Energy Bill [HL]

Lord Whitty Excerpts

2nd reading
Tuesday 19th July 2022 Lords Chamber

[Lord Whitty (Lab)]

My Lords, I begin by thanking the Minister for his cogent explanation of the Bill. I also very much appreciate following the very substantial intervention of the noble Lord, Lord Howell, where he really underlined the gravity of the short-term and long-term problems we face. The fact is that this is the first supposedly cross-sector Bill we have had for 10 years and it does not measure up. It follows detailed government statements on energy strategy, energy security and energy efficiency, on hydrogen, and also all the pronouncements on the path to carbon net zero, but the Bill, despite its size and its complexity, frankly, deals with only a small and limited part of those strategies.

It began life, of course, as an energy security Bill, but the “security” has been dropped and it now conveys, as I think the noble Lord, Lord Howell, was suggesting, very little sense of direction on energy security in either the national and global sense of energy self-sufficiency, nor in the domestic sense of affordability and reliability for the British economy, for households and for businesses here. I say to the Minister that, given the pressures on the legislative programme, it might have been better to have a more comprehensive Bill now; otherwise, we will be faced with further Bills in the next couple of years, dealing with the areas which this Bill, broadly speaking, omits. In default of a comprehensive Bill, perhaps he can give us an indication of what additional Bills, in both senses, we are expecting over the next couple of years. What is the programme of statutory instruments and policy statements that will be necessary to deliver the intentions of the Bill and the rest of the Government’s programme?

But let me give the Minister some comfort and say what I broadly approve of in the Bill first. I agree with the concept of a future systems operator and putting it on a new basis. We need some degree of operational controlling mind in the electricity and other markets, and I think this moves us in the right direction. We still need to see how this role is developed and precisely what its operation and structure will be. How will it relate to the existing National Grid functions and to the potentially extended role of Ofgem, which is implied by the Bill but not really spelled out in any great detail?

I also very much welcome the resurrection of a commitment to carbon capture and storage, and the provision for support for that sector. It has been a serious failure over the last 10 years: the failure to endorse the outcome of the first competition in this area and then to completely abandon the second competition in 2015. So, we have not been on the path we should have been. It is clear from what the Climate Change Committee says that we will need to have a very heavy contribution, particularly in the period up to 2035, of carbon capture and storage if we are to get anywhere near the path we have set ourselves in getting to net zero by 2050.

It is true that there has been little progress on carbon capture and storage in the rest of the world as well as here, but we need to make a new start, and the UK is probably one of the best places in the world, in that we are able to store carbon in abandoned oil and gas wells in the North Sea and the Irish Sea. Indeed, if we move away from the original idea of carbon capture and storage—that we would put it on the end of a large emitter or a power station—and look at it at the centre of or serving a hub of industries, then actually the economics work out and probably the complexity is much less. I think the commitment to carbon capture and storage is very important.

I also welcome, to some degree, the support for increased decentralisation through heat networks and district heating. In particular, I welcome the commitment to consumer protection regulations for users of district heating, because although I absolutely buy into the concept of district heating, and it will be part of any future energy system in this country, the fact is that consumers—the households that rely on district heating—are not able to switch or to change provider or in many cases to change the tariff and the way in which they are charged. We need some protection for those consumers built into any increase in district heating.

As to what is not in the Bill, we all know that energy efficiency needs to be in the Bill. I appreciate that the other day in the Moses Room, the Minister introduced some improvements in the ecosystem for delivery of that; they were very minimal, but I welcome them as far as they go. The commitment to energy efficiency needs to be much more structured and widespread, so that it is not all delivered through the ecosystem but is delivered by the kinds of schemes we used to have; the commitment from the Government and government-induced measures to improve energy efficiency has reduced by more than 80% over the last 10 years. That really needs a new approach. Some of the systems that are still in operation in Scotland and Wales would be helpful here.

Two other things need to happen, because we have had two disastrous attempts to introduce energy efficiency programmes for the able-to-pay sector, and we need to have one that actually works and ensures that the owner-occupiers, particularly those who can afford to do so, are attracted to increasing the energy efficiency of their own homes. That also requires an effective household advice scheme. The downgrading of the Energy Saving Trust over the past few years has been unreasonable and it needs to be revived in some sort of form, so that businesses, individual households and landlords can get the best advice on energy efficiency.

The long-term objective of energy policy must be pretty clear: to get away from fossil fuels. Here, I disagree with the noble Lord, Lord Howell, at least in the immediate term. The answer to the dependence on Russian oil and gas is not for Europe, Britain and the United States to switch to other gas and oil suppliers. Frankly, it is a bit sickening to see that the response of Johnson and Biden to get away from the dependency on Russian supplies because of its treatment of Ukraine is to go cap in hand to another dictator in Saudi Arabia, which has been bombing and committing war crimes against its own neighbour, Yemen, for several years.

Nor is the response of the climate sceptics—that we simply reopen North Sea oil and gas or start fracking here—right. The fact is that gas is a world market and the electricity market is still linked to that gas price. Hence, the huge hikes that we have seen in consumer prices here are caused by the world gas situation. We need to reduce global dependence on gas, not enhance it.

We need a system that will divert investment, and hence dependency, away from fossil fuels through lower carbon investment and fuel sources. Part of this legislation helps that, and part will help the transition. But I return to the carbon capture and storage provision because the large-scale carbon users, particularly those which supply the building industry with steel, glass, cement and so forth, are not going to get away from carbon use in production very easily or rapidly. We therefore need a proper system of carbon capture and storage, of the sort now being advocated.

That requires a change in approach, one which will encourage investment in that sector. The Government are now committed to it. One of the major propositions of this Bill is to support it, but the Minister will probably recognise that in order for that to happen and be delivered in practice, a support system is required similar to the one we gave to offshore wind after the last major energy Bill. We need a development programme, a clear timetable and a clear indication of the regulations and statutory instruments required to enforce the legislation which will be applied to carbon capture and storage.

I was at a very useful briefing the other day from the Carbon Capture and Storage Association. Its chair was there: my noble friend Lady Liddell. She would be here were it not for the heat of the day preventing safe transport from Scotland, and she would undoubtedly be participating in this debate. We are a point where we can turn around a failure to implement carbon capture and storage over the last 15 years. There is interest out there, nationally and internationally, and we need to ensure that we deliver that. That will require more than the bald provisions of the Bill and a follow-up from the Minister’s department to ensure it gets properly developed.

There are a few short paragraphs on hydrogen in the Bill. One of the difficulties with hydrogen is that it is touted as the solution to almost every sector’s problem —heavy transport, heavy industry, domestic heating—yet we do not yet have the ability to produce green hydrogen without serious problems. The Government have, of course, produced a hydrogen strategy but it gives rise to a number of questions that still have to be fully addressed.

I support many of the senses of direction of this Bill, but a lot more will be needed to deliver the outcomes the Government want. Here we are today on the hottest day of the year, with the temperature increase being the opposite of what we normally talk about, and which is required to transform the heating of homes in this country. We also need air cooling in our buildings and homes, and the technology exists to do that. To meet those kinds of challenges we need a very strong sense of direction from the Government. While the Bill goes some way in that direction, I fear that there will be many other Bills and we will require many other statutory instruments and policy statements from the Minister before the direction is properly set.