Energy Prices Act 2022 (Extension of Time Limit) (No. 2) Regulations 2026

Lord Whitehead Excerpts

Monday 20th July 2026 Lords Chamber

Moved by

[Lord Whitehead]

That the draft Regulations laid before the House on 8 June be approved.

Relevant document: 6th Report from the Secondary Legislation Scrutiny Committee. Considered in Grand Committee on 15 July.

Motion agreed.

National Energy System Operator: Blackout Risk

Lord Whitehead Excerpts

Monday 20th July 2026 Lords Chamber

[Lord Moynihan (Con)]

I declare my interests as chair of Amey, Acteon and Buckthorn Partners. Can the Minister confirm the comments of whistleblowers that on 23 June

“constraints were breached and system security was compromised”—

and, I might add, five safety limits were breached as well? Can he confirm that such events can directly contribute to potential nationwide blackouts? Why was this not reported to Ofgem within 72 hours, as legally required? Does he agree with Octopus Energy, which told Parliament on 8 July that the cost of balancing the grid, net-work constraints and capacity payments under this Government’s high-cost wind and solar-driven energy policy is to go up from £1.5 billion this year to £10 billion a year by 2030, which will further deindustrialise the country and add higher costs to already unacceptably high domestic and industrial energy bills in the United Kingdom?

[The Minister of State, Department for Energy Security and Net Zero (Lord Whitehead) (Lab)]

The Government take the allegations that the whistleblowers have made recently concerning the operation of NESO very seriously. An external legal firm has been appointed to investigate, reporting to a panel independent of senior management; indeed, there is the opportunity for anybody independent of senior management to make representations to that inquiry. It would be wrong to prejudge the outcome at this stage.

As for the wider issue of constraint payments, this is substantially an issue of grid management and grid development, which the noble Lord will know were grievously neglected under the previous Conservative Government. The present Government have very ambitious plans to make sure that the grid is expanded, repaired and updated so that constraints can be managed much more effectively as part of the overall grid process.

[Baroness Kramer (LD)]

My Lords, these allegations, if accurate, would represent a shocking breach of public trust by an organisation now owned directly by the Government. But it also demonstrates a failure of the current whistleblowing framework that, to be heard and to have some measure of protection, the whistleblower has had to go through an Opposition MP, not to Ofgem or any other part of government. Will the Government now act to provide proper protection so that people who speak out can do so without fear of detriment and as soon as they see that there is an issue to be raised, and will they take seriously the proposals of my party for an office of the whistleblower?

[Lord Whitehead (Lab)]

As far as whistleblowing is concerned, I can speak only to this particular episode, but I point to the Government’s response—or, rather, the response of NESO and other bodies—in developing very rapidly a forum in which whistleblowers can confidentially and without any concerns about their own future or safety participate in an inquiry into what has taken place. Indeed, the separation of that inquiry from senior management underlines how seriously the Government take this issue but also how they wish to make sure that whistleblowers are given the proper protection and status that their concerns merit.

[Lord Hunt of Kings Heath (Lab)]

My Lords, first, in welcoming my noble friend’s response, can he confirm that there was no loss of supply to customers on the occasion of the incidents referred to? Secondly, in response to the question from the noble Lord, Lord Moynihan, in which he attacked the Government’s investment in wind and solar, will the Minster reflect on the national security assessment published earlier this year? That report stated:

“Global ecosystem degradation and collapse threaten UK national security and prosperity”.


Does that not make it so much more important that we continue with the decarbonisation of our energy supply?

[Lord Whitehead (Lab)]

Yes, that does make it very important that we continue decarbonising our energy systems to make sure that they are very resilient in a different climate that we will have in the future, and that the consequences of, for example, continuing to provide energy via high-carbon fossil fuels are countered by the systems being thoroughly low-carbon in the future. This has a bearing on the recent episodes as far as energy margin notices are concerned. We have had a period of extreme heat in the UK that is very likely the consequence of climate change, and this has produced some system resilience issues. However, the system was easily resilient enough to cope with that particular issue: there were no blackouts, there was no loss of power for customers or industry, and the stability of the system was maintained at around the 50 hertz mark at all times.

[Baroness McIntosh of Pickering (Con)]

My Lords, does the episode not show that the integrity of the energy supply system is simply not fit for purpose? There is an overdependence on renewables that needs to be addressed as a matter of urgency.

[Lord Whitehead (Lab)]

I disagree with the noble Baroness. The recent episode showed that, even in relatively new circumstances of extreme heat—rather than the more normal issue of energy margin certificates being issued because of the effect of cold and winter on the system—the system stood up to it very well and managed to make sure that customers were not deprived of their power. As I said, the system was maintained to run at between 49.5 hertz and 50.5 hertz at all times. That is a sign that the changing nature of the system will be able to deal with these issues very well in the future.

[Lord Spellar (Lab)]

My Lords, can the Minister address the concern that the NESO inquiry is being conducted by a firm of City lawyers rather than electrical engineers? That gives the impression that the allocation of blame and legal liability is seen as more important than the integrity of the system. Is not part of the current problem that the privatised companies save money by running a lower margin of capacity than the old Central Electricity Generating Board? That, along with the changing patterns of demand and supply, make the system less stable and more vulnerable. What is the Minister doing about it?

[Lord Whitehead (Lab)]

Many things are being done alongside the changing nature of the system to make sure that it retains its resilience and ability to supply power on a no-failure basis. These include continuing to build out the grid, and bringing forward ancillary services, new forms of artificial inertia, long-duration storage and many other new instruments that the system will have to make sure that it continues on a stable and reliable basis. On the whistleblowers, yes, the investigation team will be led by a law firm, but it will report to a review panel consisting of the chair of the Audit and Risk Assurance Committee, the shareholder non-executive director and the Ofgem director-general. That is entirely in line with making sure that whistleblowers’ interests within the energy delivery system are properly protected.

[Lord Deben (Con)]

My Lords, will the Minister please accept that it is very important to ensure that the whistleblowing arrangements work effectively? Otherwise, people will use this opportunity to attack the Government’s excellent policy on moving as rapidly as we can to renewable energy, which is much cheaper and crucial for our security. Will he stand up toughly for the whistleblowers, given that some people, for some reason or other, want to attack the previous Government’s sensible policies, which this Government have continued? Will he make sure that we move to a position in which we are sovereign in our energy?

[Lord Whitehead (Lab)]

I could not agree with the noble Lord more. Whistleblowing is and should be an essential part of all these processes. Whistleblowers have to feel safe in what they say so that it can be properly looked at and lessons can be learned if it turns out that they pointed out something that should be done. It is essential that we have an environment in which whistleblowing is protected and where whistleblowers are taken seriously. That is what the Government have done on this occasion, supporting exactly what the noble Lord said about the direction that the system is taking and why it is essential that we do not fall foul of completely unfounded attacks on that system as a result.

Energy Prices Act 2022 (Extension of Time Limit) (No. 2) Regulations 2026

Lord Whitehead Excerpts

Wednesday 15th July 2026 Grand Committee

Moved by

[Lord Whitehead]

That the Grand Committee do consider the Energy Prices Act 2022 (Extension of Time Limit) (No. 2) Regulations 2026.

Relevant document: 6th Report from the Secondary Legislation Scrutiny Committee

[The Minister of State, Department for Energy Security and Net Zero (Lord Whitehead) (Lab)]

My Lords, these draft regulations were laid before the House on 8 June and, in case noble Lords think we are suffering from a small dose of déjà vu, similar regulations, which we debated at the time, were laid months ago for reasons that I will come to in a moment. Further regulations were laid concerning Northern Ireland a little while after that.

As the background to this SI, the Government acted in the Autumn Budget to reduce electricity costs to the benefit of all households with a domestic electricity meter by scrapping the energy company obligation— ECO—scheme and moving 75% of the domestic costs of the renewables obligation to the Exchequer. We have been able to provide immediate savings for households in kind. These actions also mean that the energy price cap grew by less than it would otherwise have done on 1 July this year.

On 27 May, Ofgem announced that the price cap level for the period from 1 July to 30 September would be set at £1,862—an increase of £221 from April. The changes that we made at the Autumn Budget are still factored into bills and, without that action, the price cap would be significantly higher.

This concerns the transfer of 75% of the levies on the renewables obligation scheme to the Exchequer. The renewables obligation scheme exists to incentivise UK renewable electricity generation through a system of tradeable certificates. Of course, it is not a current scheme—it closed to new applications in 2017—but existing sites will continue to receive support until the scheme ends in 2037. The scheme has been instrumental in taking a nascent renewable energy sector to where it is today, with the scheme supporting around 30% of total UK electricity generation.

The core of the renewables obligation scheme is a process in which electricity suppliers purchase certificates from renewables generators. This process continues unchanged. However, previously, suppliers ultimately recovered the costs of complying with their renewables obligations from consumers via electricity bills. Ofgem considered these costs when setting the quarterly price cap for domestic consumers in Great Britain.

From 1 April, the Government have instead been providing grant funding to electricity suppliers to cover 75% of the cost of these obligations attributable to domestic energy supply in GB. We have given a legal direction to electricity suppliers requiring them to pass these savings on to domestic consumers. Translated into the typical dual-fuel bill used by Ofgem, and accounting for other changes, our intervention delivered a reduction of £117 in the price cap on 1 April. Although the price cap on 1 July increased by £221 as a direct consequence of events in the Middle East, it would have been considerably higher still without the ongoing effect of moving the renewables obligation to the Exchequer, which continues to suppress bills.

I come to the vehicle through which those changes could be placed in legislation. The legislative basis for the grant funding that enables the energy bill reductions was originally due to expire in April; that is because the Energy Prices Act 2022 contained provisions that have been used, for the purpose of this legislation on these reductions, to sunset the possibility of those reductions being undertaken. As I mentioned, we debated the Energy Prices Act 2022 (Extension of Time Limit) Regulations 2026 in the Chamber this year. They came into force in April and extended the power so that it is now set to expire on 25 October. The regulations before us extend this time limit once more to ensure that the removal of costs from energy bills can continue.

I should say at this point by way of a confession that, when I was the shadow Energy Minister in opposition and took part in our consideration of the then Energy Prices Bill in 2022, I did state that I was rather concerned that some other Government might come along and use the provisions in that Bill for something else entirely. I was a little mollified by the fact that a sunset clause was placed in the Bill, but I consider that the changes that have been put into legislation here have a rather similar purpose to that of the Bill in 2022—at least as far as the clauses at that time are concerned; they aimed to provide additional assistance for people who had very high energy bills as a result of the Russian invasion of Ukraine and the volatility that resulted from that.

What we are looking at today is a further extension of those sunset clauses to cope with the next phase of that transfer of responsibility from energy bills to the Exchequer. The arrangements in the settlements were for three years to 2029 so, as things stand, these regulations will have to be extended repeatedly during the time that those savings on customers’ energy bills are in place.

This extension to the regulations is only until 25 April 2027. It says in my brief: “I therefore expect to return to the House by February to seek a further extension”, but that should read, “Whoever happens to be there at the time will come to the House to seek a further extension”. However, I can assure noble Lords that the department is working hard on some primary legislation, at the moment, which will provide a more permanent solution to be taken forward when parliamentary time allows. Your Lordships would therefore not be in a position of having to return every six months to take this matter forward.

I emphasise to noble Lords that the position is slightly different in Northern Ireland, as I think we know because we have debated it separately. Energy costs are a transferred matter for the Executive, and the Northern Ireland renewables obligation forms a smaller cost on electricity bills. The department has been supporting colleagues in Northern Ireland as they develop a comparable offer to the policy in Great Britain. Following a request from the Minister for the Economy in Northern Ireland, separate regulations were laid on 20 June, as I mentioned, to enable the Northern Ireland Department for the Economy to deliver a comparable offer. Those regulations have since been signed and have entered into force.

These regulations are a straightforward extension of an existing time-limited power, but they ensure that the Government can continue to deliver the bill reductions announced at the Budget while work progresses on a longer-term legislative solution. I beg to move.

[Baroness McIntosh of Pickering (Con)]

I thank the Minister for presenting the regulations before us. I express the hope that he stays in his position, as indeed does the Whip. We do not like changes in the House of Lords.

I will make a couple of comments. Eons ago, I served as the shadow Environment Minister on an energy Bill in 2006 or 2007, I think it was, so plus ça change, plus—or rather, the more things change, the more they stay the same. I do not know how Hansard will cope with a French quotation so I will not say it.

What the Minister has put before us just confirms that this is smoke and mirrors. We are all playing for what is, in effect, a subsidy, and this has been the case since the mid-2000s, when his Government introduced this type of policy. Instead of me, as a householder, paying my household electricity bill, I am now paying it as a taxpayer, through my general taxation. I just hope the Minister and the department will step back from saying that this is a reimbursement or a return to me of £117, because that is not the case.

Where the department and the Minister could make a difference is by reducing the standing charge, as Martin Lewis, the money-saving expert, has said on many occasions. I know it has been outside the remit and the purport of the statutory instrument, but I just make a plea to the Minister, who has now disappeared behind the Dispatch Box—I cannot see him any more. I think he is still there.

[Lord Whitehead (Lab)]

I think that, in fact, our government lectern is higher than the opposition lectern.

[Lord Moynihan (Con)]

For very good reason.

--- Later in debate ---

[Lord Moynihan (Con)]

My Lords, I apologise for the interruption due to the vote. I was simply going to give the Committee one example of the consequences of overreliance on renewables.

On 23 June this year, NESO, the National Energy System Operator, faced severe supply constraints caused by high electricity demand for cooling during an extreme heatwave, combined with—this is important—low wind generation at the time, unplanned gas plant outages and network constraints. These factors cause the grid frequency to fall below the normal operating limits. It should have been reported to Ofgem immediately. I ask the Minister: why was it not reported to Ofgem on the day or early the following morning?

Many other important aspects related to this matter are outside the scope of this SI, so I will either write to the Minister with specific questions or potentially table them in a Written Question. This was an exceptionally important moment for the grid, and it appears that there were many problems associated with it: control room engineers being forced to take emergency action without it being reported; allegations from whistleblowers that the grid came closer to blackouts than was reported; and senior corporate staff instructing control room engineers to avoid making or preserving permanent paper trails of their operational decisions. All of that would be wholly unacceptable; I know that the Minister will share in my condemnation of those working practices.

In closing, I revert to the point that I made at the outset. I sincerely thank the Minister for always being so gracious, receptive, polite and engaging. I wish him a good break. I hope that he will still be in his place when he comes back from the Recess, because I anticipate that the energy Bill will take up a good deal of our time in the next 12 months, and I hope that he will be a renewed voice of influence in the U-turns that Andy Burnham will be making to energy policy. I am very grateful to him for everything that he has done and the courtesy that he has shown me throughout. I attribute those comments also to the noble Earl, Lord Russell, because he has always been similarly engaging in these debates during the current Session. These have been an interesting and appreciated six months back in the job. I look forward to the following year and working with the Minister.

[Lord Whitehead (Lab)]

I thank noble Lords for their constructive contributions and hope they will forgive me if I do not tarry too long in my closing speech and try to give a detailed response to everything that has been put forward. They are all very valid points but, among other things, we have a vote in about 20 minutes. I will certainly write to noble Lords on those points.

In particular, I am happy to write to the noble Baroness, Lady McIntosh, on standing charges. I have thought about this a great deal, but the issue is fraught with practical difficulties in how you do it. As the noble Lord pointed out, everyone has to pay for something somewhere. The question is what sort of equity you put in place if you are removing standing charges. A standing charge that goes on people’s bills as a block might be more properly allocated in terms of who pays for what and where. It is not a question of just taking standing charges away but of making sure that people are properly remunerated for network costs, distributed costs and all those sorts of things in a different way. That will be part of the content of my letter.

The noble Baroness is also sort of right to say that this measure is having the effect of taking charges off bills and putting them on to the general taxpayer. I would not exactly call it smoke and mirrors, but a charge will continue to be levied. However, there is one important point in this change that I hope noble Lords will consider. This changeover has an effect on the energy price cap each time round; changing billing from the levy to the general taxpayer means that the energy price cap is lower than it would otherwise be, which really is a saving for energy customers. As we can see, that is what has transpired as a result of these changes.

The noble Earl, Lord Russell, asked about the situation in Northern Ireland. I am grateful to him for being brief, as I know he has concerns in a number of other areas. If he has any further concerns, I am sure we can take those up. As far as Northern Ireland is concerned, my understanding is that everything is now complete. We have had the legislation through to enable the Northern Ireland Executive to put their own scheme in place, which they are now doing. The net benefit is going to be less, about £30 per customer, because of the different circumstances in Northern Ireland, but there are now no impediments in the way of that scheme being fully funded by the Treasury and fully operational under the aegis of the Northern Ireland Executive. That process is completed.

I assure the noble Lord, Lord Moynihan, that the costs of operating this will be very small. It involves small administrative changes and no large costs will be outstanding from them. He mentioned NESO, the frequency response and the margin call that was made recently. I can assure him that, as far as the narrow version of events is concerned, there are active inquiries under way as to what happened on that occasion which NESO is undertaking as we speak.

[Lord Moynihan (Con)]

In the interests of transparency, will the Minister write to us with the outcome of that report, so that this Committee, and indeed the House, are fully apprised of what happened that day and the actions being taken?

[Lord Whitehead (Lab)]

Yes, I am very happy to do that, but I anticipate—I do not know whether the noble Lord has this actively in mind—that we may have an Urgent Question coming on this, so we may be able to start talking about it at that point.

On the wider question of frequency response, it is true that, as far as having a substantially renewables-based system is concerned, the possibility of wider perturbations in frequency is something that one has to consider. That is why, among other things, as he will know, there have been regular auction calls for frequency response mechanisms which can be brought to bear to make sure that those perturbations are very rapidly brought under control, because it is a question of more than 50 megahertz on either side of the 400 barrier. When it goes down too low, you have to intervene. Those frequency response mechanisms can do that very efficiently and have done it very efficiently. Therefore, there was no question that we were beyond the buffer as far as that margin call was concerned. That may be something that I add to my correspondence with the noble Lord.

Tackling affordability is the Government’s number one priority, and we acted at last year’s Budget by taking, on average, £150 of costs off energy bills, with those decisions now factored into bills for three years to come, as I have said. The recent price cap announced by Ofgem will be deeply concerning news for families. We understand that developments in the Middle East are concerning, and we will continue to monitor that situation ahead of winter and plan for contingencies. Should there be any further action relating to what is happening in the Middle East, it may well be that the Energy Prices Act 2022 comes to the rescue, as far as any of those measures are concerned. We will keep that under close review, and let us hope that things work out in a good way, but the Government will certainly keep a close eye on it should things not work out as well as we hope.

Motion agreed.

State of Climate and Nature

Lord Whitehead Excerpts

Tuesday 14th July 2026 Lords Chamber

[Earl Russell (LD)]

My Lords, we welcome this Statement. The science is absolutely certain that human-induced climate change is beyond doubt. What has changed is how fast the impacts are arriving on our very own doorsteps. This summer’s heatwaves in May and June caused as many as 2,700 excess deaths; transport systems were strained; over a thousand schools closed; and the London Ambulance Service endured its busiest ever day.

We are on our third heatwave of 2026, and 2026 is the first year the UK has reached 35 degrees in May, June and July consecutively. Excessive heat is putting a strain on every individual citizen, on our economy, on our schools and on our health systems. Europe is now confirmed as the fastest-warming continent on Earth, warming at more than twice the global average.

This Government have been genuinely good on the energy transition, approving renewable projects to power the equivalent of more than 19 million homes. But nature has been the poor relation. Not a single new site of special scientific interest has been designated in England since 2023, and our tree-planting rate remains less than half the annual target. Labour’s messaging on nature has been muddled, its green mission too often undermined from within. Climate and nature are not separate; they are codependent. A Government strong on one and weak on the other will ultimately fail at both.

Our climate is changing more quickly than our policies. The Climate Change Committee’s fourth independent assessment of UK climate risk was stark: on adaption, not a single delivery pathway was rated good. Inaction cannot continue. Three of our five worst harvests on record have occurred since 2020; our food security is threatened. The Green Alliance has today written to Ministers to warn:

“The UK was built for a climate that no longer exists”,


and emergency action is needed. We must do far more, more quickly, on adaption. It is the vulnerable, the elderly, the sick, the poor and the workers who will suffer the most.

These matters are hard when we co-operate, and they become almost impossible when we do not. So, I say with real regret that the Conservative Party’s ever-continuing retreat from reality, rejecting the 2050 net-zero target and now reportedly barring prospective candidates who continue to support it, is a betrayal of its own history and the consensus that this country requires.

To those who say the UK emits only 1% of global emissions so why bother: every major economy could say the same. To those who say net zero is impossible, I ask: what is possible instead? British leadership works only if Britain leads.

The wildfire risks this summer are at extreme levels, endangering lives and devastating habitats, yet the Government’s wildfire strategy is still not ready and we remain completely reliant on commercial aircraft to fight fires. We have had one mega wildfire already last year, and we are not prepared for the next. That must change before next year’s El Niño impacts are felt.

On tipping points, will the Minister say what more the Government will do to strengthen monitoring of the AMOC system? The Government’s nature security assessment warns that every critical ecosystem is on a pathway to collapse. If that is true, as I believe it is, the public and this House deserve to see the full assessment, not merely a summary. I ask the Minister to commit to its publication in full. The 30by30 on Land: Delivery Plan, published yesterday, is welcome but insufficient. It leans too heavily on farmers and land managers volunteering, with no statutory backstop and no guarantee that voluntary schemes will deliver at the scale required.

Labour must stop doing things to people and start doing things with them. Give communities real opportunities to protect nature, launch a national campaign and provide an emergency briefing, because misinformation is filling the gap left by government silence. Fear alone will not sustain the public throughout this crisis. We must offer hope and invest in the young people who will live the longest with the consequences of what we decide.

Finally, our climate and nature laws are out of date. Can the Minister say whether the Government will finally match strong words on climate with equally strong action for nature?

[The Minister of State, Department for Energy Security and Net Zero (Lord Whitehead) (Lab)]

I thank noble Lords for their valuable contributions in responding to this Statement made yesterday in the other place. As noble Lords know, the Statement was about climate and nature, and particularly the extent to which—as the noble Baroness, Lady Jones of Moulsecoomb, repeatedly reminds us—you cannot disentangle one from the other. Climate change drives nature loss and nature loss drives climate change. If you tackle one but not the other, you will not succeed in tackling the first thing. Making sure that our environment is liveable—that it is a thriving environment for the purposes of both nature extension and recovery—is completely wound up with the actions we take against climate change in general. The Statement set out what actions the Government are taking on that clear link.

Indeed, in the most recent spending round, the Government put aside unprecedented sums for nature development, recovery and restitution. For example, altogether they put forward over £7 billion at the spending review, including £5.9 billion for environmental farming schemes. ELMS began to take place under the previous Government and have been very successful in developing sustainable and low-carbon farming practices and in making sure that farming is about not just production but enhancing and sustaining that production for the future through changes in farming practices. In addition, £816 million has been put aside for tree-planting, with the planting of three large national forests under way, and £85 million pounds for peatland restoration. Those are practical things that tackle some of the key issues around nature degradation in this country. I suggest that the Government are matching their words with a substantial amount of investment in making sure that nature can live and survive in the right way in the future.

I anticipated that the noble Lord, Lord Moynihan, might concentrate rather more on particular energy and climate change issues. Those areas are very much tied to the balance between nature and climate change. What you absolutely need for a thriving background for nature is clean air, clean energy and clean environmental circumstances under which that energy is produced, as well as an environment that allows nature to thrive. I suggest that solar power, for example, absolutely offers those things, so I do not recognise the noble Lord’s characterisation of the apparently inherent dirtiness of solar panels. The carbon payback of a solar panel is estimated to be just 1.05 years. I agree with the noble Lord that, where a solar panel is made under circumstances in which the production arrangements are a little, shall we say, browner than they are in Europe, the payback will be marginally greater, but it is still only 1.18 years. So I do not recognise the characterisation of solar put forward by the noble Lord. It is an integral part of bringing energy and nature together in how we produce clean energy and clean air at the same time.

The noble Lord, Lord Moynihan, asked whether, in advance of the new Government being in place, I will predict a number of things they are about to do—which of course I will not do. However, I remind the noble Lord that the Jackdaw field is not a field that has not been explored but a field on which Ministers are presently deciding whether to proceed. I should not pre-empt that decision process, but he can be assured that the decision process is under way.

My final point on the noble Lord’s points about this area is that the production of clean energy and low carbon is not about deindustrialisation. As he will know, the Government have recently invested something like £61 billion and crowded in more than £100 billion of clean, green, low-carbon investment in the process. It is actually value added as much as it is investment. It is reindustrialising the country, albeit on a different level of carbon output, in a way that we can see before us in the British-based requirements for a lot of offshore wind, nuclear and various other such things. That means that a lot of this activity is taking place as industrial processes in the UK and is creating green, low-carbon jobs to replace those brown, high-carbon jobs as a result.

The noble Earl, Lord Russell, rightly talks about what is quite evident around us outside this Chamber. This Chamber, mercifully, is reasonably cooled, but outside we are experiencing the hottest year in history, as we will undoubtedly break last year’s records if we go on as we are. We are in an absolute emergency as far as adaptation is concerned. We cannot just think about mitigation for the future. I agree that there is a long way to go in getting that adaptation right for the future, but the Government are on the case. We need to look, for example, at the record sums that have been put in place for flood protection and flood relief and the work that the Government are doing to ensure that building regulations and various other such things are climate change-proof rather than lagging behind—as much of our society is at the moment. I agree that there is a long way to go and I am sure that we will debate how that process is going in the near future. I thank him for his general support for the measures that the Government are taking on climate change and nature and look forward to his continued support in future.

[Baroness McIntosh of Pickering (Con)]

My Lords, I thank the Minister for the Statement and for giving us the opportunity to raise issues in this regard. I associate myself with the comments made from the Front Bench. Will the Minister reply to the question about taking productive land out of production? The wheat harvest is expected to be devastated this year because of the lack of rain and drought conditions. North Yorkshire is being covered by BES, these big battery energy storage and solar farm projects, which are highly flammable, highly combustible and highly dangerous. How can he square that with nature and environmental benefits? They are diametrically opposed.

[Lord Whitehead (Lab)]

I did indeed not provide a complete answer to the thought put forward by the noble Lord, Lord Moynihan, on farming. He concentrated mainly on energy and climate change, which is what I responded to particularly. As the noble Baroness will know, we have recently produced the farming road map, a comprehensive road map informed substantially by farmers in the first instance on how we can develop more sustainable farming. Contrary to what the noble Lord says, that does not involve, for example, removing a lot of livestock from farming practices. It involves more sustainable practices in general.

I am sure the noble Lord will agree that the agriculture and land use sector needs to make sure that its emissions go down substantially, as it is one of the two sectors that have flatlined on emissions in recent years. The question is how you do it, rather than simply saying that there are things you must do which are detrimental to the interests of farming. I have already mentioned what is happening with the ELMS arrangements. There are all sorts of other things associated with that, such as low-methane feedstuffs for cattle, which are getting a lot of traction and interest in farming circles. These can reduce emissions substantially without having to cull any livestock or causing people to change their eating patterns or farmers to do things other than farm in a more sustainable way. That is the key to what we are trying to do on farming. I hope the noble Lord and the noble Baroness will support it.

[Baroness Jones of Moulsecoomb (GP)]

My Lords, I thank the Minister for his kind words earlier about my contributions—I think they were kind words. I also welcome the Statement from the Minister in the other place, because it was a good Statement. The spending plans sound great, but it is not only about how much you spend but about how you spend it. I often have doubts that Labour really understands that the environment and nature are integral to everything that comes through here, as again and again we see legislation that barely mentions climate change. We are at a point when we have heatwaves, people are dying, “Boris buses” are unbearable and workplaces are too hot to work. Yet this Labour Government have not put climate change into the Sporting Events Bill, the civil aviation Bill or almost any other Bill. Would the Minister suggest to the Government that I can set up some seminars with climatologists so that they understand the importance of putting climate change into all legislation?

[Lord Whitehead (Lab)]

Among other things, the actions that the Government have taken—for example, with the Energising Britain plan—are making sure that the question of climate change is not just an issue for one or two areas of government but one that all areas of government have to contribute to. Those different departments will be judged very substantially on their contributions. As this Government have shown already, there is a real sense of joint working, for example in how the National Health Service and the Ministry of Defence are decarbonising and in how various departments are working together to make sure that that overall goal is achieved. I cannot say that I could guarantee a large attendance at seminars that the noble Baroness might put on for that purpose, but she is very welcome to do so. I would certainly come along to a seminar if she wanted to set one up. The point underlining what she says is that nature is essential to the whole process. As I have said, if we neglect one element against the other in our climate change actions, we will not succeed in either.

[Baroness Ritchie of Downpatrick (Lab)]

My Lords, I congratulate my noble friend the Minister on the very welcome Statement on how the Government will deal with the interlinked issues of climate change and nature, because there is no doubt that both are interlinked and one drives the other. We have already seen examples of nature loss in our wider countryside. Reference has been made to reports issued quite recently that more than 2,700 people may have died in the May and June heatwaves this year. What further steps will our Government take to adapt UK buildings to the impact of climate change, including energy efficiency measures through the use of sustainable timber and modular buildings?

[Lord Whitehead (Lab)]

My noble friend is absolutely right to draw attention to what is sadly likely to be a large number of deaths directly attributable to the recent heatwave we have had in this country. Those deaths can quite possibly be attributed to the lack of readiness that we have in our building fabric and our homes for the consequences of climate change and what will happen with temperatures in future. I hope she can take some comfort from the fact that the Government are actively reviewing how we make sure that building standards are fully compliant with climate change resilience for the future. If we build our buildings so that they can undertake those future climate shocks rather than be victims of them, we will have done a good deed for the future.

[Lord Lilley (Con)]

My Lords, the Statement in another place said that reducing emissions would lower bills. This country has reduced emissions by more than any other country, yet our bills are now higher than any other OECD country, nearly all of which rely on gas like us. Can the Minister explain this? If he is going to say that, in future, renewables will be cheaper than fossil fuels, then why do they need subsidies, and, if they need subsidies, how can he say that they are basically cheaper?

[Lord Whitehead (Lab)]

The noble Lord is substantially but not entirely correct about OECD prices; however, he is not entirely correct that other OECD countries are reliant on gas to the extent that we are in this country. A very substantial driver of electricity prices is the volatile price of gas, as he will know, and the reliance that we still have in this country on gas as a market-maker for electricity very substantially leads to those high prices. Therefore, on the idea of getting off that wheel we are on, of volatile gas prices leading to volatile electricity prices and to high energy prices, it is quite right that we resolve that by making sure that our energy arrangements are as low carbon—and, hence, not gas based—as they can be.

[Baroness Miller of Chilthorne Domer (LD)]

My Lords, I welcome the Statement, but does the Minister agree that marine areas are very important both in terms of climate change, as a carbon sink, and in terms of biodiversity? Does he therefore agree that it is an urgent issue for the Government to make the decision to end bottom trawling in marine protected areas? It destroys vast areas of kelp beds and sea grass, both of which absorb carbon, and it is very destructive.

[Lord Whitehead (Lab)]

Yes, the noble Baroness is quite right about bottom trawling, how destructive it is and how it completely destroys the ecology of shallow to medium deep-sea areas as a result. It is very important that, among other things, those practices are not carried out in marine protected areas. She will know that the Government have a great record of developing marine protected areas around the UK’s coast and internationally in the Crown dependencies. Those will all be areas in which practices such as bottom trawling will not be tolerated.

[Baroness Hayman (CB)]

My Lords, I welcome the Statement, and I very much agree with the noble Earl, Lord Russell, on much of what he said about the issues that face us. We have some enormously difficult issues to face. We have seen some of the immediate ones in in our hospitals, schools and workplaces and in the death rates we have seen. I think the noble Lord, Lord Moynihan, agreed on the threat—to use his word—in terms of both climate and nature. We have immediate problems, and we have some very difficult problems—

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[Baroness Hayman (CB)]

My question to the Minister is this: does he share my concern that, instead of pooling our joint knowledge and energy into solving those problems when faced with a global crisis, we seem to be creating a more and more polarised and unproductive debate on all these issues?

[Lord Whitehead (Lab)]

I certainly agree with the noble Baroness on the extent to which we will make far greater progress by acting in consensus and agreement together, working out how we do things jointly, than by having an often very sterile debate about whether particular things work particularly well or otherwise. As far as I am concerned, we remain in a climate emergency and in circumstances where, as I have said, we have to consider urgent adaptation at the same time as urgent mitigation. Those are very difficult things to do, and I for one am proud that the Government have not resiled from that difficult debate, particularly on issues such as mineral fuels, but have instead tried to move forward on a broad basis of support. I reflect on the fact that, when I was in the House of Commons, we had a high degree of consensus on climate change; now, we do not, and that is a sorry state of affairs. We need to get back to that as soon as possible in order that we make the progress that we all know is absolutely necessary in the end.

[Lord Barber of Chittlehampton (Lab)]

My Lords, I had the privilege of chairing the Devon land use pilot a few years ago. We learned that people think in silos but the solutions are in combinations. On Exmoor, you have water challenges and energy challenges, and challenges relating to tourism, mental health, exercise, housing, transport, wind energy and biodiversity. We have introduced white-tailed sea eagles and pine martens on Exmoor, and you can see the change happening. The real risk in this debate is that it is not sophisticated enough and falls into a set of false dichotomies, which will frustrate us—

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[Lord Barber of Chittlehampton (Lab)]

My question to the Minister is: in taking through the agenda set out in the Statement, will the Government think in the sophisticated way I have described about broad areas of land as our population grows and the challenges of every acre of land become greater and greater? I have not even mentioned food and farming, which set up the pilot that I chaired. These are important and difficult issues, and we will not get there by simply debating false dichotomies.

[Lord Whitehead (Lab)]

My noble friend sets the question for us all: how can we work across all the different sectors of government to get to our goal? The goal is not that action on climate change is a last-ditch attempt to try to produce a less miserable outcome for the future by mitigating, by a small amount, what is happening with global warming; it is finding a way to bring about a much better life for everybody in the context of the farming and industrial environments in which we live and the enjoyment of our personal and private lives. Joint action on adaptation and mitigation is a method of bringing about that better society. It is the most important thing we need to do to bring about a society that is not only bearable in the future but is instead a big improvement on what we have at the moment.

[Lord Redwood (Con)]

Why cut back and close jobs at home, shutting down oil and gas, food production and our factories when it increases world CO₂? This is self-harm on a crazy scale. Why do the Government want to lose jobs and investment?

[Lord Whitehead (Lab)]

I am not sure I recognise much of the noble Lord’s intervention. As I have said, it is not the case that the Government are bent on a process of deindustrialisation and losing jobs. Jobs are transferring from the high-carbon economy to the low- carbon economy, and one of the duties of government, which this Government are carrying out, is to make sure there are good jobs in both the low-carbon and high-carbon economies, and that skills are transferred from the high-carbon economy to inform the low-carbon economy. That is exactly what is happening at the moment, so I really do not recognise the assertions the noble Lord makes about the future of society. Quite the opposite is taking place.

[Baroness Coffey (Con)]

My Lords, 10 of the 48 designated areas have still not produced their local nature recovery strategies. When will the Government issue directions to those councils and give them a deadline to do it by? Will there be a modest amount of money to help those councils that are clearly struggling?

[Lord Whitehead (Lab)]

I do not know the answer to the question the noble Baroness has put to me. I am happy to write to her. I know that many councils are working hard on this. It is a question of looking at the outliers rather than at people who have taken this issue seriously at a local level and are getting on with the plans that they should be getting on with as far as future environmental concerns go.

Electricity Capacity (Amendment and Transitional Provision) Regulations 2026

Lord Whitehead Excerpts

Monday 13th July 2026 Lords Chamber

Moved by

[Lord Whitehead]

That the draft Regulations laid before the House on 14 May be approved.

Considered in Grand Committee on 7 July.

Motion agreed.

Electricity Capacity (Amendment and Transitional Provision) Regulations 2026

Lord Whitehead Excerpts

Tuesday 7th July 2026 Grand Committee

Moved by

[Lord Whitehead]

That the Grand Committee do consider the Electricity Capacity (Amendment and Transitional Provision) Regulations 2026.

[The Minister of State, Department for Energy Security and Net Zero (Lord Whitehead) (Lab)]

My Lords, these draft regulations were laid before the House on 14 May. This instrument seeks to make technical improvements and changes to the capacity market, the Government’s main tool for ensuring security of electricity supply in Great Britain. Before I turn to the provisions in detail, I will outline some of the background to the capacity market.

Great Britain’s capacity market was introduced in 2014 and is designed to maintain security of electricity supply by ensuring that sufficient electrical capacity is available to meet future demand predictions. Through auctions held annually one year and four years ahead of delivery, the capacity needed to meet future peak demand under a range of scenarios is secured based on advice from the National Energy System Operator, NESO. Participants secure agreements through these auctions, requiring them to make capacity available at times of system stress. It is a technology-neutral scheme that pays providers for making capacity available when needed, covering generation, storage, consumer-led flexibility and interconnection.

Since its introduction, the capacity market has contributed to investment in around 20 gigawatts of new capacity needed to replace older, less efficient plants as we transition to meet our clean power 2030 target. To ensure that the capacity market continues to function effectively, we regularly amend the implementing legislation based on what is required to best ensure continued security of electricity supply.

This instrument will amend 11 regulations and introduce one new regulation in the Electricity Capacity Regulations 2014, amend two regulations in the Electricity Capacity (Supplier Payment etc.) Regulations 2014 and revoke one chapter of the Electricity Capacity (No. 1) Regulations 2019. The draft instrument will ensure that assets awarded a contract for difference, or CfD, following a direction from the Secretary of State will be allowed to participate in the capacity market until the start of the asset’s CfD support. This will better align the capacity market with our clean power 2030 ambition and ensure a smooth transition from payments under the capacity market to a CfD.

This draft instrument will strengthen delivery assurance by increasing termination fees and credit cover to restore their value broadly in line with 2016 levels in real terms. It will also make several amendments and a revocation to ensure that the legislation delivers on the policy intent. As a result, the Secretary of State and NESO will have the power to extend the pre-qualification deadline for an auction following a major IT outage. It will align the capacity market timetable with the ongoing market-wide half-hourly settlement reforms. Finally, it will also remove obsolete provisions.

Two public consultations were conducted in relation to the measures in this instrument towards the end of 2025. Respondents were broadly supportive of the measures included in the instrument that clarified regulations or enabled participants awarded a direct award CfD to manage their transition off capacity market payments. Responses to the delivery assurance reforms were more mixed, with some respondents raising concerns about the impact of higher termination fees and credit cover. The Government have proceeded on the basis that these increases are necessary to realign delivery incentives and strengthen delivery assurance. The changes are proportionate, aligning fees with their real-terms equivalent values in 2016, and will apply only to participants entering the scheme after the instrument comes into force.

We have also made several technical amendments to the capacity market rules, which support the changes made by these regulations, in the form of the Capacity Market (Amendment) (No.2) Rules 2026 laid before the House on 14 May. A final set of amendments to the capacity market rules will be laid on 13 July.

To conclude, this instrument will enable the continued efficient operation of the capacity market, so that it can deliver on its objectives, improve delivery assurance and ensure that the legislation is as clear as possible for all participants. I beg to move.

[Earl Russell (LD)]

My Lords, I thank the Minister for the clarity with which the instrument was introduced. The capacity market has served us well, and we welcome this examination and updating of its functionality so that it can continue to do so long into the future.

From these Benches, the Liberal Democrats have long championed a decentralised, resilient and, above all, clean energy system. We recognise the necessity of the capacity market as a mechanism that keeps the light on during periods of high demand and low generation, and we support the broad thrust of these technical reforms. They should improve confidence that providers can deliver on their obligations, increase value for money and help to further integrate low-carbon technologies into the market. These regulations may be highly technical, but it is important that they are looked at closely, so I hope the Minister will forgive me in advance for asking a couple of technical questions from these Benches.

I welcome the Government’s intent to strengthen the delivery assurance. The 30% increase in termination fees, and in initial credit cover from £10,000 to £13,000 per megawatt, rising to £19,500 for new-build units that miss their 11th-month financial commitment milestone, is a reasonable restoration of real-terms value, given that these figures have not moved since 2016. I find it surprising that these instruments, which govern so finely balanced a market, have not been updated for over a decade. As I understand it, even with these new regulations, there is no standing process to ensure that future regular updates are in place. Were such processes contemplated and examined in the work that was done in preparing this? What guarantees do we have that we will continue to see future upgrades to this important marketplace?

The plan to suspend capacity payments the moment an insolvency termination notice is issued is good stewardship of public money, and we do not oppose it. I am, however, concerned that in seeking real-terms parity, these changes may inadvertently raise the drawbridge behind the incumbents already inside the market. A near doubling of credit cover for those who miss a milestone is a serious sum for smaller storage developers or for demand-side responses, even if it is entirely reasonable for a more established or bigger generator. What assessment has been made of the impact of these credit cover changes on the smaller and newer entrants and on the diversity of technologies bidding in future auctions?

On the new provisions in relation to severe IT issues, which would allow the delivery body to extend the pre-qualification window by up to five working days, we generally welcome this flexibility and understand why this has been updated. But what objective threshold defines “severe”? Bidders deserve certainty that such extensions will be applied consistently and transparently and that they will not be left to the delivery body’s unreviewable discretion. I am not asking the Minister to be too specific, but are these changes partly motivated by any broader concerns about the future functioning of or threats to these systems?

On the treatment of contracts for difference, the instrument will allow a generator that receives a CfD via direct Secretary of State award to pre-qualify for the capacity market, provided that there is no overlap in the delivery period, yet auction-allocated CfD holders are not afforded the same route. I ask the Minister to explain the policy rationale for that distinction and confirm that it will not in any way create a two-tier system for low-carbon generators, depending on how they come by their contracts.

On the shift to accelerated reconciliation, cutting the final settlement from 14 months to four to align with the market-wide half-hourly settlement, we support modernisation, but faster reconciliation means less time to correct errors that might have crept in. What support is being offered, particularly to smaller suppliers, which may lack the systems to absorb the increased administrative velocity?

Finally, the instrument confirms that traditional gas-fired generation continues to sit comfortably within the capacity market alongside wind, solar, storage and demand-side response. Indeed, the market remains technologically neutral. It is worth saying clearly that our systems are among the most resilient in the world and these sensible upgrades will help to keep them that way.

I remind the Minister that this instrument, as sensible as it is, is no substitute for the deeper electricity market reforms that this country still needs. We continue to urge the Government to extend contracts for difference from 15 to 25 years. I have previously talked to the Minister about Greenpeace’s Power Shift proposals and the Minister has spoken about the openness of the Government to perhaps looking at a strategic gas reserve outside of the market. Obviously, those are conversations for another day. We are beginning to see signs of the decoupling of the gas and electricity prices, but more must be done. These changes would unlock future investment in renewables, strengthen our energy security and pass on cheaper home-grown power to consumers. I would welcome the Minister’s thoughts on how the Government plan to keep the capacity market under review and reform it further in the future and I look forward to his response.

--- Later in debate ---

Does the Minister agree with me that our paltry storage capacity, which has significantly deteriorated under this Government, forces the UK to rely heavily on just-in-time deliveries and daily production? Does he agree that purposely increasing the UK’s reliance on imports is rising as North Sea commercial gas reserves deplete, making the nation increasingly dependent on pipelines from Norway and global LNG? Does he also agree that, as we have seen from this instrument, because of the UK’s clean power transition, gas power stations are still needed to provide back-up when wind and solar drop off, resulting in highly volatile demand—a position exacerbated by the zealotry of DESNZ and the Secretary of State, who surely cannot be going anywhere near the Treasury?

[Lord Whitehead (Lab)]

I thank noble Lords for their important contributions to this debate. As I had slightly anticipated, the very specialist nature of elements of these regulations has been somewhat expanded on in the questions that have come forward in this afternoon’s debate. As I am sure the noble Lord, Lord Moynihan, is used to me saying, there are some areas where these things are really a debate for another day, but I will attempt to answer as well as I can the particular and constructive way in which the noble Lord put his wider points on the table.

To start with the narrower points on the regulations, concentrated on by the noble Earl, Lord Russell—I very much welcome his general support for this SI—he asks the key question, which I have asked officials myself: why have we not done anything about the level of the delivery arrangements, which were there in 2016 and are there today? Why are we therefore now raising those by 30%? On the main issue with the purpose of that raising, I cannot answer for why things were not done between 2016 and 2024, but I agree with the noble Lord that perhaps some consideration of a stepped change upwards, on an index-based arrangement or some such, might have been a good idea during those years. However, that is not the case and we are now faced with the position that we have to get these levels back to those 2016 levels to ensure, among other things, that there is a proper penalty consideration for providers who undertake participation in the capacity market, win a place in an auction and then, importantly, when it is their turn to come on stream, because of a particular issue that needs to be resolved, simply do not do so and cannot do so because the penalties for not doing so are so relatively slight. It is important that we know that there is a properly regulated delivery arrangement so that we can genuinely rely on the capacity market to operate itself properly when those calls are made.

This rise, although perhaps not ideally graduated for the reasons I have mentioned, is nevertheless proportionate. It takes us back to the situation that we were in, in the earlier days of the capacity market. It is a question not of introducing much larger fees but of getting us back to a position where the guarantees are affordable and the delivery mechanisms are not overly punitive, so that we can say that this is a reliable market for the future.

The noble Earl asked about IT issues and what a severe IT outage is. In essence, the SI is drafted to give the Secretary of State some leeway in determining a serious IT outage—and not just that but whether it affects the operation of the capacity markets, bidding and settlement arrangements. In that context, the Secretary of State would have the ability to determine what a severe outage is: obviously, it is not the lights going off for two minutes, when everyone is happy again afterwards. It would be a serious issue within the range that the Secretary of State can consider.

The noble Earl also asked about the provision in these regulations that relates to the holder of a capacity market arrangement being able to transition it to a CfD at a future date. As he rightly points out, that does not apply to those who have allocation via an auction but applies to those who have allocation by specification. Under those arrangements, if a body is seeking an extension to its existing operations, for example, and has negotiated an allocated CfD to allow that to happen, that organisation may be in receipt of capacity market arrangements until that CfD has been allocated. However, once that CfD has been allocated, it would clearly not be eligible for capacity market arrangements, because it has a CfD and the two cannot be run at the same time. The solution under those circumstances is to enable the body that has sought that extension to run its capacity market arrangements until such time as that CfD comes in—it may be a little down the line—and, at that time, to make a smooth transition from one to the other, but not to run both at the same time. That clears up a number of issues about the allocation of CfDs.

The noble Earl asks about half-hour settlements and the arrangements that smaller companies might make around the burdens related to them. We think that they are also fairly proportional, as these are not particularly onerous burdens to place on companies if they have undertaken a capacity market arrangement. The bidding process should properly have taken them into account before the company went into the capacity market in the first place. I believe I have addressed most of the noble Earl’s technical issues but, if there are any still outstanding, I am happy to write to him to clarify those points.

The noble Lord, Lord Moynihan, raised a number of very important but rather wider points. His first question was about whether the public are going to pay more and more for capacity market payments over a period. I cannot give him complete comfort on that point because, as he will know, both the T-1 and T-4 auctions will come forward at a settlement level based on what capacity is required—or thought to be required —at that particular time, how many people are competing for that particular capacity market, and how things may then turn out in terms of how the auction works.

Climate Change Act 2008 (International Aviation and International Shipping) Regulations 2026

Lord Whitehead Excerpts

Monday 29th June 2026 Lords Chamber

Moved by

[Lord Whitehead]

That the draft Regulations laid before the House on 14 April be approved.

Relevant document: 58th Report from the Secondary Legislation Scrutiny Committee, Session 2024–26

[The Minister of State, Department for Energy Security and Net Zero (Lord Whitehead) (Lab)]

My Lords, I thank the House for its consideration. The draft Climate Change Act 2008 (International Aviation and International Shipping) Regulations 2026 were laid before the House on 14 April.

This instrument makes the necessary regulations under the Climate Change Act to include emissions from the UK share of international aviation and shipping in the sixth carbon budget, all subsequent carbon budgets and the 2050 net-zero target. It formalises the Government’s long-standing planning assumption that the sixth carbon budget, starting in 2033, will be the first to include emissions from the UK share of international aviation and shipping. This has been the position of successive Governments. In 2021, the previous Government set the sixth carbon budget, factoring in the UK’s share of international aviation and international shipping. It also reflects the advice of the independent Climate Change Committee.

This debate is not about whether we take action in these sectors—we already are. The Government are committed to ensuring that long-term growth in the aviation and shipping sectors is compatible with our climate obligations. We have been working multilaterally to reduce aviation and shipping emissions within the International Civil Aviation Organization and the International Maritime Organization. We are now formally reflecting this effort in our domestic legal framework.

For earlier carbon budget periods, international aviation and shipping were not formally included in our legally binding targets. Instead, we left headroom, setting tighter limits for other sectors in order to deal with the assumptions of being in those targets in general. We are now revising this approach by legislating to formally include these emissions in the overall emissions limit from the sixth carbon budget onwards.

Accounting for international aviation and shipping emissions within the formal framework is clearer and more flexible than accounting for them outside the framework. It allows the Government to choose the best overall pathway to meeting our targets. For example, if progress in reducing aviation emissions is faster than expected, it will make it easier to meet our targets overall. Equally, faster progress in other sectors could allow more flexibility for international aviation and shipping.

Although aviation is a hard to decarbonise sector, we are already taking great strides towards greener aviation. This includes implementing the sustainable aviation fuel mandate last year, providing a further £219 million to scale up SAF production through to 2030, and up to £2.3 billion over 10 years for the Aerospace Technology Institute to support the development of more efficient and zero-emission aircraft technologies. We are also driving cost-effective decarbonisation through carbon pricing mechanisms, including the UK emissions trading scheme, or UK ETS, and the global offsetting scheme, CORSIA.

We are also committed to decarbonising shipping through the UK maritime decarbonisation strategy, investment in clean maritime technologies and support for low-carbon fuels. The UK is proud of our leadership at the International Maritime Organization, ensuring the sector contributes fully to our net-zero ambitions while maintaining the UK’s competitiveness as a global maritime nation.

To note, this statutory instrument does not alter the stringency of the UK’s climate targets, introduce new sector-specific limits or set new policy requirements for the aviation or shipping industry, and nor does it alter the climate considerations in the draft Heathrow expansion national policy statement. What it does provide is legal clarity—something colleagues in the Environmental Audit Committee and the Transport Select Committee have called for repeatedly. Successive Governments have pledged to legislate for this change as soon as parliamentary time allows; now we are keeping our word.

I recognise the amendment tabled by the noble Lord, Lord Moynihan, for discussion today. The noble Lord raises two points of concern, which I shall address in turn. First, the noble Lord regrets that the draft legislation does not define a methodology for accounting for the UK’s share of international aviation and shipping emissions for the purposes of carbon budgets. That omission is for good reason. Not prescribing a specific methodology now allows for continued methodological development in the period before the sixth carbon budget period commences—that is, in 2033. That will be in line with developments in international carbon reporting practice, in which the UK participates in ongoing discussions. That has to be an international discussion with the international agencies responsible for getting that right on an international scale. I am sure that the noble Lord would not wish to tie the Government to an outdated methodology, out of sync with wider international practice. It is not that there is no methodology; it is a question of making sure that the final methodology is fit for purpose when the sixth carbon budget comes in.

That final methodology will be determined separately by the Secretary of State before laying the first annual statement of UK emissions for the sixth carbon budget period. In the meantime, I refer the noble Lord to the technical annex of the Government’s carbon budget and growth delivery plan, which sets out the Government’s working assumption on defining a UK share of international aviation and international shipping emissions when setting and making policies for future carbon budgets. If the noble Lord wants to cut to the chase early, I suggest that he refers to paragraphs 125 and 126 of the technical annex to do just that.

Secondly, the noble Lord suggests that the regulations will place additional costs on industry. As I noted earlier, this is an accounting change that clarifies how emissions are counted within UK targets; it does not set new policies for international aviation and shipping. The Government will continue developing policies to reduce emissions in international aviation and international shipping, and these will be subject to their own assessments.

Notwithstanding that, I emphasise that the Government are acutely aware of the importance of international aviation and international shipping to UK economic growth. We are committed to pursuing solutions that do not risk displacing emissions to elsewhere in the world or damaging UK competitiveness, working closely with industry to ensure that our high climate ambition is deliverable and affordable for them and passengers. Indeed, schemes such as the sustainable aviation fuel mandate are carefully designed to protect against excessive cost increases. At the same time, measures such as the Sustainable Aviation Fuel Act and grant funding will tackle barriers to investment and support UK manufacturers to gain a share of the growing global advanced fuels industry, with all the economic benefits that entails.

I urge noble Lords to consider these points when and if they consider voting in favour of the amendment tabled by the noble Lord. The measures formalise an approach supported by successive Governments and reinforce the credibility of the Government’s strategy for aviation and shipping decarbonisation, both domestically and internationally. I beg to move.

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[Lord Whitehead (Lab)]

My Lords, I thank all noble Lords for their valuable contributions to the debate. I am greatly buoyed up by the tremendous speeches in support of this measure. It has restored my faith that this House is facing the right way on climate change and is behind measures to tackle climate change and get us to net zero. That is great.

In that respect, I recognise that I was gently chided by the noble Baroness, Lady Hayman, for being rather proceduralist in my first comments. I would like to put that right now by saying hurrah! We now have this on the statute book. It is something that the noble Lords, Lord Teverson and Lord Deben, and many others—including me—have been banging on about for many years. It always seemed that it was a terrible gap in our armoury to fight climate change that we were apparently allowing international aviation and international shipping to have a free pass as far as climate change contributions were concerned. In those days, it was partly because people could not think of how to do it easily.

The noble Baroness, Lady Bloomfield, underlined the point that we are not discussing methodology because we cannot think of what to do but because there is a still emerging and developing consensus across the world in the negotiations with the international aviation authority and the International Maritime Organization on exactly how this can best be done—not that it cannot be done, but to get it right.

As far as aviation is concerned, it is a question of getting a point-to-point arrangement, where your contributions are relevant for the outward flight and someone else’s contributions are available for the flight back. How to establish the point-to-point arrangement internationally and make it work within each country that agrees it is part of the discussion that is going on with the international aviation authority.

As far as shipping is concerned—and this is relevant to the contribution made by the noble Baroness, Lady Foster—we are now talking about international shipping coming into climate change arrangements. Obviously, domestic shipping has been in there for a while. The noble Baroness and I were engaged in an interesting discussion just recently about exactly how Northern Ireland gets treated as far as domestic shipping is concerned and the particular circumstances for Northern Ireland. As the noble Baroness said, they have led to a half-price arrangement for Northern Ireland shipping so that it is not disadvantaged compared with Republic of Ireland shipping.

There are things already that can be put into place in terms of taking account of particular circumstances. But the particular thing that has to be taken account of as far as international shipping is concerned is the fact that ships do not go to one place and then back to another place; they go to multiple places around the world. So how do you get a fair arrangement for what international shipping is paying in? You go through international bunkering arrangements and things such as that, but there is still some work to do in getting that absolutely right.

It is right that we do not put something down now on a statutory instrument and that we make sure, along with our international partners, that we have got this right on an international basis. This has to be done on an international basis to make sure that people do not escape or get out of their obligations and that it is fair to people all round. That demonstrates that this is clearly not a wrecking ball to UK industry. Indeed, as the noble Lord, Lord Deben, mentioned, if it was a wrecking ball, it would have been a wrecking ball firmly in the middle of the last Conservative Government’s arrangements for the economy, because that is what they did at the time.

It is not a wrecking ball because it will be fair to everybody. This will be the basis on which international aviation and international shipping will continue. There will not be people who get a free ride on the back of it. It will be fair shares for everybody. That is why it is important that we get the methodology right.

I do not think I need to go on a great deal about the rest of this SI, because noble Lords have made such a good case for it this evening and I do not need to add to it. If I have missed anything out in my contributions, I will write to the relevant noble Lords.

I do not agree that ETS is a method of tax raising. It is in the form of a tax, but it works with the market rather than against it to distribute properly how those contributions can be raised. It makes the cost of high-carbon activities higher than that of low-carbon activities—that is one of its purposes. However, it is not unfair taxation for particular groups of people or economies; it is a fair, market-based method of ensuring that the move towards a low-carbon economy is distributed among all people.

This measure should be passed by consensus among everybody in this Chamber. It is so important that that consensus is maintained. It was embedded in the Climate Change Act originally and has provided stability, certainty and credibility to our framework. These regulations do not raise our ambition or weaken it but ensure that it is applied consistently. I therefore urge noble Lords to support these regulations and, in doing so, uphold the United Kingdom’s status as a global leader in tackling climate change. Should this matter be put to a vote, I would urge that this Chamber vote solidly against the idea that there should be a regret amendment attached to it.

Climate Change Act 2008 (Credit Limit) Order 2026

Lord Whitehead Excerpts

Tuesday 23rd June 2026 Lords Chamber

Moved by

[Lord Whitehead]

That the draft Order laid before the House on 14 April be approved.

Relevant document: 58th Report from the Secondary Legislation Scrutiny Committee, Session 2024–26

Amendment to the Motion

Tabled by

Carbon Budget Order 2026

Lord Whitehead Excerpts

Tuesday 23rd June 2026 Lords Chamber

Moved by

[Lord Whitehead]

That the draft Order laid before the House on 2 June be approved.

Relevant document: 5th Report from the Secondary Legislation Scrutiny Committee (special attention drawn to the instrument)

[The Minister of State, Department for Energy Security and Net Zero (Lord Whitehead) (Lab)]

My Lords, I thank the committee for its consideration. The draft Carbon Budget Order 2026 was laid before the House on 2 June and the draft Climate Change Act 2008 (Credit Limit) Order 2026 on 14 April.

Given that we are sitting here this evening on the second of the four hottest days there ever have been in June, after a similar number of hottest ever days in May, we may think that the question of whether we should debate doing anything about climate change answers itself. We have a far more scientific way to act on climate change at the moment, as this Carbon Budget Order sets a science-led budget to reduce emissions by about 87% for the period 2038 to 2042 compared to 1990 levels. This is in line with the level recommended by the independent Climate Change Committee and endorsed by the Environmental Audit Committee.

The detailed impact assessment published alongside the Carbon Budget Order provides a rigorous assessment of options, all showing significant benefits of continuing towards net zero over abandoning it. The proposed seventh carbon budget sets a pragmatic and achievable path that will enable the UK to continue seizing the benefits of clean energy and climate action, including energy security, lower bills, good jobs and growth, and health and nature benefits. This is also consistent with the action needed globally to meet the goals of the Paris Agreement, building on the UK’s 1.5 degree-aligned nationally determined contribution for 2035. We can fight for our national interest only by pushing for global action built on the power of our domestic example.

A delivery plan setting out how carbon budget seven will be met will be published as soon as reasonably practical after Parliament has approved the budget. I emphasise that what we are debating today is the level at which carbon budget seven should be set. We are not debating—or should not be debating—the policies that will be set by the Government in response, to make sure they can meet that level. Those policies, as I have emphasised, will be published shortly but are not really a question for debate in detail today.

Under the Climate Change Act, the Secretary of State is required to set a limit on the number of international credits that can be used towards a carbon budget at least 18 months before the budget period starts. That is very relevant to the second SI we are discussing tonight, concerning the credit limit order. This order sets a zero credit limit for the carbon budget five period of 2028 to 2032. It does not represent a change in policy but reflects the fact that carbon budget five can be met through domestic action. All other carbon budgets to date have been delivered solely through domestic action. The order takes into account the advice of the independent Committee on Climate Change that carbon budget five can, and should, be achieved without the use of international credits, and this also ensures that the UK economy will profit from the co-benefits of the transition.

The Secondary Legislation Scrutiny Committee has reported on the Carbon Budget Order, and I am grateful to the committee for its report and the careful consideration of this draft instrument. The committee noted the importance of incentivising the shift to clean electricity. The Government recognise that rebalancing the price ratio between electricity and gas is important to long-term fairness so that electricity prices reflect the falling cost of clean power.

We are taking steps to address this from Budget 2025, removing £150 off energy bills due to the success of the contracts for different scheme in bringing forth new renewable assets at fixed competitive prices, which are beginning to decouple electricity and gas markets. Reformed national pricing enables us to further bear down on network constraint costs and improve system efficiency.

I recognise the non-fatal amendments tabled by the noble Lord, Lord Moynihan, for discussion today and I will address the points he has raised in turn. In relation to the Carbon Budget Order, the noble Lord first suggests that this will increase reliance on intermittent renewables. The Government are, in fact, strengthening energy security by reducing dependency on volatile fossil fuel markets and delivering a diverse, secure and clean energy system. This will be backed by unabated gas only when it is essential, and any residual emissions would be offset by removals.

The noble Lord suggests that the order will cause higher energy prices. The main driver of high energy costs has been global gas prices, which have also pushed up electricity prices. Clean power is what will give us control over prices, with the offshore wind secured in a recent auction being 40% cheaper than building and operating new gas plants.

On causing deindustrialisation, this Government are committed to supporting UK industry to decarbonise, while protecting and creating thousands of jobs across the UK. We are taking ambitious steps to lay the groundwork for further industry investment. Last year, the Government set out their modern industrial strategy, which will drive forward ambition for UK business operating in the clean energy space.

With regard to economic growth, setting carbon budget seven at this level builds on the UK’s pioneering Climate Change Act 2008, providing a framework for combining economic growth and climate action. I have a fairly simple and straightforward comparison. The UK has cut its emissions by 54% since 1990, while growing the economy by over 85%. In other words, emissions reduction and growing the economy have been fully and effectively decoupled over that period. Indeed, since July 2024, the UK has seen over £100 billion of private clean energy investment announced and the Government’s clean energy plans are expected to support 400,000 extra jobs by 2030.

With regard to claims that retaining the carbon tax negatively impacts households and industry, the biggest threat to energy security is the UK’s dependency on volatile fossil fuel markets, not the carbon price applied under the emissions trading scheme. The UK has had an emissions trading scheme in place for over 20 years. It provides stability to UK businesses and industries, supporting them to take long-term investment and planning decisions, while “free allowances” protect sectors at risk of carbon leakage, ensuring we decarbonise over time without undermining UK competitiveness, and limits many sectors’ exposure to the carbon price. It has already played a key role in ending the burning of coal for electricity, setting us on our way to being a clean energy superpower.

On behaviour change, the noble Lord suggests that the Carbon Budget Order relates to a reduction in livestock numbers and meat and dairy consumption. This Government have been clear that we will meet our targets in a way that does not tell people how to live and behave. The transition will be led by consumer choice. Accepting the CCC’s recommended target does not mean we replicate its pathway.

I am sure a number of other issues will be raised in the debate, including offshoring UK emissions. Clear actions are being undertaken—CBAM and various other things—to make sure that does not happen and we are taking precautionary action to prevent carbon leakage.

In conclusion, these orders set a clear, credible pathway to net zero and ensure that these emissions reductions are delivered at home. I urge noble Lords to act together in the interest of current and future generations by agreeing these statutory instruments, which will give us energy security, lower bills, good jobs, cleaner air and protect our homes for our children and grandchildren. I beg to move.

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[Lord Whitehead (Lab)]

My Lords, first, let me thank noble Lords for their valuable—that is what it says here in my brief—contributions to this debate. I cannot say that I endorse that entirely. I also cannot quite get my mind around the parallel universe that some noble Lords seem to have been inhabiting while making their points this evening.

On that parallel universe, I draw noble Lords’ attention to a very significant speech that was made today just a few hundred yards from this building. It was given by the Secretary-General of the United Nations, who, as part of London Climate Action Week, made an impassioned speech on climate change, including what we need to do about it, how quickly we need to do something about it, and what we need to do on electrification and low-carbon economies in particular.

I hope that noble Lords will go away and look up that speech, because among other things it completely gives the lie to the idea that no one else in the world is terribly interested in this climate change business, that no one else is doing anything about it, that the activities we are undertaking on climate change are just blowing in the wind, and that we are giving away our industries to other people who will take advantage of them. A number of the industries that they are talking about are sunset industries that are being replaced by low-carbon industries which, if we are not careful, the rest of the world will run away with. They would then overtake the advantages that we have at the moment in green industry, which we are doing very well in. The green economy has grown three times as fast as the general economy in the last few years.

The people who live in this fantasy parallel world appear to be saying that none of that counts. We are making tremendous changes to how energy is distributed in the low-carbon economy. This is a good thing for climate change purposes and will bring people’s bills down in the long term. The energy we will be using will inevitably be cheaper, more affordable, less volatile and more stable than the energy we are using now. It will produce a very large number of jobs: £100 billion in green investment has come into this country over the last two or three years.

However, none of this appears to have any effect whatever on the parallel facts that are put forward. The noble Lord, Lord Frost, appeared to be saying that the rest of the world was moving away from action on climate. I was at an international meeting this morning where people from around the world were standing up and saying what they were doing about this, how committed they are to a low-carbon future and how important it is for their own countries and for the world that we continue down this path.

This climate budget has to be set in the context of the real world of facts and information about where our world is going and what we need to do to make sure that it does not continue in the direction that it appears to be going at the moment, rather than in the context of quite a lot of what we have heard this evening about why all of this is a waste of time. I am afraid that I must single out the noble Lord, Lord Redwood, in this respect. One really cannot make a serious case that, because we cannot completely know the future, we should do nothing whatever about it and just hope that the market somehow sorts it out. We have got to take action.

As the noble Lord, Lord Deben, mentioned, we took action with the Climate Change Act, which was carried by everybody in the Commons except five people. I can name them.

[Lord Lilley (Con)]

Me.

[Lord Whitehead (Lab)]

Indeed, the noble Lord, Lord Lilley, is with us this evening. At least I can say that the noble Lord is consistent. He did not sign it in the first place and I do not think he would sign it now if he had the opportunity.

That Climate Change Act, which requires us legally to carry out these carbon budget examinations, set up the Climate Change Committee to advise us on the science behind the proceedings and tell us what we need to be doing, not just now but in the future, so that we have time to make policy for what we will be doing to match what is required in those carbon budgets. We have that legal obligation, because we passed the Climate Change Act together in that year.

It has stood us in very good stead. It has directed what this country tries to do, without telling us what we do in detailed policy. Some of the discussions this evening have set up what the Government are apparently going to do and then said, “We don’t like it very much”. No, the Government are not going to go around shooting cows and rounding up livestock for slaughter. The Government will be doing what it is doing now and investing £5 billion over two years in farming. This is perhaps the largest investment in sustainable food production and nature recovery in this country’s history.

Alongside that, the Government are actively exploring ways to reduce livestock-related greenhouse gas emissions, including through scientific research on mitigation strategies and management, feed, such as the increasing adoption of methane-suppressing food products, and breeding. There are many alternative ways of making sure that agriculture and land use plays its part in climate change emission reductions without the straw man that some of the opponents of climate change action seem to have set up in this Chamber—that the Government are somehow going to chase livestock out of the country in order to meet climate change restrictions. To produce alternative theories, I am afraid you need alternative facts.

The impact assessment has, among other things, a fairly exact examination of the costs of doing nothing, as opposed to the costs of doing something. This has been a long-standing theme. The University of Cambridge, for example, estimates that climate damage will reduce global GDP by up to 24% under a high emissions scenario by 2100. There are pages of other information about the costs of doing nothing, as opposed to the cost of doing something, and I always advise noble Lords to go to impact assessments if they want to know the truth about what is happening on any piece of legislation.

My noble friend Lord Hunt underlined that the regret amendments that we have in front of us are big on things that are not liked very much and tiny to insignificant on what, if anything, to do about it. Indeed, one has a responsibility, if one does not like what is being done now, to say what should be done alternatively. Alternatively, if one does not like, say, the climate change legislation, stand up and say that, and say what else you will do instead, or, as some Members have said, just deny that the whole thing is an issue and have an alternative universe of facts to try to underpin that.

I am conscious that I will have to write to a number of noble Lords on specific issues, but I thought it necessary to put what we are doing tonight in the right context. What we are doing is making sure that our futures are secure in this world.

[Lord Roborough (Con)]

I asked two specific questions relating to these orders. One was about the timing of the update and the valuations for carbon, and the second was whether the Minister would reconsider the faulty basis on which I think they are calculated. If he does not have answers today, would he commit to write?

[Lord Whitehead (Lab)]

Yes, indeed. The noble Lord makes those points, which I have taken well on board. The question of carbon pricing, of course, is a long-standing issue as far as carbon valuation is concerned, but I certainly will write to him about the particular points he raises as soon as possible.

[Lord Moynihan (Con)]

My Lords, I disagree with the Minister on one thing: I think this was a valuable debate. I thought that contributions from every Member of your Lordships’ House have been helpful and constructive. I do not think it has been, to quote him, “a waste of time”. I do not think anybody who spoke this evening wasted anybody’s time. There is cross-party recognition of the importance of addressing these issues, addressing the carbon order and addressing climate change. The question before us this evening is about the Carbon Budget Order 2026.

The Minister is completely right to say that we should address this in the context of the impact assessment, which he considers to show us the truth. He is completely right to have identified that importance. Everything in my speech related to that—everything. I say to my noble friend Lord Deben that the public and our grandchildren will never forgive us if we destroy our economy with high energy prices. That is a real concern across this Chamber. We currently have electricity prices that are four times higher than the United States. That is the issue that we need to address. The impact assessment shows us that prices will go even higher if we follow these measures.

I say to the noble Lord, Lord Hunt, that we share this factor: neither of us is obsessed with anything. There is no obsession on this side of the House, but there is real concern. There is cross-party concern with what is being proposed. Tony Blair has said that the net-zero policies that are being pushed forward are viewed as

“unaffordable, ineffective, or politically toxic”.

Gary Smith of the GMB, who is absolutely all over these issues, has recently said that the policies being pursued by the Government are “economic madness”. Even the Unite the Union says “No ban without a plan”.

These points are worthy of consideration, because the North Sea issue is very important. I know everybody may have been distracted by Makerfield, but an important referendum was in effect being undertaken in the constituency of Aberdeen South, which was overwhelmingly won by the Conservative candidate. It was an overwhelming rejection of both the measures that are in this climate change Carbon Budget Order and the current Government’s policy on the North Sea, which is referred to.

In closing, it is important for all of us to recognise that there is a universal position across this House that we have to get policy right. I do not think this order does. We cannot afford to damage our economy irreparably through a zealotry on net zero that goes too fast, too far, too early, and jeopardises our economic recovery and the key underlying policy of the Government, with which we agree—economic growth. The impact assessment is fundamentally flawed, not least on the important point about CCS, which, interestingly enough, is one point that was criticised by my noble friend Lord Deben. It is one of the three fundamental pillars on which the whole of this is based.

With those concluding comments, and with my gratitude to everybody who has contributed to this valuable debate, I seek to test the will of the House.

Contracts for Difference (Allocation) (Amendment) Regulations 2026

Lord Whitehead Excerpts

Wednesday 10th June 2026 Grand Committee

Moved by

[Lord Whitehead]

That the Grand Committee do consider the Contracts for Difference (Allocation) (Amendment) Regulations 2026.

[The Minister of State, Department for Energy Security and Net Zero (Lord Whitehead) (Lab)]

It is unfortunate that your Lordships have me again for this SI, but I hope I can be brief and to the point on this one. I believe that this particular SI produces a number of fairly technical but pretty minor changes to the way contracts for difference are bid for and allocated, and I hope we will gain the approval of noble Lords this afternoon.

These regulations were laid before the House on 20 April 2026. As I alluded to, the statutory instrument makes several minor and technical amendments to improve the operational efficiency of the contracts for difference scheme during the assessment of applications. Subject to Parliament, the Government intend to introduce these targeted and practical measures in time for allocation round 8, which opens to applications on 20 July—so there is some haste in this procedure this afternoon.

The contracts for difference scheme is the Government’s flagship policy for supporting new low-carbon electricity generation in Great Britain. CfDs are awarded through annual, competitive auctions, with the lowest-priced bids being successful. In March, the Energy Secretary outlined a package of measures to go further and faster on clean power in response to events in the Middle East. That included bringing forward the opening of AR8 to July to provide certainty for clean energy investors.

The most recent allocation round, allocation round 7, alone secured 14.7 gigawatts of clean, homegrown generating capacity, across 201 new projects. AR7 built on the success of AR6 in September 2024, which secured over 7 gigawatts of renewable capacity across Great Britain. It is worth just looking at the upward curve of the amount of capacity procured in those two rounds. We will not go back to allocation round 5, but certainly in those two rounds there was a very successful allocation outcome.

Indeed, AR7 was the most successful renewables auction in European history. The AR7 reforms we introduced to boost competition and investor confidence secured renewable capacity at strike prices 40% lower than the cost of building and operating a new gas power plant. These achievements show how central the CfD scheme is to our mission to deliver clean power by 2030 and strengthen Britain’s energy security.

The Government keep the CfD scheme under review to ensure that it remains fit for purpose. The regulations will make the following three amendments to improve the future operation of the scheme.

First, they will enable the National Energy System Operator, NESO, which is responsible for the allocation round process, to correct certain types of errors it makes during the assessment of applications by issuing new or amended qualification decisions where evidence supports this. NESO, in its role as the CfD delivery body, assesses applications against the eligibility criteria and determines whether applicants qualify to participate in the competitive allocation process.

As the CfD scheme has grown in popularity, the volume of applications has increased significantly, with several hundred submitted in recent allocation rounds. Although eligibility checks are very robust, a larger number of applications increases the risk of errors in assessment decisions, and this amendment will ensure greater consistency and fairness in how the CfD eligibility requirements are applied.

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I realise the need to have put this into an SI. I have never seen it before. It is an extraordinary primer. With that in mind and with the recognition that the Government have opened up, accepted that this is happening and put forward proposals to remedy it, it will meet with the agreement of this side of the Committee. However, it is an extraordinary admission by a Government who have had to come forward with a specific statutory instrument to address all the errors that their own flagship body is making.

[Lord Whitehead (Lab)]

I thank noble Lords for their very constructive and interesting contributions. I will attempt to address them as best I can. I do not think that I will have to write to anybody but, if necessary, I will make sure that it is done.

I have worked very successfully with the noble Lord, Lord Teverson, over a number of years in all-party groups and as shadow Energy Minister, and have always found him to be very constructive and helpful. He has been particularly helpful today by raising geothermal, which for a long time has been one of the issues closest to my heart. The Southampton geothermal scheme came in seven years before the Government recognised that geothermal had some interest and future. I acknowledge that this was in 1990, but the Southampton scheme had been up and running for seven years before that. However, that is a very minor point.

The noble Lord put important points forward concerning what is likely to happen to geothermal. Do we think that it is a very important technology for the future? Yes, and it is a very important technology in terms of the rollout of heat networks that is taking place. Also, being one important low-carbon source for informing those heat networks, it is pretty good for ensuring that, if you have a low-carbon alternative to what is normally the case in heat networks—a high-carbon gas engine—going into the scheme, geothermal can be a very efficient, long-lasting and virtually permanent alternative to that gas engine putting the heat around the network.

There are questions to answer about the capex involved with that process and how that is undertaken—whether jointly with the heat network or in addition to a heat network that is already existent. There are also questions on how geothermal may or may not be eligible for the AR process. The noble Lord knows that geothermal is not just one thing. Sedimentary geothermal is normally drilled at shallower depths, gets heat up from aquifers and associated activities and then goes through a heat transfer arrangement. Then you have much deeper geothermal, which can go far deeper and penetrate, for example, hot rocks. That is what is happening in Cornwall, which the noble Lord opened up. I was unfortunately unable to be there on the opening day, but I was very glad that he was the person chosen to open those proceedings.

The noble Lord will know that those particular schemes, of which there are three—one of them is now operational—are all about producing mainly electricity with, interestingly, lithium extraction as a by-product, but they are not strictly comparable with sedimentary geothermal, which is all about heat elsewhere in the country. Indeed, there are much greater prospects than were hitherto thought for both sedimentary thermal and hot rocks. As the noble Lord mentioned, it was almost a lucky accident of AR5, you might say, but the miserable outcome of AR5 was tempered somewhat by the fact that, because there were no bids in the main pot, geothermal actually managed to get its bids in at that particular point.

Bringing that together for AR8 and future allocation rounds, clearly, allocation rounds are based on the production of electricity, so purely heat-based geothermal would not qualify and would need to be supported— if it is to be supported—by means other than the allocation round process. So, as far as AR8 is concerned, the question of the pots and so on is still being determined, but it is certainly the case that purely heat-based geothermal will not qualify in future. Then we have the question of the United Downs schemes. We await the outcome of the other two schemes. Of course, they have a great deal on their plate at the moment, so I am not sure whether they will be bidding for a lot more schemes right this minute, but that is where we stand as far as geothermal and allocation rounds are concerned.

The noble Earl, Lord Russell, was concerned about the extension of the CfD from 15 years to 20 years in the most recent rounds. I note his party’s policy to take that even further. The extension from 15 years to 20 years was certainly a measure to make sure that those people who are bidding into the system have good, regulated cover for their product for a reasonable number of years; obviously, that then reflects on to the amortisation of the capital process and the security that that gives. Clearly, that was a factor in making sure that so many people got into the allocation rounds, bid and succeeded.

Whether that 20-year figure needs extending further, as far as offshore wind is concerned, will need to be looked at in terms of the experience of AR8 and, possibly, AR9—and, indeed, the practical outcome of AR7. So, it appears at first sight that it has been a very positive extension, but, of course, as the noble Earl will know, there were different levels of CfD provision for, for example, Hinkley. So it is not the case that CfDs are “one size fits all” as far as those terms are concerned.

The noble Earl also asked what is being done about onshore wind. There is a lot happening as far as onshore is concerned, in addition to offshore, in terms of its access to the AR process, from which it was previously banned, in effect, and in terms of not just powering new onshore schemes but repowering existing onshore schemes. He will know that the intention is to bring repowering into the AR process, if that can be done, which would in itself be a considerable step forward—for example, in the threefold additions that one can get from repowering on sites that have hitherto worked to a much lower capacity in the past. I think I have responded to the points from the noble Earl, Lord Russell, but if he does not think so, I can certainly take them up in writing.