Energy: Welsh Government

Earl Russell Excerpts

Wednesday 24th April 2024 Lords Chamber

[Lord Callanan (Con)]

I am sorry that the noble Lord takes that attitude, because all projects across the UK are evaluated on the same basis. Of course, it is not possible to take forward every project, but the assertion that projects in Wales are somehow discriminated against is just not true. I could give him many alternative examples of projects in Wales—from nuclear, to hydrogen storage, to hydrogen allocation rounds, and CCUS projects—that are going forward.

[Earl Russell (LD)]

My Lords, does the Minister agree with the Institute of Welsh Affairs that Wales should retain, and local communities gain, greater income from the renewable energy developments that they host?

[Lord Callanan (Con)]

I am not familiar with those particular circumstances; I would be happy to chat to the noble Earl about it.

Offshore Petroleum Licensing Bill

Earl Russell Excerpts

Committee stage
Tuesday 23rd April 2024 Grand Committee

[Lord Lilley (Con)]

May I just add a few brief comments? I endorse what my noble friend Lord Moynihan and the noble Lord, Lord Bruce, have said.

I speak from a position of considerable ignorance. I used to know quite a lot about this but I know much less now. However, it seems that everyone is agreed that future fields will not be allowed to flare and vent and are not planning to flare and vent. So the first subsection of the proposed new clause to be inserted by Amendment 1 would legislate for something that is going to happen anyway.

However, the second proposed new subsection says that we should not allow any new fields until old fields have been prevented flaring. I do not see the relevance of the connection between the two. If we can stop old fields flaring and venting, we ought to. If we cannot, that is a problem, but what has it got to do with new fields, which will not flare and vent? Unless we have some explanation from the backers of this amendment of why they are linking the two, I cannot see why we should support it.

[Earl Russell (LD)]

My Lords, I rise to speak in favour of all the amendments in this group.

I start with the first amendment, which is in the names of the noble Baronesses, Lady Hayman and Lady Blake of Leeds, and the noble Lord, Lord Randall of Uxbridge; I have also put my name to it and support it. The amendment comes out of Alok Sharma’s amendment in the Commons; it was the one amendment that the Minister in the other place said the Government were prepared to go away and look at.

I take the points that have been made about what has been achieved under a voluntary mechanism. I also recognise that the new oil fields do not have this, but I would like to hear from the Minister and get a response from the Government as a productive one was not really given in the Commons. This is a real issue that needs looking at, and the Government may have real concerns about bringing this measure in for old fields.

My understanding is that some of this can be done by replacing methane with compressed air, et cetera. If there are concerns, I would like to hear them because, as we have heard, methane is 80 times more potent over 20 years than carbon dioxide. It is a huge greenhouse gas and the Government have signed up to the 2030 commitment to reduce it; indeed, the UK leads the world in some of these respects. So it would be good to see stricter regulations written in.

Progress has been made. The Government have committed to zero venting and flaring by 2030. Already, a near 50% reduction in flaring since 2018 has been achieved, but to put that in perspective, Norway banned venting and flaring in 1971, which is the year I was born. This is not rocket science; it is not difficult to achieve. While I recognise that progress has been made, I am 52 now, so we are 52 years behind Norway. These are powerful greenhouse gases, so we are waiting for this voluntary system to come in, but we need to take action: we need action at speed, at pace, to make sure that these things happen. I want to hear from the Minister whether he has ideas about how that can be done.

I recognise as well that the NSTA guidance currently states that there should be none for new developments and it should be phased out by 2030. However, the problem with this is that the enforcement is patchy and 2030 is still a long way off. It is a long time for us to be letting out these extremely powerful greenhouse gases, so I think something should be done at scale and speed to make that happen.

The Government argued throughout this Bill that they want to give the industry certainty, and that is one of the underlying themes behind the need to put forward these measures. My question to the Minister is why we are not doing that on venting and flaring. If this is about certainty for industry, and this involves industry having to invest to change and adapt, why are we not giving a clear steer—clear guidance, clear timetables—on the intention to do this? That would seem to be the sensible thing to do and the thing that industry would welcome the Government doing, so I call on the Government to do that and I support the amendment. I thank everybody who has spoken to it.

My Amendment 6 is a simple amendment replacing one word with another. It replaces “must” with “may”, but it goes to the very heart of the Bill. The story is that the Bill was cooked up over a boozy lunch as a way of dividing the Opposition. Who knows whether that is true or not but, if our energy crisis and energy security could be resolved by a two-clause Bill, I suspect that somebody might have done it before and that it would not have magically appeared when nobody else had managed to do it.

The Bill actually says that there is a duty to invite applications. I listened to all the debate in the Commons as part of my preparation for the Bill, partly because I am new to this place and am a bit sad, sitting there on the weekends, but I felt that this point was missed in the Commons, which is why I tabled this amendment. Having spoken to colleagues on the Opposition Benches, I kindly ask the Government to look at this probing amendment, because it is important to understand their motivations. They are putting this legislation forward, taking parliamentary time, telling us that it does things that are needed and are important, and I had to ask the House of Lords Library for a special briefing on the Bill because I was frankly astounded that it could be passed and never again would another North Sea oil or gas licence be agreed. How do these two things happen?

The Government are telling me that this is resolving our energy security and providing certainty, yet the Bill can pass and another licence can never be granted. I am confused about what the Bill actually does and have put forward this amendment in the hope that there is substance in the Bill and it is not just an attempt to divide the Opposition and destroy the consensus that existed on climate change. This is so important not just to the way we work here or in the other place but to the message that we send to the people of this country as we transition. We had the chief executive of the CCC on Laura Kuenssberg this weekend and have heard Alok Sharma; the Government have had resignations and this Bill has damaged our international reputation.

It is important that we understand what the Bill does if we are selling our international reputation for it. What does it do? What is the point of it and what does it achieve? My amendment is really an attempt to figure that out. That is why I have included it and I will question the Minister on that.

My Amendment 7 would mean that only companies that have publicly stated that they will invest in the green economy half the profits derived from winning an application can be invited to apply. I point out that 50% is a random figure—we can amend and debate that—but I believe in the green transition and in the need to protect these jobs. I believe in a just transition and that these things are extremely complicated. I also recognise that we will continue to have some dependence on oil and gas as we transition to net zero, not just for our energy needs but for lubrication and other industrial purposes.

I recognise that we will have oil and gas licences, but we must act at scale and speed to disinvest from oil and gas. We must leave as much of this stuff in the ground as we can. Once it is extracted, it may not count towards our net-zero targets, but it will for some other country after it has been sold on the international market, as 80% of it will be. It will be burned. We live on one planet and have one atmosphere. Emissions go somewhere and they will affect us. The idea that the Bill does no harm is not correct; it has consequences. A lot of oil and gas companies do not invest in the green economy in the North Sea, and they should. This amendment is simply an attempt to lay down a marker.

My Amendment 8 would mean that

“the OGA cannot invite nor accept an application for a seaward area production licence from a Russian oil and gas company”.

This point was raised by Richard Foord in the other place. It is my understanding that one Russian oil or gas company has a licence in the North Sea, when we have a war in Ukraine and continued threats to our European security. The Minister spoke quite clearly at Second Reading about the Bill providing for our energy security, but these Benches have questioned that because 80% of our oil goes into the international market.

This is a simple, clear, straightforward amendment that does what it says on the tin. If we are concerned about energy security, why are we allowing Russian oil and gas companies to bid for, win and run licences to extract our oil and gas, put it on the international market and perhaps even sell it back to us? The Government would then have to subsidise bill payers with billions of pounds to pay for it, in a vicious circle that helps no one. This amendment is clear, and I would like it to be agreed to.

Of the other amendments, I strongly support Amendment 9 on a marine spatial strategy. It is extremely important, and it is important that we plan for the future. If we are to have new oil and gas licences, it is important that we do not rule out the ability to have other green energy. I also support Amendment 10 in this group, but I apologise for getting a bit carried away and going over my time.

--- Later in debate ---

[Baroness Jones of Moulsecoomb (GP)]

My Lords, I shall speak to the two amendments in my name, Amendments 4 and 19, but I also want to say that I very much enjoyed the introduction to the amendments from the noble Lord, Lord Lennie. He said that this is a very damaging Bill, and that is absolutely true—but what offends me so deeply is that it is so old fashioned and out of date. It does not take into account any of the science that has happened over the past 10 years. But luckily, these amendments expose the falsehoods that have been told by the Government in attempting to justify new fossil fuel extraction in the midst of a climate crisis.

First, the Government are deluded in saying that new oil and gas licences can in any way be compatible with delivering our climate targets. That is impossible. Secondly, they are deluded in thinking that propping up the oil and gas industry can possibly be in the interests of workers—and doing that rather than genuinely engaging with the need for a just transition and the practicalities of how that can be delivered. Thirdly, they are deluded in thinking that new oil and gas extraction will do anything to reduce domestic energy costs rather than be exported on the world market to the highest bidder.

Amendments 3 and 8 would establish a climate test, which is very necessary. The UN Production Gap Report has warned that the worlds’ Governments already plan to produce more than double the amount of fossil fuels in 2030 than would be consistent with limiting heating to 1.5 degrees centigrade. The IPC’s sixth assessment report was clear that

“projected CO₂ emissions from existing fossil fuel infrastructure without additional abatement would exceed the remaining carbon budget for 1.5 degrees centigrade”.

Closer to home, the Climate Change Committee observed in its latest progress report that

“expansion of fossil fuel production is not in line with net zero”.

Regardless of the claims from some people, possibly on the opposite Benches, that the UK will continue to need some oil and gas up to 2050, again to use the words of the Climate Change Committee,

“this does not in itself justify the development of new North Sea fields”.

The issuance of new fossil fuel extraction licences will directly contribute towards global heating. The Government will not accept a climate test in this Bill, because they know that new oil and gas is incompatible with a safe climate. If the Minister would like to hear more about this, I would be very happy to meet him and explain it as simply as I possibly can.

My Amendments 4 and 19 set out the just transition test. It is ironic that this Government try so hard to invoke the destruction of working-class communities by the Thatcher Government when they attempt to use oil and gas workers as an excuse to continue pumping new oil and gas, which will further inflame the climate emergency and actually make life harder and harder for people. The choice that we are facing is between a managed and fair worker-led transition now, or chaos later, when the reality of the planet crisis bites even more fiercely. Without serious plans for a just transition, communities will once again be left behind and hollowed out as a result of Conservative policy.

This proposal would require just transition plans for the North Sea workforce that are compatible with limiting global heating to 1.5 degrees centigrade. It specifies that these plans must be agreed through formalised collective agreements with unions and that they apply to all workers, whether they are directly or indirectly employed, or even self-employed—which is vital, given the heavy casualisation in the oil and gas workforce. This amendment will be a step towards delivering a just transition that would see workers at the centre of transition planning, with a clear and accessible pathway out of high-carbon jobs. We have to do this—we absolutely must, if we care about people and their work.

So, rather than propping up jobs that we know will not exist in the future, the Government should be actively supporting workers to transition out of the oil and gas sectors while also addressing their very real concerns—such as around the cost of retraining, which is often borne by workers themselves. The failure to deliver a just transition is not inevitable; it is a political choice. If the Government were serious about listening to workers and protecting jobs, they should have no problem supporting this amendment, which puts job security at the heart of the transition to a green future.

[Earl Russell (LD)]

My Lords, I will speak to my Amendments 5 and 17, which would introduce a cost of living and consumer energy price test that the OGA must conduct before inviting applications for seaward area production licences. The cost of living and consumer energy price test is met in relation to a relevant year if the production of domestic natural gas will clearly, first, lower energy prices and, secondly, reduce the cost of living.

Originally, as was alluded to, the Minister in the other place claimed that this Bill would reduce energy prices but very quickly had to retract that statement from the public domain. My question is: why are we passing this Bill if it will not have any impact at all on reducing the cost of energy bills for consumers? Some 80% of all the natural oil and gas here will be exported. As we have heard, the Bill will do little, if anything, to help our energy security, protect jobs, transition and help the green economy, which is the energy of the future. Instead, we are investing in the energies of the past, and that investment seems to bear few benefits for people or the planet.

We are already seeing individuals with record debt for their energy prices. We have seen the war in Ukraine and the spike in energy prices. As long as we as a country continue not to invest in energy efficiency or renewables and continue to be dependent on the international energy markets, we will continue to suffer as those markets fluctuate. The Government themselves have had to invest £7 billion in subsidising energy bills—in effect, a continued and added subsidy to the oil and gas companies on top of the tax breaks that they already have. We have the most expensive energy prices in Europe so this amendment simply seeks to put in a test where the cost of energy to consumers should be considered.

On the other amendments in this group, Amendments 3 and 18 in the name of the noble Lord, Lord Lennie, would apply a climate change test. I fully support applying a climate change test. The question I would put to the noble Lord, in relation to these specific amendments, concerns asking the Intergovernmental Panel on Climate Change whether it is set up and in the best position to conduct that particular test for us as an individual country. I suggest that, if we want a climate change test, it might be better for the UK’s own Climate Change Committee to pass a judgment on whether that test could be met.

Finally, on to the amendment in the name of the noble Baroness, Lady Jones, of course, although we on this side recognise that we will continue to have some oil and gas as part of our energy mix—even under net zero—we want to see a move to a just transition. I welcome this amendment as an attempt to do that.

However, the amendment is slightly ill defined. I would rather see that transition come about through the profits from the extraction of this energy being directly allocated to the green economy. So, while I welcome the amendment and we do not oppose it, my personal view is that that is a more efficient way of doing it.

--- Later in debate ---

[Baroness Jones of Moulsecoomb (GP)]

All the amendments I have tabled here reveal the scam that is absolutely built into this Bill—it is really offensive to the general public—because this carbon intensity test has been deliberately drafted so that UK oil and gas are always deemed to be low carbon, as compared to international comparisons. So there will never be any limit to the number of oil and gas licences issued. My Amendment 11 probes why the Government have chosen to apply the carbon intensity test only to natural gas. It is our first example of how the Government are fudging the numbers with egregious greenwashing.

Why is the carbon intensity of crude oil being ignored in the Government’s test? The answer is obvious: oil is more carbon intensive than gas and the North Sea produces far more oil than gas, making North Sea production more carbon intensive than most of the countries we import oil and gas from. So the Government fiddle the numbers by ignoring oil altogether, thereby making North Sea extraction look like it is somehow tackling climate change rather than pumping even more carbon into the atmosphere and making it ever harder to reach net zero.

The second part of the scam is that the Government do not compare like with like. Despite the fact that most of our imported gas comes via pipeline from Norway, which has less than half the carbon intensity of UK oil and gas, the Bill compares the UK’s gas with liquefied natural gas. LNG is almost four times as carbon intensive as a UK gas and almost 10 times as carbon intensive as gas from Norway because of the processing necessary to liquify, import and regasify the LNG. By comparing UK production with imported LNG instead of all natural gas imports, the Government have added another layer to this dubious test that will green-light new oil and gas licences for decades to come.

The Government have drafted this Bill at an extremely well liquified dinner—if my guess is right—to exclude the bulk of UK oil from the equation, despite oil being the most carbon-intensive component of North Sea production. It is an absolutely outrageous piece of draftsmanship, and yet another example of this Government legislating against reality to create whatever legal conditions are required to force through government policy.

Taken together, my amendments will ensure that the carbon intensity test compares like for like. The amended carbon intensity test will compare all UK oil and gas production with their equivalent imports and include all relevant processes for the extraction, transportation and delivery of oil and gas in usable form to its final customer. I hope that all noble Lords will agree that, if a carbon intensity test is to be used, it must properly assess the carbon intensity of North Sea oil and gas relative to their imported equivalents. It is essential to amend with the Bill along the lines that I propose. I beg to move.

[Earl Russell (LD)]

I speak in favour of the amendments in this group. They all relate to the two tests in the Bill, as the noble Baroness, Lady Jones, has said. The LPG and the UK net importer test are both one-way gates, where the answer is always yes. That is not good enough. There needs to be a proper test that counts the carbon cost of doing these things.

My slight issue with this is that a lot of the amendments in this group are not in scope in this very short, almost Private Member’s Bill-type of legislation. Inevitably, the amendments were gathered around the little bits that are in scope in the Bill to be amended. From our side’s point of view, there are lots of amendments seeking to change these tests. I am not minded to say which is the best amendment to take forward. From our side of the Room, some thought should be given to coalescing around one of those tests. I am happy to support that, but we need to go away and do some thinking to get a unified position.

On the proposal of the noble Baroness, Lady Jones, to remove Clause 1, if that were to be pushed to a vote, I would be prepared to support it. The Minister makes a lot of grand claims for this Bill. In his summing up, he keeps saying that the granting of licences do X, Y and Z. That may well be true, but nothing in the Bill commits to anyone granting any licences. The only thing that the legislation does is to say that there should be tenders. The joined-up logic that the Minister is giving us for the Bill does not, in point of fact, bear relevance, because it could be passed but no licences ever granted again. Equally, we could continue to have licences every year without this Bill.

The Bill does little other than to drive a wedge between us and our commitments to protect the environment, and serves as a way in which to politicise this issue in the run-up to the election. That is all I have to say.

--- Later in debate ---

Moved by

[Earl Russell]

20: Clause 2, page 3, line 25, leave out “Scotland”
Member’s explanatory statement
This amendment would mean the Act does not extend to Scotland.

[Earl Russell (LD)]

My Lords, I shall be brief, as these amendments are pretty straightforward. I recognise that the amendment would have an impact on the Bill but against that, it must be said that Scotland has provided the UK with lots of North Sea oil and gas and very little is coming back to Scotland. There is no allocation of money for the green transition and no commitment to the green transition—nothing flows back to Scotland. There is no protection for the workers; not a single penny that is generated from this extra extraction of North Sea gas and oil is in any way directly allocated to come back to the people of Scotland or to their industry.

The other amendment in my name would delay the implementation of the Act until 1 September 2025. To my mind, the Bill is not really properly put together; it is not properly worked out or part of a full and coherent energy strategy. Everyone on this side of the Room has recognised that we will continue to be dependent on oil and gas, even under net zero—but there is no coherent, conjoined or constructive strategy for providing energy security or lots of the things that are claimed in the Bill. For that reason, there are good and sound reasons for arguing for the implementation of the Bill to be delayed. I beg to move.

--- Later in debate ---

In our view, it therefore makes sense to provide certainty for our oil and gas industry, to help to utilise those domestic resources and to continue the transition to net zero. I thank noble Lords for their attention and I hope they will feel able not to press their amendments on the basis of the reassurances that I have been able to give.

[Earl Russell (LD)]

I thank the Minister for his response and thank all noble Lords who have taken part in this short debate. Of course I recognise what the Minister has said to me, but my understanding is that all the Bill does is require an annual tendering for licences to take place. While I recognise a lot of the sentiment and the answers that the Minister has given me, I do not feel that the consequences flow just from not having an annual tender for licences for Scotland. We could still have licences granted every year if the Bill was not in place.

I thank the noble Duke, the Duke of Montrose, for his contribution. Again, I do not see how it was my intention to remove in any way the whole of Scotland from the renewables debate, and I am not aware that this is a consequence of my amendment, but I will of course go away and have a look at that. I beg leave to withdraw my amendment.

Amendment 20 withdrawn.

Paying Polluters: UN Report

Earl Russell Excerpts

Monday 22nd April 2024 Lords Chamber

[Lord Callanan (Con)]

I thank the noble Baroness for her question. I cannot comment on cases that are currently ongoing, but we will certainly bear her comments in mind when we consider our policy on this matter.

[Earl Russell (LD)]

My Lords, with fossil fuel and mining industries already having won more than $100 billion in awards and at least 175 treaty-based ISDS cases closed or pending that are directly related to environmental measures, does the Minister agree that foreign investors are using the dispute settlement process to seek exorbitant compensation from states that seek to strengthen their environmental protection? What actions are the Government taking with partners and allies on the international stage to try to find solutions to these problems?

[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.

Offshore Petroleum Licensing Bill

Earl Russell Excerpts

2nd reading
Tuesday 26th March 2024 Lords Chamber

[Earl Russell (LD)]

My Lords, like the noble Baroness, Lady Jones, I will try not to be too boring and go on too long. I will also try not to damage any animals, either living or extinct, during my speech. On these Benches, we will oppose this Bill. I notice that, as in the other place, the opposition parties here are united in opposing it.

If the Bill passes, it will be remembered for two things: being mostly pointless and being needlessly politically divisive. The noble Lord, Lord Lennie, said that it is a straightforward Bill. The noble Baroness, Lady Young, said that its only virtue is that it is brief. The length of the Bill reflects any usefulness that flows from its consequences. The Bill does what it claims—somebody said this, but I am not sure who—but sadly what it does is damaging.

I venture to suggest that the Bill is not about energy security at all; instead, it is much more about performance politics and the need for political security on the Benches opposite. The clue to the whole Bill is contained in the first four words: “Duty to invite applications”. I want the House to note that this is not a duty to grant any applications—at all at any point. It is entirely possible that the Bill will be passed and enacted for not one more single North Sea licence ever to be granted again. The Bill is barely longer than a Private Member’s Bill. Who knew that the answer to all our energy security needs lay in a little over 250 words?

The Government have made grand claims that the Bill will provide energy security and protect jobs, and that it is more environmentally friendly than importing LPG. As the noble Lord, Lord Lennie, said, the Energy Secretary in the other place also claimed that it would lower energy bills, but that was quickly retracted. In truth, the Bill achieves none of these things.

I was interested in the story the noble Lord, Lord Lennie, told about the lunch where the Bill was supposedly cooked up over a few glasses of wine as a skewer to pin the opposition down on a political wedge and divisive issue. To my mind, the Government have created a heffalump trap for themselves.

The Government also argue that the Bill provides energy security. Fundamentally, it will make no difference at all, in my mind, as NSTA already has the power to grant licences and has done so almost every year since it was set up. NSTA itself, at its own board meeting, said that it did not want or require the powers contained in the Bill. Therefore, the Bill undermines the independence of the organisation that the Government set up to deal with granting new licences. As Alok Sharma said in the other place, the Bill, as drafted, is “something of a distraction”, and NSTA’s ability to grant new licences will not change materially because of it.

The oil and gas is all owned by private companies and is sold, as people have said, on the global markets. The Government have no say or control over where it is sold or to whom. As has been discussed, Global Witness has argued that up to 80% of that goes on to the international market and does not come in any way to the UK. It has been estimated that the gas supply created will be the equivalent of just four days on average per year. This is hardly going to provide us with energy security in the future. I do not believe that the Bill will do anything for energy security or to reduce bills.

The Government have made a series of arguments about securing jobs in the North Sea. It is undoubtedly true that North Sea oil is in decline, as everyone across this House has agreed and the Minister himself has noted. To my mind, the only way to protect jobs is through a real and meaningful plan, investment and a shift to a green economy, but this Bill does not do any of those things. I want to be clear that we on these Benches believe in a just transition. We recognise, fundamentally, the importance of protecting the jobs involved in this industry—between 30,000 and 200,000. We have heard different numbers, but I do not think we should argue about numbers. We should be respectful to all those who work in this industry, and I think the last thing they want is us having petty political arguments about the future of their jobs.

I welcome the contribution of the noble Lord, Lord Bruce, with his knowledge and experience of this industry. I welcome his basic message that these people want to be part of the future and do not want us arguing about their jobs. They want us to work together to create a transition for the North Sea towards a green economy, which is the only future they have. All of us need to find ways that we can do that. As the noble Baroness, Lady Hayman, said, new licences will not protect industry or workers to secure that just transition. For that to happen, there need to be allocated funds and plans, but, again, the Bill does not do that. As the noble Lord, Lord Bruce, said, they know what they want, and they want to be part of the future, so it is a shame that this Bill does nothing to secure or provide that future for these people. I honestly wish that it did, as not a single extra penny of taxpayer revenue will be allocated to the transition as a direct result of this Bill.

Three-quarters of all the oil and gas companies that operate in the North Sea do not invest a penny in UK renewables. Why do we allow them to have licences but not require them to invest in the transition? The tests to attain those licences are, in the words of the noble Baroness, Lady Boycott, “impossible to fail”, or, in the words of the noble Baroness, Lady Hayman, “unfailable”. The importing of LPG is not a fair equivalence, when, as the Minister knows, a lot of our oil comes through the pipelines from Norway. The consequences of these tests are all negative, and they are damaging for our reputation abroad and our standing on the world stage.

I welcome the £30 billion investment in the low-carbon economy, mentioned by the Minister. I thank the Conservatives for halving our CO₂ emissions; they are now at the lowest levels since 1837. What a tremendous achievement this Government have made, and I am grateful for it. However, at a time when they should be basking in the warm glow of their achievements, the Government come forward with a politically divisive Bill. It is a shame; we should be leading the world, not having arguments at home.

We freely recognise that, under net zero, we will need some oil and gas, not just for our energy but for industrial and other processes. As the noble Lord, Lord Lilley, says, it is a huge challenge, and we need to phase out demand for fossil fuels—I completely agree with him there. The war in Ukraine has had damaging impacts on energy prices, and the Government have spent some £70 billion supporting bill payers. I welcome that, but it is money we could have put into the green economy. We cannot continue going round the mulberry bush and investing in old energies; this money should be going into the energy of the future.

I welcome the contributions about the need for spatial plans and the need to protect marine protection areas. These are important issues raised in this Bill that need to be discussed. We will have an opportunity to discuss, through amendments, how we balance these protections with our need to do different things with our seabed.

As the right reverend Prelate the Bishop of Norwich said, the Bill is damaging to our international reputation. It will make it harder for us to secure the investment that we need in our green industries going forward. I call on the Government to accept Alok Sharma’s amendment which was tabled in the other place and which will, I think, be tabled here. It is the one that the Minister in the other place said the Government might be prepared to consider. If the Government are going to be doing this anyway, why not put it in the Bill and give the signal to industry that this is their intention? We are here to provide certainty to industry, so let us put it in the Bill.

We really have to leave fossil fuels in the ground. We have to wean ourselves off these things that are killing our planet. Alternatives do exist; the transition will be difficult and painful, but we must make that journey and seize the nettle. We have no choice. We need to work together as politicians to make sure that the transition happens and that it is a just one. Drilling for more oil is like offering an extra duvet to someone in the middle of a burning building. Rishi Sunak has said that he wants to max out North Sea oil.

The Bill will achieve nothing and will weaken our climate commitments. It sows division and weakens our international reputation. It makes the UK look like a riskier place to invest, just when we need that investment so that we can transition. That is why the Bill is so damaging. It does nothing but send out a signal that the Government’s policy on the environment is not clear, consistent or dependable, and, as a result of that, that the UK is not as safe a place as it should be to invest in the energy needs of the future. That is a bad message.

My party is committed to boosting renewable energy and increasing funding for wind, solar, marine power and tidal schemes. We will also enact an emergency programme to insulate all British homes by 2030, cutting emissions and fuel bills and ending fuel poverty.

Strategy and Policy Statement for Energy Policy in Great Britain

Earl Russell Excerpts

Monday 25th March 2024 Lords Chamber

[Lord Naseby (Con)]

My Lords, I welcome the speech from my noble friend and congratulate him on his dedication to this challenging industry. When one looks at the background to the document we have today, it is just over 10 years ago that the concept of a strategy and policy statement was introduced by the Act in 2013—and here we are now. We now have it, and the vehicle is to be this organisation, the NESO—I do not know exactly how to pronounce it.

It would be helpful for colleagues in the House if we had some indication of what the costs will be when NESO is actually established, as the sphere of influence it has to cover is massive—its responsibilities go right across electricity, gas and hydrogen—and it is no bad thing in life to know, before you start something, what the cost is likely to be. That at least provides you with criteria.

It is fortunate, or unfortunate, depending on one’s viewpoint—I had the privilege of serving on the Public Accounts Committee in the other place for some 12 years, as well as on the Select Committee on energy—that the National Audit Office published a report titled Decarbonising Home Heating on 18 March, precisely a week ago. Thankfully, I managed to pick it up. The summary of its investigations are, in effect, the first solid piece of evidence we have had in any depth on the particular area of home heating. We are talking about 28 million homes, which is a huge market, and the emissions that come from burning natural gas to heat homes. Reducing emissions from heating homes is a key component of the Government’s overall target of achieving net zero greenhouse gas emissions by 2050, and they have printed that here.

The report says, in paragraph 3 of its summary, that

“growing the supply chain for heat pumps to a minimum market capacity of 600,000 heat pump installations per year by 2028”

is the Government’s target. In the last 12 months, they have achieved 55,000, which seems like slow progress, quite frankly. Furthermore, it says that the Government are

“developing the evidence base to inform strategic decisions in 2026 on the future role of hydrogen in home heating”.

It seems to me that we should have done a fair bit of that work already, but apparently we have not.

Paragraph 4 says:

“The government also committed £6.6 billion from 2021-22 to 2024-25 for schemes to improve energy efficiency … This includes the Boiler Upgrade Scheme”,


which, equally, does not appear to be doing too well.

The report goes through a series of other points, with which I will not tire colleagues here, but it is well worth reading. I will, however, highlight points on some of the key findings. First, the NAO has established that some aspects of the

“plans to test the feasibility of hydrogen for home heating are behind schedule or have been cancelled, meaning it will have less evidence to make decisions in 2026 on the role of hydrogen”.

We know that British Gas has a trial going, and there is a small government trial, but I find that rather worrying. Secondly in relation to hydrogen,

“Ongoing uncertainty over the role of hydrogen could slow the progress of decarbonising home heating”.


The report goes on to say that the Government are thinking of using local government to play a role in establishing what to do about decarbonising home heating. As someone who had the privilege of being a leader of a local authority for some years, I do not think this is something, with a subject that is so important, that will be hugely welcomed by local government, which has more than enough on its plate.

As someone who comes from the world of advertising and marketing, I found it worrying to read, in paragraph 14 of the report, that the department has developed a campaign to promote heat pumps, but it does not seem to be getting through:

“public awareness is low: around 30% of respondents to a government survey in summer 2023 had never heard, or hardly knew anything, about the need to change the way homes are heated”.

This is all very worrying; we do not seem to be making the progress that we ought to be making.

There are a series of eight recommendations in the report; I will not go through them all, but I will pick out a couple. On page 12 of the summary—and remember this is the NAO, which is not prone to stating anything positive unless it feels quite strongly about it— recommendation c states that the department should:

“Consider whether it is possible to provide more certainty on the role of hydrogen in home heating before 2026 to help industry plan and invest”.


There are then some suggestions as to how that could be done.

Additionally, I have one other further area, and that is small nuclear reactors, which were not covered in the NAO report. It is worrying that we have known for at least three years that Rolls-Royce is geared up to do small nuclear reactors, and we have given it good money to work on them, but we are still not at a point where anybody is being appointed. There is a list of six potential people involved; some of them are not even ready now to do a proper pitch, and the rumour is that the pitch will be put back further because some of them are not ready. This slippage, all the way through, symbolises this market, and it is extremely worrying. It is possibly one of the most key areas of our industry and our lives when we talk about home heating.

I do not envy my noble friend on the Front Bench the job, and I thank him for his work so far. There is an awful long way to go, and even though His Majesty’s Government are not the vehicle for doing the communication, we must make sure there is better communication with the general public and that we should go forward together to meet the main policy objective in a way that is based on good science and good experience.

[Earl Russell (LD)]

My Lords, this is the first use of the power to designate a strategy and policy statement—SPS—for energy policy in Great Britain, which was introduced in the Energy Act 2013. The changes in that Act included the powers to establish a National Energy System Operator a new independent public corporation responsible for planning Britain’s electricity and gas networks and operating the electricity system. NESO will be required to have regard to the strategic priorities set out in the SPS and new duties for Ofgem, which are all contained in this statement. Can the Minister confirm that NESO will be set up this summer?

All that this statement does is to bring together existing policy and restate that policy in one coherent paper; the statement

“does not introduce new roles or duties for bodies in the sector, it is comprised of only existing government policy, commitments and targets”.

We broadly welcome the statement, but my first question is: why has it taken 11 years, since the Energy Act 2013, to get where we are today? It is 11 years late; we should have been revising the second edition by now. While key elements are welcome, there is much that remains unclear or subject to regular change going forward. I do not think this statement should last five years without review. Will the Government commit to more regular reviews, even an annual review, as we continue our process of transition?

The relationship between the National Energy System Operator and Ofgem is still undefined in this strategy, so when will this be defined? Will the Minister agree to give a further review as soon as NESO is set in place, so that its powers, functions and relationships can be fully scrutinised? The strategy document says that NESO has a duty to notify the Secretary of State if, at any time,

“it thinks that a policy outcome in the SPS is not...achievable”,

as has been stated by other speakers. What are the interim arrangements for the period until NESO is up and running if it decides that there are policies that are not achievable?

I worry also that Ofgem is not accountable to Parliament at the appropriate level of scrutiny for the new powers that are given to it under this policy. There seem to be some tensions for Ofgem between net-zero targets and promoting economic growth as set out in its core functions.

While I welcome the continued commitment to reach net zero, and I am thankful for all the work the Government have done, the Government need to do more at pace. There are key areas where progress is lagging, such as: the development of long-term energy storage; meeting targets, particularly for power generation to be decarbonised by 2030; and the ability to deliver the nuclear plan for a 24 gigawatt deployment by 2050, when many projects are running behind or are late. There are questions about whether we are still on track for offshore wind, following the collapse of the offshore wind auction this year. There are internal disagreements over the clean heat mechanism, and a year of delays means that the target for implementing heat pumps is in question, as we have heard. Emission targets for 2030 look unlikely to be met, the sixth carbon budget is behind schedule and the planned energy efficiency upgrade of ensuring that all properties achieve a rating of band C by 2030 does not have clear mechanisms to take it forward.

The Government are missing their own 2030 fuel poverty targets by 90%; we need a fair and just transition to net zero, yet fuel poverty is completely missing from this statement. I could not find the words in the document and neither does it make any mention of the Government’s own fuel poverty strategy. There is also no mention of the social energy tariff, and the rollout of smart meters is behind. We need more renewables, and we to do more to improve home insulation at scale and at pace. These matters need to be at the heart of our future energy polices, and it feels like they have been forgotten in these documents.

The mention of the EU-UK Trade and Cooperation Agreement is very welcome, as we are spending £1 billion extra a year on our energy bills. When do the Government think the strategic spatial energy plan will be ready? The policy states that the Government expect an investment of around £100 billion in the energy sector by 2030. Does the Minister agree that recent changes in government policy direction, particularly in relation to electric vehicles as well as on other matters, have caused market uncertainty and damaged investor confidence? What actions are the Government taking to ensure the long-term clarity and stability of our environmental policy?

Home Insulation: Health and Mortality Rates

Earl Russell Excerpts

Tuesday 19th March 2024 Lords Chamber

[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.

[Earl Russell (LD)]

My Lords, it feels as if energy conservation is still the last thought and never the first. We have some of the highest domestic energy bills in Europe and some of the worst-insulated homes, yet we fail adequately to improve home insulation. Meanwhile, we continue to import gas from countries such as Russia. When will the Government do the right thing for bill payers and the environment and set more ambitious home installation targets, particularly for social rented homes?

[Lord Callanan (Con)]

I disagree with the noble Earl; the figures he quoted are not correct, and we are improving home insulation standards. To give one figure, in 2010, 17% of homes in the UK were EPCC or above; now the figure is almost 50%, so we are making progress. We have a lot more to do. We have the oldest housing stock in Europe, but we are making progress.

Advanced Modular Reactors: Criticality Tests

Earl Russell Excerpts

Tuesday 19th March 2024 Lords Chamber

[Lord Callanan (Con)]

I understand the noble Lord’s concern, and I know the close interest he takes in this; I share his concerns. I know he had a very productive meeting with the Secretary of State and Minister Bowie to discuss these matters, and he has written following that. A letter on that is being drafted and will come to him shortly.

[Earl Russell (LD)]

My Lords, following the transfer of the intellectual property and personnel in the U-battery project to foreign control, are the Government confident that enough action and support are being provided to UK-based projects to develop advanced modular reactors to prevent them also falling under foreign ownership?

[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.

Gas-fired Power Stations

Earl Russell 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.

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

I thank the noble Baroness and the noble Earl for their questions, especially the noble Baroness, although I am slightly perplexed. If she thinks that this announcement was unnecessary, why did the Labour Party ask for it to be repeated in this House today, given that it makes the same point? However, essentially, I accept the point that the noble Baroness has made. We think that this capacity is necessary; it is all about security of supply. The estimate is that in 2035, it might account for only 1% to 2% of all of the capacity that might be required. We are looking forward a decade, with uncertain projections of what the demand will be, how much renewable capacity will be available and even what the weather conditions will be like that far ahead. So, this is sensible contingency planning.

On the questions from the noble Earl, we very much hope and expect that these will be hydrogen ready or capable of having CCUS fitted. Indeed, some gas plants are already taking part in the CCUS cluster sequencing process. This announcement is entirely compatible with our net-zero obligations. Indeed, this is net zero: there will be some emissions but those can be abated, eliminated or captured, or the power stations can run on hydrogen.

We are very proud of our record. We have one of the fastest rates of decarbonisation in the G20, and we announced before Christmas that we have reduced our emissions by 50%. We have the five biggest wind turbine farms in Europe, and that capacity continues to be rolled out. This is sensible contingency planning to make sure that the lights stay on at those times when, as we all know happen, the wind is not blowing and the sun is not shining.

Biomass: Power Generation

Earl Russell Excerpts

Wednesday 13th March 2024 Lords Chamber

[Lord Callanan (Con)]

My noble friend is right. It is a complicated subject and should not be the subject of easy sloganeering or campaigning. A number of different issues are involved. What the primary wood is used for is, of course, a matter for the US authorities and for the Canadians.

[Earl Russell (LD)]

My Lords, yesterday at Oral Questions, the Minister— the noble Lord, Lord Benyon—said:

“Biomass is a perfectly legitimate renewable energy source if the wood that is being used is a renewable and sustainable harvest”.—[Official Report, 12/3/24; col. 1897.]


My question is simple: can the Minister—the noble Lord, Lord Callanan—confirm exactly what steps the UK is taking to verify beyond doubt that no old-growth timber is being cut and burnt at Drax?

[Lord Callanan (Con)]

Of course I agree absolutely with the statement made by my noble friend. As I said, I have spoken to Ofgem, which is investigating. It is its job to enforce against these criteria. My officials are in touch with those in British Columbia for further discussions. However, there are many perfectly legitimate reasons why timber would be removed from old-growth forests—for instance, for firebreaks, diseased wood, et cetera. This is a complicated issue. Drax is an important part of the UK’s energy security. Let us make sure that it does this sustainably and abides by the rules before we rush to judgment.

Energy Bills Discount Scheme (Amendment) Regulations 2024

Earl Russell Excerpts

Tuesday 12th March 2024 Grand Committee

[Earl Russell (LD)]

My Lords, this statutory instrument sets out to enable the Secretary of State to put down a date after which heat networks may no longer be able to make an application for support under the energy bills discount scheme. The EBDS was established in April 2022 to provide non-domestic energy consumers with a discount on their higher gas and electricity bills. It also gives discounts to domestic consumers on communal heat networks, who, unlike households using a normal mains electricity or gas supply, were not supported under the terms of the energy price guarantee.

Under the terms of the EBDS, qualifying heat suppliers—QHSs—are required to apply for support, which they must then pass on to the domestic customer in the form of energy bill discounts. The Minister in the other place noted:

“Without that support, domestic customers on heat networks would have been exposed to the full impact of high wholesale market prices. The support that we have provided through the EBDS regulations is estimated to be worth £180 million in total, and £1,200 for the average … customer”.—[Official Report, Commons, Fifth Delegated Legislation Committee, 5/3/24; col. 3.]


This is, if you like, the architecture that was set up at pace and at scale to deal with, as the Minister here has said, the consequences of the invasion of Ukraine, its impact on rising energy costs here and the impact of that on the cost of living.

I want to be clear that any comments I make on this statutory instrument are set against a background of welcoming all the measures that the Government put in place, at scale and at pace, to deal with those consequences in response to what was a crisis. That being said, I have some concerns about this instrument and its impacts; I am also concerned about the way in which this scheme was set up, particularly for people on communal heat networks. I also note that this instrument has been noted as being of interest by the Secondary Legislation Scrutiny Committee and the Joint Committee on Statutory Instruments.

The Government’s position is an administrative one in wanting to bring this scheme to an end. I fully understand that. The legislation, as originally drafted, means in effect that there is no end date, so, although the scheme will end, people will be able to continue to make applications for ever. That clearly has to end, so I have no disagreement there.

The intended end date is 31 March 2024. As the Minister said, there will be a two-week extension for those people who could not reasonably be expected to make an application because they hit the deadline. From a purely administrative point of view, this all seems fine and reasonable, but, from a customer’s point of view, there are impacts here. The customers we are talking about are those who are vulnerable and living in social housing.

The way in which the system was set up was not brilliant. I do not think that the operators of communal heat networks should have been required to apply in order to get the discounts in the first place. There have also been problems with pass-through to customers living in communal heat networks.

I want to ask a couple of questions before I come to an end. The end date is the end of this month, so it is literally the blink of an eye away. Why the urgency here? The Explanatory Notes say that the Government are still getting 20 applications a month. Is there the possibility of extending this?

I am concerned about what the Government are doing to inform the end-users and beneficiaries of these schemes. My thinking is that one of the reasons why this scheme was set up the way it was is that the Government do not have proper databases on the number of communal heat networks that exist, let alone the people in them. I understand why, in response to a crisis and not having those databases, the Government went down the route they did. However, I feel that this situation is likely to repeated in future. I request that the Minister and his department think again about trying to set up databases, so that the next time we are in this position, the discount on the cost of energy for people living in communal heat networks can come directly to them. That would be one point.

The numbers may not be that great, but there are still 60,000 individuals from vulnerable groups, as both committees have noticed. The cost per individual is likely to be £1,200. These are vulnerable people, and this is a big loss to them.

I note that the Government say that people can still seek redress through the ombudsman and the court system. However, that is quite slow and blunt, and applies only where owners of communal heat networks have made an application and received the funding but not passed it on to the end-user. I could find nothing in the information provided, but does the Minister know how many of those particular cases there are and what action the Government will be taking to support residents in those cases? Clearly, that is a criminal case—I am sorry if I am wrong and happy to be corrected—as the owner of a network has a discount but has failed to pass it on.

That is pretty much it from me. My real concern is that these are vulnerable people, and I encourage the Minister to do everything he can to make sure that they are supported. My real point is about learning, so that, the next time we are in this position, we can make sure that people in these situations get a better deal.

[Lord Lennie (Lab)]

My Lords, as we have heard, this instrument enables the Secretary of State to set a date after which heat networks can no longer apply for support under the energy bills discount scheme. Under the scheme, qualifying heat suppliers are required—that is the word used—to apply for support, which they then pass on to their domestic customers in the form of energy bill discounts. The Department for Energy Security and Net Zero has said that not all QHSs have applied for EBDS support. Although the scheme itself will end on 31 March, there is currently no effective date for applications to be received. The Minister has set this out—so far, so tidy.

DESNZ has estimated that 3,000 qualifying heat suppliers may not have applied for the EBDS, but we do not actually know, because there was no register of the qualifying heat suppliers. We do not know how many there are or where they are, so we cannot follow them all up. That is one of the problems with the scheme that was set up. However, we estimate that up to 60,000 domestic customers may lose out on support as a result of qualifying heat suppliers not applying for a scheme discount, as required.

As we have heard from the noble Earl, Lord Russell, the noble Lord, Lord Vaux, and the Minister the value of lost discounts is about £1,200 a customer. That loss will disproportionately affect disadvantaged groups, such as the elderly and ethnic minorities—people who have been described as “skint little people”—who are significantly more likely to be on heat networks. Could the Minister set out what specific initiatives have been undertaken to encourage take-up of EBDS bids by heat networks? Have they made inroads into identifying where the qualifying heat suppliers are, so that they can be targeted and encouraged to apply? Which initiatives have been successful, if any, and how recently? Has it been an evolving, slow process?

The proposal in this instrument makes administrative sense, rather than leaving open an estimated total liability of £6 million for not closing the scheme to new applicants. Administrative sense is one side of this equation; the other side is the customers, and it seems less considered from their perspective. The Joint Committee on Statutory Instruments and His Majesty’s Opposition initially expressed concern that an obligation was being placed on intermediaries without any means of enforcing it. It is all very well requiring someone to do something when, if they fail to do it, nothing happens except that the individuals can take them to court or to the ombudsman.

How many times has that happened during the course of the scheme? I suspect it is very few times, if any. Can the Minister tell us whether any such initiatives have been taken? Essentially, this is about a vulnerable customer being required to take their landlord to court to get a subsidy for their gas bill. The chances of that happening are fairly remote, but we will no doubt hear from the Minister on that. This means that companies and organisations that have failed to apply for, or pass on, discounts have simply got away with it. Who knows the truth of that? We do not know who they are.

As I indicated, we support the closing of the scheme and the ending date for applications, but we are unhappy with the way the scheme has been allowed to drift into oblivion with no forfeit for those who should have acted on it.