Energy Bill [HL]
Monday 17th April 2023
(1 year ago)
Lords ChamberEnergy Act 2023 View all Energy Act 2023 Debates Read Hansard Text Read Debate Ministerial Extracts Amendment Paper: HL Bill 86-II Second marshalled list for Report - (13 Apr 2023)
17:23 - Division on Amendment 97 - Ayes: 227 / Noes: 194 - Amendment 97 agreed.
18:25 - Division on Amendment 131 - Ayes: 197 / Noes: 194 - Amendment 131 agreed.
18:37 - Division on Amendment 133 - Ayes: 208 / Noes: 182 - Amendment 133 agreed.
18:49 - Division on Amendment 134 - Ayes: 197 / Noes: 186 - Amendment 134 agreed.
Lord Teverson
“(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.
Lord Callanan
Member’s explanatory statement
This amendment ensures that the amendment made by paragraph 8 of Schedule 9, in relation to section 105(1)(a) of the Utilities Act 2000, dovetails correctly with the amendment to that provision made by paragraph 5 of Schedule 5 to the Bill.
Lord Callanan
“(7) Where by virtue of subsection (6)(c) tender regulations provide for the imposition of a financial penalty, they must also include provision for a right of appeal against the imposition of the penalty.”Member’s explanatory statement
This amendment requires regulations under section 6CA of the Electricity Act 1989 (tender regulations: power to require information) (inserted by Schedule 13) that provide for the imposition of civil penalties to include provision for a right of appeal.
Lord Teverson
“(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.
Lord Whitty (Lab)
My Lords, I have a small amendment in this group—Amendment 68—which deals with electricity storage. This very comprehensive Bill looks a bit different from the one that we first saw, and I am not absolutely confident that I have inwardly absorbed the implication of every government amendment that we have had in the last few months. But I am pretty sure that one dimension of investment in the system that has not been fully spelled out is that of electricity storage.
We have obviously dealt with it as a way of subsidising and encouraging investment in generation and there are big changes which are welcome, by and large, in relation to carbon capture and storage, and slightly more controversial in relation to hydrogen. But one of the key things about the new system—which will be much more decentralised than previously and dependent on different forms of generated electricity—is that we need some real investment in electricity storage. We need it partly because those who have always opposed some renewables stress that they are variable and there is occasional intermittence. That will happen, but investment in pipes, pylons and wires may not be sufficient to avoid some faults and breakdowns in the system.
We need to be able to call on electricity which is stored in some form to ensure that supplies are continuous. I am not sure why this has not appeared in the strategy. It needs to be somewhere. I attended part of a seminar over at the Institution of Mechanical Engineers a few weeks ago which explained the different technologies that exist for electricity storage. There are obviously some old-fashioned ones such as hydroelectric power, where you keep the water back, but there are many new technologies that could be developed for a significant investment in electricity storage. The common assumption is that it will be batteries in some form or another, but batteries in themselves raise considerable problems. In particular, a significant installation would involve problems of maintenance and of the critical materials needed for large-scale battery storage.
There is the possibility of storage in hydrogen—and that may raise other problems with hydrogen—and there is storage in ammonia and storage in compressed air. Any of these technologies need to be pursued, but we do need some system of storage. The least I would hope for from the Minister today is an acceptance that part of the strategy will be to ensure that we have cutting-edge technology in electricity storage, and an indication of how that will be financed, what the government incentives are and what the regulatory structure will be. If the Government can give me that general assurance, I will be happy.
Lord Ravensdale (CB)
My Lords, I declare my interest as a project director and engineer working for Atkins in the nuclear industry. I also chair the cross-party group Legislators for Nuclear.
In Committee, my previous amendments in this area—they were originally put forward by the noble Baroness, Lady Neville-Rolfe, before she joined the Front Bench—aimed to define nuclear as taxonomy-aligned within the UK’s green taxonomy. Naturally, I was delighted to see the Government commit to this in the Spring Budget, pending a consultation,. I shall speak briefly to my resulting Amendment 137.
Following the green taxonomy announcement and progress on the renewable transport fuel obligation, there remains one glaring aberration in the treatment of nuclear in the Government’s financing frameworks: the current exclusion of nuclear from the UK green financing framework, which describes how the UK Government plan to finance expenditures through the issuance of green gilts and the retail green savings bonds. Now that nuclear is due to be specified as taxonomy-aligned, I am sure that the Minister would agree, for consistency if nothing else, that it should also now be eligible under the green financing framework. This would have many benefits in ensuring the availability of vital extra funding for nuclear projects to enable the decarbonisation of our energy system.
I would be grateful if, in summing up, the Minister could state when the Government intend to address this issue.
Baroness Bennett of Manor Castle (GP)
My Lords, I will speak briefly to Amendment 68 in the name of the noble Lord, Lord Whitty, to which I have attached my name. I will also make a couple of other comments on this group.
I can probably predict some of what the Minister will say about the amendment from the noble Lord, Lord Whitty. I note, as I am sure all Members of the House have, that, three days ago, the Government announced £30 million for experimental or first-stage renewable storage projects. We have pump thermal, thermal and compressed air, and a number of other schemes. What is really important about this amendment is the context of the report to Parliament in six months. This is something that is absolutely crucial to the renewables transition, and we really need to see democratic oversight of where it is going.
I particularly make the point that this must be a strategy. Instead of one-off projects here and there, we need a whole integrated system. One thing that is really unconsidered is vehicle-to-grid storage. As we have more and more electric cars, if we have innovation in management we can use those cars as storage when people do not need them for transport. This is a way in which we would need much less resources—the Government are themselves saying that we could save £10 billion by 2050 by reducing our need to generate electricity.
I have just a couple of comments to make on the other amendments in the group. It will not surprise anyone in your Lordships’ House to hear that I oppose Amendment 137 in the name of the noble Lord, Lord Ravensdale. However, its very existence is a demonstration of the way in which new nuclear can be a distraction from the renewables investment that is our energy future.
On the amendments in the name of the noble Lord, Lord Teverson, on electrifying and decarbonising oil and gas facilities, I am afraid that the term “greenwash” has to appear at this point. I have an amendment in a later group asking for no new oil, gas or coal. Any reduction in energy use on a new oil rig because it has some solar panels on top of it does not take us anywhere like where we need to go in this climate emergency.
Baroness Blake of Leeds (Lab)
My Lords, I will speak briefly to the amendments in this second group, starting with Amendment 65 from the noble Lord, Lord Teverson. All I can do is echo his clear requests for confirmation that the Government will be more flexible and for clarity around multipurpose interconnectors, particularly with regard to the relationships between Great Britain and other jurisdictions. Will the interconnectors operate in a similar way to the offshore electricity transmission regime? I hope that the Minister will be able to give the reassurance and clarification that the amendments in the name of the noble Lord, Lord Teverson, ask for.
I thank my noble friend Lord Whitty for tabling Amendment 68, on an issue that he feels passionately about and comments on whenever the opportunity arises. We know that, as the electricity network develops new facilities and new renewable sources of generation, there will be a need for more storage capacity. As we have said, there is a non-exhaustive list of technologies, and new ones coming on stream that we might not have considered so far, and so comments must extend beyond batteries. The important part of this amendment to consider is a commitment from the Government to give support to assist with developing the storage capacity that we need.
The further amendments, led by the noble Lord, Lord Teverson, look to remove legislative barriers to the electrification and decarbonisation of oil and gas facilities, and to work towards a green financing framework. We must be mindful of the uncertainty of costs, going forward. When considering these amendments, it is important to consider decarbonisation, which is critical to the Bill, but also affordability and ensuring that energy is within the reach of every person in the country.
We know that the zero-carbon electricity system is possibly 19% cheaper than gas-based facilities, and that UK gas power is currently estimated to be nine times the amount of renewable power. Driving down energy costs means that we need cheap, clean power. We must take this rare opportunity presented by the Bill to ensure that we use the legislative framework to drive measures that will, in the short-term, reach towards action to decarbonise the electricity system and bring down costs.
The passage of the Bill through the House has been quite lengthy, but we really must take the opportunity presented to us to ensure that we make the progress that is required.
Lord Callanan (Con)
My Lords, I thank all Members who have contributed to the debate.
I completely agree with the last point made by the noble Baroness, Lady Blake. It is very important that we use the powers to do exactly what she suggested: to drive the decarbonisation agenda. Despite some of the criticisms, we are making excellent progress in this country—much better than most other G7 countries. However, we must be very conscious of the cost to consumers.
Amendments 125 to 129 were tabled by the noble Lord, Lord Teverson. I was amused to see that he has incurred the wrath of the noble Baroness, Lady Bennett, in trying to come up with pragmatic, sensible solutions for the energy system of this country. All I can say is, “Welcome to the club”.
I will start with his comments on the North Sea Transition Authority. We are engaging with industry to ensure the delivery of the North Sea transition deal emissions reduction targets and the successful rollout of electrification, which we all want to see. We are also considering how to utilise the Secretary of State’s existing powers, if needed, to support electrification. We are confident that, in this area, additional primary legislation is not required. As the noble Lord mentioned, the North Sea transition deal commits the offshore oil and gas sector to reducing emissions from operations to 50% of 2018 levels by 2030. As I have said repeatedly in this House, during the transition there will be an ongoing need for existing oil and gas resources, but it makes sense to extract them with the minimum possible carbon emissions.
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.
Lord Whitty
“(A1) Within six months of the day on which this Act is passed the Secretary of State must place before each House of Parliament a strategy for a significant increase in the provision of electricity storage facilities to enhance the resilience and flexibility of electricity supply.(B1) This strategy must cover all forms of electricity storage, including battery, hydrogen, ammonia, adiabatic compressed air energy storage systems, and hydroelectric storage; and cover potential licensing, planning, regulation, subsidy and taxation considerations.”Member’s explanatory statement
A future electricity network based largely on renewable sources of generation will require significantly increased storage capacity – which could be based on multiple technologies and is likely to require some form of government support in its development. This amendment would ensure that this dimension is considered and reported to parliament.
Lord Whitty (Lab)
My Lords, I beg to move Amendment 68, and if my voice holds out I will also speak to Amendment 74. I appreciate that the Bill is primarily about the system, the capital investment and the totality of the supply of electricity, but, as the Minister recognised in his reply to the first group, the issues among the public are, “How much does it cost?”, “What effect does this have on my standard of living?”, and, in particular for the more vulnerable consumers, “Can I afford to keep my family and my house warm?”. There is no mention of any new initiatives in the Bill.
The Deputy Speaker (Lord Russell of Liverpool) (CB)
My Lords, I think the noble Lord may think that he is on the following group of amendments; this is the amendment in the previous group that I suspect he did not want to move. He is perhaps a touch premature.
Lord Whitty (Lab)
Oh! My apologies to the House and to the Deputy Speaker. I will return to the subject.
Lord Whitty
“Introduction of a social tariff for vulnerable energy customers(1) Within six months of the day on which this Act is passed, the Secretary of State must prepare a plan in relation to bringing forward a social tariff for vulnerable energy customers and lay that plan before Parliament.(2) The Secretary of State may by notice in writing require the economic regulator to introduce a social tariff for energy that satisfies the following conditions—(a) it is additional to the Warm Home Discount and Default tariff price Cap,(b) it is mandatory for all licensed electricity and gas suppliers,(c) it is targeted on households that are in or at risk of fuel poverty,(d) it is set at a level that is below the market price, and(e) it automatically enrols eligible households onto the tariff.”Member’s explanatory statement
An amendment to give the Secretary of State the power to introduce a social tariff for energy and place a duty on the UK Government to prepare a plan for the introduction of such a tariff.
Lord Whitty (Lab)
My Lords, I will now move this amendment properly. I will not repeat what I just said, but the fact is that in this massive Bill, which gives the strategy for the energy sector for the next 10 years, the social dimension of that strategy and its effect on consumers are not entirely but largely ignored.
I moved a similar amendment in Committee and the Minister was not particularly interested. He claimed that we were already looking after the interests of vulnerable consumers. A couple of years ago, or slightly more, I did a small job for Energy UK, looking at the effect of the energy system on vulnerable consumers. To be fair, as a result of that both the trade body and some individual companies significantly improved their consumer service to the more vulnerable consumers, but they have not dramatically changed the tariff structure in favour of those who are least able to pay or who require a rather larger amount of energy than average because of their family condition, health, age, mobility and so forth.
A simple requirement that energy suppliers must include in their tariffs a social tariff for identified vulnerable consumers seems the most obvious and straightforward way forward. We have the warm home discount and the major intervention, using taxpayers’ money, to off-set the effects of the gas price rise, which I fully recognise is the biggest intervention the Government have made on this front, but this would be an obligation on the companies to ensure that they have a social tariff. This is because the present structure of tariffs is unfair and discriminates against more vulnerable consumers. Anybody who does not pay by direct debit is at a disadvantage with almost all the energy-supplying companies. A failure to pay by direct debit means that you pay more.
At a more extreme level even than that, those who are on prepayment meters—we have seen the scandals that have appeared in the last few months—systematically pay significantly more than those who pay by direct debit. This is not right. Those consumers are the most vulnerable. In many cases they are put on prepayment meters because they find it difficult to meet the cost. I appreciate that the Government have intervened to ensure that the more draconian measures to force people on to prepayment meters have been tackled, and I thank them for that, but it is still the case that the most vulnerable consumers, using the easiest method for them to pay, pay more than the rest of us on higher incomes. That is wrong. The easiest way to get out of that is to require all companies to have a social tariff, and to ensure that the system of the priority service register, which in theory exists to identify those customers, actually leads to an offer and a supply of a differentially favourable tariff.
The priority registration system was originally to make sure that they were not hit by shortage of supply. It has been used by companies to identify those who are most vulnerable, but it is differentially effective. Our study found that the level of signing up for the priority service was very different region by region and company by company. Also, the use to which it was put was not at all systematically clear. The large number of people who do not know of the register, or that they could perhaps use their presence on it to ask for a different tariff, means that, in essence, people who perhaps are not digitally literate or do not have time to compare the market—or “Compare the Meerkat” or whatever—are doubly disadvantaged with respect to the systems of pricing and tariffs available to them.
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.
Lord Lennie (Lab)
My Lords, this group of amendments from the noble Lord, Lord Teverson, my noble friend Lord Whitty and the noble Baroness, Lady Bennett, consider the circumstances of some of the vulnerable customers in the energy market, and the actions the Government might take to protect them from the vagaries of the market. Such actions range from a social tariff through to inhibiting the exploitation of current prepayment meter customers and a prohibition on the installation of prepayment meters unless specifically requested by a customer. These amendments would collectively offer protection for these customers, who are often regarded as problems by billing companies.
As was said by the noble Lord, Lord Teverson, Ofgem recently announced a stop to companies forcing their way into premises to fit prepayment meters. This practice was commonplace and saw such customers paying more in energy costs as companies passed on the costs associated with the fitting and maintenance of prepayment meters. The ban was originally due to last until the end of March and has now been made indefinite.
The call for a social tariff has been advocated by Citizens Advice and is supported by the Social Market Foundation. It comes in a report that follows a long period of consultation with industry leaders, civil society and the general public. Last year, National Energy Action also argued for a social tariff for low-income households, highlighting the double bind of energy costs and rising bills coupled with paying more due to the poverty premium. A targeted social tariff would limit the impact of these circumstances, as well as help accelerate a fair transition towards net zero. I repeat the question asked by my noble friend Lord Whitty: are the Government able to give an indication that they might review the current tariff structure with a view to making it fairer, in favour of vulnerable customers, including prepayment meter customers?
Baroness Bloomfield of Hinton Waldrist (Con)
My Lords, this group covers amendments tabled regarding support and protections for the most vulnerable energy consumers. First, I thank the noble Lords, Lord Whitty and Lord Teverson, and the noble Baroness, Lady Bennett of Manor Castle, for their amendment to introduce a social tariff for vulnerable energy customers.
I am all too aware of the context for the noble Lords’ amendments, as energy bills have dramatically increased for all households over the past 18 months. This, coupled with the wider cost of living, has put the budgets of vulnerable households under considerable pressure. Noble Lords will be aware that the Chancellor set out in the Autumn Statement that the Government would work with consumer groups and industry to explore the best approach for consumer protection from April 2024. He also said that the Government would assess options, including a social tariff. These discussions are already well under way and are ongoing.
As set out in Powering Up Britain: Energy Security Plan, the Government have committed to consult this summer on options to provide better targeted support for those who need it most. In addition, the Chancellor announced in the Spring Budget that the energy price guarantee will be extended at £2,500 for an additional three months to the end of June 2023. This is in addition to the expanded warm home discount scheme, which has been extended until 2026 and which provides £475 million in support per year in 2020 prices.
The amendments tabled by the noble Lord, Lord Teverson, and the noble Baroness, Lady Bennett of Manor Castle, relate to the smart prepayment meter rollout and the restriction of the use of prepayment meters. The Government want to see the highest possible levels of smart meter coverage across the country, including for prepayment. Energy suppliers are each being set annual minimum installation targets and large suppliers are required to publish their performance against those targets, broken down by credit and prepayment.
This amendment would go further, effectively mandating the replacement of legacy prepayment meters by the end of 2025. This would present significant logistical challenges, including the need for energy suppliers to obtain warrants to enter consumers’ homes. I think we can all agree that that would not be a satisfactory outcome. Prioritising the replacement of legacy prepayment meters may have the unintended consequence of creating disincentives for suppliers to install smart meters for vulnerable credit customers. Data from Ofgem indicates that around 70% of those with disabilities pay by direct debit and may therefore benefit from the automated readings which smart meters deliver.
I understand the sentiment that lies behind the noble Lord’s calls for measures aimed at ending self-disconnections, such as a social tariff. However, his amendment is not the way to achieve this. The best way is through the work under way to explore the best approach for consumer protection, which I outlined earlier.
Regarding the noble Lord’s second amendment, the Government agree that the recent findings in the Times in relation to customers of British Gas having prepayment meters forcibly installed were both shocking and unacceptable. It is critical that our most vulnerable energy users are protected, and that is why the Government acted quickly to tackle this issue of inappropriate prepayment meter use. The Secretary of State wrote to energy suppliers insisting they revise their practices and improve their action to support vulnerable households.
Following that, all domestic energy suppliers have agreed to cease the forced installation of prepayment meters, and the remote switching of smart meters to prepayment mode, while Ofgem and industry agree and implement a code of practice to improve consumer safeguards. Ofgem will then start a formal statutory consultation process to modify suppliers’ licence conditions in line with the code, which will allow Ofgem to use its full enforcement powers to enforce compliance with the code.
I am pleased that the Chancellor has acted through the Budget to remove the premium paid by prepayment meter customers. That will happen from July initially, through the energy price guarantee, with Ofgem bringing forward options for longer-term solutions to be implemented by April 2024.
Prepayment meters can continue to play an important role in the market. They are a useful tool for some customers to prevent debt building up, and a complete ban on prepayment meters would likely see a move to using debt enforcement via the courts and bailiffs, which is not a desirable outcome. However, it is important that the rules around their use are sufficient and properly enforced. That is why Ofgem is undertaking a review to consider how prepayment meters are handled across the market. The Government will continue to review progress to ensure that these processes lead to positive changes for vulnerable consumers.
Amendment 74 tabled by the noble Lord, Lord Whitty, relates to protecting heat network consumers. Robust consumer protection rules are of paramount importance, which is the primary reason that the Government are regulating the heat network sector. Schedule 16 provides for regulations to make the regulator’s principal objective to protect the interests of existing and future heat network consumers. That mirrors Ofgem’s principal objectives regarding existing and future gas and electricity consumers.
I would like to provide more detail on what that principal objective will mean in practice. It will ensure that the regulator prioritises enforcing rules that ensure that heat network consumers receive fair prices and reliable supplies of heat. The regulator will have powers to investigate and intervene where prices appear unfair or are significantly higher than comparable heating systems. The regulator will also introduce heat supply standards of performance, including adequate compensation for consumers who experience outages. That will ensure that heat network consumers receive comparable standards to gas and electricity consumers.
We are introducing these measures through secondary legislation and authorisation conditions, as with gas and electricity consumer protections, to ensure that rules can be updated more easily as the market matures and decarbonises. The Government will consult on the specific consumer standards that need to be met, and I encourage the noble Lord to consider that consultation once it is published later this year.
I hope that noble Lords are reassured by this explanation and feel able not to press their amendments.
Lord Whitty (Lab)
My Lords, I thank the noble Baroness for that considered reply and the recognition in her remarks that there is still a serious problem. She referred to Ofgem coming up with something in relation to the way in which prepayment meters operate. In this new era, with a new structure following the Bill, it would be useful if Ofgem and the Government looked at the totality of structures for all forms of supply of energy, and particularly at the impact on more vulnerable consumers—Ofgem would need to take the lead, I guess. I hope the issues that I raised on the structure of tariffs in relation to the priority service register and the impact on vulnerable consumers would be included. I am watching this space. The noble Baroness has moved some way towards recognising that there is an issue.
I refrained from commenting in detail on heat networks because my voice was going. There is a problem. I very much welcome the fact that this is one bit of consumer protection in the Bill; it has been extended to the users of district heating. District heating has been convenient and is usually quite cheap but is now faced with real problems. I hope that the consultation will cover it.
Lord Callanan
Member's explanatory statement
This amendment makes regulations under Clause 167 (which contains a power to amend certain definitions relating to heat networks) subject to the affirmative procedure.
Lord Callanan
Member's explanatory statement
This amendment removes a reference to Scotland in connection with installation and maintenance licences (which do not apply in relation to Scotland).
Member's explanatory statement
This amendment is consequential on the amendment in the name of Lord Callanan at page 341, line 7.
“(2A) Where regulations make provision by virtue of paragraph 37(2)(c) for the imposition of a penalty on a relevant person, the regulations—(a) must also include provision enabling the relevant person to challenge the penalty in legal proceedings;(b) may, in particular, specify the grounds on which and the time within which a penalty may be challenged and the remedies that may be given.” Member's explanatory statement
This amendment requires regulations made by virtue of paragraph 37(2)(c) of Schedule 16 (heat networks regulation: methods of enforcement) that provide for the imposition of a penalty to include provision for challenging the penalty in legal proceedings.
Member's explanatory statement
This amendment corrects an error in paragraph 40(1)(f) of Schedule 16.
“(3) In this paragraph, “the appropriate authority” means—(a) in relation to England and Wales and Scotland, the Secretary of State;(b) in relation to Northern Ireland, the Department.”Member's explanatory statement
This amendment provides a definition of “the appropriate authority” for paragraph 50 of Schedule 16 (to match the definition in paragraph 61 of that Schedule).
Lord Callanan
“(1) The first regulations to be made by the Secretary of State under section 170 are subject to the affirmative procedure.”Member's explanatory statement
This amendment clarifies that the first regulations made by the Secretary of State under Clause 170 are subject to the affirmative procedure.
Member's explanatory statement
This amendment clarifies that the list in Clause 171(2) of cases in which the affirmative procedure applies relates to regulations made by the Secretary of State (as opposed to regulations made by the Department for the Economy in Northern Ireland).
Member's explanatory statement
This amendment is consequential on the amendment in the name of Lord Callanan at page 141, line 38.
“(iv) any provision of Part 8 or 9 of Schedule 16, or(v) paragraph 56 of Schedule 16;”Member's explanatory statement
This amendment adds regulations relating to step-in arrangements, special administration regimes and powers of entry to the list of the kinds of regulations under Clause 170 that are subject to the affirmative procedure.
“(2A) Any other regulations made by the Secretary of State under section 170 are subject to the negative procedure.”Member's explanatory statement
This amendment is consequential on the amendment in the name of Lord Callanan at page 141, line 38.
“(4) The first regulations to be made by the Department under section 170 may not be made unless a draft of the regulations has been laid before and approved by a resolution of the Northern Ireland Assembly.”Member's explanatory statement
This amendment is part of a rearrangement of procedural provision in Clause 171 relating to regulations made by the Department for the Economy in Northern Ireland, aimed at mirroring the corresponding provision in that clause relating to regulations made by the Secretary of State.
Member's explanatory statement
See the explanatory statement relating to the amendment in the name of Lord Callanan at page 142, line 16.
“(iii) any provision of Part 8 or 9 of Schedule 16, or(iv) paragraph 56 of Schedule 16;”Member's explanatory statement
This amendment makes provision in respect of regulations made by the Department for the Economy in Northern Ireland corresponding to that made by the amendment in the name of Lord Callanan at page 142, line 8 in respect of regulations made by the Secretary of State.
“(6) Any other regulations made by the Department under section 170 are subject to negative resolution within the meaning of section 41(6) of the Interpretation Act (Northern Ireland) 1954 (c. 33 (N.I.)).”Member's explanatory statement
See the explanatory statement relating to the amendment in the name of Lord Callanan at page 142, line 16.
Lord Callanan
Member's explanatory statement
This amendment provides that regulations under Clause 173(1) (which confers power to designate the Gas and Electricity Markets Authority as the licensing authority for the purposes of the Heat Networks (Scotland) Act 2021) are subject to the affirmative procedure.
“(4) Regulations under this section are subject to the affirmative procedure.”Member's explanatory statement
This amendment provides that regulations under Clause 174 (which confers power to make provision about the enforcement of conditions of heat network licences issued in Scotland) are subject to the affirmative procedure.
Member's explanatory statement
This amendment omits provision that would have enabled heat network zones regulations to require a person to comply with the provisions of a non-legislative document.
Member's explanatory statement
This amendment is consequential on the amendment in the name of Lord Callanan at page 153, line 14.
“(1A) Zones regulations made by virtue of section 181(2)(c) or 184(2)(c) must include provision for a right of appeal against the imposition of a penalty.”Member's explanatory statement
This amendment requires zones regulations made by virtue of Clause 181 (requests for information) or Clause 184 (enforcement of heat network zone requirements) that make provision for the imposition of a penalty, to include provision for a right of appeal.
Lord Ravensdale
“PART 7ALocal Area Energy PlansDuty to provide guidance(1) The Secretary of State must publish guidance for local authorities on local area energy planning within 12 months of this Act being passed.(2) The guidance in subsection (1) may include, but is not limited to, guidance on—(a) contributing towards meeting the targets set under—(i) Part 1 of the Climate Change Act 2008 (UK net zero emissions target and budgeting), and(ii) sections 1 to 3 of the Environment Act 2021 (environmental targets);(b) adapting to any current or predicted impacts of climate change identified in the most recent report under section 56 of the Climate Change Act 2008 (report on impact of climate change);(c) the data and assumptions used in creating a local area energy plan;(d) the roles and responsibilities of those involved in creating a local area energy plan;(e) the minimum standards for a local area energy plan.(3) Local authorities must have regard to the guidance produced under subsection (1) when developing local area energy plans.(4) In this section, “local authority” has the meaning given in section 178.”Member's explanatory statement
This amendment provides guidance for local authorities to help them produce Local Area Energy Plans. It aims to widen the roll out of Local Area Energy Plans among local authorities and help better define the role of local authorities in delivering the future energy system.
Lord Ravensdale (CB)
My Lords, I declare my interests set out earlier and add my interest as a director of Peers for the Planet. I also thank the noble Baroness, Lady Bennett, for her support on Amendment 94. I will keep my remarks brief, but first I thank the Minister and his Bill team for meeting me and for all of the engagement on this important issue over the last few months.
I feel that one of the key missing pieces in the net-zero puzzle before us is in better defining the role of local authorities within the whole governance structure. We all know that local authorities have a vital role to play, but there is limited definition of this. I think that local area energy plans are at the core of fixing this. Local area energy planning is a data-driven and whole-energy-system evidence-based approach, which sets out to identify the most effective route for a local area to contribute towards meeting the national net-zero target, as well as meeting its local net-zero target. Its proven methodology is a well-trodden path which has been effectively used in a number of other countries.
I wanted to return to this issue on Report as I strongly feel that there is a missed opportunity within the Bill to set out the role of local authorities more clearly. There have been some developments since Committee. In particular, the Skidmore Mission Zero report was published, which recognised the issue and aligns with what I am asking for in this local area energy planning amendment. This was brought out strongly in the report, as one of the 25 key actions for 2025 was for the Government to provide guidance on local area energy planning. The Committee on Climate Change also recognises the need for this.
The amendment does not ask for much; it asks only for guidance to be published, and it does not mandate the approach in any way. It simply asks for the Government to publish guidance for local authorities to use in local area energy planning—this step has already been taken by the devolved Governments in Scotland and Wales. So it will provide much-needed clarity to local authorities on how they should approach energy planning, and it will also send the important signal that the Government are behind the approach to help to increase the rollout of these plans. So I look forward to the Minister’s response, and I hope he can provide me some reassurance on this point. I beg to move.
Baroness Boycott (CB)
My Lords, I will speak to Amendments 134 and 135, about community energy. In the midst of an energy crisis, when cheap and clean home-produced energy has never been more vital, as we have heard in this debate, we are far behind where we could be with the amount of small-scale renewable energy, especially community energy schemes, which are simply community-owned and community-run renewable energy projects. Our limited number of schemes has been massively welcomed by politicians of all parties because they provide cheaper and greener power, and they distribute benefits locally, rather than up to the big power companies.
The feed-in tariff briefly created rapid growth in these schemes, but that has dwindled to almost nothing—despite renewable technologies being cheaper than ever. The lack of growth is largely the result of the prohibitive cost that the small-scale generators face. The problem is well recognised, and 318 MPs from all major parties back the Local Electricity Bill, which would enable community energy schemes to sell electricity they generate to their local customers.
The potential is enormous. According to the Environmental Audit Committee, community energy could grow by 12 to 20 times by 2030, power 2.2 million homes and save 2.5 million tonnes of CO2 emissions every year. This would take our renewable energy generation from community schemes to almost 10% of our entire needs, and the substantial benefits of enabling this can barely be overstated. However, community energy has seen a trickle of minimal growth, amounting to less than half a per cent.
The problem can be solved without subsidy, and this seems to be the key point. Small-scale renewable energy generators need to receive only a guaranteed fair price for the electricity they contribute to an energy system in desperate need of homegrown energy, as we have heard. Amendment 134 establishes a
“Community and Smaller-scale Electricity Export Guarantee Scheme”.
It would provide a guaranteed income for the electricity from small-scale low-carbon energy generators, with “small” defined as “a capacity below 5MW”. This would mean that communities get properly remunerated for their contribution to the system, and they can therefore go to their banks and raise the funds to expand or establish. This guaranteed price could be set by regulations, revised annually by Ofgem, with the initial contract guaranteed for at least five years—not that long.
Amendment 135 establishes a
“Community and Smaller-scale Electricity Supplier Services Scheme”.
This, again, would allow community schemes that registered under the electricity export guarantee scheme also to sell the electricity they generate locally. No requirement is placed on community schemes to do this, so, if they wish, they could operate simply using the proceeds of the export guarantee. For some, such returns would be sufficient to encourage local people to invest in new energy schemes—such was the case when we had a feed-in tariff.
But, if a community wants, it can sell the electricity it generates directly to households and businesses in its community. It can do so, for example, as an additional incentive for local people to invest or because it believes it can offer a lower tariff to the less well off in the community—this point was made on previous amendments this afternoon. This means that the community, which knows its people and what is going on, can flex its tariffs, and everyone can buy in to the project.
As with the clause created by Amendment 134, this would all be monitored by Ofgem and reported on annually. This is a nationwide campaign backed by a coalition of over 80 organisations—the Church of England, the CPRE, the Energy Saving Trust et cetera; I will not name them all—and 100 councils have already stated their support. Four of the six major distribution network operators—basically, our regional energy grid monopolies: Electricity North West, SP Energy, UK Power and Western Power—are supportive. As has been mentioned before, the Skidmore review supports all such organisations and ideas that will help green renewable energy, so I am completely puzzled as to why Ministers are not falling over themselves to make this thing happen.
In Committee, the Minister, the noble Lord, Lord Callanan, said that the amendments would create a subsidy to community energy schemes. However, we need to be really clear—in saying this, I want to pre-empt a response from the Minister—that the amendments do not establish subsidies for community energy schemes. Renewable energy can stand on its own two feet now; it has been successful in cutting costs over the last two decades and is now completely viable without the need for feed-in tariffs. We just need to set up the right market system for the energy for people to buy it and for people to be responsible for it. I will be completely puzzled if the Minister does not accept that, and I warn him now that I intend to test the opinion of the House later.
Baroness Bennett of Manor Castle (GP)
My Lords, the three amendments have been extremely ably introduced by the noble Lord, Lord Ravensdale, and the noble Baroness, Lady Boycott. It is a pleasure to speak after them, having attached my name to all three amendments.
I will briefly sum up what they seek to achieve. Amendments 134 and 135 are about community energy, which is where people can get together as a community, decide what they want their local energy system to look like and deliver it. There is no need for any involvement from Westminster or big multinational companies; it is a chance for communities to get together. Surely, as the noble Lord, Lord Lucas, has signed both Amendments 134 and 135, this would be seen to be utterly in line with Conservative approaches. I note that, in the other place, among the hundreds of signatories is Sir Graham Brady, so if you want a full political spread, perhaps from me to Sir Graham Brady will pretty well cover the breadth of support for community energy.
On Amendment 94, we know that there is huge concentration of power and resources, and that the reins are held very tightly by Westminster. As the noble Lord, Lord Ravensdale, set out, Wales and Scotland have already seen the importance of local decision-making to solve local problems to ensure that they are able to deliver renewables, with local people making the decisions about where they go, what they look like and how they are distributed. Indeed, as the noble Baroness, Lady Boycott, said, this could be a local poverty alleviation issue and a levelling-up type of approach.
I acknowledge that the Minister has very kindly had meetings with us to discuss the amendments. We keep being told that this is something that the Government would like to do eventually but it is all too difficult. However, I think it is all worked out and set out in the amendments. Clearly, many people in the other place and here have been convinced that now is the time to go for community energy.
I will offer a final reflection. I happened to be in a bed and breakfast in Norfolk this morning, chatting across the table to some residents of Herefordshire who had just driven across the country and were about to drive back. They asked me, “Where are all the solar panels? We can’t see solar panels where we know we should see solar panels.” I said that the answer to scale this up quickly could be community energy.
Baroness Young of Old Scone (Lab)
My Lords, I support Amendments 134 and 135, so ably led by the noble Baroness, Lady Boycott. I had hoped that my name would be added to them, but something happened along the way.
It is true that everybody is saying that there is real importance in community energy, but the proof of the pudding has to be in the eating. After that initial burst of schemes that the feed-in tariff encouraged, we have really not seen any major growth and the government measures that have been put in place simply have not worked. The amendments are important for two reasons. First, they would enable improved financial predictability and viability for community energy schemes, because, at the moment, there are a number of hurdles that such schemes have to cross. If financial viability and predictability are not there at the start, they lose heart very rapidly in approaching the other hurdles. The second is the issue that has already been touched on: that is the whole business of community “joie de vivre” around energy generation schemes. A surefire way of not having local schemes is where there is a scenario of “all pain and no gain”—where there is a bit of local environmental disruption and a little adjustment to the view. Local communities very rapidly turn off those schemes if they do not see any value for themselves. That is happening more and more at the moment. Local community generation schemes are not very popular since there is landscape blight and no direct benefit. In fact, the figures show that more solar farms were turned down in 2020 at planning stages than had been turned down in the previous four years.
The presence of a local community scheme may even lead to dialogue locally about increased uptake of energy efficiency measures. People become interested in both energy efficiency and demand-side and supply-side issues. That is exactly the sort of community engagement we need if we are really going to see net zero hit. Indeed, Chris Skidmore in his much-quoted net-zero review urged the Government to produce a community energy strategy and to break through the current regulatory and legislative funding barriers. He supported the provisions of the Local Electricity Bill, which these amendments have largely reproduced.
As has been said, the noble Lord, Lord Callanan, assured us in Committee, in his letter of 22 December and in subsequent meetings that the Government want to see more community energy schemes. We are really asking him what in effect will be done, as, so far, government measures have not worked. To echo the noble Baroness, Lady Boycott, we are not seeking subsidy; we are looking for a fair price varied by government, as advised by Ofgem—an increased price, perhaps, where schemes need to be encouraged and a reduced price, perhaps, if scheme growth is going gangbusters. It is about a guaranteed floor price, similar to the contracts for difference from which other renewable sectors benefit.
I thank Octopus and other major suppliers for tackling some of these issues. The reality is, however, that they are not creating the volumes that are required. It is quite a telling fact that Octopus, through Unity, its subsidiary, is now responsible for one-third of all the community energy sector schemes. If one company, busting a gut, can actually be involved in one-third of the community energy sector, it seems to imply that it is not moving very fast. We are not seeing the volume of schemes being created. Other barriers need to be tackled, particularly access to the grid, lack of early-stage feasibility funding and planning complexities, but to accept these two amendments would go a long way to encouraging the community energy sector and to removing the most fundamental barrier, which is the economic one.
It would also be good if the Minister could tell us what the latest timescales are for the review of the electricity market arrangements, because that is another area where the whole business of how renewable energy competes is going to be fundamental. Can the Minister tell us today—if he is not going to accept these amendments, as I am sure he will not do—what the Government are going to do that will be effective in getting the community energy sector off its knees, where it is at the moment?
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.
Lord Callanan (Con)
I thank all Members who have contributed, particularly the noble Baronesses, Lady Boycott and Lady Bennett, for Amendments 134 and 135—the noble Lord, Lord Lucas, proposed them but sadly is not in his place. I am grateful to noble Lords who met me and officials recently to discuss this matter and give us a chance to talk through the departmental thinking.
As I said when we met, the Government recognise the role that community and local renewable energy schemes can play in supporting our net-zero targets. But we continue to believe that small-scale, low-carbon electricity generation should be brought forward through competitive, market-based solutions. A key feature of the smart export guarantee regime is to allow suppliers to set both the tariff level and the structure and for suppliers themselves to determine the value of the exported electricity alongside all the associated administrative costs. Any move to introduce a regulated price for exported electricity has the potential to limit the overall scope for innovation and export tariff packages. This would fundamentally undermine the principles of the supported export guarantee policy objective, which looks to encourage a market-driven approach.
Furthermore, the amendments as drafted are unlikely to result in better outcomes for consumers compared with other tariffs that would be available from suppliers. First, there would be initial set-up and ongoing delivery costs associated with the scheme for both Ofgem and the suppliers, which we expect would be material. These costs would be recovered via the service fee charged by suppliers and therefore probably reflected in the local tariff price.
Secondly, small-scale, low-carbon generation will, by its nature, be intermittent and unable to supply local consumers at all times. Suppliers would therefore need to buy additional wholesale energy from other sources—for example, during periods of peak demand—and incur all the associated network and system costs. The local tariff would also be required to have regard to the export price paid to the local generator. This would create a somewhat perverse outcome where higher export prices would benefit the generator but also increase the tariff price.
As a result, there is no guarantee that the local tariff would be lower than the current regulated standard variable tariff. In fact, there is some reason to believe that it would actually be higher.
Baroness Bennett of Manor Castle (GP)
Before the Minister sits down, I would like to apologise to the House; I should perhaps have declared my position as a vice-president of the Local Government Association. The Minister referred to the costs of local schemes, but would he acknowledge that there has been historically—and certainly will be in the future—a great deal of voluntary effort and contributions in the administration and running of such schemes, and that that is a net input into communities that does not have a financial cost, which can affect the price?
Lord Callanan (Con)
If organisations take advantage of community-minded individuals prepared to contribute work to their local community, that is something that we welcome. However, what will be critical to those communities is the ultimate tariff that they pay, irrespective of how much voluntary effort goes in. Our concern is that these amendments are being slightly oversold to many communities; they may think that they are somehow going to get a favourable tariff compared to what they would get in the wider market. As currently structured, we do not believe that the amendments would produce that.
Baroness Boycott (CB)
Before the Minister sits down, I think that that is slightly unfair on local communities. A lot of people enjoy being involved in local community schemes and, as the noble Baroness, Lady Bennett, just said, a lot of volunteering work goes into this. It is not just about getting lower prices; it is also about reducing our carbon emissions and being part of the campaign to get to net zero. You cannot just quantify everything in pounds, shillings and pence.
Lord Callanan (Con)
I agree with the noble Baroness, and we are supporting a number of community energy partnerships at the moment. As I say, we are not against the idea in principle, but we need to work through the proper policy implications and ensure that some of these very worthwhile schemes are not piggybacking on to the costs that everybody else pays into the system.
Lord Ravensdale (CB)
My Lords, I thank the Minister for providing that detail on the department’s approach to local area energy planning and for recognising the ongoing work. With the reassurance that has been provided by the Minister, I beg leave to withdraw my amendment.
Lord Callanan
Member's explanatory statement
This amendment ensures that the acceptance by an enforcement authority (under energy smart regulations) of an enforcement undertaking in respect of a person’s act or omission does not prevent the authority imposing a penalty on that person in respect of a different act or omission.
Lord Callanan
“(5A) Energy smart regulations that are not within subsection (5) are subject to the made affirmative procedure if they—(a) are the first energy smart regulations to make provision about a particular description of energy smart appliance,(b) make provision by virtue of section 189(4)(b) imposing requirements of a kind not previously imposed by energy smart regulations,(c) make provision by virtue of section 190(1)(a) or (b) by reference or in relation to a published document, standard or list (as the case may be) in respect of which such provision has not previously been made,(d) confer new powers for the enforcement of energy smart regulations, or(e) make provision by virtue of section 192(2) for the imposition of new civil penalties.(5B) A revised version of a published document, standard or list is to be disregarded for the purposes of subsection (5A)(c) if provision has previously been made in respect of the document, standard or list by virtue of section 190(1)(a) or (b) (as the case may be).”Member's explanatory statement
This amendment provides that energy smart regulations that are not the first energy smart regulations but that include certain kinds of provision for the first time are subject to the made affirmative procedure.
Baroness Hayman
“National Warmer Homes and Businesses Action Plan(1) The Secretary of State must, before the end of the period of 6 months beginning with the day on which this Act is passed, publish an action plan entitled the Warmer Homes and Businesses Action Plan, to set out how His Majesty’s Government intends to deliver on—(a) achieving a low-carbon heat target, of 100% of installations of relevant heating appliances and connections to relevant heat networks by 2035,(b) achieving EPC band C by 2035 in all UK homes where practical, cost effective and affordable,(c) achieving EPC band B by 2028 in all non-domestic properties, and(d) introducing the Future Homes Standard for all new builds in England by 2025.(2) The Secretary of State must, in developing the Warmer Homes and Businesses Action Plan, consult the Climate Change Committee and its sub-committee on adaptation.”Member's explanatory statement
This amendment imposes a duty on the Secretary of State to bring forward a plan with timebound proposals for low carbon heat, energy efficient homes and non-domestic properties and higher standards on new homes.
Baroness Hayman (CB)
My Lords, in moving Amendment 97 I remind the House of my interests as set out in the register. This is truly a cross-party amendment, and I am grateful to the noble Lords, Lord Bourne, Lord Whitty and Lord Foster of Bath, who have added their names to it. The noble Lord, Lord Foster of Bath, has Amendment 98 in this group, and has been fighting the battle on energy efficiency even longer than I have.
I do not need to speak at length on this issue, as I explained the rationale of it in Committee. For any noble Lords who missed that event, I also explained the rationale for amendments to the Social Housing (Regulation) Bill and the Levelling-up and Regeneration Bill. This is an important issue and it goes across many sectors. In the private sector, social housing and owner occupation we have the same problem: our housing stock is old, leaky and draughty—and part of the leaking that goes on is of money. There are also the effects on health and productivity.
There has been no challenge at any time when I have suggested that it is important that we focus on energy efficiency. The analysis that we have a real problem is universally accepted. Indeed, six years ago the Government first set out their own aspiration for as many homes as possible to be EPC band C by 2035. However, I am afraid that, although the aspiration has been there, the achievement has not. Since that aspiration was set out, we have had numerous schemes for home insulation, which in the main have failed. They have been piecemeal and ineffective, and have given no confidence to the industries that we need to deliver those services that there will be long-term investment and that they too can invest and train the workforce necessary to make the inroads we need into the problems.
We have had those sorts of schemes and a string of announcements from Governments. There has been a string of announcements, a string of reannouncements, a string of consultations and, most recently, an announcement that there was a commitment to publish the responses to a previous consultation. What we have not had is the comprehensive, coherent, cohesive plan that would see us able to make real progress in this area.
Everyone else has quoted the Skidmore review so I will too. In that review, Chris Skidmore said that the mission to improve energy efficiency for households
“will not only reduce energy demand and bolster our energy security, but also save consumers money on their bills”.
To that, I add that it will also save taxpayers money because, at the moment, they are subsidising those bills. Good money is literally going up in smoke; we need to stop it now. What we need is a comprehensive, cohesive plan with set times for the achievement of set objectives—something that we have never had.
This is not only my analysis. In its progress review—last month, I think—the National Infrastructure Commission highlighted:
“Government is not on track to deliver its commitments on heat or energy efficiency … A concrete plan for delivering energy efficiency improvements is required, with a particular focus on driving action in homes and facilitating the investment needed”.
We need to take that conclusion very seriously; my amendment seeks to do just that.
I am grateful to the Minister, who found time to discuss these issues with me. He had some concerns about the drafting of the amendment, particularly the words “cost effective”, “practical” and “affordable”. I am trying to make this amendment sensible, cost effective, practical and affordable, but I hope to reassure the Minister that those words were not just plucked out of the air by me. They come from the Government’s own Clean Growth Strategy and were quoted back at me as something that the Government supported by the noble Earl, Lord Howe, in his response to my amendment when we debated it during a debate on the levelling-up Bill.
For those reasons, I hope that these words will not worry the Minister in the way that they did when we had a conversation. If he was still concerned and felt the need to change them at Third Reading, I think we would all be happy to come back and see whether there was a way in which we could accommodate that. Meanwhile, I do not resile from my view that, as a Parliament, we need to say how firmly we believe that the Government have not made enough progress on this issue and that we need a road map to do so urgently.
I beg to move.
Lord Foster of Bath (LD)
My Lords, I am absolutely delighted to support this amendment from the noble Baroness, Lady Hayman, and to speak to my Amendment 98. For those who have not necessarily followed the debate, which has gone on for many years, it is worth pointing out by way of background that the International Energy Agency has repeatedly argued that the best way to tackle the impact of climate change is to reduce our use of energy and that the most cost-effective and environmentally friendly option is to avoid unnecessary consumption. Clearly, the benefits of such an approach are pretty obvious: increased national energy security and reduced carbon emissions, coupled with reduced household energy bills and improved quality of life, not least for those living in old, damp, mouldy homes. There are other benefits too, including, for example, the saving to the NHS in England of £1.4 billion a year—its estimate of the cost of people living in cold homes.
Schemes to deal with this have come and gone. Promises have been made but rarely kept. Existing schemes have been inadequately policed. The Green Deal and the green homes grant schemes came and went. Even the 2019 Conservative Party manifesto promise to invest £9.3 billion of public funding to stimulate energy efficiency up to 2024 appears to have been cut to £6.6 billion, as we see in the document produced in March this year. Measures that are still on the statute book are being inadequately policed, so the assumed impact is not being achieved. For instance, not all properties that should have a display energy certificate do so.
Lord Deben (Con)
My Lords, having been introduced by the noble Lord, I want to try to help the Government. We all know that, first, energy efficiency is the most sensible way of proceeding towards the statutory targets that this Government have supported and this Parliament has voted for. Secondly, we know that every mechanism that we have tried so far has not delivered to the extent that we hoped it would. Thirdly, we know that this is an all-party view; nobody disagrees with it except those who still believe that climate change is not happening. Even if you do not believe in climate change, you must understand the cost of living crisis and, therefore, that doing this is crucial to reduce costs, particularly for those who are least able to bear them. So there is every reason for energy efficiency.
It is therefore not surprising that every adviser of the Government has emphasised this—not just as one among many possibilities but as the most important thing that any Government could do at this time. That is not just the Climate Change Committee but the National Infrastructure Commission and everybody else who has paid any attention at all to this. Yet the Government, in explaining to their supporters why this would not be an acceptable amendment, suggest that somehow or other it would add unnecessarily to the various schemes and programmes that are already in place.
I have to say to the Minister that the Climate Change Committee has looked very carefully at this and it does not actually meet the facts, because none of these other things satisfactorily deals with the reduction of energy use. There is a bit of an argument about how much of a difference you could make but, roughly speaking, if we had real energy efficiency, we could do all the things we are doing at the moment at about half the energy use. This is a hugely important matter.
These particular amendments may well have failings, but that is to remind the Government that they should have brought this forward in the Bill themselves, so that it did not need to be amended. I beg the Minister, whom I hope is in a sympathetic mood, even to statements by me, to take seriously the fact that no one believes that we should not have this amendment or something like it—no one who I can find logically does.
There will be some people who, if it is pressed to a vote, will support the Government because they feel that they must. I am happy to meet any of them and listen to their arguments for not doing this; it will be difficult for those arguments to be effective. I merely ask the Minister to please not put us yet again in the embarrassing position that either we vote against energy efficiency on the side of the Government or we vote against the Government for energy efficiency, which is what every independent adviser advises and which is, I happen to be sure of, actually the view of any Minister who has looked at the facts.
Lord Whitty (Lab)
My Lords, I am glad to follow the noble Lord, Lord Deben; in the way he has spelled it out, it is clear that there is a huge gap in the energy strategy being presented by the Government. You would not believe that from the size of the Bill and the details within it, but the fact is that, unless we have a strand of policy, properly delivered and enforced, that deals with energy efficiency, we are missing the easiest target: to stop households and businesses spending money on energy when relatively simple adjustments to their homes or to the regulations that cover buildings could change that.
I am lost in admiration for the noble Baroness, Lady Hayman, who raises this issue on every piece of legislation going through the House. I am astounded that the Government have not taken it up.
There is something odd about this. More than 20 years ago, I was sitting where the Minister sits, and I was responsible for policies against fuel poverty and for energy efficiency. At the end of the Labour Government, we were doing roughly four times the number of interventions that the Government have done. So when the Minister turns around, as he did in Committee, and says that they are already doing a very substantial amount of stuff—they are doing some stuff; there is a social housing fund for energy efficiency and the ECO scheme, which is not a particularly efficient way of delivering it but does deliver something—at the end of the day, it does not amount to what we were doing 20 years ago. Had we continued doing that for the last 20 years—maybe we would have had to alter it and to update the interventions—then the energy efficiency of our buildings would be substantially greater. The Minister is required to explain to the House why this glaring omission is not in this or any other Bill.
There are relatively simple things you can do which make a dramatic difference, though it is slightly difficult to do it. Why, for example, do regulations on new builds not universally require new-build houses to approximate to a net-zero position? Why, for example, does the planning system tend to favour demolition of buildings, which itself is carbon-releasing and carbon-inefficient, rather than effective retrofitting? Why, in effect, have the schemes that the Government have come forward with in the owner-occupier sector—the green homes grant and the Green Deal—not worked, despite the fact that industry and campaigners have been very much in support of them? The answer is that they have not been made sufficiently attractive and the delivery has not been made sufficiently attractive to businesses—installers and the workforce—to ensure that we have a massive effort on this front.
I am glad that the Government have established a more effective Energy Efficiency Taskforce, but that task force needs to come up rapidly with a strategy which will address all of these issues and deliver for us a contribution to solving the energy-induced part of the cost of living crisis, and at the same time begin to reduce our dependence on energy use and enhance our contribution towards meeting net zero. It is so obvious that I am astounded, as the noble Lord, Lord Deben is, that the Government have not seized this opportunity.
I hope that, before the Bill finishes its turn in this House, we will see a rectification of that and a real commitment to an energy efficiency strategy which makes sense, is attractive and works.
Baroness Altmann (Con)
My Lords, I support these amendments and the concept of improving energy efficiency. I probably cannot express the rationale for that better than the noble Baroness, Lady Hayman, and my noble friend Lord Deben.
I would like to ask my noble friend the Minister if there are particular issues in the wording of these amendments that the Government have a problem with. Is it the EPC ratings or the six months? If there are such issues, would the Government consider coming back at Third Reading with their own version of what seems, universally across the House and across the country, to be so sensible? Given the Government’s excellent record and excellent intentions in improving the energy performance and net-zero performance of the British economy and our country, would they consider these measures?
Lord Lennie (Lab)
My Lords, these welcome amendments in the names of the noble Baroness, Lady Hayman, and the noble Lord, Lord Foster, are concerned with energy efficiency in homes and non-domestic premises. As the noble Lord, Lord Deben said, the Government have set statutory targets aimed at reducing carbon emissions, achieving net zero and improving energy efficiency in homes.
There is consideration under way in the Minimum Energy Performance of Buildings Bill to move EPC ratings for rental properties from band E to C by 2025. The original plan was to ensure that all tenancies were in that band by 2025, but after much lobbying by landlords and others, DESNZ decided to scrap the 2025 target and now have until 2028 to achieve that target.
I want briefly to set out some facts: energy-efficiency measures are now 20 times lower than under the last Labour Government; the UK has the least energy-efficient homes in Europe; domestic energy-efficiency measures have fallen 95% since 2012; and the Resolution Foundation estimates that 9 million households are paying an extra £170 a year as a result of these failings. So we support these amendments, and should the noble Baroness, Lady Hayman, test the opinion of the House, we will support her in that vote.
Lord Callanan (Con)
My Lords, this group covers the two amendments concerning the energy performance of existing premises and of new builds.
I will start with Amendment 97, from the noble Baroness, Lady Hayman, and the noble Lords, Lord Foster and Lord Whitty, which would require the Secretary of State to publish a national warmer homes and businesses action plan six months after Royal Assent. That proposed plan looks very similar to and would duplicate the Government’s existing Net Zero Strategy and the Heat and Buildings Strategy—added to, of course, by the Powering Up Britain publications. Therefore, we feel that it is unnecessary.
On minimum energy-efficiency standards for domestic buildings, the Government agree with the ambition of reaching EPC band C by 2035 for as many homes as possible where that is cost effective, and for commercial properties below EPC band B where that is cost effective. On minimum energy-efficiency standards, these ambitions have already been published in various publications, including the Net Zero Growth Plan. The Government have already set out their timeline to deliver the future homes standard by 2025 and we have accelerated work on its full technical specification. We will consult further on that later this year. Regarding the proposal on heat networks, the Bill already outlines our heat network zoning proposals for England, which details where buildings should be connected to heat networks and gives local authorities the power to implement heat network zones.
On top of all those major commitments, as has been referenced in the debate, we recently launched the Energy Efficiency Taskforce, of which I have the honour to be co-chairman, to deliver our ambition to reduce the UK’s final energy consumption from buildings and industry by 15% by 2030. So there is no difference in ambition from the Government on energy efficiency. I agree with many of the points made on how important energy efficiency is, and we are progressing work to increase it across a whole range of sectors, as I have outlined.
In addition to all that, in the Statement on powering up Britain, which was made just before the Easter Recess and will be repeated here on Wednesday evening, we announced a further insulation scheme—the Great British insulation scheme—to deliver £1 billion in additional investment by March 2026 in energy-efficiency upgrades in some of the least efficient homes, including those in the so-called able-to-pay sector. Furthermore, we announced that we will extend the boiler upgrade scheme until 2028, supporting both domestic and small non-domestic buildings, building on the existing £450 million-worth of funding already committed between 2022 and 2025 to provide the signal that people have been asking for that the scheme will last in the longer term. All of that will help us to reach our ambition of phasing out all new installations of natural gas boilers by 2035, but before we can proceed to legislate for that we must provide effective cheap alternatives; otherwise, the population will, in my view, react badly to being compelled to do that.
I turn next to Amendment 98, tabled by the noble Lords, Lord Foster, Lord Lennie and Lord Whitty, and the noble Baroness, Lady Hayman, with contributions from my noble friend Lady Altmann. I would also like to thank the noble Lord for his important work as chairman of the committee. This amendment would require all privately rented homes to have a minimum energy performance certificate—EPC—rating of band C by December 2028, subject to specified exemptions. The amendments would also require non-domestic privately rented properties to meet EPC B by December 2028.
Again, the Government agree with the principle of increasing the ambition for minimum energy-efficiency standards to help reduce energy bills for tenants and to deliver carbon savings to meet our net-zero and achieve our fuel poverty targets. That was reflected in the Government’s consultation, which has been referred to, on proposals to raise the minimum energy-efficiency standard for privately rented homes to EPC C for new tenancies from 1 April 2025 and for all tenancies by 1 April 2028. We are currently considering the results of that consultation, but, as I have said in the House before, it is not an easy policy to progress. There are already shortages of rented accommodation in many parts of the country, and it is certainly not my ambition to further increase those shortages, so we will have to be careful how we proceed in that legislation. The Government also consulted on a minimum energy-efficiency standard for non-domestic privately rented buildings of EPC C by 2027, and EPC B by 2030.
Under the Energy Act 2011, the Secretary of State already has the necessary powers to amend the PRS regulations to raise the minimum energy-efficiency standards and set the dates by which landlords must comply with the new energy standards. As I explained in Committee, the amendment would not allow us to reflect the immense amount of valuable feedback that we received from the consultation in the final policy design that we are currently working on. This will be essential to ensure that it is fair and proportionate for tenants, of course, but also for landlords themselves. As I said at the time, we intend to publish the summary of responses to this consultation later in the year, as confirmed in the powering up Britain Statement.
I hope that I have been able to reassure noble Lords as to our ambitions in this area. We want to see the same policy outcomes as do many in this House and we are already working on many of these areas. I hope that my reassurances will enable the noble Baroness to withdraw her amendment.
Baroness Hayman (CB)
My Lords, I am grateful to everyone who has spoken on this important issue. The Minister said, in essence, that there is no difference between the Government and my amendment. If that is so, it will not be such a big deal for them to accept it. However, the truth of the matter is that this amendment would mandate action in this area, and in a specific timeframe. I am sad to say that the Government have a credibility problem in this area with their own ambitions, objectives and restatements of policy. I have been very much supported from all Benches—I am particularly grateful to the noble Lord, Lord Deben—and I wish to test the opinion of the House.
Lord Callanan
“(A1) ESOS regulations that provide for the imposition of a financial penalty must also provide for a right of appeal to a court or tribunal against the imposition of the penalty.”Member’s explanatory statement
This amendment requires ESOS regulations that provide for the imposition of financial penalties to include provision for a right of appeal.
Member’s explanatory statement
This amendment is consequential on the amendment in the name of Lord Callanan at page 177, line 13, which makes provision about appeals against the imposition of a financial penalty.
Member’s explanatory statement
This amendment is consequential on the amendment in the name of Lord Callanan at page 177, line 13, which makes provision about appeals against the imposition of a financial penalty.
Member’s explanatory statement
This amendment is consequential on the amendment in the name of Lord Callanan at page 177, line 13.
Member’s explanatory statement
This amendment is consequential on the amendment in the name of Lord Callanan at page 177, line 13.
“Marine habitats: reducing effects of offshore wind developments(1) The Secretary of State may, by regulations, prohibit offshore wind developments in marine protected areas.(2) The Secretary of State may, by regulations, prevent consent being granted for an offshore wind development if the mitigation hierarchy has not been followed.(3) “Mitigation hierarchy” means a framework for developers to address harms to biodiversity and ecosystems caused by developments, based on the sequential and iterative application of actions to avoid, mitigate, and then compensate for, such harms.(4) Subsections (1) and (2) apply to—(a) an offshore installation used for or in connection with wind energy generation;(b) offshore infrastructure, including cables and pipelines, connected to such an installation;(c) infrastructure connected to such an installation that is being decommissioned, has been decommissioned, or has been abandoned.(5) Regulations under this section are subject to the affirmative procedure.”Member’s explanatory statement
This new Clause would strengthen protection for marine protected areas from damage related to energy infrastructure and ensure the mitigation hierarchy is followed.
Baroness McIntosh of Pickering (Con)
My Lords, it gives me great pleasure to speak to Amendment 104. I look forward to hearing from other noble Lords with amendments in this group, notably the noble Lord, Lord Teverson, looking at the prohibition of coal mines in Amendment 131. Amendment 124, tabled by the noble Baroness, Lady Sheehan, looks at the prevention of flaring and venting, which causes great concern. The noble Baroness, Lady Bennett of Manor Castle, also has an amendment looking at the
“Prohibition … of new oil and gas fields and issuing of exploration licences, and of new coal mines”.
I will restrict my remarks to the mitigation hierarchy. I start by saying that I welcome the government amendments to the Levelling-Up and Regeneration Bill—Amendments 373A through to 373F—which I understand will add the mitigation hierarchy to that Bill. I thank my noble friend the Minister and his colleagues in DLUHC for listening to the concerns expressed by myself and other noble Lords at earlier stages of proceedings.
However, I will press my noble friend to confirm the extent to which this commitment applies only to new environmental outcome reports. For greater clarity, will this matter relate to all environmental outcome reports or just the new ones that will take effect at that time? Further to that, for my better understanding and to assist the House in considering Amendment 104, to what extent will tests be included within these environmental outcome reports? What will those tests cover? Will my noble friend go as far as to say that the tests will cover the site assessments involved in offshore wind planning?
The purpose of Amendment 104, which I am delighted to have the opportunity to speak to today, is to strengthen the protection for marine protected areas from damage related to energy infrastructure, and to ensure that the mitigation hierarchy is followed. I was delighted to serve on the EU Environment Sub-Committee, chaired by the noble Lord, Lord Teverson, for a short period. We took compelling evidence on the serious disruption caused by both the construction and operation phases of wind farms. So I put to my noble friend the Minister that ample academic and other evidence proves that this damage to sea mammals, seabirds and other creatures—indeed, to all marine life—is substantial.
This is a probing amendment and I do not intend to press it to a vote, but I would be interested to learn to what extent the addition of the mitigation hierarchy, in the amendments that the Government have tabled to the levelling-up Bill, will cover these points—namely, that this will apply to all environmental outcome reports and that this will cover site assessments involved in offshore wind planning. Earlier, I argued that there should potentially be a moratorium—I am sure the Government would not welcome that—on new applications for offshore wind developments, until we understand that the mitigation hierarchy will be followed. With those few remarks, I beg to move Amendment 104.
Baroness Sheehan (LD)
My Lords, I will speak to Amendment 124 in my name, but, before I do so, I will take some time to support my noble friend Lord Teverson’s Amendment 131—I will not say much else until he has had a chance to speak to it. I also support the amendment in this group in the name of the noble Baroness, Lady Bennett, which would stop the issuing of new licences for fossil-fuel exploration and exploitation in the North Sea.
Amendment 124, on “flaring and venting”, follows on quite neatly from the two amendments in the previous group on energy conservation in the home. I am delighted by, and congratulate the noble Baroness, Lady Hayman, on, her decisive win on that issue. The Government ought to have grasped that low-hanging fruit with both hands already, and flaring and venting in the North Sea is more low-hanging fruit that the Government have failed to grasp. It too could use energy that we already generate in a much more effective and efficient manner. A ban on oil and gas flaring and venting in the North Sea is the single most effective action that the Government could take to dramatically reduce methane emissions from that sector.
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.
Baroness Blake of Leeds (Lab)
My Lords, I thank all noble Lords for their very important contributions on the amendments in this group. It is an enormous privilege to follow the noble Lord, Lord Deben, with his experience and expertise in the subject matter before us today. I want to keep my comments brief as we have had a lot of opportunity in different discussions and debates, particularly during the passage of this Bill, to try to get across just how strong the feelings are around the House on these matters.
I pay tribute to the noble Baroness, Lady Sheehan, for her amendment on the burning of methane and other hydrocarbons produced during oil extraction. As we have heard, very distinguished bodies have come out against this. In particular, there is a real concern that not taking notice of the need to address this issue undermines the UK’s commitments made at COP 26 and COP 27 under the global methane pledge. We need to take this seriously. We have heard how important the contribution of methane is towards the UK’s net greenhouse gas emissions. Just to add to the statistics around this, during the last decade the UK has wasted £2.6 billion in lost gas sales due to flaring and venting, and released 45 million tonnes of carbon dioxide into the atmosphere. When you put that into the context—as the noble Baroness, Lady Sheehan, did—of what could have been done with that fuel, it is a lesson that needs to be learned.
I concentrate my comments this afternoon on Amendment 131 in the name of the noble Lord, Lord Teverson, and supported by the noble Baronesses, Lady Sheehan and Lady Boycott, and my noble friend Lord Lennie. As we have heard, this amendment is specifically to prevent the opening of new coal mines in England and is a response to the proposed opening of a new coal mine in Cumbria. I have said before that I am really concerned about the message this coal mine sends out. It undermines totally our claim to be an international leader on climate. One only had to look at the press reports from around the world after the announcement was made to understand just how damaging this is.
I fully support the comments from the noble Lord, Lord Deben, on the planning system. I hope that we can move forward on this, so that local authorities and anyone who has a role in making decisions through the planning system have the necessary tools to stand up and not be concerned about the extortionate costs that would come their way if, after having turned down an application, it was turned over on appeal.
The other area that we have not emphasised enough is this: we cannot even claim that the coal mine in Cumbria would provide secure, long-term jobs. That just is not part of the equation here. As we have heard, it will not benefit British Steel. We are already seeing a significant decline in the coal used by the UK steel industry, including a 19% drop in demand for coking coal to run UK blast furnaces. As the noble Lord, Lord Teverson, said, the future is not coking coal.
I am not sure if anyone has mentioned the rather fanciful claim that this mine would be the first carbon-neutral operation of its kind. How can we stand here and say this seriously and honestly, and with particular regard to the fact that, as we have heard, a high percentage of the coal would be exported and so we would have no control over its use.
I am very disappointed that part of the debate around opposing the mine has ignored the far greater opportunities of investing in new green technologies for the local area. It is a perfect area for so many of the possibilities that are coming our way with real, sustainable jobs.
I repeat that Alok Sharma, a former president of COP, said last December that opening
“a new coalmine would send completely the wrong message and be an own goal”.
Surely we should be doubling onshore wind capacity, tripling solar capacity and quadrupling offshore wind capacity. I hope I have made it clear that on our Benches we support the amendment in the name of the noble Lord, Lord Teverson.
Lord Callanan (Con)
I thank all noble Lords for their amendments and contributions.
I will just make an observation first, having listened with great interest to the noble Baroness, Lady Blake. I was actually hoping that the noble Lord, Lord Lennie, would reply to this debate, as a fellow politician from the north-east of England. He will know very well that, in virtually every election that I fought in the region, the Labour Party campaigned against the closing of coal mines. I will be gracious and accept that time moves on, but it was only fairly recently that some of their parliamentary colleagues in the other place were campaigning for the opening of new coal mines and against the closing of old ones. Time moves on in politics but, had you said to me 10 or 15 years ago that I would be standing up in the House of Lords opposite a Labour Party telling me it does not want to see the opening of any coal mines, I would not have believed you.
Baroness Sheehan (LD)
Flaring and venting is something that I am keen on eliminating, and I will use every opportunity in the House to progress the issue further. Therefore, would it be sensible for the Minister to agree to meet with me and other noble Lords who have expressed an interest in this issue, so that we can talk sensibly about it, going forwards?
Lord Callanan (Con)
I did organise a recent meeting with officials to discuss the issue, at the request of the noble Baroness’s Front-Bench colleague, the noble Lord, Lord Teverson. The noble Baroness had the opportunity to attend if she had wished to.
Baroness McIntosh of Pickering (Con)
My Lords, I am grateful for the discussion that we have had on the various amendments in this group, and that my noble friend the Minister referred to the use of coal on heritage railways. I am delighted to say that I am president of the North Yorkshire Moors Railway and hope that we can continue to enjoy the spectacular scenery and days out that heritage railways offer.
I am disappointed that my noble friend missed an opportunity to explain to the House specifically which areas the amendments to the levelling up Bill will cover. Rather than detain the House further at this stage, I will pursue that through Written Questions, where I will have to get an Answer. I beg leave to withdraw my amendment.
Lord Callanan
“(8A) Where regulations under subsection (1) or (5) provide for the imposition of a civil penalty, they must also include provision for a right of appeal against the imposition of the penalty.”Member's explanatory statement
This amendment requires regulations under Clause 246 (arrangements for responding to marine oil pollution) that provide for the imposition of civil penalties to include provision for a right of appeal.
Lord Callanan
“(8A) Where regulations under this section provide for the imposition of a civil penalty, they must also include provision for a right of appeal against the imposition of the penalty.”Member's explanatory statement
This amendment requires regulations under Clause 247 (habitats: reducing effects of offshore oil or gas activities etc) that provide for the imposition of civil penalties to include provision for a right of appeal.
“(9) Regulations under this section are subject to the affirmative procedure.” Member's explanatory statement
This amendment provides that any regulations under Clause 247 (habitats: reducing effects of offshore oil or gas activities etc) are subject to the affirmative procedure.
Lord Callanan
Member's explanatory statement
See the explanatory statement for the amendment in Lord Callanan’s name at page 210, line 23.
Member's explanatory statement
This amendment provides for charges in connection with the carrying out of functions under Part 4 of the Petroleum Act 1998 to be imposed by regulations, rather than by an administrative scheme.
Member's explanatory statement
This amendment is consequential on the amendment in Lord Callanan’s name at page 210, line 23.
Member's explanatory statement
This amendment is consequential on the amendment in Lord Callanan’s name at page 210, line 23.
Member's explanatory statement
This amendment is consequential on the amendment in Lord Callanan’s name at page 210, line 23.
Member's explanatory statement
This amendment is consequential on the amendment in Lord Callanan’s name at page 210, line 23.
Member's explanatory statement
This amendment is consequential on the amendment in Lord Callanan’s name at page 210, line 23.
Member's explanatory statement
This amendment is consequential on the amendment in Lord Callanan’s name at page 210, line 23.
Member's explanatory statement
This amendment is consequential on the amendment in Lord Callanan’s name at page 210, line 23.
Member's explanatory statement
This amendment is consequential on the amendment in Lord Callanan’s name at page 210, line 23.
Member's explanatory statement
This amendment is consequential on the amendment in Lord Callanan’s name at page 210, line 23.
“(8A) A statutory instrument containing regulations under this section is subject to annulment in pursuance of a resolution of either House of Parliament.”Member's explanatory statement
This amendment provides for a statutory instrument containing regulations under new section 38C of the Petroleum Act 1998 (inserted by clause 248) to be subject to the negative procedure.
Member's explanatory statement
This amendment is consequential on the amendment in Lord Callanan’s name at page 210, line 23.
“(za) in paragraph (a), for the words from “the reference” to “Scottish Parliament” substitute “sections 38C(8A) and 39(6) of the 1998 Act are to be read as if each of those sections imposed a requirement that regulations under the section concerned are subject to the negative procedure (see section 28 of the Interpretation and Legislative Reform (Scotland) Act 2010)”;”Member's explanatory statement
This amendment ensures that where the Scottish Ministers make regulations under new section 38C of the Petroleum Act 1998 (inserted by clause 248), as applied in relation to carbon storage installations by section 30 of the Energy Act 2008, the regulations are subject to negative procedure in the Scottish Parliament.
Member's explanatory statement
This amendment removes amendments to section 30(2) of the Energy Act 2008 that are no longer thought to be needed.
Member's explanatory statement
This amendment is consequential on the amendment in Lord Callanan’s name at page 210, line 23.
Lord Teverson
“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.
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.
Baroness Hayman
“GEMA general duties relating to climate change(1) In section 3A(1A) of the Electricity Act 1989 (the principal objective and general duties of the Secretary of State and the Authority), for paragraph (a) substitute—“(a) their interests in enabling the Secretary of State to meet the targets set under Part 1 of the Climate Change Act 2008 (UK net zero emissions target and budgeting);”.(2) In section 4AA(1A) of the Gas Act 1986 (the principal objective and general duties of the Secretary of State and the Authority), for paragraph (a) substitute—“(a) their interests in enabling the Secretary of State to meet the targets set under Part 1 of the Climate Change Act 2008 (UK net zero emissions target and budgeting);”.”Member's explanatory statement
This amendment seeks to include within Ofgem’s general duties a specific requirement to have regard to meeting the UK’s net zero emissions target.
Baroness Hayman (CB)
My Lords, we debated this amendment before Easter. At that time, I put forward the case that it was strange that Ofgem, as the regulator for energy, would not have a responsibility for net zero. I explained how many organisations and consumer bodies in the industry supported having such a duty, and asked the Minister why the Government were the odd ones out among all those informed views. I am afraid that he did not give me an answer that I found compelling. Therefore, I wish to test the opinion of the House.
“Community and Smaller-scale Electricity Export Guarantee Scheme(1) Within six months of the passing of this Act, the Secretary of State must by regulations require licensed energy suppliers with more than 150,000 customers (“eligible licensed suppliers”) to purchase electricity exports from sites including those operated by community groups, that generate low carbon electricity with a capacity below 5MW.(2) Fossil fuelled local power plants with a capacity of less than 5MW are not eligible for participation in the Community and Smaller-scale Electricity Export Guarantee Scheme, with the exception of a local combined heat and power plant that generates electricity ancillary to its purpose of providing heat for local heat networks.(3) “Fossil fuel” has the meaning given in section 101(4).(4) Licensed energy suppliers with fewer than 150,000 customers may also purchase electricity exports from the sites defined above provided that they do so on the terms set out by the regulations.(5) The regulations must require that eligible licensed suppliers—(a) offer to those sites a minimum export price set annually by the Gas and Electricity Markets Authority (“GEMA”),(b) offer to those sites a minimum contract period of five years, and(c) allow the exporting site to end the contract after no more than one year.(6) Within six months of the passing of this Act, GEMA must—(a) set an annual minimum export price for those sites that has regard to current wholesale energy prices and inflation in energy prices and the wider economy,(b) introduce a registration system for exporting sites meeting the requirements set out in subsection (1) and wanting to access these export purchases,(c) define specifications for the smart export meters required by such sites, (d) define “low carbon electricity” in such a way that it includes renewable generation technology and may include other technology with extremely low carbon dioxide emissions,(e) define requirements for an exporting site generating low carbon electricity with a capacity of less than 5MW to be registered as a Community or Smaller-scale Energy site, and maintain a register of such sites.(7) To access the export purchase agreements defined in this section exporters must—(a) register their site with GEMA,(b) install a smart export meter that meets specifications defined by GEMA, and(c) notify GEMA if their ownership structure meets the definition of a Community or Smaller-scale Energy site.(8) All licensed suppliers providing such purchase agreements must report annually to GEMA—(a) the number and capacity of Community or Smaller-scale Energy sites that have been offered contracts to purchase electricity and the number of these that agreed those contracts,(b) the total amount of electricity purchased under these agreements, and(c) the price paid for that electricity.(9) OFGEM shall make and publish a report annually on the operation of the export purchase agreements, setting out—(a) the number of Community or Smaller-scale Energy sites contracted with licensed energy suppliers under this section and the total amount of electricity purchased,(b) the licensed suppliers contracting with Community or Smaller-scale Energy sites and the amount of electricity each has purchased,(c) an assessment of how the mechanism is performing and the contribution it is making to delivering secure and low carbon electricity supplies, and(d) recommendations on how the mechanism could be improved.(10) Regulations under this section are subject to the affirmative procedure.”Member's explanatory statement
This and related amendments aim to provide a framework to support the growth of community and smaller-scale energy schemes and provide annual reporting on the success of the framework in increasing the number of such schemes.
Baroness Bennett of Manor Castle (GP)
My Lords, the noble Baroness, Lady Boycott, being unable to be here and following on from our debate earlier, I beg to test the opinion of the House on Amendment 134. In doing so, I note the acknowledgement that Amendment 135 is consequential on Amendment 134.
“Community and Smaller-scale Electricity Supplier Services Scheme(1) Within six months of the passing of this Act, the Secretary of State must by regulations require licensed energy suppliers with more than 150,000 customers (“eligible licensed suppliers”) to offer a Community and Smaller-scale Electricity Supplier Service agreement to any registered Community or Smaller-scale Energy site under section (Community and Smaller-scale Electricity Export Guarantee Scheme) for the purposes of allowing that site to sell electricity to local consumers.(2) The Community and Smaller-scale Electricity Supplier Service agreement will require licensed suppliers to make a community or smaller-scale energy tariff available to consumers local to the exporting site that has regard to the export price paid or that would be paid to that site under section (Community and Smaller-scale Electricity Export Guarantee Scheme).(3) The eligible licensed supplier may limit the total number of consumers the community or smaller-scale energy tariff is available to such that the total annual energy sold under the tariff is broadly equivalent to the total annual energy generated by the site.(4) The eligible licensed supplier will be the registrant for the meters of any local consumer purchasing energy under the community or smaller-scale energy tariff. (5) The eligible licensed supplier may charge a reasonable fee for the provision of services under this section provided that it has regard to distribution, licensing and regulatory costs and any guidance provided by GEMA.(6) The eligible licensed supplier shall return any money raised through the sale of energy under a tariff set up under this section to the Community or Smaller-scale Energy site, save for the fee allowed under subsection (5).(7) Eligible licensed suppliers must report annually to GEMA on—(a) the number and capacity of community energy groups or smaller-scale sites offered Community and Smaller-scale Electricity Supplier Service agreements and the number who have contracted to use them,(b) the total amount of electricity purchased under these agreements, and(c) the tariffs for each agreement.(8) GEMA must—(a) produce guidance on the level of community or smaller-scale energy tariffs and on the reasonable charges that eligible suppliers may charge for Community and Smaller-scale Electricity Supplier Service Agreements,(b) make and publish a report annually on the operation of the export purchase agreements, setting out—(i) the number of community energy projects or smaller-scale sites contracted with licensed energy suppliers under this section and the total amount of electricity purchased,(ii) the licensed suppliers contracting with community energy groups or smaller-scale sites and the amount of electricity each has purchased,(iii) an assessment of how the mechanism is performing and the contribution it is making to delivering secure and low carbon electricity supplies, and(iv) recommendations for how Community and Smaller-scale Electricity Supplier Service agreements could be improved.(9) Regulations under this section are subject to the affirmative procedure.”Member’s explanatory statement
This and related amendments would guarantee small energy generators a stable tariff for selling their energy based on current market rates and establish a local energy supply mechanism to enable community or smaller-scale low carbon generation schemes to sell directly to local people, along the lines of the Local Electricity Bill tabled in the last session of Parliament.
Lord Berkeley
“Renewable liquid fuels for low-carbon heatingWithin six months of the day on which this Act is passed, the Secretary of State must introduce proposals to bring into force a Renewable Liquid Heating Fuel Obligation, setting annual obligations on fuel suppliers to ensure the supply of recognised low-carbon renewable liquid fuels for domestic and commercial heating.”Member’s explanatory statement
This amendment requires the Government to introduce a Renewable Liquid Heating Fuel Obligation (RLHFO) for home and commercial building heating purposes, which would create a scheme that mirrors the Renewable Transport Fuel Obligations Order 2007. This would offer the option to off-gas-grid properties to switch to renewable liquid fuels, as another choice available to decarbonise their heating.
Lord Berkeley (Lab)
Noble Lords will be pleased to know that Amendment 138A in my name is a probing amendment, and I certainly do not intend to divide the House. This issue, which has come to me from a number of people in the south-west, is about the need for parity in the government incentives for heating homes that are off the gas mains. This would require a scheme that mirrors the Renewable Transport Fuel Obligations Order 2007.
I get the impression that the government policy on this is that everyone who is off the gas grid should be able to install a heat pump. When I am not in Scilly, I live in a little village in the middle of Cornwall, where lots of my friends use fuel oil for heating because there is no way that you can put a heat pump in some of these houses. Heat pumps are very good, but, in terms of fairness, about 1.7 million homes—perhaps occupied by 4 million people—are off the gas grid. They all want to decarbonise quicker, but how will they do so? The Government’s statistics show that 20% of off-grid homes are not suitable for heat pumps—again, we quite understand that. There is also the cost of installing them, of about £22,000, which is quite expensive for some people.
I am interested in a recent survey by the Future Ready Fuel campaign, which showed that 90% of people living off the gas grid are concerned about the Government’s current heating proposals, which are treating them unfairly. They would rather a greater choice of low-carbon heating solutions. The amendment asks the Government to investigate this further.
Before I speak about that, and the obvious need for consumer choice in this, it is probably worth explaining what the material—hydrotreated vegetable oil, or HVO—actually is. The easiest way of doing so is to say that it is used vegetable cooking oil, animal fat residue and tall oil—whatever that is—which is a by-product of the manufacture of wood pulp. Most of the time, when we hear about used cooking oil, it is because people have tipped it down the drains and eventually blocked them; it is very nasty for the drainage companies to solve this and take it away.
What surprises me is that the industry data has forecast that, by 2030, the feedstock availability, which is the important resource, is more than enough to meet the transport and non-transport needs, including home heating. The Department for Transport is very keen to use this to get more environmentally friendly airplanes in the sky—we might all have views about that. Production of HVO in the United States is already 10 billion litres and is expected to increase to 22 billion litres by 2025; ditto in Europe, where it is expected to double in the next two years from 5.5 billion litres to 11 billion litres.
This is not suggesting that this is the only low-carbon solution for people who need to heat their homes and who cannot use the existing systems, but it is an important issue for debate. You are telling people that they need to reduce their carbon usage and that the best way is air source or ground source heating, but there is an alternative. I suggest that the Government need to look at this and see whether there is a compelling case to look again at the tariffs. The Minister may say that the Government are doing this already; in which case, I shall say, “Well, that is lovely, but when is the report going to be published?” If they are not, I gently suggest that they should look at it, and I will be happy to facilitate a meeting between Ministers and the group of manufacturers concerned to see how we could take it forward. I beg to move.
Baroness Young of Old Scone (Lab)
My Lords, I will not detain the House. I declare an interest as living in an off-gas-grid property. I am sure that the Minister knows what I will ask him.
There is a lacuna in government communications or policy about the off-gas-grid regulations. These were consulted on extensively but so far, unless I have missed it, they have not resulted in an emanation in government policy. We are in a situation where, if you are one of the folk in an off-gas-grid residence, you do not know what to do. Under the system that was consulted on, it was proposed that, after 2026, if your oil boiler broke down you could not replace it with another oil boiler; as yet, we do not know whether that date is still in currency or not. It would be good if the Minister could tell us exactly what the current policy of the Government is and, if it is to change from something that was consulted on, when we would get an announcement.
The alternative, if they do not adopt the proposition from the noble Lord, Lord Berkeley, is that people need to get themselves an air source or ground source heat pump, but that is not a feasible proposition if you are trying to replace your recently defunct oil-filled boiler that has broken down between Christmas and New Year, when you have the grandchildren or your elderly great-granny in residence. Frankly, from the work done by the Environment and Climate Change Select Committee of this House on the boiler upgrade scheme, it was clear that getting an air source or ground source heat pump not only was an expensive proposition but would take some time. For the most part, it would take a number of weeks, and often a number of months, rather than having a nice man from British Gas or the local oil company coming round to give you a replacement on Boxing Day.
Apart from that, there is a debate to be had about the efficacy of air and ground source pumps in some houses, though I must admit that I probably come from the school that says that, providing you get a big enough one, you can heat almost anything—but that then raises major questions about ongoing energy costs.
Although I welcome the Minister’s statement earlier today about the extension of the boiler upgrade scheme term, it is a real pity that it was a complete failure in terms of numbers in the last financial year, and that most of the money that had been allocated had to be sent back to the Treasury. That is a great regret. My question—which my noble friend Lord Berkeley has given me the opportunity to ask yet again—is when we will get some clarity on the off-gas-grid regulations and what that clarity, if I have missed it, might be.
Lord Ravensdale (CB)
My Lords, I want to offer a few words of support for the amendment from the noble Lord, Lord Berkeley. It is something that the Government should take very seriously if it is to be used in a very specific and limited way for off-grid properties—the key point being the feedstock availability, which needs to be understood in more detail.
On the link with sustainable aviation fuel that the noble Lord, Lord Berkeley, mentioned, there is potentially an important counter-cyclical benefit here, in that jet fuel is dominant in the summer months and heating oil is dominant in the winter months. They are essentially the same fuel, so there is potentially a good economic fit between those two cases, and the relevant departments—DESNZ and DfT—should work together on that.
I would suggest some potential improvements to the amendment, such as limiting it to those off-grid properties that already use heating oil and specifically stating in the amendment that this is only for recycled fuels, to eliminate the unintended consequences of biofuels being eligible. Overall, however, this is something that the Government should take seriously.
Lord Teverson (LD)
My Lords, I certainly echo the question that the noble Baroness asked about the timing of the boiler scheme. There has been a big debate in the past on the use of frying oil, and getting the fiscal measures and the subsidy right so that it can be used as a transport fuel. Those arguments went on for a long time. However, I believe that there needs to be fiscal-incentive neutrality between the different types of renewable fuels, whether they are used within transport or indeed off grid.
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?
Baroness Bloomfield of Hinton Waldrist (Con)
My Lords, I too thank the noble Lord, Lord Berkeley, for his amendment, and the noble Baroness, Lady Young, and the noble Lords, Lord Ravensdale and Lord Teverson, for their contributions to this debate. Decarbonising buildings off the gas grid—and I should perhaps declare an interest in that I, too, live in a house that is off the gas grid—using fossil-fuel heating is a key priority for the Government, as they use some of the most polluting fuels. Action on these buildings will help us to reduce our dependence on imported oil and protect consumers from high and volatile energy prices, while keeping us on track for net zero.
In 2021, we consulted on a policy of phasing out the installation of fossil-fuel heating systems in homes, businesses and public buildings in England off the gas grid during the 2020s. We will issue the government responses to these consultations in due course, setting out our plans regarding these policies. I am afraid that I cannot be more specific than that on the timing.
The noble Lord’s amendment seeks to impose new obligations on heating fuel suppliers, to encourage the supply and use of renewable liquid heating fuels. I appreciate his intent to increase the role of renewable liquid fuels in heating to help with the transition to clean heat off the gas grid. However, a number of questions must be answered before we can make decisions on what role renewable liquid heating fuels should play in the future heating mix and develop the policy framework which would support such a role. As he will be aware, sustainable biomass is a limited resource. We will need to prioritise its use in sectors that have the fewest options for decarbonisation and the most potential for emissions reductions. Indeed, the Climate Change Committee argues that the use of biofuels in heat should be minimised as far as possible to enable best use of biomass across the whole economy. Overcommitting in heating risks having effects in other sectors, such as transport, or driving up the prices paid for these fuels. The forthcoming biomass strategy will review the amount of sustainable biomass available to the UK and will then consider how this resource could be best used across the economy to achieve net zero. Policy decisions on the role of renewable liquid fuels will need to reflect this strategy.
Lord Berkeley (Lab)
I am grateful to the Minister for her reply; I will read it with great interest. I think what she was really saying is that further work needs to be done, but the problem is that the zero carbon target date is still there. Perhaps she would not mind if, having digested what she has said and talked to some of my colleagues, we could come back to her and see whether it would be appropriate to have a meeting. In the meantime, I beg leave to withdraw the amendment.
Lord Callanan
“(4A) Where regulations under this Act are subject to the made affirmative procedure, the statutory instrument containing them must be laid before Parliament after being made. (4B) Regulations under this Act contained in a statutory instrument laid before Parliament under subsection (4A) cease to have effect at the end of the period of 28 days beginning with the day on which the instrument is made unless, during that period, the instrument is approved by a resolution of each House of Parliament.(4C) In calculating the period of 28 days, no account is to be taken of any whole days that fall within a period during which—(a) Parliament is dissolved or prorogued, or(b) either House of Parliament is adjourned for more than four days.(4D) If regulations cease to have effect as a result of subsection (4B), that does not—(a) affect the validity of anything previously done under the regulations, or(b) prevent the making of new regulations.”Member’s explanatory statement
This amendment makes provision about the “made affirmative” procedure for the purposes of the amendment in the name of Lord Callanan at page 161, line 15.
Member’s explanatory statement
This amendment is consequential on the amendment in the name of Lord Callanan at page 230, line 18.
“(5A) Any provision that may be included in regulations under this Act subject to the made affirmative procedure may be made by regulations subject to the affirmative procedure.”Member’s explanatory statement
This amendment is consequential on the amendment in the name of Lord Callanan at page 230, line 18.
Lord Callanan
Member’s explanatory statement
See the amendment in the name of Lord Callanan at page 230, line 18.
Lord Callanan
“(ca) section (Treatment of recycled carbon fuel and nuclear-derived fuel as renewable transport fuel);”Member’s explanatory statement
This amendment provides that the new Clause inserted after Clause 113 by the amendment in Lord Callanan’s name comes into force two months after Royal Assent.