Net Zero (Economic Affairs Committee Report)
Baroness Kramer Excerpts(6 months, 3 weeks ago)
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Baroness Kramer
That this House takes note of the Report from the Economic Affairs Committee Investing in energy: price, security, and the transition to net zero (1st Report, HL Paper 49).
Baroness Kramer (LD)
My Lords, the noble Lord, Lord Bridges, the chair of the Economic Affairs Committee, sends the House his apologies as he had to be absent today. He wished to move the debate on the committee’s report Investing in Energy: Price, Security, and the Transition to Net Zero because it has been 15 months since it was issued, but any further delay in debating its conclusions and recommendations in this Chamber would have been intolerable, so the role falls to me.
I start by thanking all the witnesses who gave evidence to the committee and expressing our appreciation to the outstanding staff who were essential in enabling us to deliver the report: Adrian Hitchins, Peter Jenion and Gurjeet Rathore, and I also thank one of our current staff, Neil Mellor, who helped me remember a report that I had put aside 15 months ago.
This is a brief debate, so I shall spare everyone a discussion of the impact of the Russian war in Ukraine on global energy markets and the impact of energy price rises on the cost of living of ordinary people. However, both factors were constantly in our minds and part of the background as we developed this report. Our focus was the Government’s commitment in law to achieve net zero by 2050 and their target to decarbonise the power system by 2035. We sought to answer the question: how can the Government mobilise the capital needed to ensure that the transition is orderly and that energy supply is affordable and reliable?
Our conclusions were structured under four headings. First, we considered investment and action in the short term. We urged the Government to seize the moment and respond to public concerns on energy prices by: speeding up the pace of reducing energy consumption, notably by accelerating measures such as home insulation; signalling very clearly that goal to the private sector; and providing far more detail on how such investment will be released. We asked the Government to publish an energy demand strategy and to include financing options and a means of incentivising investment in energy-efficient measures. We are still waiting. We called on the Government to re-examine their limited ambitions for onshore wind, to extend the life of nuclear power stations over coal power stations—that essentially seems to be the focus—and to seek an agreement with the EU and Norway on energy co-operation to manage possible shortages of liquefied natural gas.
Our second set of recommendations focused on increasing investment in the transition. While the committee supported the Government’s clear and ambitious targets for many renewable technologies, we asked for far more policy detail on a range of issues, including long-duration energy storage, market structures and mechanisms for hydrogen production, market models for carbon capture and storage, and investment in transition networks. We also sought more policy detail on the delivery plan for nuclear and sought an explanation for the Government’s target for 24-gigawatt nuclear capacity when the Climate Change Committee can see a route to only something like half that capacity. That question remains essentially unanswered.
The committee also suggested:
“Any extension of oil and gas exploration or investment should focus on projects with short lead times … and not enable substantial levels of long-term production that conflicts with net-zero objectives”.
I shall make a comment about that at the end of my speech.
We sought an assessment of the energy profits levy and any plans for carbon pricing. To oversee the complexity of the energy network, new technology and the security of supply, we recommended a new body, independent of government: the future systems operator.
Our third set of recommendations focused on financial regulation to ensure that the mandate for the Bank of England to support the transition to net zero included having regard to energy security. We received a fairly extensive response from the Bank of England assuring us that it was aware of the issues.
We called for better data and better disclosure. We also asked for the Government to help unlock new capital with Solvency UK; they have made moves in that direction. We asked them to work internationally on green taxonomies—investors need consistency, not just in the UK but across the whole marketplace that they serve—and to consider international opportunities, such as working with the EU common purchase platform. We also raised the issue of access to critical minerals and mitigating vulnerabilities in the supply chain.
All these strands were pulled together in our call for an energy strategy. Throughout the committee’s work, it became increasingly evident that there is a critical missing piece: a detailed and comprehensive plan. The gaps between the Government’s ambition and practical policy are significant. We recommended that the strategy should both set out a proper plan, even if in broad terms, and provide an assessment of costs and savings. A net-zero delivery plan would highlight vulnerabilities, take account of key issues such as energy security and foreign policy, and energy affordability, and help avoid a disorderly transition. An agreed plan in which all parties have confidence removes uncertainty—and, without certainty, the private sector will not make the critical commitments and investments necessary to achieve net zero.
The work of the committee ended here, in essence, but I will add a few comments of my own based on recent developments; I stress that they are my own comments. I recognise that this Government have made some progress—on a hydrogen road map, on identifying our first carbon capture site, and on a plan for insulation—but I agree with the Climate Change Committee in its comments made in March:
“Delivery and deployment of infrastructure must be achieved at a much greater pace”.
I am—as I said, these are personal, not committee, remarks—utterly disappointed by the Government’s decision to approve the Rosebank oil and gas field development. There is no way that I can see that it meets the committee’s recommendation that
“investment should focus on projects with short lead times … and not enable substantial levels of long-term production that conflicts with net-zero objectives”.
The five-year delay of the ban on the sale of new petrol and diesel cars is not just a blow to the UK automotive industry but, indeed, a blow to achieving net zero on time. I think others in this debate will expand on this but, talking to people within the automotive industry, the comment that has struck me most strongly is that the delay has made a fool of those who believed, and made investment decisions based on, the Government’s original commitment. Undermining certainty is a very dangerous thing to do, especially in a policy so critical to us as net zero, and so complex because of all the related activities and decisions.
The decision to delay for nine years the ban on fossil fuel heating for off-gas grid homes; exemptions to the ban on the sale of gas boilers in 2035; scrapping the requirement for landlords to ensure that all rental properties have an energy performance certificate of grade C or higher from 2025—all these are not just disappointments but, again, undercut any sense of certainty for the private sector as it decides how to plan and invest.
I thank all the members of the committee, several of whom will be speaking in this debate. They often have much more understanding of the broader issues here than I do, so I hope that their comments will be taken very seriously. Some of our members have passed on to pastures new. I also thank our chairman, the noble Lord, Lord Bridges, even in his absence, for his determination to be inclusive; we were a committee of fairly varied opinions. His wisdom and skill in focusing on the essentials in the end gave us harmony and brought us to a report around which there was a great deal of consensus.
The key messages of the report are the need for accelerated action, for an independent co-ordinating body and, above all, for a detailed and comprehensive energy strategy that gives certainty to individuals and the private sector, and—these are my own words—is not subject to whims and elections. That remains key to achieving net zero and resolving the potential conflict of net zero, affordable energy and energy security. We have to make sure that all three goals are wedded together in the co-ordinated plan that we then deliver. I ask that the House takes note of the report.
Baroness Kramer (LD)
My Lords, all that remains is for me to say thank you to all of those who participated in this debate. We have heard a very wide range of views and I think anyone listening to this range of speeches, including the Minister’s, would turn around and say “Yes, energy strategy and fast, energy demand reduction strategy and fast, and it sounds like we need infrastructure far more rapidly than we had previously planned”. I hope that those are the lessons that are taken away by everybody who is here, and I thank everyone for participating in this report and taking note of its content.
Road Fuel Prices
Baroness Kramer Excerpts(10 months ago)
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Baroness Blake of Leeds (Lab)
My Lords, cost of living pressures are affecting people right across Britain. In that context, we welcome the Government commissioning the Competition and Markets Authority to investigate soaring fuel prices last July. The CMA has finally recommended measures to improve fuel price transparency and stop inflated fuel prices being passed on to hard-hit consumers. The fuel finder open data scheme is welcome, but given that retailers have been inflating the prices, how do the Government expect the CMA’s voluntary scheme to work? When will the Government end the painful wait for consumers and bring forward the legislation that is needed to enforce it?
Baroness Kramer (LD)
My Lords, the Government have stood for this gouging behaviour by the supermarkets over the past year. In rural areas such as Somerton and Frome, and Mid Bedfordshire, people find themselves facing the highest prices and the least competition, and will benefit the least from the comparison scheme. I have two questions for the Minister. Is it fair that supermarket bosses will get bonuses based on gouged profits, and will the Minister review the rural fuel duty relief scheme, which gives a 5p-per-litre reduction, to see whether it can be extended to rural areas not presently covered?
The Parliamentary Under-Secretary of State, Department for Energy Security and Net Zero (Lord Callanan) (Con)
My Lords, let me thank both noble Baronesses for their support for the report and the Government’s action. First, in response to the noble Baroness, Lady Blake, putting the open data scheme and monitoring function on a statutory footing will require parliamentary time, but the Government will work as quickly as possible to do so. I note that she welcomed the fact that in the meantime we have asked the CMA to create an interim voluntary scheme encouraging fuel retailers to share accurate, up-to-date prices. Of course, we expect all fuel retailers to co-operate with the CMA by providing that information fully and promptly. We will legislate as soon as parliamentary time allows, but we need the primary legislation to be passed by both Houses first. We will consult on the secondary legislation in advance of primary legislation being approved in the digital services Bill. The noble Baroness will know that taxation and fuel duty are matters for the Treasury and the Chancellor, and I would not want to predict what he might do on that.
Lord Callanan (Con)
I understand the point that the noble Lord makes, but I think that he is being a little unfair. The CMA is a regulator, of course; this particular regulator very much had the interests of the consumer at its heart when it produced this report, which has widespread support and backing from all parts of the House. The Government will act on its recommendations, so that is a case of a regulator acting in consumers’ interests. The CMA is designed to produce competition, which is the best thing that can operate for the consumer.
The other example mentioned by the noble Lord is slightly off topic, but much more attractive interest rates are offered by a number of smaller financial institutions. It really is a question of the consumer shopping around, but plenty of information and online resources are available for someone to find the best return on their money. No doubt the noble Lord has lots that he wants to invest; if he looks at the various websites, he will be able to invest it well. Obviously, he is a well-known Scottish Member so is bound to have plenty of funds to invest.
Baroness Kramer (LD)
My Lords, picking up the point made by the noble Lord, Lord Vaux, about motorway services, a number of continental countries have signs along the motorway telling drivers what the price of petrol will be at the first, second, third and fourth service stations along their route. That provides a competitive element and is supposed to have been very successful in managing prices. Are the UK Government looking at such a scheme?
Lord Callanan (Con)
The noble Baroness makes a good suggestion. I am not aware of that being contemplated or what powers we would need to implement it, but I will certainly ask officials to have a look at it.