Oral Answers to Questions

Peter Aldous Excerpts

Tuesday 27th February 2024 Commons Chamber

[Amanda Solloway]

I could not agree more that we should not be paying different prices at different petrol stations. That is one of the reasons why we have launched a consultation on Pumpwatch, and why we have very regular meetings with the suppliers to make sure that they are not doing this. They should not be doing it and we are very clear about that.

[Peter Aldous (Waveney) (Con)]

T9. Offshore Energies UK’s industry manifesto highlights the once- in-a-lifetime opportunity that a home-grown energy transition provides to bring investment and jobs to communities all around the UK. This requires close collaboration between the private and public sectors. Can Ministers confirm that the Government are absolutely committed to such a partnership?

[Graham Stuart]

I can. What the sector does not need, of course, as OEUK has itself set out, is the tens of thousands of job losses that would be driven by the ideological and climate-damaging obsession of the right hon. Member for Doncaster North (Edward Miliband) with ending new UK oil and gas licensing.

Offshore Petroleum Licensing Bill

Peter Aldous Excerpts

Committee of the whole House
Tuesday 20th February 2024 Commons Chamber

[The First Deputy Chairman of Ways and Means (Dame Rosie Winterton)]

Before I bring in some of those who may not have tabled amendments, I remind Members that we are at Committee stage, so discussion is of the amendments. However, as we are also discussing clauses 1 and 2 stand part, there is perhaps a little more scope.

[Peter Aldous (Waveney) (Con)]

As I mentioned on Second Reading, the Bill is of particular interest to me because the oil and gas industry has played a significant role as a major employer in the Waveney and Lowestoft area for nearly 60 years. Moreover, the offshore wind industry and other low-carbon energy technologies, such as nuclear and hydrogen, will provide exciting local job-creating opportunities for generations to come. Dame Rosie, I also chair the British offshore oil and gas industry all-party parliamentary group.

--- Later in debate ---

[David Duguid]

My hon. Friend mentioned the role of the NSTA in the facilitation and delivery of the North sea transition deal, which, as he said, was negotiated between industry and the UK Government. Does he agree that what he is advocating is precisely the purpose of the North sea transition deal—to facilitate the delivery of energy transition to net zero?

[Peter Aldous]

My hon. Friend is quite right: the North sea transition deal is the foundation stone on which we should be building, involving industry, involving the NSTA and giving industry the confidence to make the significant investment that we need.

The North sea transition deal includes the target to cut greenhouse gases and emissions by 10% by 2025 and by 25% by 2027. The NSTA wants to halve emissions by 2030. It is also committed to all new developments having no routine flaring and venting, with zero routine flaring across all North sea platforms, whether new or existing, by 2030 at the latest. Good progress is being made. Although figures are not yet available for 2023, emissions were reduced by 23% between 2018 and 2022, while flaring has been reduced by 50% over the same period. In addition to tracking, monitoring and reporting performance, the NSTA closely scrutinises operators’ applications for flaring consents, pushes back against requests to increase flaring, and has ordered operators to restrict production to stay within agreed limits. It has, where necessary, issued fines for breaches.

On marine spatial planning, the NSTA follows a precautionary approach and is acutely aware of the need for co-ordination and collaboration in what are increasingly crowded and sometimes very sensitive and precious waters. It is thus working closely with such organisations as the Crown Estate and the Marine Management Organisation in delivering the marine spatial prioritisation programme of the Department for Environment, Food and Rural Affairs.

In conclusion, the Bill and the amendments raise very important matters, but to tackle them properly, we need to adopt a long-term approach that transcends the four-to-five-year political cycle and that fully involves business.

[Lloyd Russell-Moyle (Brighton, Kemptown) (Lab/Co-op)]

I rise to support amendments 17 and 19, and to speak to my amendments 22 and 24 on energy efficiency tests and amendments 23 and 25 on the energy charter treaty.

Let me start with amendment 25. At the moment, the energy charter treaty, of which we are a member, is a failed international treaty. It binds us to any contract that we sign for oil, gas or any energy. Once it is signed, we cannot get out of it without paying the hope value of that contract. What I mean by the hope value is that a member does not pay the actual material value if it wants to stop that contract now; it has to pay all the potential value of that contract if the oilfield, for example, were fully exploited.

The treaty has cost other European countries billions and billions of pounds when they have tried to implement climate mitigation policies. It is dangerous, because the decisions are made not by British courts or by international courts with a British judge, but by secretive tribunals where the corporations get to appoint the people who make the deliberations. It is so outrageous that European Union members have agreed to withdraw en masse—they are currently negotiating on how to do so in a co-ordinated way—and to do side letters with each other to ensure they are not bound by the 25-year clause under which any extant licences that have been signed must continue to be honoured, even after withdrawal.

Offshore Petroleum Licensing Bill

Peter Aldous Excerpts

2nd reading
Monday 22nd January 2024 Commons Chamber

[Peter Aldous (Waveney) (Con)]

Energy production, either offshore in the form of oil and gas production and offshore wind, or on the coast in the form of nuclear, is of specific interest to the Waveney constituency that I represent. The oil and gas industry has been a significant employer locally for nearly 60 years, one of the largest clusters of offshore windfarms in the world is located off the East Anglian coast, and Sizewell C will bring significant job-creation opportunities to the area.

To realise the full potential of the opportunities, both nationally and locally, we need the right policy, fiscal and regulatory frameworks that satisfy the three criteria of energy security, affordability and decarbonisation. It is also necessary to provide investors with the confidence and certainty to invest in the UK. It should be borne in mind that the market for energy capital is global, footloose and highly competitive.

It is against that backdrop that we should judge the Bill. There are reasons for supporting it, but we must not lose sight of the need for long-term stability and consistency in energy policy that is required to attract the enormous amount of private investment that we need to modernise and decarbonise our energy system and to make it more secure and resilient.

I chair the all-party parliamentary group for the British offshore oil and gas industry, and I highlight three factors that should be borne in mind in setting energy policy. First, we are moving away from businesses, wherever they are in the supply chain, that specialise in a particular sector, whether that is oil and gas, offshore wind, carbon capture or hydrogen. Such businesses are increasingly becoming all-energy companies that work in a range of different sectors.

Secondly, as I have mentioned, many such businesses are globally footloose and will operate anywhere in the world. If we have policy, regulatory and fiscal regimes that are continuously flip-flopping, they will go elsewhere.

Thirdly, it should be emphasised that the vast majority of these companies—I highlight those operating in East Anglia—are committed to net zero. They regard it as both a moral and a legal obligation from which we should not be distracted.

As I have mentioned, there are reasons to support the Bill and I shall briefly highlight them. First, our energy policy is determined by the trinity of energy security, affordability and decarbonisation. Recent geopolitical events, in particular the Russian invasion of Ukraine and the conflict in the middle east, have created major concerns with regard to security of supply and unpredictability of price. We have felt the backlash of the latter very harshly in the past two years and its impact has hit hardest the poorest and most vulnerable. It is against that backdrop that it is sensible for the UK to be more energy independent and to use our own energy supplies—whether that is offshore wind, nuclear or oil and gas.

Secondly, we need to reduce our reliance on oil and gas, and, indeed, we have made good progress in doing so, as the UK has decreased oil production by 66% since 2003. At the turn of the century, we were producing 4.5 million barrels of oil equivalent per day. Today, that figure is below 1.5 million and still falling. However, we still rely on oil and gas for much of our energy needs and shall continue to do so, albeit on a significantly declining trajectory in the coming decades. It is in that context that it is logical to use our own oil and gas. It should be pointed out, as others have done, that the carbon footprint of domestic gas production is around a quarter of that associated with imported and energy-intensive liquefied natural gas.

Thirdly, at a time of global economic uncertainty as well as geopolitical instability, we need to have in mind the huge benefits that the oil and gas industry brings to our country. Domestic oil and gas production provides many jobs and adds approximately £16 billion to the UK economy each year, while tax receipts are significant—£33.7 billion since 2010 and an estimated £50 billion over the next five years.

Fourthly, as I have mentioned, today’s energy companies operate across a variety of sectors and there is a risk that, if we close down the North sea too quickly, we will imperil investment in new low-carbon sectors. Many companies investing in nascent opportunities require a cash flow from a stable and predictable oil and gas business. Moreover, freedom to explore can be a major driver for investment on the UK continental shelf not only in oilfields and gasfields, but in carbon capture and hydrogen production. Closing the door on exploration reduces the option value of the UK as a destination for overall investment.

Finally, it should be pointed out that most of the new licences that would be granted are near fields adjoining existing ones. That means that there would be a lower incremental emission intensity as production will take place using existing facilities.

It is important to emphasise that the Bill is not a panacea for the future of the North sea. There is other work that the Government must carry out alongside it. One of the most notable achievements of the Conservative Government in recent years was the creation in 2016 of the Oil and Gas Authority, which now operates as the North Sea Transition Authority. It is a regulatory authority that has achieved a great deal and that has also recognised the vital importance of net zero.

The NSTA’s great advantage over its predecessor, which was embedded in the Department of Energy and Climate Change, is its independence of Government. There is a worry that the Bill undermines that independence, and I hope that, in his summing up, my right hon. Friend the Minister will take on board and allay that concern. The Government should also consider providing the NSTA with an enhanced role. As the transition has become centre stage to the authority’s work, the authority has taken on additional regulatory responsibilities—for carbon capture, usage and storage and hydrogen. Consideration should be given to adding to that the oversight of the emerging geothermal sector, an increased focus on the offshore energy supply chain and maximising the future use by low-carbon technologies of the infrastructure that has been laid down in the North sea over the past 60 years.

We are at times in danger of talking glibly about a just transition and the creation of new jobs. We can help to achieve that in a meaningful way by focusing more strategically on skills and infrastructure. I am mindful that the regulatory space on the UK continental shelf is crowded. As well as the NSTA, other organisations, such as the Marine Management Organisation and the Crown Estate, are carrying out important work. We must ensure that all that work is properly co-ordinated, is effective in its precautionary objectives, and is not so overly bureaucratic as to deter investment.

I mentioned that the majority of businesses working in the North sea are committed to the transition. Yes, they want the Government to be realistic and pragmatic about the future of the domestic oil and gas industry, but they are also ambitious. They want to be part of an industry that is in the vanguard of the transition from fossil fuels to renewables—global leaders on the road to net zero. That should mean, for example, a more ambitious climate compatibility checkpoint, and bringing forward the ban on routine venting and flaring.

The Bill has merit, but it needs to be accompanied by other measures, some of which I have outlined, to maximise the enormous amount of private investment that is required to decarbonise. We also need to dispel any false notion among investors about the UK’s commitment to delivering on our net zero targets. As the Government have stated, there is a need for pragmatism, proportionality and realism, but that must be accompanied by ambition, consistency and clarity.

Civil Nuclear Road Map

Peter Aldous Excerpts

Thursday 11th January 2024 Commons Chamber

[Andrew Bowie]

My hon. Friend is absolutely right about the footprint and the comparable impact on land of nuclear compared to other technologies, but it is very important that we have a wide range of energy technologies moving forward. We will benefit from investment in wind, solar, hydrogen, CCUS and the nuclear we are announcing today, but I welcome his support for what we are announcing.

[Peter Aldous (Waveney) (Con)]

I welcome the statement and the publication of the three documents. With Sizewell C, as well as offshore wind and hydrogen, East Anglia, Suffolk and Lowestoft will play a vital strategic role in enhancing our energy security, keeping bills low and driving forward the transition to net zero. To enable the local area to play this lead role to the maximum advantage of local people and local businesses, does my hon. Friend recognise the vital importance of investment in skills at East Coast College and investment in infrastructure, such as in the port of Lowestoft?

[Andrew Bowie]

Absolutely. My hon. Friend is spot on. I was very happy to visit East Anglia last year and see for myself the investment Sizewell C is making in the local community and in local colleges, supporting young people who want to get into the new high-skilled jobs that will be produced through the development of projects such as Sizewell C. I am very happy to announce that I will be visiting East Anglia again on Monday to see the progress that has been made at Sizewell C. He is absolutely right that the benefits that accrue locally through investment in nuclear, at large scale and at small modular scale, are unprecedented. That is one of the things that I hope comes out of today: yes we are talking about our energy security and yes we are talking about reaching net zero, but the impact locally to communities through investment in new nuclear is unprecedented. I am very excited to see what it brings in the years ahead.

Energy Social Tariffs

Peter Aldous Excerpts

Thursday 23rd November 2023 Westminster Hall

[Peter Aldous (Waveney) (Con)]

It is a pleasure to serve with you in the Chair, Sir George. I congratulate the hon. Member for Motherwell and Wishaw (Marion Fellows) on securing this debate and setting out in comprehensive detail the evidence base for an energy social tariff. I also thank the Backbench Business Committee for granting the debate.

Everyone should have access to a warm and secure home. For the majority of people, that will be provided through the marketplace, although our energy market is imperfect and invariably, at all times, in the interest of fairness, there is a need for Government intervention. Before the current cost of living crisis, that intervention was provided predominantly through the energy price cap, which, while not perfect, performed an important role. The energy price cap has been increased today, although from what we have heard from the hon. Lady, and from the feedback that I am receiving, that will be of limited relevance to many of those who are struggling with their bills.

The dramatic increase in energy prices, primarily caused by the Russian invasion of Ukraine, has necessitated a different approach, and to their credit the Government have stepped in with more direct support over the past 18 months to two years. My right hon. Friend the Chancellor of the Exchequer continued with that strategy yesterday in his autumn statement, and I particularly welcome the increase in the local housing allowance. I have also heard that, as the hon. Lady has outlined, there is some concern as to whether he has done enough. I think he has tried, and I hope he has done enough, but in many ways I am on tenterhooks to see whether he actually has.

That said, it is clear that in the medium-to-long term—when I talk about the medium term, realistically I am now talking about 2024-25 onwards—a different approach is required to protect the most vulnerable. The energy price cap on its own has run its course, and it is thus appropriate to consider a social tariff, which can provide longer-term, more targeted support for the most vulnerable households.

The fact that we need such support is clear from the evidence base we heard about from the hon. Lady and from the feedback that we all receive in our constituencies from those who come into our surgeries, often with heartbreaking stories of the challenges they face. Those messages are reinforced by the briefings we all received ahead of this debate—as the hon. Lady said, we have received a great many of them—from such organisations as Citizens Advice, Mencap, Marie Curie, the Royal National Institute of Blind People, the Cystic Fibrosis Trust and Scope. All those organisations have one thing in common: their clients—the people they look after, whom they support and whose needs they articulate to us as Members of Parliament—are the most vulnerable. They are the people who are the most challenged at this time.

It is also important to thank those churches and other faith groups, charities and volunteers, aided by local councils right throughout the country, who have reached out and are supporting those who are struggling with their energy bills. A network of warm rooms has now sprung up across the UK, which shows British society operating at its very best.

From my perspective, as I have said, the case for a social tariff is proven. It is now necessary to move on to the more complicated and difficult challenge: how to design that tariff and then introduce it. We have received a great many representations ahead of this debate; the one I found particularly interesting and relevant was the report of the Social Market Foundation from March this year, entitled “Fairer, warmer, cheaper”. That report is a good starting point for the discussion about the form that a social energy tariff might take.

As we have heard, the Social Market Foundation concluded:

“The current system of policies supporting households with high energy bills is inadequate for an era of high energy bills”—

one that is, I fear, likely to continue for the foreseeable future. It recommends a social tariff arrangement whereby households that spend an excessive proportion of their income on energy bills should receive targeted financial support to reduce those bills in the form of a social tariff. The Social Market Foundation also points out that the precise form of the social tariff warrants further consideration, but its own analysis suggests that the most progressive and fiscally efficient form is a lump sum payment. I will return in a minute to the precise form that the tariff might take.

The Social Market Foundation believes that the social tariff should be funded from general taxation—a view that the hon. Member for Motherwell and Wishaw articulated and with which I concur. It also rightly emphasises that at the same time as we introduce an energy social tariff, we need to significantly expand the energy company obligation scheme so as to improve the energy efficiency of homes. As we have heard, we have a very leaky housing stock; we have made some progress in improving it, but there is a long way to go. It is absolutely vital that we are not diverted from that pressing and crucial task, and we must significantly step up our efforts in that regard, with funding for the ECO continuing to be raised via on-bill levies.

As I have mentioned, the issue on which there is some dispute and where there is a need for discussion is the form that the tariff should take: whether it should be a social tariff or what is known as a block tariff. That is a complicated debate and I am not going to go into it in any great detail now—that is why we need the consultation that I am going to plead for in a minute, and which the hon. Lady already asked for. National Energy Action, which does great work in this field, favours a social tariff: it believes that a block tariff would be distributionally unfair and would create very vulnerable users. The counter- argument in favour of a block tariff is that it would incentivise energy efficiency, which should be a long-term goal and objective and is a challenge we must not shirk.

In conclusion, although I shall not go into any detail as to the design of the tariff, we need to get on straightaway and talk about it. It is ironic that, as the hon. Member for Motherwell and Wishaw said, we are having this debate the day after this year’s autumn statement. If we go back a year to the autumn statement of 2022, my right hon. Friend the Chancellor undertook to

“develop a new approach to consumer protection in energy markets, which will apply from April 2024 onwards.”

That commitment was reiterated in the April just gone by the Department for Energy Security and Net Zero, which set out the intention to consult this summer.

This is a very important task, as well as an incredibly complicated one, and we need to be getting on with it as quickly as possible. April 2024 is six months away, and I am not sure that that provides us with sufficient time to have an energy tariff in place for 2024-25. I know that there will be other distractions but, for an awful lot of vulnerable people, it is vital that we put that longer-term arrangement in place. I am not begrudging the support that has been given—the sticking-plaster approach of short-term support—but the longer-term approach is vital.

I would be grateful if, in her summing up, my hon. Friend the Minister, who does great work in this policy area, could provide us with details of when the consultation will get under way. Time is of the essence. We will not have it in place this winter—no way— but we do need it in place for 2024-25.

Contracts for Difference Scheme

Peter Aldous Excerpts

Thursday 19th October 2023 Westminster Hall

[Peter Aldous (Waveney) (Con)]

It is a pleasure to serve with you in the Chair, Dame Angela. I congratulate the hon. Member for Strangford (Jim Shannon) on securing the debate. His case was very much location-specific, and I thought he made it well. I will not dwell on it any longer, and I will wait with interest to hear the response from my right hon. Friend the Minister. The debate is timely, because it comes in the wake of a disappointing and unsuccessful auction round 5, and ahead of the publication next month of the draft allocation framework for auction round 6.

Contracts for difference have been around for a very long time. They were originally developed in the UK in 1974 as a way to leverage gold. The context in which we are considering them today is their use as a means of supporting new low-carbon electricity generation, as introduced by the Energy Act 2013. Over the past decade, they have been remarkably successful. They have enabled the UK to become a global leader in the offshore wind sector, which will be the focus of my attention over the course of the next few minutes.

CfDs have been the foundation stone for securing significant inward investment into coastal communities all around the UK, including Lowestoft in my constituency, and the first four allocation rounds were remarkably successful. Unfortunately, this undefeated run came to an end with round 5, when no offshore wind bids were submitted, as the core parameters did not take into account the changed geopolitical situation in the light of covid and the war in Ukraine, and the uncertain and inflationary global economic outlook that has ensued.

It is vital that lessons are learned and that we get back on track ahead of allocation round 6. The work to do this should be set in the context of the UK providing a response to the US’s Inflation Reduction Act, and I suggest that that should come in the Chancellor’s autumn statement next month. I shall say a few words about that later, as the energy industry is globally footloose. Although the UK has been very attractive to investors—in many respects, it has been the come-to place—we cannot rest on our laurels, and we are now in danger of being overtaken. As Keith Anderson, the chief executive of Scottish Power, has said of the US:

“We can’t possibly hope to outspend them. What we can do is outsmart and outpace them.”

After the failure of auction round 5, it is vital that auction rounds 6 and 7 are successes. One failure is a blip, but two risk setting a trend that will send a negative signal to developers and investors, and the situation could then become very difficult to retrieve. This is particularly important for the continued development of the offshore wind industry off the East Anglian coast, with ScottishPower Renewables and Vattenfall’s forthcoming projects in mind. The parameters that the Government should take into account are as follows. First, there is a need to provide more clarity, consistency and certainty with regard to the longer-term pipeline of projects. That will give developers, supply chain businesses and infrastructure providers the confidence to invest, often way ahead of demand. A clear pipeline will help to deliver long-term apprenticeship initiatives, optimise the cost profile of development and better facilitate strategic investment in the national grid.

We also need to improve the way we incentivise developers to commit to invest in UK infrastructure and supply chains. This can be achieved through non-price factors in the CfDs, provisions in seabed auctions and improved collaboration in supply chain plan delivery. Dusting off and reviewing the offshore wind sector deal, which was originally signed in Lowestoft in 2019, would be very welcome.

The feedback I am receiving, which is welcome, is that ahead of the draft allocation framework for allocation round 6 being published next month, there is positive and ongoing engagement between the Department, trade associations and developers. I would suggest that the key points that need to be addressed are as follows. First, the administrative strike price must be set at a level that takes account of market pressures, so that this time, developers do actually bid. Secondly, so as to give certainty to the market, there should be a ringfenced pot for offshore wind. That is vital, taking into account the targets that Government have set for offshore wind delivery. Thirdly, taking into account the missed opportunity with allocation round 5, the pot budget and parameters should be set so as to reflect the pipeline that is now available in order to secure maximum capacity through allocation round 6.

Work along those lines is necessary so as to correct the mistakes that were made in allocation round 5. However, at the same time, we cannot ignore the new world order. As I have mentioned, we cannot and should not get into a subsidy race to the bottom with the likes of the US, but what we can do is work faster and smarter, building on the foundations that have been laid over the past decade.

In the upcoming autumn statement, our energy policy framework should be adjusted to include the following initiatives: first, expanding reforms to capital allowances and introducing new tax incentives and grants; secondly, supporting the UK supply chain through multi-year co-funding for the industrial growth plan; and finally, as we discussed yesterday in the Westminster Hall debate led by my right hon. Friend the Member for Preseli Pembrokeshire (Stephen Crabb), we need policies that unlock private investment in port infrastructure.

We invariably herald offshore wind as a great British success story, and indeed, the way that the industry has developed over the last decade has been remarkable. Contracts for difference have been the cornerstone on which this success has been built. They have the advantage that they are flexible and can be adapted. Unfortunately, that did not happen for allocation round 5. It is important that this mistake is not repeated in round 6, and I hope that the Minister will provide the assurances that the industry is seeking. It is vital that he does, as offshore wind is bringing significant benefits to coastal communities such as Lowestoft, and it is imperative that it continues to do so.

--- Later in debate ---

[The Minister for Energy Security and Net Zero (Graham Stuart)]

It is a pleasure to serve under your chairmanship, Dame Angela. I join others, and not least on this occasion the Scottish National spokesperson, the hon. Member for Coatbridge, Chryston and Bellshill (Steven Bonnar), in applauding his favourite Unionist—sitting behind him there—the ever-present, ever-active and ever-decent hon. Member for Strangford (Jim Shannon).

As the hon. Member for Strangford knows, and as he has mentioned, he and I have communicated extensively over the past year or so on the question of extending the GB contracts for difference scheme to Northern Ireland. He has asked questions in Parliament about this issue, most recently last month. I believe we know each other’s positions very well by now. Let me say at the outset that I admire his tenacity in continuing to raise this matter with me, which I know he does with the best interests of his constituents and the people of Northern Ireland in mind. However, I am afraid I have to say to him again that I do not believe that what he proposes is feasible—although I understand why he proposes it and why he hopes to find a solution—and nor would it lead to renewables or their associated benefits being delivered faster for Northern Ireland, as he hopes. I will explain why I believe that shortly.

First, though, to set the context, I would like to say a few words about the CfD scheme. The scheme was introduced in 2014 and is the Government’s main mechanism for supporting new low-carbon electricity generation projects in Great Britain. CfDs are awarded through competitive auctions that, from this year, are held annually. The lowest-priced bids are successful, which drives efficiency and cost reduction and is a low- cost way to secure clean electricity.

It is an interesting—but not necessarily surprising—fact that in every single year that the CfD has existed, industry has said that the prices we have suggested are too low, so this year is no different. I suppose it is also unsurprising that His Majesty’s Opposition should always speak up for the producer interest and be so indifferent, if not deaf, to the interests of the consumer, around whom we should build policy.

Winning projects are guaranteed a set price per MWh of electricity for 15 years, indexed to inflation. That provides income stabilisation, making projects that have high up-front costs but long lifetimes and low running costs attractive to investors and lenders. Importantly, the CfD also protects consumers when electricity prices are high, as it did last year. Understandably, this Conservative Government are extremely proud of the CfD scheme and its effectiveness, in not only securing clean generation but doing so at the lowest possible price to consumers—that is what has triggered the 70% reduction in costs for offshore wind. As I say, industry has always suggested that it wants to be paid more, and we have heard from His Majesty’s Opposition that they would be delighted to do so at the expense of ordinary consumers.

It was in the light of the challenge of setting the parameters of each CfD that we decided to move to an annual system. The hon. Member for Manchester, Withington (Jeff Smith)—he is not my favourite Unionist, but he is one of my favourite members of the shadow team—seems to have been deliberately innumerate. He will be aware that AR4 covered three years, and AR5 was the first annual auction. Like me, he will be able to divide by three the total generation that was in AR4, and to divine that in terms of annualised generation AR5 was the most successful round of the CfD that has ever existed. I would even gently chide my always loyal and fair colleague, my hon. Friend the Member for Waveney (Peter Aldous), for buying into the idea: at a time when other countries’ rounds have failed, we generated 3.7 GW. We supported geothermal and tidal and, I think, saw a near doubling of onshore wind.

That is not to say that I do not regret, and have not previously publicly regretted, the fact that in a highly turbulent geopolitical situation the window for offshore wind did not ultimately allow bids to come in from industry. However, that was one of the key reasons why we decided to move to an annualised system, so that we could quickly move forward. Of course, unlike a solar scheme, for example, these schemes are not things that are brought up quickly: they are developed over many years, with parameters informed by the behaviour of the industry.

We always gather the data each year from the industry—companies sign non-disclosure agreements with us and we commission external research—but the most important of all the data we use is behaviour in auctions, because we need that real-world data to inform the parameters we set. It is exactly that process—unchanged but better informed by behaviour in AR5—by which we will set AR6’s parameters, and I am confident that it will be successful.

[Peter Aldous]

rose—

[Graham Stuart]

I see that, having been chided, my hon. Friend is looking to intervene on me.

[Peter Aldous]

I was listening with interest to what my right hon. Friend was saying. To a degree, I hear what he says, but does he not agree that with offshore wind not being successful in AR5, the costs go up in future allocation rounds? It was ready to go, and there were economies of scale that it was ready to take full advantage of, but it was not able to go. The feedback that I am getting from industry is that these things cannot take place in a vacuum, ignoring what is going on throughout the world. Does my right hon. Friend not agree with me that it would have been much better if offshore wind had been successful in AR5?

[Graham Stuart]

Having been chided, my hon. Friend is of course—quite rightly, and characteristically—straining to justify his position, and I have a lot of sympathy with it. I have said that we would ideally have got the window in a way that better matched that reality. But there are reasons for having the annual auction. We always come up with a window that industry says is not enough. We have managed to bring down the costs by 70%. It is hard to overestimate the importance of this. This country, the CfD mechanism and, I have to say, this Government have transformed the economics of offshore wind—not just to the betterment of UK consumers, but to the benefit of the whole world. It is only because of what has happened here with this approach, which every year is in a state of tension with industry, that we have been able to show and reveal these prices. We are now able to export our expertise to the north-east of the United States, to the Gulf, to Taiwan—all over the world—as a result of this process.

I said that I wished we could have better attuned the window to the realities—they changed even after we set the prices in November. That was precisely why we decided on having an annual auction. To put it another way, if what someone offers is always accepted, they might want to consider whether they are overpaying. That is not to say that I in any way revel in the fact that we did not get offshore wind in that round, but I am glad that we had the foresight to move to an annual system and that we are able so swiftly to move on. It will just be the middle of next month when we set out the core parameters for the next round, which will happen next year.

Green Energy: Ports

Peter Aldous Excerpts

Wednesday 18th October 2023 Westminster Hall

[Peter Aldous (Waveney) (Con)]

It is a pleasure to see you in the Chair, Mrs Cummins. I congratulate my right hon. Friend the Member for Preseli Pembrokeshire (Stephen Crabb) on securing this debate. He is right to highlight the opportunities in the Celtic sea. I shall briefly provide some geographical balance and complete our tour of coastal Britain by showcasing the work that is taking place in the southern North sea, off the East Anglia coast. With the right investment in ports such as Lowestoft, so much more could be achieved that would not only enhance our energy security and propel us down the road to net zero, but help to deliver long-term economic growth.

Lowestoft port, which is likewise part of the ABP fleet, has a good story to tell. SSE has run its operations and maintenance base in the outer harbour since 2012, and ScottishPower Renewables has done likewise since 2019. ABP is progressing plans for the Lowestoft eastern energy facility. There will also be a direct air carbon capture demonstrator site in the inner harbour, which is being progressed by ABP in conjunction with Sizewell C. Lowestoft and Ipswich ports will also play important roles in delivering materials to the Sizewell C nuclear power station.

A good start has been made, but there are challenges immediately ahead that need to be addressed if we are to make the most of this once-in-a-lifetime opportunity. There is a global race for green investment. The UK should not and cannot get into a subsidy race to the bottom with the likes of the United States. Instead, we should work faster and smarter, building flexibly on what we have already achieved.

In his April report, UK offshore wind champion Tim Pick highlighted a variety of risks that have limited UK port investment. Some of those relate to the contracts for difference mechanism. I will not go into those in detail, as many of us will be back here tomorrow to take part in the debate on the subject led by the hon. Member for Strangford (Jim Shannon). The report highlighted a variety of obstacles that need to be addressed. There are some interesting recommendations, which I will briefly highlight: an industrial growth plan; a support framework for offshore wind ports targeted at the risks that they face; and a recommendation that the Government should give offshore wind ports priority, just as they do to offshore wind farms, in the national policy statements. I would be most grateful if, in summing up, my right hon. Friend the Minister advised us how he and the Government will respond to Tim Pick’s report, with specific regard to promoting investment in port infrastructure.

In conclusion, over the past decade offshore wind has been a great British success story. We put in place a mechanism that has worked very well. However, due to geopolitical and inflationary pressures, it needs recalibrating. As part of that process, leading up to the autumn statement, we need to review the way we promote investment in port infrastructure. Ports such as Lowestoft are honeypots not only for decarbonisation but for job creation and regeneration. They are the link between offshore electricity regeneration and onshore supply chains. Nurture them properly and the dividends will be significant.

--- Later in debate ---

[Peter Aldous]

Offshore wind champion Tim Pick has highlighted some of the obstacles that need to be overcome for the industry to realise its full potential. Some of that focuses on ports. Will the Minister provide a bit more detail on the Government’s response to his proposals and recommendations?

[Graham Stuart]

We are working with industry through the Offshore Wind Industry Council, of which I am a co-chair, to consider Tim Pick’s wide-ranging recommendations, including developing an industry growth plan. Again, this is to do with supporting the development of the UK supply chain and, as we do this massive deployment, trying to ensure that as much as possible of the industrial heft of that can be delivered through the UK and UK jobs. That work is ongoing, and we will keep going.

The hon. Member for Strangford will be aware that Northern Ireland has a target for 1 GW of offshore wind from 2030. SBM Offshore and Simply Blue are developing FLOW projects in Northern Ireland. Likewise, Simply Blue is developing the Erebus project in the Celtic sea.

I was asked about meetings. Notwithstanding any transport and logistical challenges, I would be delighted to come to Wales. I must pay tribute once again to my right hon. Friend the Member for Preseli Pembrokeshire, who is relentless, albeit always cheerful and well-considered, in promoting the need for understanding and engagement with his part of the world and the opportunities that offers for the whole of the UK in contributing to the global challenge on climate change and, most importantly, in delivering a more prosperous and better future for constituents in his part of the world. Thank you, Mrs Cummins, for chairing the debate.

Oral Answers to Questions

Peter Aldous Excerpts

Tuesday 19th September 2023 Commons Chamber

The Secretary of State was asked—

[Peter Aldous (Waveney) (Con)]

1. What recent assessment she has made of the effectiveness of the contracts for difference scheme in supporting low-carbon electricity generation.

[Selaine Saxby (North Devon) (Con)]

2. What assessment she has made of the potential implications of the outcome of the contracts for difference allocation round 5 on the future development of floating offshore wind.

[The Secretary of State for Energy Security and Net Zero (Claire Coutinho)]

Our contracts for difference scheme is a UK success story, having contracted more than 30 GW of capacity, including 20 GW of offshore wind, since 2014. AR5 delivered a record number of clean energy projects, enough to power the equivalent of 2 million homes, and the Government’s commitment to offshore wind remains unchanged, which is 50 GW by 2030.

[Peter Aldous]

I welcome my right hon. Friend to her place. The great advantage of the CfD scheme is that with forward planning it has the flexibility to adapt to changing economic conditions. Can she therefore confirm that the Government will be working collaboratively and straightaway with industry to ensure a successful round 6 so that offshore wind can get back on track, and UK consumers and the UK economy can benefit from low-cost, low-carbon energy?

[Claire Coutinho]

I thank my hon. Friend for his long-standing support in this area and I can confirm that we are wasting no time in engaging the sector in advance of AR6. I personally spoke to offshore wind stakeholders following AR5 and confirmed our commitment. The Minister for Energy Security and Net Zero held a roundtable with the sector on 12 September. We are listening to the sector and annual auctions mean we can respond quickly.

--- Later in debate ---

[The Parliamentary Under-Secretary of State for Energy Security and Net Zero (Amanda Solloway)]

The hon. Gentleman will be aware that the Government are raising a 75% energy profits levy, and he will also be aware that standing charges are a matter for Ofgem. Let me reiterate, however, that we are mindful of the cost of living crisis and have been providing support with the warm home discount, the £900 cost of living payment, and a raft of other measures to support people through this crisis.

[Peter Aldous (Waveney) (Con)]

T2. The launch last week of the Great British insulation scheme was very welcome. So as to build on this and to kickstart a mass retrofitting revolution, will my hon. Friend liaise with the Treasury to obtain its support for the introduction of such fiscal measures as an energy-saving stamp duty and an employee benefits scheme similar to the cycle to work scheme?

[Amanda Solloway]

The Government set the aspiration in the clean growth strategy of upgrading as many homes as possible to energy performance certificate band C by 2035, where practical, cost-effective and affordable. We remain committed to that aspiration. Although tax policy sits with the Treasury, we are considering how to improve energy efficiency for owner-occupied homes and plan to consult by the end of 2023.

Offshore Wind Contracts

Peter Aldous Excerpts

Tuesday 12th September 2023 Commons Chamber

[Graham Stuart]

I thank the hon. Gentleman for revealing the true face of where the Labour party is going. We can go back to the days when we had hardly any renewables, and we can allow Great British Energy, or whatever Labour is going to call its creature, to squeeze out private investment and destroy the most successful renewables market in Europe, and to destroy this Government’s progress on tackling the parlous position left behind by the right hon. Member for Doncaster North and his friends. We will continue to be the world leader in cutting emissions, but not if we move to the state-run, left-wing obsessions of colleagues like the hon. Member for Brighton, Kemptown (Lloyd Russell-Moyle).

[Peter Aldous (Waveney) (Con)]

Offshore wind plays, and will continue to play, a key strategic role in enhancing energy security, achieving net zero and revitalising coastal communities such as Lowestoft. To get back on track, can my right hon. Friend confirm that the criteria applying to round 6 will take account of current economic realities, that appropriate fiscal measures are being considered ahead of the autumn statement and that specific focus will be given to enhancing local supply chains?

[Graham Stuart]

I thank my hon. Friend, who has been such a consistent champion not only for the power of renewables to meet our environmental challenges but for the economic benefits that come from them. He is absolutely right that the nature of the CfD system is that it learns from the previous auction round, which is the most real data of all, and uses that learning to inform the next round. That is why I am confident that, just as we had a success with 3.7 GW on Friday, AR6 promises to be more successful still.

Energy Bill [Lords]

Peter Aldous Excerpts

Report stage
Tuesday 5th September 2023 Commons Chamber

[Dr Caroline Johnson (Sleaford and North Hykeham) (Con)]

The beautiful food-producing farmland in my constituency is a particular target for industrial-scale solar farms, often backed by prospectors who have no personal connection to our area. This raises huge concerns among my constituents about the scale of the projects and the lack of thorough consultation. With the imperative of food security on our minds, we must explore alternatives to covering vast expanses of our productive land with solar panels.

Many people do not appreciate the scale of the issue, so to illustrate the magnitude of this challenge, I will highlight one proposal for a solar farm in my constituency. It aims to engulf a staggering 587 hectares of land, just under half of which is grade 1 to grade 3A farmland—the very best and most versatile agricultural land, the best land for food production. In fact, almost 10,000 acres of my constituency are currently open to planning for solar farms. Those farms will dwarf villages such as Witham St Hughs, Thorpe on the Hill, Bassingham and Holdingham, and will almost encircle villages such as Scopwick, Digby and Ashby de la Launde.

I do not stand against solar panels in principle; I have previously spoken about the unexplored potential of utilising industrial roof spaces for them. However, I do not believe that covering our farmland in solar panels is the right thing to do, and I vehemently object to the lack of food security it could produce. I therefore support new clause 48, tabled by my hon. Friend the Member for Rutland and Melton (Alicia Kearns), which seeks to solve this injustice and put an end to these large-scale projects. Furthermore, I appreciate that that clause also encourages future developments on brownfield sites, which are far better suited to such endeavours. Let us work together to protect our precious farmland, maintain our food security, heed the concerns of our constituents, and chart a more sustainable path for our energy future.

I was also shocked to hear that more than 90% of solar panels may be made by, or have elements that come from, slave labour. As we discuss the slavery of the past, let us do all we can to prevent the slavery of the here and now. I therefore also support new clause 47, which should be pushed to a Division later.

Lincolnshire as a whole produces a vast amount of this country’s food, yet 22,500 acres—1.3% of its land area—are currently open to applications for solar panels. As such, I ask the Minister to answer two questions in his summing up. First, what will we eat when our best and most versatile farmland is covered by solar panels? Secondly, what is his assessment of the impact on the environment of growing energy from solar panels instead of food, then importing food from elsewhere?

[Peter Aldous (Waveney) (Con)]

The Bill has an important role to play in ensuring that we meet our 2050 net zero targets, enhancing our energy security and creating new jobs, particularly in coastal communities such as the constituency I represent. In driving forward the measures in the Bill, I urge the Government to have in mind the following parameters.

First, we need to pursue a strategic approach to the provision of infrastructure while maximising the leveraging-in of the enormous amount of much-needed private sector investment that will be required. Secondly, the Bill’s framework needs to be sufficiently flexible to allow all regions of the UK to play their full role in the transition. It has been estimated that by 2035, East Anglia’s renewable and low-carbon energy supply portfolio could power the equivalent of 90% of the UK’s homes. In our area, we need a recognition of the role we will play.

Finally, the Government need to rural-proof their policies, as articulated by my right hon. Friend the Member for Camborne and Redruth (George Eustice) and the hon. Member for Gower (Tonia Antoniazzi).

Community energy has an important contribution to make in boosting clean energy generation and in offering people the opportunity to benefit from agreeing to host new energy infrastructure. Therefore, the announcement of the new £10 million community energy fund is to be welcomed. However, it is important that the Government monitor very closely the fund’s impact and whether it is successful in unblocking more community-owned projects. If it is not, they need to bring forward further measures, such as the amendments that were proposed in the other place.