Pippa Heylings

Drax sources the vast majority of its supply of biomass pellets from the US, with a small percentage from Canada, and elsewhere. It transports pellets to the UK by shipping them on bulk carriers, unloading at ports including Immingham, Liverpool and Port of Tyne before final transport to the Drax site by rail. Bulk transport of biomass pellets can be a highly carbon-efficient way of moving material across large distances.

Under the new arrangements agreed with Drax we have strengthened the supply chain emissions threshold in line with European standards.

The new CfD arrangement caps the volume of supported generation to an annual load factor of 27% compared to Drax’s current 65%. This incentivises dispatchable biomass generation only when the system needs it, ensuring consumers can benefit from cheaper wind and solar power at other times.

The new arrangement is estimated to halve subsidies to Drax, saving around £6 per household per year compared to current arrangements. The strike price for the new CfD is £113 (2012 prices) compared to £100 MWh currently. This modest increase reflects that Drax’s fixed operating costs will be spread over fewer units of generation, but consumers get more valuable power for lower overall subsidy.

The Government believes that our mission to deliver clean power by 2030 is the best way to break our dependence on global fossil fuel markets and protect billpayers permanently. With this, the Government is also committed to ensuring a fair and affordable transition to Net Zero while considering the impact of policy costs on all energy consumers.

NESO’s advice in their Clean Power 2030 Report on the impact of clean power on energy bills finds that a 2030 clean power system can be cheaper for the consumer than the one we have today.

Policy costs, or levies, fund essential schemes that have delivered significant benefits, including increasing renewable generation capacity and reducing reliance on fossil fuels. The Department keeps the aggregate impact of these policies under review.

The Government’s main mechanism to invest in new renewables capacity are our Contracts for Difference. We have consulted on reforms to the Contracts for Difference, which are intended to ensure we secure the capacity needed to deliver Clean Power by 2030, whilst minimising the costs to consumers. The Government will publish a response with a view to implementing any changes in time for Allocation Round 7 to open in summer 2025.

As the first step towards the Warm Homes Plan, the Government has committed an initial £3.4 billion over the next 3 years towards heat decarbonisation and household energy efficiency.

Government energy efficiency schemes such as the Energy Company Obligation, Great British Insulation Scheme, Warm Homes: Social Housing Fund and Warm Homes: Local Grant are targeted at low-income households to fund energy efficiency upgrades and low-carbon heating for those eligible.

Further details on the Warm Homes Plan will be set out in due course.

The Government only provides support for biomass sourced from forests which are sustainably managed.

Under the agreed Heads of Terms for short term support from 2027-2031, Drax must source 100% of its biomass from sustainable sources, and must exclude primary forest to receive support. Drax will be supported at a 27% load factor and we do not anticipate they will be incentivised to generate further, without subsidies.

Nevertheless, we are considering further options through the new contract and the consultation on the Common Biomass Sustainability Framework to provide additional protection for primary forests.

The Clean Power Action Plan (CPAP) sets out regional capacities for solar and battery storage required to achieve Clean Power by 2030. Regional capacities out to 2035 are also included to provide a 10-year time horizon for connections offers.

2035 capacities are based on the top of the range of NESO's Future Energy Scenarios. NESO analysis suggests that projects allocated to the 2031-35 period may be able to connect pre-2030 where there is spare network capacity or if needed to deal with attrition. However, the reformed queue to 2030 will already contain additional capacity beyond the amount needed to achieve Clean Power by 2030.

My Rt hon Friend the Secretary of State and I have regular discussions with Ministerial Colleagues on a number of issues. We also both engage with Mayoral Strategic Authority leaders on the delivery of net zero regularly, including through roundtables.

As part of the Warm Homes Plan, the Government has committed an initial £3.4 billion over the next 3 years towards heat decarbonisation and household energy efficiency, including £1.8 billion to support fuel poverty schemes.

There are multiple targeted schemes in place to deliver energy efficiency measures to low income and fuel poor households. Current schemes include the Energy Company Obligation (ECO) and the Great British Insulation Scheme (GBIS). The Government recently announced Wave 3 of the Warm Homes: Social Housing Fund to support social housing providers and tenants, and the new Warm Homes: Local Grant to help low-income homeowners and private tenants with energy performance upgrades and cleaner heating. Both schemes are expected to deliver in 2025.

Support is also available through the Warm Home Discount schemes which provide eligible low-income households across Great Britain with a £150 rebate off their winter energy bill.

Further details on the Warm Homes Plan will be set out in due course.

I refer the hon Member to the answer I gave to her on Question UIN 32430:

The Government is committed to supporting the growth and scaling-up of green technologies, including through the creation of GB Energy, as part of its Clean Energy Superpower Mission. A combined total of £1.3 billion has been committed through the 2021-25 Net Zero Innovation Portfolio (NZIP) to accelerate the commercialisation of green technologies supporting around 5,500 jobs and leveraging £750 million in private investment. The Government will set out its full approach to seizing the growth opportunities from clean energy industries in the forthcoming Industrial Strategy.

Private finance can play a key role in helping us achieve our decarbonisation ambitions. As part of the Government’s ambitious Warm Homes Plan, officials are exploring the role of incentives and private finance to support homeowners with the upfront costs of energy efficiency improvements and low carbon heating. This includes engaging with the finance sector on the potential for low interest loans.

The Government is now consulting on increasing minimum energy efficiency standards in the domestic private rented sector. The consultation sets out proposals on the maximum spend required from landlords and the exemptions regime to manage the cost burden placed on landlords and the impact on the rental market. We are considering how we can best support landlords to meet the new standards and welcome responses from landlords to the consultation.

The Warm Homes Plan will help cut household bills for families and slash fuel poverty. The Government has committed £3.4 billion towards the Warm Homes Plan over the next three years. Further details on the Warm Homes Plan will be set out in due course.

Future funding towards decarbonisation and to tackle fuel poverty will be considered as part of Phase 2 of the Spending Review, which will conclude in late Spring 2025.

By investing in the electrification of heat in buildings, the Warm Homes Plan will help to protect families and businesses from the volatile costs of the international fossil fuel market and make us more secure from the actions of foreign powers.

The data presented in the oil spill map overstates the number of permit breaches associated with oil or chemicals discharged to sea as a number of these report duplicate discharges while some relate to administrative failures to comply with permit conditions, such as sampling and late reporting. The UK has a comprehensive environmental regulatory regime for the offshore oil and gas sector which ensures that provisions are in place to minimise the chances of and, if required, respond to oil and chemical spills. Oil and chemical spills from offshore oil operations are of significant concern to OPRED which is why there is no minimum quantity for reporting. The number of oil and chemical spills reported to OPRED has almost halved since 2018 and the amount of oil and chemical spilled in 2023 is at a historic low. Every spill is investigated by OPRED proportionately and OPRED can take enforcement action against operators if needed, including the use of fines or referral for criminal prosecution. OPRED continues to work with industry to improve their performance and further reduce the occurrence of oil and chemical spills.

The data presented in the oil spill map overstates the number of permit breaches associated with oil or chemicals discharged to sea as a number of these report duplicate discharges while some relate to administrative failures to comply with permit conditions, such as sampling and late reporting. The UK has a comprehensive environmental regulatory regime for the offshore oil and gas sector which ensures that provisions are in place to minimise the chances of and, if required, respond to oil and chemical spills. Oil and chemical spills from offshore oil operations are of significant concern to OPRED which is why there is no minimum quantity for reporting. The number of oil and chemical spills reported to OPRED has almost halved since 2018 and the amount of oil and chemical spilled in 2023 is at a historic low. Every spill is investigated by OPRED proportionately and OPRED can take enforcement action against operators if needed, including the use of fines or referral for criminal prosecution. OPRED continues to work with industry to improve their performance and further reduce the occurrence of oil and chemical spills.

The Government has launched the ‘Warm and Fuzzy’ campaign to promote the Boiler Upgrade Scheme. The campaign seeks to build consumer awareness and understanding of heat pumps, as well as publicising the £7,500 government grant which is available to homeowners, including landlords.

The Government continues to provide advice and support for home upgrades, including the GOV.UK webpage ‘Find Ways to Save Energy in Your Home’ (https://www.gov.uk/improve-energy-efficiency) and the GOV.UK Heat Pump Suitability tool (https://www.gov.uk/check-heat-pump) which landlords can access.

All heat pump installations are expected to comply with Building Regulations. Heat Pumps installed under Government schemes are required to be installed by a Microgeneration Certification Scheme (MCS) certified installer.

As part of the Review of Electricity Market Arrangements or ‘REMA’ we are continuing to assess reforms for sending more efficient locational signals in the electricity market. This includes robustly assessing the costs and benefits of both locational (or zonal) pricing against improvements to locational signals in a reformed national pricing market. This will feed into the cost-benefit assessment of REMA reforms.

We have not made any decisions yet and aim to take a decision by around mid-2025.

The Department has been undertaking work to explore how the future role of local energy planning might support net zero, clean power 2030 and efficient network planning. This includes engaging with Ofgem on Regional Energy Strategic Plans, as well as working closely with Innovate UK and the Local Net Zero Hubs.

Additionally, Great British Energy will partner with, and provide funding and support to, local and combined authorities, as well as community energy groups, to roll out a pipeline of local renewable energy projects and develop up to 8GW of cleaner power.

Enforcement is a critical aspect of the policy and is something we are working to address. Government will be increasing our engagement with local authorities to understand the impact and burden of the proposed policy to enable us to take steps to mitigate the impact and support local authorities. The development of the PRS Database in England and Rent Smart Wales will also greatly increase availability and ease of access to information for local authorities.

The electricity market in GB operates on the principle of marginal pricing, whereby the price of electricity is set by the last technology needed to meet overall demand. In the current market, gas prices often set the wholesale electricity price because it is typically the last source of supply to meet demand.

Decarbonising the power system will increase energy security by reducing dependence on imported oil and gas, which will in turn reduce the exposure of consumer bills to volatile international prices. The ever-increasing participation of renewables in the wholesale market means that over time, cheaper electricity produced by renewable technologies will determine the price more often and gas will play a much more limited role in setting the wholesale market price.

Increasing the number of renewables on Contracts for Difference (CfDs) has already made a tangible difference. When wholesale electricity prices spiked in the winter of 2022/23, the CfD delivered the equivalent of an £18 saving on a typical annual household bill.

Expanding the CfD scheme to enable more renewables in the wholesale market will help to rapidly decouple electricity from gas prices without the need for more complex arrangements.

The Review of Electricity Market Arrangements (REMA) programme is considering what further steps can be taken to shield consumers from the impacts of potential price spikes.

The second REMA consultation sought views on some specific proposals, including retaining marginal pricing across the wholesale market alongside futureproofing the CfD scheme as the best tool to decouple gas and electricity prices.

Standing charges are a commercial matter for suppliers, and are regulated by Ofgem, but we know that too much of the burden of the bill is placed on them. The Government has worked constructively with the regulator on the issue of standing charges, and we are committed to lowering the cost of them.

Ofgem’s recently published update on reform of standing charges outlines how it will look to make standing charges fairer for consumers. Ofgem has also committed to consider whether these regional differences should remain or whether there is a different option that would better protect consumers overall.

The Review of Electricity Market Arrangements (REMA) is considering a range of reforms to unlock renewable investment and pass through the benefits of cheaper renewables to consumers. REMA’s Autumn Update, published on 13 December, detailed the progress of policy development in the assessment of options. The Government is aiming to conclude the policy development phase of the REMA programme by mid-2025, after which the final decisions and timetable for implementation will be announced.

The Government is committed to working with the pensions sector to transition to net zero. DESNZ collaborates with DWP and others in Government on this.

Pension schemes in scope of DWP’s requirements must produce an annual Taskforce on Climate-related Financial Disclosures report. In the manifesto, we committed to mandate listed companies, financial institutions and pension funds to develop and implement credible transition plans that align with the 1.5°C goal of the Paris Agreement. The Government will consult in the first half of this year on how best to take this forward.

The Government is also exploring ways to unlock the investment potential of the Local Government Pensions Scheme, through asset pooling for investment into climate-related projects.

The Government is committed to supporting the growth and scaling-up of green technologies, including through the creation of GB Energy, as part of its Clean Energy Superpower Mission. A combined total of £1.3 billion has been committed through the 2021-25 Net Zero Innovation Portfolio (NZIP) to accelerate the commercialisation of green technologies supporting around 5,500 jobs and leveraging £750 million in private investment. The Government will set out its full approach to seizing the growth opportunities from clean energy industries in the forthcoming Industrial Strategy.

The Government is committed to expanding the electricity network to support its Clean Energy Superpower mission and is working closely with Ofgem and industry to mobilise the required investment. Under the most recent price control for electricity distribution, covering 2023-2028, Ofgem has allowed £22.2bn for upfront network investment, of which £3.1bn is set aside for network upgrades to ready the grid for low carbon technologies.

The National Infrastructure Commission published recommendations on 21 February [1] on making the electricity distribution network fit for net zero. We will review the study with our key delivery partners and will publish a formal response this spring.

[1] https://nic.org.uk/app/uploads/Electricity-Distribution-Networks-report-21-Feb-2025.pdf

The National Infrastructure Commission published recommendations on 21 February¹ on making the electricity distribution network fit for net zero. Their modelling demonstrates that nationally, £37-50 billion of investment in the distribution network could be needed to meet net zero targets by 2050, taking into account expected increases in electricity demand. We are reviewing the study with our key delivery partners and will publish a formal response this spring.

1 https://nic.org.uk/app/uploads/Electricity-Distribution-Networks-report-21-Feb-2025.pdf

The Government will ensure that the protection of nature is embedded into the delivery of clean power and we will be driving for nature to not only be protected but restored through clean power infrastructure.

As part of our Clean Power Action Plan, we are considering how to use development to fund nature recovery unlocking a win-win outcome for the economy and for nature. We are working with nature delivery organisations, stakeholders and the sector to consider how we can better support the delivery of infrastructure whilst driving better environmental outcomes.

The Government is committed to delivering clean power by 2030, to accelerating to net zero and to restoring nature. New energy infrastructure should be built in a way that protects the natural environment and supports nature recovery, by following a “mitigation hierarchy” to avoid damage to marine protected areas, and minimising, restoring and delivering compensation when damage cannot be avoided. On 29 January 2025, the Government announced reforms in infrastructure consenting to unlock up to thirteen major offshore wind infrastructure projects while protecting the marine environment and the Government’s commitment to protect 30% of our seas for nature by 2030.

The Government is committed to delivering clean power by 2030, to accelerating to net zero and to restoring nature. The Government needs to ensure that the UK’s marine ecosystems are healthy and capturing and storing carbon too. This means that new energy infrastructure needs to be planned and developed in a way that protects the natural environment and supports nature recovery.

Assessment and mitigation of environmental impacts are a core part of the Government’s planning processes, and future spatial plans will support rebuilding the UK’s natural infrastructure at the same time as building the new energy infrastructure the UK needs for the twenty-first century.

Fuel switching from fossil fuels to electricity has the potential to significantly reduce annual industrial emissions, making a critical contribution to our carbon budget commitments contributing between 15% and 40% of the necessary carbon abatement in industry by 2050. The Government remains committed to supporting industrial electrification and addressing the barriers to investment that were highlighted in the 2023 call for evidence on enabling industrial electrification. This includes further development of policy options to address the high cost of electricity relative to natural gas, and the implementation of planning reforms to speed up infrastructure development and unblock issues on grid connection delays.

The Government has pledged to take action to stand with tenants and deliver the safety and security of warmer, cheaper homes. We are currently consulting on plans to reduce energy bills by increasing standards in the private rented sector in England and Wales.

As Government-funded trials have shown, Heat-as-a-Service is a potentially attractive way for consumers to finance the installation and operation of low carbon heating systems. We continue to explore how Government can enable these types of business models, while working to ensure consumers are protected.

The Government published the ‘Improving the energy performance of privately rented homes in England and Wales’ consultation on 7 February 2025. This consultation includes government responses to the 2020 consultation on ‘Improving the energy performance of privately rented homes’.

Responses to the 2019 and 2021 consultations on minimum energy efficiency standards in the non-domestic private rented sector are being reviewed to inform the policy design and ensure it remains fair and appropriate for landlords and tenants, with the aim to publish in the early part of 2025.