord, Lord Lennie, and the noble Baroness, Lady Blake. I will not bore your Lordships’ House with the details of why my name appears on Amendment 56 in the Marshalled List with a line through it. Suffice it to say, I support the measures in it.

However, I support even more strongly Amendments 53, 54 and 57, which aim to get rid of the hydrogen trials altogether. Although hydrogen has a role in decarbonising our future in many sensible ways, domestic heating is categorically not one of them. I would recommend anyone who is not convinced by that statement to look at the work of the Hydrogen Science Coalition, a group of independent academics, scientists and engineers who give their time voluntarily and have no public or private vested interests. Its briefing is very clear on how it arrives at its conclusion that there is overwhelming evidence against the use of hydrogen for heating homes in the UK and in favour of using heat pumps and district heating networks. Equally, it makes a well-argued case against the provisions of Clause 111 that compel consumers to take part in hydrogen heating trials, not least because the introduction of hydrogen into UK homes will significantly increase the risk of serious explosions and fires, as well as increasing exposure to NOx emissions, which pose a significant public health risk.

To back up its own analysis, it cites the overwhelming techno-economic evidence against the use of hydrogen for heating buildings compared with other sources. There have been 37 independent studies on the use of hydrogen for heating since 2019, by organisations such as the IPCC, the IEA, McKinsey, Imperial College London, the Potsdam Institute, the University of Manchester, the Wuppertal Institute, Element Energy, the International Council on Clean Transportation, the Energy Transitions Commission, et cetera. Every one of these studies has ruled out hydrogen playing a major role in heating buildings because it will be too expensive and inefficient compared to other clean alternatives such as heat pumps and district heating. Too expensive is putting it mildly; it will be six times more expensive than going down the heating networks route.

Chris Skidmore, chair of the net zero review, said in a recent article in the Times that he

“did not think the UK should embrace the idea of repurposing gas networks to run hydrogen boilers, a proposal that is being trialled at a pilot project at homes in Ellesmere Port in Cheshire.”

The House of Lords Environment and Climate Change Committee recently said that hydrogen is

“not a realistic replacement for natural gas”

and is “not a serious option” for heating. A House of Commons Science and Technology Committee report in December 2022 said that hydrogen is likely to play only a limited role in home heating and is not a panacea. Lastly, in a report in January 2022, the International Renewable Energy Agency—IRENA—said that residential heating is the lowest-priority application for hydrogen

“because heat pump solutions and district heating options already exist.”

I apologise for labouring the point but it is important for the people in the trial villages of Ellesmere Port and Teesside. The provisions of the Energy Bill that give gas companies a new power of entry into homes to cut residents off the gas network without their consent are particularly worrying. The bottom line is that the Bill should not be promoting hydrogen heating trials that expose consumers to health and safety risks and excessively high energy costs.

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[Lord Callanan (Con)]

As I said, the powers that we propose to provide are essentially similar to those that the networks already have on the basis of essential safety works. Still, I am happy to provide the noble Lord with further information and details.

[Lord Teverson (LD)]

My Lords, when the IPCC report on the global warming challenge came out last week, and it gave a pretty dire view, the Secretary-General of the United Nations, António Guterres, who I think had just been watching the Oscars, said it was

“everything, everywhere, all at once”—

but I do not think he would have included the village hydrogen trials within that broad definition. I understand what the Minister has said, and I welcome all his assurances to local citizens about how the trials will work, but, frankly, the science clearly says that hydrogen sent through the gas pipe network to a range of residential properties does not work, does not make sense and is not going to happen in the future.

Energy Bill [HL]

Lord Teverson Excerpts

Report stage
Tuesday 28th March 2023 Lords Chamber

[Baroness Bennett of Manor Castle (GP)]

My Lords, I am aware of the desire to get to votes, so I shall be brief. It is a great pleasure to follow the noble Baronesses, Lady Altmann and Lady Hayman. They have overwhelmingly made the case for Amendment 133 and the need for the systems operator to have that net-zero duty.

I shall briefly address Amendment 1, which sets the tone and direction of this debate in an important way. The noble Lord, Lord Ravensdale, and the noble Baroness, Lady Hayman, made the case for the need for an energy system to deliver for net zero. I want to focus on one word in Amendment 1—“resilience” and the need to increase it. We are now in the age of shocks. So many shocks have hit the world and our country, whether they be climatic, health or economic. There is a need for resilience. There is an idea that we can pick off these new, shiny technologies and say, “Great, we will chase after this or after that”. We should look at the basics, starting with an energy system which understands that the cleanest, greenest, cheapest, best possible energy is the one you do not need to use.

I am not sure that the report is out yet, but it is worth noting anecdotally the interesting experiments in energy demand that have happened during the winter. They will ensure that we can manage the peaks of demand and have less need for generation overall. I wanted to set out that focus on resilience because, in later amendments, we will get to the issue of community energy—local energy generation systems in local communities, spread around our islands. These will give us a real foundation of resilience and security that we desperately need for the future.

[Lord Teverson (LD)]

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

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

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

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

[Lord Lennie (Lab)]

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

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

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

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

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

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

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

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

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


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

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


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

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

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

He argued that there is a

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

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

Jonathan Brearley, chief executive of Ofgem, said:

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


We appreciate that argument.

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

“put net zero up top”,

balancing out its other duties against the context of

“hitting that legislated carbon target”.

Professor Mitchell said that

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

and argued that

“delivering on legally enshrined commitments to decarbonise”

should form part of Ofgem’s principal duty.

The committee concluded:

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


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

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I hope the Minister will take this seriously. If I have not convinced him, will he sit down and talk to the industry itself?

[Lord Teverson (LD)]

My Lords, I will speak to my Amendment 33, which is around the decommissioning costs of carbon capture and storage installations. First, I will read what is in Clause 85(1) about financing costs:

“The Secretary of State may by regulations make provision for requiring relevant persons to provide security for the performance of obligations relating to the future abandonment or decommissioning of carbon dioxide-related sites, pipelines or installations.”


It is not often that one is shocked in Grand Committee in the Moses Room. Normally it is a feeling of impotence when you are going through SIs, rather than some sort of greater emotion, but I was shocked when we discussed this. I asked the Minister how we protect the funds that are for decommissioning at some point way into the future. How are we sure that they are not like the dodgy builder who takes your deposit and then, when you ask him or her to decorate your house, the phone is no longer answered and the money has disappeared? How do we know, in this rather difficult area of energy, that those “relevant persons”, and more importantly their banks accounts, will still be there so that in some distant future, maybe decades ahead, this money is available?

If I am honest, when I had the answer from the Minister—which I cannot quote as I have not looked it up—I was shocked that there did not seem to be any provision for protection of the rather large sums that I expect to be there. That is why I have introduced this amendment. It is very simple and demands that when these payments are made they are effectively put into an escrow account, or at least a ring-fenced fund of some sort, so that they are there when these facilities need to be decommissioned. It is then up to the Secretary of State to agree when that money can be disbursed so that decommissioning can take place or disbursed because the funds are no longer needed.

It is as simple as that. It is about protecting that money that we as taxpayers and citizens of the UK are owed when that decommissioning happens and making sure that the money really is paid rather than having disappeared at the time. I see no guarantee within the three pages of other details about how these funds should work. I hope the Minister can come back to me and reassure me that, if he is not going to accept this amendment, the Government will ensure that this money is ring-fenced and is there for us and future generations when we reach that decommissioning point.

[Baroness Sheehan (LD)]

My Lords, I declare my interest in the register as a director of Peers for the Planet.

I shall speak to only one amendment in this group, Amendment 33, in the name of my noble friend Lord Teverson, to which I have added my name. It aims to ensure that decommissioning funds, as the noble Lord has explained, are available for decommissioning when the time comes. I support it not least because it complements Amendment 222A, which I tabled in Committee, on transparency of decommissioning, particularly with respect to future taxpayer liability for decommissioning relief deeds, which are agreements between the individual oil and gas companies and the Treasury. The National Audit Office and the Public Accounts Committee have both expressed concern about this public liability. I quote from the 2019 NAO report on decommissioning:

“With decommissioning activity increasing, the government is paying out more in tax reliefs for decommissioning at the same time as tax revenues have fallen due to a combination of lower production rates, a reduction in oil and gas prices and operators incurring high tax-deductible expenditure.”


That represents a triple whammy for UK taxpayers since, as the report says, for the first time ever, in 2016-17,

“the government paid out more to oil and gas operators in tax reliefs than it received from them.”

The scenario under which that public subsidy of oil and gas production took place in 2016-17—that is, the triple whammy of lower production rates, a reduction in oil and gas prices and operators incurring high tax-deductible expenditure—is the future outlook for the gas and oil sector as the world moves ever more rapidly towards decarbonisation. The USA’s inflation reduction Acts and the imminent EU response via the green deal industrial plan will turbocharge that transition, and rapid transformative change is very visible on the horizon.

While oil and gas expansion currently looks secure, it is only artificially so, given the very generous tax reliefs, subsidies and other support that the Government continue to provide, not least via decommissioning relief deeds. With over 100 new licences for exploration and production on offer, the risk of stranded assets is compounded hugely. Why do the Government persist in giving preferential treatment to fossil fuel producers? That is a question that I have put to the Minister before on several occasions, and I hope that this time there might be an answer.

It used to be that a ceiling of sorts was kept on the overall cost to the taxpayer by the fact that a firm could not claim back more in decommissioning tax relief than it had previously paid in tax. That makes sense but, since 2017, the Government have explicitly said that when firms default the partner firms that pick up the bill can claim back more in tax relief than they have ever paid. That certainly needs some digesting.

It cannot be right to put on life support an industry that has had its day—life support that is publicly funded. The amendment asks the Government to take precautions with the public purse, uphold the “polluter pays” principle and ensure that operators of new fields and buyers of existing ones accept that they cannot escape their responsibility to our planet, the one and only planet that we have.

--- Later in debate ---

[Baroness Bennett of Manor Castle (GP)]

My Lords, it is a pleasure to follow the noble Baroness, Lady Worthington, and to partly agree and partly disagree with her comments. I speak in strong opposition to government Amendment 58, which is the substantive amendment in this group, buried in the depths of a whole lot of technical detail.

It is worth focusing on what Amendment 58 actually does. The Minister said this in his introduction, but it deserves to be highlighted. The Minister acknowledged that these are not renewable sources of energy, but what we are doing here is to treat them as though they are renewable. That is an important distinction, which clearly needs to be made. It is quite significant.

As the noble Lord, Lord Ravensdale, said earlier, we have been debating this Bill for eight months or so. The second element of the government amendment, referring to nuclear-derived fuels, reflects something that the noble Lord brought to Committee but, so far as I can recollect across those eight months, recycled carbon fuels have suddenly popped here at Report, without any previous debate at all. That is something that presents an issue when it comes to scrutiny and examination—an issue which the other place, when this Bill reaches it, may well need to look at and consider in some detail, given that your Lordships’ House has not had the opportunity to look at recycled carbon fuels along with some of the issues that the noble Baroness, Lady Worthington, raised and which I am going to expand on.

It is worth highlighting that nuclear-derived fuel is now an extremely hot political issue—no pun intended—in Europe. Germany, Spain and Denmark are among the countries opposed to nuclear-derived fuel being classed as a renewable there, in a debate that is going on this very week, as we are meeting now in your Lordships’ House. The opposition from those states says that nuclear energy does not belong within renewable targets and that there is a risk that treating it as though it was renewable will undermine the massive expansion of renewables that we need to hit our climate goals. So this is a replacement-type issue—and that raises a very important point.

When I speak in opposition to this amendment, I am not necessarily saying that we should not, in a limited way, be using recycled carbon fuel of the industrial waste type to which the noble Lord, Lord Ravensdale, referred, or even, while we have the nuclear plants, nuclear-derived fuel. The question is whether it receives treatment as though it was a renewable when it is not a renewable—that is the question that arises from this amendment.

On recycled carbon fuel, as the noble Baroness, Lady Worthington, said, there are some grave concerns about burning fossil fuel wastes, particularly plastics, in incinerators or hydrolysis processes to produce fuels. I can quote some figures on this. When municipal solid waste containing 65% of non-biogenic waste, which is usually mostly plastic, is turned into fuel, the emissions range between 52.6 and 124 grams of carbon dioxide equivalent per megajoule. When the waste is all non-renewable, the impact is actually worse than conventional diesel, petrol or kerosene. Even when there are some reductions, at best they are 1% to 14%.

We come to a broader issue, and here I mention the noble Lord, Lord Lansley, who I see is not in his place. Yesterday, on the levelling-up Bill, he was expounding the virtues of the circular economy. Of course, in a circular economy, and thinking about the waste pyramid, the best thing we can possibly do is reduce the amount of waste. There is a risk if we are providing a way out at the other end for plastics, subsidising them as though they were renewables: this could encourage the production of more plastics, which is absolutely the last thing this planet needs, both for climate reasons and for all the other reasons of human health and well-being, microplastics and all the issues we have on a planet that is choked with the stuff already.

There is also the problem, of course, that while recycling is the third-best option—a bad option but not as bad as the others on the waste pyramid—anything that encourages the production of more plastics is an issue. I am aware that the Minister, when we were debating methane earlier this month, complained that people keep quoting scientists at him. I am afraid I am going to do that again, and I make no apology for continuing to do so, because I believe that we should have evidence-based policy that relies on the science. A study was published in Energy in 2017, “The utilisation of oils produced from plastic waste at different pyrolysis temperatures in a DI diesel engine”. I apologise that that is a bit of a mouthful. To boil down the point of this study, there are different ways of doing pyrolysis with fuels made from plastic, but whichever way you do it the air pollution results are worse than diesel.

Many Members of your Lordships’ House will be aware that my noble friend Lady Jones of Moulsecoomb has taken the Clean Air (Human Rights) Bill right through the House and has received very wide backing. There is a real issue here: climate is only one of the many threats we face. Air pollution is a very serious issue. Essentially, we are in a position where it is very clear that we have to stop burning stuff and polluting our planet, whether that is carbon dioxide pollution or other pollutants that come from burning fossil fuels or organic materials. There is a very grave danger in this amendment, I suggest.

Given that we are where we are, I am not going to call for a vote on this; I do not think your Lordships’ House is ready. I do not think we have had sufficient debate on this issue to do that, but I very much hope that today’s debate—and others may contribute as well—will be taken on board when the Bill gets to the other place.

[Lord Teverson (LD)]

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

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

[Lord Lennie (Lab)]

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

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

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


I think that is something we can all agree with.

--- Later in debate ---

Tabled by

[Lord Teverson]

33: Clause 85, page 75, line 30, at end insert—
“(7A) Any decommissioning fund must be ring-fenced and held in an escrow account, or similarly ring- fenced fund.(7B) The funds may be released only when—(a) decommissioning work takes place;(b) it is determined by the Secretary of State that the funds are no longer required for the purpose of decommissioning.”Member's explanatory statement
This amendment ensures that funds for decommissioning are still available when required for decommissioning.

[Lord Teverson (LD)]

I am very happy with the Minister’s reply, and I will not move Amendment 33.

Amendment 33 not moved.

Cleaner Energy Technologies

Lord Teverson Excerpts

Tuesday 14th March 2023 Lords Chamber

[Lord Callanan (Con)]

I understand the point my noble friend is making, but the potential of hydrogen to support the global transition to net zero is widely recognised, with international partners, such as the US and the EU, also having set out significant support for hydrogen. The Government are supporting multiple hydrogen production technologies, including both CCUS-enabled and electrolytic hydrogen, to get the scale and cost reductions we need.

[Lord Teverson (LD)]

My Lords, the Energy and Climate Intelligence Unit released a report last week that stated that, when it comes to green steel, the EU has some 38 projects, while the United Kingdom has one—and eight of those in Europe are already functioning. Does that mean, for the country that invented the Industrial Revolution, that we are about to see the extinction of our steel industry?

[Lord Callanan (Con)]

No, I think the noble Lord is being too pessimistic, as he often is. We have ambitious projects supporting steel. The noble Lord is right that hydrogen is probably one of the technologies that will be required to decarbonise the steel industry and we are working closely with the industry on that.

Green Investment

Lord Teverson Excerpts

Tuesday 7th March 2023 Lords Chamber

Asked by

[Lord Teverson]

To ask His Majesty’s Government what assessment they have made of (1) the environmental provisions of the Inflation Reduction Act 2022 in the United States of America, and (2) the Green Deal Industrial Plan announced by the European Union in January; and what plans they have to prevent any resulting leakage of future green investment from the United Kingdom.

[Lord Teverson (LD)]

My Lords, I ask to give leave to ask my Question standing on the Order Paper to the Minister.

[Noble Lords]

Oh!

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

I think that the noble Lord wants to ask the Question standing in his name on the Order Paper; I hope so, anyway. The Government welcome international action on climate change, and work closely with allies and partners to ensure that we can collectively drive global decarbonisation. We continue to assess the impact of international policies on UK investment to ensure that we meet our net-zero and economic growth ambitions. The UK has made significant progress in decarbonising and growing our economy, and we will continue to back our ambitious targets with impactful domestic policy and targeted funding.

[Lord Teverson (LD)]

My Lords, I will try to be a little more fluent in my follow-up question. This is very serious. Industry and many people see the Inflation Reduction Act and the EU response as a real threat to us—piggy in the middle—as an economy and on where we need to go on green investment. I do not get the impression that the Government have a plan here. It looks like we are a rabbit frozen in the headlamps of trucks coming in both directions. Is there really a plan coming for how we will survive this onslaught from our economic neighbours?

[Lord Callanan (Con)]

The short answer to the noble Lord’s question is yes, in essence. He is right to point to both these actions as potential threats, significantly so in the case of the US. The protectionist measures are the problem; we have no problem with it finally coming to the decarbonisation table. We are still waiting to see the details from the EU and will know more next week, but it does not look as though there will be much protectionism there: certainly, from the outline that I saw, none of the items listed is a particular threat. We are looking at this very closely across the Government and will be responding in due course.

Heat and Buildings Strategy: Gas Boilers

Lord Teverson Excerpts

Tuesday 28th February 2023 Lords Chamber

[Lord Callanan (Con)]

I can correct the right reverend Prelate. We have not set a date of 2035 for prohibiting the installation of new gas boilers; we have said that this is our aim but, crucially, it will depend on the availability of cheap alternatives for people to heat their homes with.

[Lord Teverson (LD)]

My Lords, the overwhelming evidence is that hydrogen will never work in domestic heating. Will the Government stop their trials of hydrogen villages and concentrate their efforts where hydrogen really can make a difference?

Methane Emissions

Lord Teverson Excerpts

Wednesday 22nd February 2023 Lords Chamber

[Lord Callanan (Con)]

I do know the answers to the noble Baroness’s questions, she will be shocked to know. In answer to her first question, I say that the UK is signed up to, and helping to implement, a global target. On the waste sector, she is absolutely right that we need to do more. Landfill emissions over the last 25 years have been tackled in two ways: by reducing the amount of biodegradable waste going to landfill, with the landfill tax being a key driver, and by increasing the efficiency of methane collection from existing landfills. The other thing we need to do more is to increase waste food collections, so that we can generate more clean gas through anaerobic digesters, which is part of my department’s policies.

[Lord Teverson (LD)]

My Lords, the Minister mentioned the word “urgency”, yet if we look at the North Sea, we are emitting three times the amount of methane compared with the equivalent extraction by Norway. On our side, the Government, through the North Sea Transition Authority, are just saying that there should be an end to the regular venting and flaring of methane by 2030. Should we not be performing as well as Norway now, if that urgency is there?

[Lord Callanan (Con)]

The noble Lord is right that we need to do better venting and flaring; it is a priority. We set out our commitment to the World Bank’s Zero Routine Flaring by 2030 initiative, as the noble Lord said. We are working with regulators and industry to eliminate this practice as soon as we possibly can.