Offshore Petroleum Licensing Bill

Baroness Blake of Leeds Excerpts

Committee stage
Tuesday 23rd April 2024 Grand Committee

[Baroness Blake of Leeds (Lab)]

I start by reflecting on the comprehensive discussion we have had. All noble Lords in the Room are looking forward to the Minister’s comments on the points raised.

Just to reflect on the Second Reading in the Chamber, many of us asked then about the purpose of the Bill, whether this legislation is really necessary and if it will satisfy its stated objectives to boost the economy, deliver energy security and transition to net zero. I do not need to go through those points again; we made them very clearly at Second Reading and could well return to them.

--- Later in debate ---

[Baroness Blake of Leeds (Lab)]

I was just going to strike a more positive note by saying that, although I question why this legislation is before us and how necessary it is, I welcome within the amendments, particularly in this group, an opportunity to seek improvements on a wider particular area, and we have had some good justification today as to why that is.

I am pleased to have been able to sign the first amendment, in the name of the noble Baroness, Lady Hayman, which is also signed by the noble Lord, Lord Randall, and the noble Earl, Lord Russell. I just emphasise that this amendment is looking to prevent the invitation of new seaward area production application licences until the Secretary of State has introduced a ban on the flaring and venting of methane by new offshore installations, and it would further require the Secretary of State to prevent further rounds if a wider ban is not put in place within two years.

We have heard very clearly today that there is a general feeling that the damage caused by methane has been overlooked, and this presents an opportunity to address that, to acknowledge its potency as a greenhouse gas and to bring it up to speed, with the focus that there has been on carbon dioxide. In addition, as the noble Baroness, Lady Hayman, said, the statistics are quite staggering in terms of the sheer waste every year in the burning off of wasted gas. Just think of the powering of the number of homes times the number of years: we are talking into the hundreds of thousands and, really, we should be doing better.

As we know, NSTA guidance states that there should be zero routine flaring and venting from any new developments—that is very clear. That seems to give a sense of security to some noble Lords in the debate. There was also an acknowledgement that routine flaring and venting should be phased out by 2030. However, I emphasise that, although those words are there, the problem remains that enforcement is patchy and measures are found only in non-binding guidance. I believe that this amendment seeks to manage this situation and help us move forward.

The one point on which I would like to press the Minister picks up on the conversations and discussions that we had at Second Reading concerning the amendment put down by the Member of Parliament Alok Sharma and the suggestion from the Minister in the other place that there would be another look at this. I would just like an update on whether those discussions have progressed and, if they have not so far, would the Minister be prepared to meet with us to talk about how we could come to some agreement or consensus—a way of moving forward that would satisfy the serious concerns that have been expressed in different debates?

Referencing Amendment 2, in the name of the noble Baroness, Lady Hayman, also signed by my noble friend Lord Knight, I do not honestly think that we emphasise enough in our discussions around this agenda just what an opportunity is presented. This was the basis of the discussions of the chief executive of the CCC over the weekend. We should be talking about the growth potential and opportunities that should be created, not only in jobs, as we have heard about today, but in attracting investment into this whole area.

--- Later in debate ---

[Baroness Blake of Leeds (Lab)]

I acknowledge the comments from the noble Baroness, Lady Jones, and the noble Earl, Lord Russell. To repeat the concerns as outlined at Second Reading, our belief is that the tests identified in the Bill will be impossible to fail and are thereby fundamentally flawed, as my noble friend Lord Lennie has previously outlined.

Amendments 12 and 15 in my name are straight- forward. The intention is to be as simple as possible, leaving out “liquified” from the Bill to include all natural gas imported into the UK. We need to achieve clarity, which is not present in the current wording. If the Government want to keep it in, they should be open about the consequences. Liquified natural gas will always be more greenhouse gas intensive in production than UK natural gas. The North Sea field will not meet our total demand for oil and gas, as we know. We need to replace these tests with ones that produce a proper judgment about whether a licence should be issued. The main consideration should be whether issuing a licence is in line with our climate change goals.

Another disappointment with this Bill, as we have discussed, is that there is no reference to previously introduced climate change compatibility tests into production generally—quite an omission. Including only LNG presents a serious problem. We acknowledge that substantial amounts of natural gas come into the UK from Norway via the pipeline. The production of that gas is substantially cleaner than that of UK natural gas. Indeed, we need to be sure that managing the decline in demand for gas is at the heart of a successful net-zero transition. The best and fairer test would be to consider gas imports in the round.

We are trying to amend a Bill that is deeply flawed, as I have previously recognised. I recognise the opposition of the noble Baroness, Lady Jones, to the Bill as a whole. I believe that this a simple way in which we could make some improvements; I look forward to the Minister’s comments with interest.

[Lord Callanan (Con)]

The noble Baroness, Lady Jones, tabled notice of her intention to oppose Clause 1 standing part of the Bill so let me begin my remarks by briefly outlining the purpose of that clause. Under the Petroleum Act 1998, offshore oil and gas licences are administered by the Oil and Gas Authority, which is operating as the North Sea Transition Authority. A seaward production licence grants exclusive rights to the licensee to explore, bore for and produce oil and gas from the geological formations that lie beneath the UK’s offshore waters, within an area defined by the licence. Additional permissions are required before any activity can take place.

Periodically, the NSTA launches licensing rounds inviting companies to apply for such licences. During this process, interested companies submit bids and licences are awarded to bids that promise to ensure the economic recovery of the UK’s oil and gas resources, while of course supporting the drive to net zero by 2050. This existing arrangement means that industry does not have certainty as to when—or, indeed, if—the NSTA will launch a new licensing round. This clause provides that certainty by amending the Petroleum Act 1998 to place a duty on the NSTA to invite applications for seaward production licences in each annual period, which runs from October to September each year. This is subject to two tests being passed: that the average carbon intensity of domestic UK gas is lower than the average carbon intensity of imported liquified natural gas; and that the UK remains a net importer of both oil and gas.

Together, these tests, which will be conducted by the NSTA, will ensure that the annual duty on the NSTA applies only where this supports our wider energy security and energy transition objectives. If the annual duty is triggered, the NSTA proceeds with the current licensing process. It will remain a matter for the NSTA as an independent regulator to decide how many and which blocks or part-blocks to offer for applications—with a minimum of one block—and to ensure and apply the appropriate criteria for determining those applications. It will remain the responsibility of the NSTA to decide whether to offer and grant any licences at the conclusion of that process and whom to offer them to; the NSTA will retain the discretion to grant licences outside of this new annual process in the usual way where needed.

I assure noble Lords that the offering and granting of licences under the new annual process will remain subject to the existing rigorous environmental regulatory requirements. These include the obligation written into the NSTA’s strategy to assist the Secretary of State in meeting the target of net zero by 2050. Indeed, I want to be clear that nothing in this clause contradicts our steadfast and, of course, legally binding commitment to achieving net zero by 2050. We do not need to choose between either delivering net zero or supporting our domestic oil and gas sector; the two things are not mutually incompatible.

Amendments 11, 13, 14 and 16 in the name of the noble Baroness, Lady Jones, and Amendments 12 and 15 in the name of the noble Baroness, Lady Blake, seek to amend the carbon intensity test. This test looks at historical carbon dioxide emissions from the production and supply of natural gas during an assessment period spanning the preceding three years. The test is passed if, during that timeframe, per unit of energy, the carbon emissions of producing gas domestically were lower than the average carbon emissions from the production and delivery of liquefied natural gas from all geographic locations.

The amendment put forward by the noble Baroness, Lady Jones, seeks to change the test to include in the comparison all imported and produced petroleum products, including crude oil, and all forms of natural gas. The amendments put forward by the noble Baroness, Lady Blake, seek to include an assessment of the carbon intensity of all imported natural gas.

It is important to recognise that the markets for oil and gas work very differently; it is not possible to make the same comparisons for oil as it is for gas. In the case of gas, we have a choice either to maximise domestic production or to import more. The more gas we produce domestically, the less we need to import; that seems obvious to me. For oil, we do not have that same choice because oil has to be refined before it is used. For historical reasons, UK oil is generally processed abroad—predominantly in Europe, where our production supports the energy security of our European allies. So a comparison of the carbon intensity of imported oil versus domestically produced oil would be the wrong one to make.

Turning to the test for gas, LNG has been chosen as the relevant comparator as it is a critical marginal source of energy, providing an essential buffer source—especially in winter, when gas demand is higher. Over the past decade, LNG has become an increasingly important method of moving natural gas to market. This will only intensify in the coming years because UK natural gas production peaked in 2000 and the UK has been a net importer since 2004 in order to meet domestic demand.

It is fortunate that some of the UK’s gas imports, in particular pipeline imports from Norway, have relatively low production emissions. However, it is a fact that Norwegian production, like our own, is declining. We will still need gas in the coming years as we transition to net zero. With both UK and Norwegian production declining, it is likely that LNG will play an increasingly important role. During periods of high demand in winter, LNG is a key, flexible source of supply; this role will only increase over time as UK and Norwegian production declines. Producing less domestically means importing more carbon-intensive LNG, which is why a comparison with LNG is the right one to make, in our view, and why we have included it in the Bill.

With the explanation I have been able to provide, I hope that it is clear why the test focuses on LNG and not comparators with oil, which is completely different, or other forms of gas. I therefore ask the noble Baroness to withdraw her amendment.

Paying Polluters: UN Report

Baroness Blake of Leeds Excerpts

Monday 22nd April 2024 Lords Chamber

[Lord Callanan (Con)]

As the noble Earl is probably aware, there are discussions in the OECD at the moment about the use of these clauses. As I said, we are responsible for the ones that we have signed, recognised and arbitrated against, and we very carefully ensure that these clauses protect our right to regulate in these circumstances on energy and climate change matters. The success of that has meant that we have seen no successful claims against the UK.

[Baroness Blake of Leeds (Lab)]

My Lords, while we will of course hear a lot about the importance of investor confidence, it is as important to ensure that Governments, particularly of less affluent and more vulnerable nations, are able to fulfil their climate commitments. It is estimated that those Governments fulfilling their commitments under the Paris Agreement might be liable to pay up to $340 billion in future cases under this system. Can the Minister tell us the Government’s assessment of what the impact of this system will be on limiting the increase in global temperatures to 1.5 degrees centigrade above pre-industrial levels?

[Lord Callanan (Con)]

The noble Baroness is using the generality to refer to the specific. ISDS clauses are very useful in a whole range of different areas. I accept her point that there is some evidence of their misuse in the case of energy and climate change policies, and we will work with international partners to see how this can be mitigated. We are very careful to make sure that the ones to which we agree preserve our right to regulate. Other countries take their own decisions, of course.

Offshore Petroleum Licensing Bill

Baroness Blake of Leeds Excerpts

2nd reading
Tuesday 26th March 2024 Lords Chamber

[Baroness Blake of Leeds (Lab)]

I thank noble Lords for their constructive comments this afternoon, despite repeated concerns from around the House that the Bill is far from benign and could have damaging consequences, as was eloquently outlined by the noble Baronesses, Lady Young, Lady Willis and Lady Hayman, and others. The noble Lord, Lord Bruce, reflected the conclusions from the other place that the Bill is a distraction from the serious challenges facing us on our path to net zero. It is clear, I have to be honest, that the Bill will not be scrapped, despite the opposition to it, so all of us have a responsibility to limit any potential damage that it might cause, especially as the noble Baroness, Lady Boycott, outlined.

As we heard—although this has not been emphasised enough—the Bill will bring in a duty for the North Sea Transition Authority to run annual licensing rounds for oil and gas extraction in the UK by amending the Petroleum Act 1998. It outlines the two tests that have to be met and, as we have heard repeatedly, it is clear that, as they stand, it is virtually impossible for these tests to fail. The question we need to ask is: why are we being asked to legislate for something that happens anyway?

The stated aim of the Bill is to boost the UK economy, strengthen the UK’s energy security and assist the transition to net zero, while enhancing investor and industry confidence. We have heard excellent contributions explaining why these laudable objectives will not be achieved. The Bill will make no difference to the staggering household bills individuals have to pay, which, frankly, is undermining the economy. As we heard, the Secretary of State has made this absolutely apparent. As my noble friend Lord Lennie said, our dependency on gas has been fuelling these staggering price rises. Households are currently in a record amount of debt, estimated to be £3.1 billion, to energy suppliers. Debt levels have doubled since 2020. Surely this should focus all our minds on the challenges facing us.

This will also not make a difference to our energy security, according to the former chair of BP, the noble Lord, Lord Browne. It will undermine the independence of the NSTA, according to its own board minutes. Also, unforgivably—we have to keep mentioning this point—it will continue the reputational damage to the UK on the global stage in moving towards net zero. I need do no more than ask everyone to look at the speech by the former MP Chris Skidmore and his reasons for resigning. That was an extraordinary action to take, and it was taken because of his serious disappointment with and anxiety about the proposed legislation and the message this is sending across the world. Many noble Lords expressed this concern, and we have repeatedly tried to impress upon the Government that this damage is serious and is affecting our reputation and, therefore, investment in the important work on renewables outlined today.

It is a false premise to present tests that cannot be failed. It feels like manipulation: it is disingenuous, and it needs calling out. Surely the best test would be to demonstrate that a particular action is compatible with our climate change goals. Where is the reference to this legitimate demand in the Bill? The current climate compatibility checkpoint does not have a legislative basis. I make it absolutely clear that Labour recognises that oil and gas will be produced at existing sites in the North Sea over the coming years; to suggest otherwise is wrong and is designed to cause mischief. What needs to be recognised is that such production will taper, as the Minister outlined, to make way for the switch to low-carbon energy sources, coupled with demand reduction through investing in retrofitting our buildings and, in particular, our housing stock. Suggesting that the few new licences that the Bill might deliver are essential to our long-term objective of a transition to clean energy is misleading and provocative. We need a strategy to deliver for those North Sea workers new opportunities that will be enhanced by transitioning to floating offshore wind, carbon capture usage and storage, and hydrogen. We need a clear plan to deliver these opportunities.

Another serious flaw in the Bill is that there is no reference to methane emissions. I am grateful to noble Lords who highlighted this, and, for the sake of time, I will not go into the details. The Bill talks about measuring carbon dioxide emissions, but it therefore focuses on production emissions and does not take on board that methane emissions at different stages of production and transportation of LNG are, in aggregate terms, worse than the emissions of UK-produced and piped natural gas.

I listened with interest to the debate in the other place. It was clear that the right honourable Alok Sharma was concerned about the whole issue of methane. He looked to the debates in the House of Lords to come up with some answers to the amendment that he put forward. Can the Minister enlighten us on where the Government have got to in these discussions? Will there be movement? If not, I am sure this subject will come up in Committee. There have already been demands for a ban on flaring from the CCC and the Environmental Audit Committee.

Does the Minister have an answer to the concern that more licensing could have a chilling effect on the Government’s offshore wind target of 50 gigawatts by 2030, caused by their failure to publish their spatial plan for the UK seabed? The lack of any consideration of a marine spatial prioritisation test is further increasing alarm over the risk to marine health, especially given the lack of regard for protected marine areas. I pay tribute to my noble friend Lady Young and the noble Baroness, Lady Willis, for their contributions in this important area. I understand that there will be further debate on this in Committee, and I look forward to those discussions and the amendments they will generate.

All of us know that cross-party consensus on the important long-term consequences of climate change has been invaluable over recent years. I believe the Bill undermines that consensus for the expectation of short-term political advantage. This was clearly articulated by my noble friend Lord Lennie, and we will not be silent on this point. We need a collective, serious and responsible approach, not a distraction that will contribute nothing to achieving our climate and energy production goals. We need a serious plan, reflecting energy security concerns, the need to provide new jobs and the transition from the current high-skilled jobs to the new jobs that are being created. We need a functioning industrial strategy, as clearly laid out by Labour in its proposals for the future. I assure everyone that we do not want to see a disastrous repeat of the deindustrialisation policies of the 1980s that laid waste to whole communities, especially in the north, where I come from.

The limitations of the Bill offer us little opportunity to secure improvements. However, I am confident that further discussions will take place in Committee and improvements will be sought through amendments concerning, as we have heard, methane, including leak detection, as well as the protection of marine areas and enhancing new job opportunities, to name but a few. The hope is that we can achieve cross-party agreement to secure at least some benefit from this distracting and frustrating legislation.

--- Later in debate ---

[Lord Callanan (Con)]

If the noble Baroness is asking me if they pay billions in taxes and make billions in profits, then yes, I guess the answer is that the international oil companies do very well out of it. Of course, some of them are also financing renewable infrastructure. Some of the big oil and gas companies are helping to invest in CCUS in this country. We very much hope that they will continue to make profits, because it pays our pension funds and a lot of investors, and a huge amount of money into the UK Exchequer that the Liberal Democrats are normally very keen on spending. The noble Baroness needs to allow that money to be raised in the first place. The companies are responsible for decommissioning their assets.

The Government continue to work with the NSTA and the Health and Safety Executive to ensure that well decommissioning is progressing in line with the relevant safety and environmental regulations and standards. That is exactly the same as has been happening previously. The UK has a very robust decommissioning regime whereby operators are responsible for decommissioning their assets at the end of their useful life. This regime of course includes protections for taxpayers, so that the costs fall on those operators. I hope the noble Baroness is reassured by that.

I was of course also pleased to hear the support of the noble Lord, Lord Bruce, for the jobs in the sector. He has a lot of relevant experience, particularly in north-east Scotland. This is in line with the words of Sir Ian Wood:

“Owing to a world-class oil and gas sector, the North East … is home to the critical mass in skills and expertise that will be crucial to ensuring that we successfully accelerate new and green energies, protecting and creating jobs as we do so”.


I am pleased to have the support of the Labour Party, but we must retain those skilled jobs in the industry, and our firm belief is that this Bill will help us to achieve exactly that.

To conclude, the Bill will give industry the certainty and confidence it needs to continue to invest in the North Sea, strengthening our energy security and supporting the energy transition as we move towards our goal of net zero, through the introduction of annual licensing rounds, subject, of course, to all the appropriate tests being met. I look forward to continuing the scrutiny of the Bill as it progresses through the House, but in the meantime, I beg to move.

[Baroness Blake of Leeds (Lab)]

Before the Minister sits down, could he answer my question about whether discussions are continuing on the issue of methane, as was raised in the other place, and particularly the withdrawal of the amendment from the right honourable Alok Sharma? Can we expect to have some discussion on where those conversations might lead us, if they are indeed taking place?

[Lord Callanan (Con)]

As I always do, I will listen very carefully to the point of view the House expresses in Committee, and, as is normal practice, as a Government we will then consider whether there are any concessions or changes we want to offer in the Bill. I am sure we will want to talk further to the noble Baroness and her colleagues at that point.

Home Insulation: Health and Mortality Rates

Baroness Blake of Leeds Excerpts

Tuesday 19th March 2024 Lords Chamber

Asked by

[Baroness Blake of Leeds]

To ask His Majesty’s Government what recent assessment they have made of the impact of current levels of home insulation on health and mortality rates.

[The Parliamentary Under-Secretary of State, Department for Energy Security and Net Zero (Lord Callanan) (Con)]

My Lords, evidence of the health benefits of government insulation schemes is gathered as part of those schemes’ evaluations. Recent evaluations show that schemes had a positive impact on general health. For example, improvements in the health of someone in the household were reported after the installations from our government energy efficiency schemes. Of course, the health impacts are higher for those with pre-existing health conditions.

[Baroness Blake of Leeds (Lab)]

Recent reports, including by Sir Michael Marmot, have made a clear link between poor home insulation—coupled with the cost of living crisis and high energy costs—and devastating impacts on the health outcomes of thousands of the most vulnerable people across the country, young and old. What cross-cutting analysis are the Government undertaking to reassess fully the impact of their performance in delivering home insulation in the light of the chronic health outcomes highlighted?

[Lord Callanan (Con)]

I just explained in the Answer to the noble Baroness that as part of all our energy efficiency schemes, we do evaluations afterwards of the effect on people’s bills and health. We are spending over £12 billion over this Parliament and the next on insulation schemes, because we know they make a crucial difference.

Advanced Modular Reactors: Criticality Tests

Baroness Blake of Leeds Excerpts

Tuesday 19th March 2024 Lords Chamber

[Lord Callanan (Con)]

Of course there is always more that we can do to support these projects, but we are supporting them with massive financial resources and research and development designs. It is always concerning if foreign companies are taking control of some of these projects, but we nevertheless have a really good scheme of projects in the UK and we are supporting them.

[Baroness Blake of Leeds (Lab)]

My Lords, it is very welcome to hear that the Government plan to invest in new nuclear research and development. However, after their failure to build a single nuclear power station in 14 years and with the rollout of small modular reactors proving to be a protracted process, can the Minister give us a date for the conclusion of the SMR competition?

[Lord Callanan (Con)]

It is great to see that Labour now supports new nuclear projects, because that was not always the case for previous Governments. As I said to my noble friend Lord Howell, we want to see them in production by the early 2030s.

Gas-fired Power Stations

Baroness Blake of Leeds Excerpts

Thursday 14th March 2024 Lords Chamber

[Baroness Blake of Leeds (Lab)]

My Lords, it is fair to say that there has been some scratching of heads as to why exactly this announcement was deemed necessary. There is general agreement that gas-fired power stations will be needed during the transition to net zero. However, there is disquiet at the emphasis on this aspect of policy rather than on alternative approaches such as ramping up investment in renewables.

If new-build plants are needed, it is essential that they are capable of converting to hydrogen or are connected to functioning carbon capture and storage. May I seek assurance from the Minister that this is indeed the Government’s view? Can he also inform us what estimate has been made of how many of these new gas plants will be needed, when they will come on stream and how long reliance on them is expected to last?

[Earl Russell (LD)]

My Lords, this announcement comes out of the blue and fuels doubts that this Government are on track to meet their own target of fully decarbonising power generation by 2035. So far, instead of progress we have seen repeated failures to prepare; the offshore wind auction collapse; an effective ban on onshore wind; nuclear power projects delayed; slow or no progress on battery storage, hydro-generation and tidal projects; and a lack of investment in overall grid capacity. I ask the Minister to confirm that the Government are still committed to fully decarbonising power generation by 2035 and that these will be the last ever carbon-based power generation plants to be built in the UK.

Heat Pumps

Baroness Blake of Leeds Excerpts

Wednesday 6th March 2024 Lords Chamber

[Baroness Blake of Leeds (Lab)]

My Lords, the number of heat pumps per 100,000 people in the UK is about eight times lower than the average across the EU. What steps are the Government taking to investigate how other countries have found success in raising their adoption rates, and will they apply any lessons learned to increase our own adoption rate, which is far lower than it needs to be?

[Lord Callanan (Con)]

The noble Baroness is right; it is lower than it needs to be, which is why we have plans to expand the installation rates up to the levels that I mentioned. We have a number of schemes to support that: the clean heat market mechanism, which I mentioned; the boiler upgrade scheme; and we increased the grants to £7,500. We support it under the social housing decarbonisation fund, and under the eco scheme as well. We have ambitious plans to expand the installation rate.

Overhead Electrical Transmission Lines

Baroness Blake of Leeds Excerpts

Thursday 29th February 2024 Grand Committee

[Baroness Blake of Leeds (Lab)]

I thank the noble Lord, Lord Swire, for bringing this debate before us. I also thank the noble Earl, Lord Effingham, and the noble Lord, Lord Bruce, for their contributions so far.

The view coming through is clearly that none of us can underestimate the challenges ahead in being able to deliver the UK’s target to achieve net-zero carbon emissions. It is intense, and it is fair to say that we are already witnessing unprecedented change in the way our electricity is being generated. We recognise the demands this is putting on the industry to deliver, but also on the capacity of the electricity grid to catch up and then keep pace with the dramatic investment and build required.

I think we all know the pressure there is on government. In fact, in talking to businesses about the timescales that they are being quoted for connection to the grid, some of the waiting times we hear of are, frankly, eye-watering. The years quoted—we are talking in years here—start at seven years and go up to 12; even longer waits are not uncommon. From our conversations, I think that these are some of the most problematic areas that industry generally and investors are having to grapple with at the moment. Fortunately, other places around the world have a more attractive set of circumstances; they can go more speedily.

Briefings from industry representatives suggest that it can take around 10 years to build a new transmission line, seven of which can be spent on the consenting and planning side, with just three years on construction. Clearly, our debate today with regard to a preference for underground transmission lines or overhead lines with pylons is critical to understanding some of the reasons for this lengthy process. As we have heard, the context is that the Secretary of State should grant development consent for underground or subsea sections over overhead alternatives only if they are satisfied that the benefits clearly outweigh any extra, economic, social or environmental impacts. The mitigation hierarchy must be followed and technical obstacles must be overcome.

The latest government guidance presumes that the lines will be built overhead, with notable exceptions, as we have heard, including areas of outstanding natural beauty and national parks. The responses on this have been split, not always in predictable ways. To cut to the point: will the Minister tell us whether the Government feel that expediency or landscape considerations should take precedence? Further, how can he ensure that the correct balance is achieved and delivered consistently across the country, when these planning applications are determined? With regard to the areas of natural beauty and other sensitive areas, can he confirm whether it will just be within the boundaries of those areas, or will consideration be given to the aspect—the areas outside those boundaries that are overlooked by people who go into our national parks to enjoy the natural amenities there?

A recurring concern with overhead lines is connected to their ecological impacts. I do not think we have heard much about that. Some of the evidence coming through in responses to consultations might seem slightly perverse, but this is not straightforward. The RSPB has stated that both overground and underground lines can have detrimental impacts on birds and other wildlife, depending on the terrain—for example, wetland habitats or through the impact of hedgerow removal. Can the Minister comment on this and give us his assessment as to whether a more discretionary, rather than prescriptive, starting presumption might be a better way to manage the ecological impact of implementing new electrical lines? It clearly is not possible to have a one-size-fits-all approach in this area.

We know that, before adding new parts to the electricity network, the transmission owners will always consider first whether they can achieve more capacity by upgrading or enhancing the existing networks. This is quite right and as we would assume. When this is not possible, a robust and transparent options appraisal will follow. Further to assessments flowing from this, planning authorities will work on the proposals in line with the national policy statements, ready to take proposals for decision.

Consultation with local communities and stakeholders then becomes a key component in making progress. A transparent process must be established to gain the confidence of all parties in an attempt to avoid confrontation. Achieving a balanced view on all the available considerations is then the responsibility of local planning authorities and, ultimately, the Government if still contentious.

We can all recall when we had a Question on this in the Chamber. It coincided with the Government’s announcement of their national plan, back in November last year. The Secretary of State announced an ambitious programme to deliver a transformation of the electricity network to support energy security and the transition to net zero. This will include plans to halve the time taken to build new transmission infrastructure and will therefore reduce the time taken for viable projects to connect to the grid.

As we know, local objections have delayed many of these considerations. The Secretary of State also announced plans to introduce “a community benefits package” and

“a national communications campaign to improve public understanding of electricity infrastructure and its benefits”—[Official Report, Commons, 22/11/23; col. 22WS.]

to enable local communities to make the choice before them. Do we have any more idea what these community packages will look like or what the communications campaign will contain? Could the Minster update us on the proposals and inform us when they will be implemented?

--- Later in debate ---

[Lord Callanan (Con)]

Yes, I absolutely concede the noble Lord’s points but, given the modern policy environment and all the legal impacts, much energy infrastructure that was built many years ago would be very difficult to build today. In past generations, consumers were perhaps much more understanding of installations of nationally significant infrastructure than they are now. I absolutely accept the noble Lord’s point. In all these considerations, it is also about balance—balancing out competing factors, of which cost is one and convenience is another, but security of supply is an equal factor that also needs to be considered. I suspect that the noble Lord is probably considering the low-voltage distribution network rather than the high-voltage transmission aspect of the supply.

My noble friend Lord Swire talked about the different creative technologies available for laying underground cables and asked whether the Government had considered those factors. Ultimately, it is not for the Government to opine on those matters. Those innovative solutions are quite rightly being driven forward by industry and they are a brilliant example of how we can use such innovations to support the delivery of our energy infrastructure ambitions and our net-zero infrastructure. The transmission owners and others are the experts in this field and, of course, we will continue to liaise with and support them in their endeavours.

I hope I have—but I suspect I have not—succeeded in persuading noble Lords that undergrounding is far from being the silver bullet in our endeavour to expand our network transmission infrastructure and meet our net-zero targets. In fact, using underground rather than overhead lines may in some respects have the opposite effect and lead to more delays rather than fewer, given that the installation takes much longer. In some cases, the upfront costs are perhaps not worth it in the longer term, as my noble friend Lord Effingham suggested. In our bid to greatly expand our domestic energy production and meet the needs of households up and down the country, I am afraid that we need to act and build networks faster than we have ever done in the past.

It is for those reasons, which I have talked the Committee through, that the Government have decided to maintain our policy position of a starting presumption of overhead lines for electricity network developments in general. That is not to say that the Government stand idly by while communities living in the path of new transmission infrastructure are affected; it is quite the opposite. That is why, at last year’s Autumn Statement, the Chancellor announced proposals for a community benefits scheme for communities living near transmission network infrastructure, which the noble Baroness, Lady Blake, asked about. The communications campaign is due this year and I invite the noble Baroness to get in touch directly so that we can provide more details on it.

I am afraid that I am running out of time, so I will move to my conclusion. I will write to noble Lords if I have not answered any of their points.

I do not need to tell the Committee that, as with so many issues, no policy is etched in stone indefinitely. In fact, the Government would not be doing our job properly if we did not keep policies under review. However, that falls far short of committing to look again at the Government’s current policy on undergrounding less than two months after it came into force. Now is not the time. The Government can determine whether this should be reassessed if and when more evidence is provided by industry. For now, the best place for the majority of transmission infrastructure is—I am sorry to say—up in the air, for technical, operational, environmental and cost reasons and, most importantly, to protect consumer bills.

[Baroness Blake of Leeds (Lab)]

May I ask for a written response with reference to the community benefit packages and the consultation package, just to give us an update? Several months have gone by and we should be moving on this.

[Lord Callanan (Con)]

I would be happy to write to the noble Baroness on that matter.

Global Heating

Baroness Blake of Leeds Excerpts

Thursday 18th January 2024 Lords Chamber

[Baroness Blake of Leeds (Lab)]

My Lords, I add my thanks to the noble Baroness, Lady Sheehan, for securing this debate and for her introduction. I am mindful of the contributions of the noble Lord, Lord Lilley, and my noble friend Lord Young. It is good to have these debates, not least to recognise some of the challenges that we face and the need to hone all the evidence and bring the arguments together to make sure that we can move forward together on this important issue.

As we have heard throughout the debate, analysis published by NASA indicates that the earth’s average surface temperature in 2023 was the warmest on record, with global temperatures around 1.2 degrees Celsius above their baseline period of 1951 to 1980. This links with what billions of people around the world have experienced—extreme flooding, rising sea levels and exceptional heat, accompanied by widespread unprecedented media coverage, bringing evidence of these impacts into households across the world.

The inclusion of the 1.5 degrees Celsius target was regarded as a great breakthrough in the Paris climate agreement of 2015. Although this was a drop of only half a degree, the IPCC has since spelled out the growing risk of calamities if 1.5 degrees is breached, and the consequent need to halve carbon emissions by 2030 to have any chance of avoiding them. I thank the noble Baroness, Lady Hayman, and my noble friend Lady Kingsmill for outlining those calamities, and the risks, so well.

As we know, the EU’s Copernicus earth observation programme has stated that 2023 was the warmest year on record “by a large margin” and has estimated that it is likely that a 12-month period ending in January or February this year will exceed 1.5 degrees Celsius above the pre-industrial level. The Met Office has also projected that global temperatures could temporarily exceed the 1.5 degrees threshold in 2024. Although this would not of itself mean a breach of the Paris agreement, I think we can almost all agree that the first year above 1.5 degrees will indeed be a difficult milestone to reach in climate history, even taking into account the impact of El Niño in boosting temperatures.

Against this backdrop, serious alarm has been raised about the current UK Government’s changes in policy, despite the rhetoric and their welcome commitments and targets. As we have heard, these policy changes include: pushing back the planned date for phasing out the sale of new petrol and diesel cars and vans from 2030 to 2050; reversing the plans to introduce a new requirement for landlords to upgrade the energy efficiency of their properties; and the even more damaging decisions to approve a new coal mine in Cumbria and to allow the approval of new oil and gas licences in the North Sea—which, we also know, will not contribute to reducing energy costs or increasing energy security.

This all speaks of a Government who simply do not understand the impact of trashing our reputation as a world leader on tackling climate change, the damage they are doing to the confidence of investors and businesses and the subsequent damage to our economic prospects, as well as our ability to deliver net zero. Indeed, although the Climate Change Committee’s 2023 progress report commends the overall aims of the Government’s 2030 strategic framework, it cautions that

“more must be done to support the ambitions expressed in the document with detailed future actions”.

Further, it criticises the Government for the reputational damage the UK has suffered over the past year as a result of their policy changes, stating that these changes represented a “retreat” from the strong leadership position established during the UK COP presidency in 2021. The report talks about the

“decline in profile for international climate issues”,

highlighting that domestic policy decisions

“clash with the UK’s international messaging”.

I conclude by asking the Minister for the Government’s views of the risks posed by the temperature rise predictions highlighted in today’s debate. Further, do the Government have plans to respond constructively to the criticisms levelled at them from the international community? Does the Minister acknowledge that our reputation has been severely damaged and, if so, will he tell us what actions the Government will take to restore our reputation as a global climate leader?

Hydrogen Production Revenue Support (Directions, Eligibility and Counterparty) Regulations 2023

Baroness Blake of Leeds Excerpts

Monday 18th December 2023 Grand Committee

On a personal note, I have decided to stand down at the end of this year as spokesperson on energy and climate change for the Lib Dems. Despite the Minister’s huge admiration for Liberal Democrats, I have very much enjoyed working with him. Over my time in the role, I perceive that he may have become even more dedicated to the subject than he was at the beginning. I have genuinely enjoyed our interactions and I wish him well. I am not retiring from the place and will stay involved in these issues, but not from the Front Bench. It has also been my great pleasure to work with the noble Lord, Lord Lennie, and the noble Baroness, Lady Blake, on legislation in similar areas to this.

[Baroness Blake of Leeds (Lab)]

My goodness. I was not expecting that announcement and have not been party to that information. I am sorry: I was not clear from the noble Lord’s comments whether he meant the end of this year. Perhaps he has secret information about when this Parliament might come to an end.

[Lord Teverson (LD)]

I meant this year.

--- Later in debate ---

[Baroness Blake of Leeds (Lab)]

Can I just put on record my appreciation for the incredible contribution that the noble Lord, Lord Teverson, has made in this area? I certainly benefited enormously from our working closely on the Energy Bill, and going forward from that.

I also echo the Minister’s comments on the progress that has been made; during the passage of the Bill, there were times when we wondered how we were going to get through it. I assure the Minister that the announcement of the first funding round, with its 11 successful green hydrogen projects, has been noted and is welcome. I certainly look forward to hearing about their progress.

I want to make a few comments on the regulations before us. As we have heard, this statutory instrument is one of the first to follow from the 2023 Act and we know that there are more to come. The regulations cover, in particular, the process whereby the hydrogen low-carbon business plan will be implemented during the initial allocation period of contracts for hydrogen producers; all of this goes towards the target of 10 gigawatts of hydrogen production.

As I understand it, schemes will be identified and quality-assured by the Minister, who will then direct the hydrogen counterparty—it is identical in structure to the low-carbon contracts company—to provide contracts for companies that have been deemed eligible. All of that is absolutely fine and the right thing to do, especially when we consider the initial allocation process.

The Explanatory Memorandum states that the initial allocation will give way to a competitive tender process later on. Some more detail on that would be useful as we go forward; perhaps it will be forthcoming. However, at this moment in time, we are considering the initial allocation process, which is to be informed by the centrepiece of the SI: the low-carbon hydrogen standard, which has been outlined for us today. This refers to a detailed document setting out the greenhouse gas emissions and sustainability criteria that programmes applying for an allocation contract should follow.

I note the stringent qualifying criteria for a project’s eligibility. Of course, they require a project not to exceed a certain level of carbon emissions and to measure fugitive hydrogen—that is, the process whereby hydrogen is produced and all the implications around hydrogen—for its duration. It is a system-wide standard for the low-carbon nature of that hydrogen. For a project to get a direction from the Minister, it must comply with the standard when it receives agreement to proceed.

I just want to pick out that point. As we understand it, the standard will evolve. Indeed, the standard to which the SI refers is version 2 of the UK low-carbon hydrogen standard; that evolved from the initial standard, which was produced immediately after the Act was passed. Version 2 has emerged from consultation with the correction of various elements of the initial standard that could have caused difficulties. It has tightened up several matters that were uncertain, difficult or in need of clarification. It is absolutely clear in the documentation and the Explanatory Memorandum that it is intended that the standard will evolve; this means that the department envisages that it will produce further iterations of the standard in future. The low-carbon hydrogen standard as it currently stands is therefore likely to change. Does the Minister think that this will present some difficulties for those companies that have had their contracts approved? Clearly, although they will be signing up under version 2, they may not necessarily comply if we move on to versions 3 or 4—or more. It would be good to get some assurances around what the implications will be for companies in the earlier rounds.

There needs to be a bit of thought about whether those companies could be disadvantaged as we go forward. Will the Minister have some discretion in considering this? Of course, it could go either way, although it is very unlikely that there would be a relaxation of the carbon emission standards, but there is something to pick up there. Is it possible that, with these changes, companies might be put in a place where there are more costs, expense and planning? It would be useful to have more understanding of the methodology that will be used to determine whether companies are continuing to adhere to the standard once it is set in the contract. From the initial comments, I understand that the Minister is satisfied that this will work well. Could he expand on some of the changes that might come along?

During the consultation, some respondents suggested that further information could be published in a contract register, including outturn volumes, CO² capture rates and CO² capture quantity. It is obvious that a balance needs to be struck between transparency and what useful information is kept confidential but, as making this information public seems like it would have a positive impact, is it that the impact is not deemed significant enough to lower confidentiality? Alternatively, is it that there are further drawbacks to publishing this information that have led the Government to proceed with the initial approach? A bit more clarification around that decision-making would be welcome. On the other hand, 10 of the 23 respondents disagreed with information that the Government are proceeding with publishing, primarily due to the financial aspects. Could the Minister please elaborate on the decision-making process there?

I welcome the progress that has been made and look forward with interest to see how we can move forward in the area of hydrogen, which seems to be fairly fraught—I note the comments of the noble Lord, Lord Naseby. I am also interested in the response on the review. It is very noticeable that that is missing, because of the process. But, in such a new departure, a review would be useful and welcome.

[Lord Callanan (Con)]

I thank all noble Lords for their contributions to the debate. Low-carbon hydrogen will be an essential part of our future energy mix, and the hydrogen production business model seeks to address one of the key barriers to its deployment: the higher cost of low-carbon hydrogen, compared to higher-carbon counterfactual fuels. The Government remain committed to delivering on our hydrogen ambitions—first, those to help support energy security, but also our decarbonisation goals.

The message from the 2023 progress report from the Climate Change Committee was the need to deliver policies to enable deployment at scale of new industries such as hydrogen. I think that sentiment is widely recognised across this House and by industry. Last week’s announcement represents a major step forward in helping producers to deliver a fuel of the future today, backing some of our fantastic businesses here in the UK to go greener. These regulations are vital to enable those contracts to be awarded, so that projects can take the investment decisions that will kick-start the deployment of low-carbon production in all parts of the United Kingdom. But we are not stopping there. A new second round of funding is already available for producers to apply for, so that they can develop the next round of projects and then subsequent ones that help to build on that success. I will deal with some of this in more detail as I go through the questions raised by noble Lords.