COP 27: Outcome

Lord Callanan Excerpts

Tuesday 6th December 2022 Lords Chamber

[Lord McNicol of West Kilbride (Lab)]

My Lords, I beg leave to ask the Question standing in my name on the Order Paper, and I make the House aware of my register of interests.

[The Parliamentary Under-Secretary of State, Department for Business, Energy and Industrial Strategy (Lord Callanan) (Con)]

My Lords, COP 27 established a new fund for responding to loss and damage as part of other funding arrangements relevant for loss and damage. This is significant in supporting the most vulnerable. New pledges were also made to the Adaptation Fund totalling more than $230 million. However, we had to fight at COP 27 to keep 1.5 degrees alive. While we were disappointed not to make progress on fossil fuels, the deal does preserve the Glasgow climate pact.

[Lord McNicol of West Kilbride (Lab)]

My Lords, I thank the Minister for his Answer. I had the privilege of attending COP 27 with rewired.earth, a not-for-profit organisation. Like many, we were very concerned at the low level of agreement and ambition for the future. With the war in Ukraine, the energy crisis and the cost of living crisis, it is understandable but very worrying that there was not more emphasis on the net-zero approach. Global emissions remain at a record level and the world is on track for warming well in excess of 2 degrees. I believe Britain can be at the forefront of solving the problem. What mechanisms have the Government put in place to ensure joined-up, consistent policy-making between departments so that policies are aligned with and do not put in jeopardy our pull towards delivering on climate?

[Lord Callanan (Con)]

I agree with the noble Lord’s initial comments about COP. I think it is worth being a little optimistic, in that over 90% of world GDP is now covered by net-zero commitments and 169 countries have put forward new or updated 2030 NDCs. However, I entirely agree with him that there is a lot more progress still to be made. This Government are very proud of our record. We have the world-leading net-zero commitment in law and all government departments are working together to deliver that.

[Lord St John of Bletso (CB)]

My Lords, one of the most significant challenges outlined at COP 27 was the rapidly increasing use of single-use plastics globally. The United Kingdom is one of the worst offenders, with almost 99 kilograms per person. What are the Government doing to address this and transition to more sustainable alternatives?

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[Lord Callanan (Con)]

The Government have taken a number of measures—I point the noble Lord to the tax on single-use plastic bags—but clearly there is a lot more that we need to do. I know that colleagues in Defra are working on this.

[Baroness Altmann (Con)]

My Lords, I praise the Government on all their work so far on the climate issue. Could my noble friend tell the House whether they have plans to embed into the United Kingdom standards in the upcoming Financial Services and Markets Bill the recommendations of the UN high-level expert group on the net-zero pledges of non-state entities, such as pension funds, to ensure that our massive, long-term institutional investor money will support net zero and green growth?

[Lord Callanan (Con)]

I am sorry to tell my noble friend that I am not responsible for the financial services Bill. I would be very happy to get Treasury colleagues to write to her.

[Baroness Walmsley (LD)]

My Lords, could I ask the Minister about our overseas investments? It is important that we put our money where our mouth is. Since Boris Johnson announced that we would stop supporting fossil fuels overseas nearly two years ago, what, if any, investments have been made into fossil fuels through British International Investment, UK Export Finance or one of their subsidiaries? If he does not know the answer, would he write to me?

[Lord Callanan (Con)]

As far as I am aware, the Prime Minister’s pledge has been kept. If that is not the case, I will certainly write to the noble Baroness.

[Lord Sikka (Lab)]

My Lords, can the Minister confirm that the UK’s share of the cost of reparations relating to damage from greenhouse emissions will be borne solely by the ultra-rich? Research shows that billionaires are responsible for a million times more greenhouse emissions than the average person.

[Lord Callanan (Con)]

If the noble Lord is referring to the UK’s taxation system, it is clear that those at the top end of the scale pay the largest amounts of taxation by far. If that translates through to our international climate commitments, where we are proud to be contributing something like £11 billion, then I suppose in a strange way the noble Lord gets his wish.

[Lord Howell of Guildford (Con)]

My Lords, the main problem at COP 27, and the main disappointment, was that it failed to address the central and crucial issue of rapidly rising global carbon emissions. In light of that, is it not time to reassess our own contribution to meeting this crisis, recognising that a 1% reduction in emissions, which our net zero might achieve, is all right, but it is only an example and an example is not going to be enough. We have to think in terms of mobilising old and new technologies on a massive scale with other countries to begin to bring the temperature down from the 2 to 2.5 degrees centigrade it is heading to, and curb the otherwise inevitable climate violence which will hurt a lot of people.

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[Lord Callanan (Con)]

My noble friend makes a very good point of course. Our 1% is not going to make a massive difference, but there are also opportunities attached to it. Our rollout of renewables is going extremely well. We have one of the largest selections of offshore renewables in the world, which has enabled the cost to come down. It is an example we have set through our contracts for difference scheme, and now renewables—particularly offshore wind renewables—are coming in at a fraction of the cost of fossil-fuel generation, so the market is also helping to drive these matters, and of course provides excellent export potential for our industries.

[Baroness Blake of Leeds (Lab)]

My Lords, as well as the net-zero priorities highlighted at COP 27, the Russian invasion of Ukraine has of course underlined the need to move away from oil and gas and on to homegrown, cheap, clean energy sources that guarantee our energy security. Why have the Government been doubling down on this in regard to fossil fuels, including the loophole to save generators’ profits, while continuing to block the cheapest, cleanest, quickest forms of power —onshore wind and solar?

[Lord Callanan (Con)]

As I said in response to the previous question, we have one of the fastest rollouts of renewables in the developed world. We have the second largest share of offshore wind after China, but there is undoubtedly still a need for gas as a transition fuel. It makes sense therefore to use that transition fuel from our own North Sea resources, rather than importing it, in a very carbon-heavy manner, in LNG.

[Baroness Boycott (CB)]

My Lords, when we were in Egypt, the UK Government signed up to the global methane pledge, which commits to a cut in global methane emissions by 30% by 2030, though we have not yet set any domestic targets. Bearing in mind that 80% of methane stems from agriculture and waste, will the Government consider bringing forward the UK’s ban on landfilling biodegradable waste, better biogas capture from landfill and better slurry management?

[Lord Callanan (Con)]

The noble Baroness raises an important point. I am happy to tell her that, through our green gas levy and support scheme, we are continuing to support the rollout of biomethane—an understated industry in the UK but one doing extremely well—and we need to align our food waste policies to produce even more biomethane.

[Baroness Manzoor (Con)]

My Lords, my noble friend is well aware of the devastating effects of climate change on countries such as Somalia and India and Pakistan. In Somalia, there were first floods and then drought. I am therefore very pleased to hear that the Government have worked closely at COP 27 to secure compensation. Will my noble friend agree that that framework needs to ensure that the money goes to the people who really need it—those families and children who are currently dying?

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[Lord Callanan (Con)]

I agree with the point made by my noble friend. We will need to make sure that, when the fund is up and running and established, it goes to the people who really need it, which is sadly not the case with some other UN funds.

[Baroness Jones of Whitchurch (Lab)]

My Lords, in addition to the steps we need to take to curtail our use of excavation of fossil fuels, we need to do something about the consumption of those fossil fuels. What are the Government doing, in terms of our use in industry, home heating and transport systems, to cut down on the demand for fossil fuels and to make sure that all those sectors start to move very quickly towards using renewable energy?

[Lord Callanan (Con)]

The noble Baroness makes an important point. Energy efficiency should be our first port of call, and indeed it is. Over this Parliament, we are spending £6.6 billion on home energy efficiency measures. In the mini-Statement a couple of weeks ago, the Chancellor announced additional funding of another £6 billion from 2025. We are currently consulting on the £1 billion ECO+ energy conservation scheme. We are looking at additional measures in terms of regulation that we would also need to introduce, and that is just on the domestic side. On the industrial side, we have a suite of measures—the industrial decarbonisation fund, et cetera—to help industry to cut back on its emissions and to save energy as well. Energy efficiency should always be our first port of call, and I agree with the noble Baroness.

Energy Bill [HL]

Lord Callanan Excerpts

Tuesday 6th December 2022 Lords Chamber

Moved by

[Lord Callanan]

That the Bill be reported from the Committee of the Whole House in respect of proceedings up to and including Wednesday 7 September; and that the order of commitment of 19 July be discharged and the remainder of the bill be committed to a Grand Committee; and that the instruction to the Committee of the Whole House of 19 July shall also be an instruction to the Grand Committee.

Motion agreed.

Energy Security

Lord Callanan Excerpts

Monday 5th December 2022 Lords Chamber

[Baroness Sheehan (LD)]

My Lords, I thank the Minister for bringing the Statement to the House. I of course also welcome the return of the Energy Bill.

I will start with nuclear, and the Government’s generosity with British taxpayers’ money in rebooting Sizewell C. I understand that common sense has prevailed: reports are circulating that China General Nuclear has been bought out. Can the Minister confirm that that has in fact already happened, and is not just an aspiration? Can he also comment on a recent article in the New Civil Engineer about fears of an 11-year delay to Hinkley Point C, on the back of news of a new contract between the Government and EDF, stipulating that Hinkley C will still be funded even if it does not start operating until 2036? If this were to be the case it would not be surprising, since no nuclear reactor has ever been built on time or on budget.

Finally on nuclear, the Secretary of State in his Statement cites it as a key plank in our bid for energy sovereignty. Can the Minister say where the raw uranium fuel for nuclear power generation originates from? The last time I looked, we do not mine any of it in the UK. I hope the Minister will agree that nuclear cannot be said to be the indigenous energy we need in the same way that energy farmed from our sun, wind and waves undoubtedly is.

Intermittency concerns about energy from renewables are often cited as a reason why nuclear is necessary. However, those concerns have been comprehensively debunked. There are many, much cheaper answers to intermittency if the Government were but minded to invest in them seriously. Energy storage is an example, including in the form of green hydrogen generated from the excess wind power that the grid is unable to harness in real time. There is also pumped hydro, more solar and onshore wind geographically spread out, marine energy, smart energy and demand management et cetera.

I have not even mentioned interconnectors. Can the Minister outline the Government’s view on the Morocco-UK interconnector power project? A project that is expected to provide low-cost, clean energy to more than 7 million UK homes by the end of 2030 with no taxpayer inputs and create 1,350 permanent jobs in the UK is surely worth a mention in any government energy Statement in 2022.

Moving on to fossil fuels, why do the Government persist in preferential treatment for the fossil fuel sector, for example, through subsidies? The OECD reports UK subsidies in 2021 of £200 million on decommissioning, £250 million on oil and gas investment, £1 billion on fuel oil, £1.5 billion on ring-fenced oil and gas trade corporate income tax relief and £2.1 billion on red diesel fuel. That is £5 billion of subsidies, which is unjustifiable.

On investment allowances, I agree with every word that the noble Lord, Lord Lennie, said. In the windfall tax paid by oil and gas extractors, they benefit from an investment allowance. However, no equivalent relief is available for renewable energy generators. This is nothing short of outrageous and will disincentivise investment in that sector.

Finally, on decommissioning, the subsidy regime may be even more costly than the £200 million reported by the OECD, because decommissioning relief deeds risk leaving taxpayers paying out to companies which never made a contribution to the Exchequer. That is madness. Can the Minister say to what extent the Exchequer is exposed to these types of deed? Currently we have no visibility of the assumptions behind those deeds or the liability that might result from them.

In conclusion, a Government who produce a Statement on energy needs which does not give immediate full-throttle support and investment impetus to energy efficiency of the built sector, on-ground solar, onshore wind and community energy projects are a Government who do not get the urgency of the situation the planet faces. The lack of ambition on energy saving is breathtaking. These are the low-hanging fruit which can do so much to wean us off expensive and immoral payments to the Russian pariah state as well as other unstable regions of the world. The Government could and should have done much more on these easy wins if they are serious about energy sovereignty. I am sure that many of these things will come up in the Energy Bill that we will debate next week.

[The Parliamentary Under-Secretary of State, Department for Business, Energy and Industrial Strategy (Lord Callanan) (Con)]

I thank the noble Lord, Lord Lennie, and the noble Baroness, Lady Sheehan, for their questions. I will start with nuclear, and I thank the noble Lord, Lord Lennie, and Labour for their support for it. The noble Baroness, Lady Sheehan, and the Liberal Democrats are absolutely wrong on this. The idea that we can satisfy all of our baseload capacity from a little bit of pumped hydro storage, a few batteries and a bit of hydrogen is nonsensical, I am afraid. If the Liberal Democrats are serious about ever being in government, they need to seriously address these issues of how to provide long-term energy security. I am afraid that, at the moment, nuclear is the only carbon-free option that will do so at scale. The option that the noble Baroness talks about produces puny amounts of power.

In the British Energy Security Strategy, we provided a clear, long-term plan to accelerate our energy transition towards net zero and away from fossil fuel prices set by global markets beyond our control, and we are making serious progress towards that. We have more offshore wind than the rest of Europe put together; we have the second-largest offshore wind sector in the world, and the contracts for difference scheme has made a massive difference. I get that the Opposition think we should go even further and even faster, and we are expanding our ambition, but the turbines are being rolled out at a rate of many hundreds a year, and there are a number of supply chain limits. I assure the noble Lord that we will continue to roll them out because, at the moment, it is the cheapest form of generation—albeit intermittent, and we therefore need to provide back-up power for it.

That is why the investment in nuclear was announced. We are confirming the first state backing for a nuclear project in over 30 years, with a £679 million investment to support the UK on our journey to greater energy freedom. We are taking a 50% stake in the project’s development, with EDF. Sizewell C is set to generate reliable and clean homegrown electricity for 6 million UK homes, but it will of course also deliver thousands of high-value jobs in East Anglia and nationwide. We are also working hard to set up Great British Nuclear with support from the industry and our expert adviser, Simon Bowen. Great British Nuclear will aim to develop a resilient pipeline of new-build projects, supporting them through every stage of development. There are a number of exciting developments, such as small modular reactors, which will come on stream in a few years’ time.

[Lord Wigley (PC)]

Hear, hear.

[Lord Callanan (Con)]

I am pleased to hear that Welsh support.

The noble Baroness, Lady Sheehan, and the noble Lord, Lord Lennie, both mentioned the importance of energy efficiency and public communication, and I completely agree with them. The noble Baroness said that there was nothing in the Statement on energy efficiency, but I am afraid that she is wrong. We of course will not fix our energy future by focusing on supply alone; we have to sort out our own homes and buildings. That is why we set out our ambition, backed by an energy efficiency task force, to reduce our final energy consumption from buildings and industry by 15% by 2030.

We have already come a long way, with £6.6 billion provided in this Parliament, but we recognise the scale and urgency of our challenge. In this year’s Autumn Statement, the Chancellor announced an additional £6 billion to be spent between 2025 and 2028. In addition, we announced the start of a consultation on the £1 billion ECO Plus scheme, which will run between spring 2023 and March 2026 and will aim to save consumers around £310 a year on their heating bills by installing insulation in hundreds of thousands of homes across the country. As I said, I would be interested to see any consultation responses for that.

Having all this support in place is all very well, but people need to know where to find it. That is why we are providing about £18 million to expand our public awareness campaign to help households to do what they can to reduce their usage and bills, protecting vulnerable people over this winter and beyond. Again, I welcome the support for restarting the energy security Bill, and I look forward to our further debates on it in this House. It will be the most significant piece of primary energy legislation since 2013, and it will liberate private investment in clean technologies and encourage competition in the sector, protecting consumers and reforming the UK’s energy system to ensure that it is resilient, efficient and safe.

Both noble Lords also mentioned the subject of onshore wind. We know that onshore wind is a mature, efficient and cheap technology and that we will need more of it. We are clear that, to achieve this, we will require a sustained increased in locally supported offshore wind through to 2030. However, we understand the intensity of feeling that some people have about the impact of wind turbines in more densely populated parts of England, and we want to maintain the ability of local communities to input into those proposals. Noble Lords will be aware that various amendments have been tabled to the Levelling-up and Regeneration Bill addressing onshore wind in England. We are currently giving consideration to this issue and will respond in due course.

On the issue of solar, the Government recognise that there is a need to preserve our most productive arable farmland. It is important that the Government can strike the right balance between these considerations and securing a clean, green energy system for the future; that is why the planning system is designed to take account of those issues.

In response to other issues mentioned, I am aware of the exciting proposal for the interconnector linking us with Morocco. It is an awfully long way, and the electrical engineer in me thinks of the length of that cable and the losses that will result from that, but it will be great if we can get that to fruition as it is an extremely exciting project.

The noble Baroness referred to subsidies for fossil fuels. I reiterate once again that the UK does not subsidise fossil fuels; no matter how many times she makes this point, I will give her the same answer. She and the noble Lord, Lord Lennie, referred to billions of pounds unclaimed from the fossil fuel industry. The Chancellor announced the extension of the energy profits levy, and there were lots of wild squeals from many of those companies that the Treasury has gone too far with this tax because investment is drying up. I am sure that the Chancellor will want to keep that under review.

I think I have answered most of the other questions.

[Lord Howell of Guildford (Con)]

My Lords, there is much to welcome in this very important Statement. It shows real momentum in this area, which has been lacking in the past. I will ask the Minister two questions. First, the whole of Europe is covered by an intricate and balanced system of electricity interconnectors. Can we be assured that there is no question of undermining that in pushing for the greater degree of energy security which the Statement calls for, because that will be sorely and continuously needed?

Secondly, would he care to chance his arm and offer even an estimate of when Sizewell C might be operational, if it is authorised from now? I declare an interest as being involved in the instigation of Sizewell B. That took 15 years to get going, from the authorisation to the actual production of commercial electricity. The idea is that Sizewell C is going to be a replica of Hinkley Point C. As we all know, Hinkley Point C is not without its problems, and the EPR model on which it is built is certainly full of problems. At every point where it has been tried and tested, not one EPR has yet existed which has not run into major problems. There are those who say that a set of small modular reactors would be ready much earlier on a Sizewell C site than sticking to the large-scale EPR Hinkley model. Could the Minister comment on that? There is very strong opinion that, if we want low-carbon electricity within the lifetimes of most people now alive, we are going to need that rather more quickly than these huge large-scale projects can achieve or have achieved in the past.

[Lord Callanan (Con)]

I thank my noble friend for his question. He takes a close interest in this issue, having been Secretary of State for Energy in the past. He makes a very good point about the importance of interconnectors. They will clearly play a key role in balancing supplies across Europe, particularly as we have more and more intermittent renewables both in this country and in other parts of Europe. Of course, there are interconnectors linking us with Ireland, as well as with France, the Netherlands, Belgium, et cetera. They clearly will have an increased role to play. I forget the exact figure, but in the energy security strategy we set out that we wanted to expand the number of interconnectors that are available because of the important role that they will have.

I cannot give the noble Lord an exact date for when Sizewell C will be commissioned; these large nuclear projects have a somewhat chequered history. This is a tried and proven design, but it clearly will be a number of years before this comes on stream; it will, however, still be valuable and still be needed. In fact, if we had disregarded the advice of the former leader of the Liberal Democrats in 2010 in his famous video, we would indeed now be having new nuclear coming on stream to help us in the energy crisis that we have at the moment. SMRs, of course, will also play an important role, but they are still being developed and designs are still being improved, so, again, it will be a few years before they come on stream.

[Baroness Bennett of Manor Castle (GP)]

My Lords, my question is also on Sizewell C and nuclear. I am sure that the noble Baroness, Lady Sheehan, and the Liberal Democrats do not need me to defend them, but none the less I will quote the CEO of the National Grid in 2015. He said:

“The idea of large power stations for baseload is outdated”.


Perhaps the Minister needs to update his assumptions in that regard.

However, I will continue on from the question that was just asked by the noble Lord, Lord Howell, because the Minister was asked when Sizewell C would come on line and he declined to give an answer to that. Surely, the Government must have both a medium estimate and a worst-case estimate—for the enormous amount of money that they are spending—of when it is actually going to be working. I will therefore put that question again to the Minister.

[Lord Callanan (Con)]

I disagree fundamentally with the noble Baroness. Sizewell C is an important investment. It is still at the planning stage at the moment. We will secure the funding for it and we will bring it on stream as quickly as we possibly can.

[Lord Naseby (Con)]

My Lords, I welcome my noble friend to the Front Bench again. This was a very important Statement, and I can think of no better man to handle this very challenging area faced by His Majesty’s Government. On the nuclear issue, can he reassure me that the small modular reactor programme from Rolls-Royce will not be side-lined? It seems to me a very exciting project—one that, to date, has gone well with the company, as I understand it, and with those who are working closely with it.

Secondly, as he knows, I have a genuine interest—it is nothing to declare—in what is termed in the Statement “nascent hydrogen”. I personally believe that we will see, quite possibly, a similar revolution to that which we saw when we moved from coal gas to North Sea oil. In this instance, it will be a mixture of gas from the North Sea and hydrogen. If that were to happen, that would be a major step for every household in the United Kingdom. Can I be reassured that that will not be forgotten, and that hydrogen is vitally important, not just for normal usage but for the air industry, in which I also have an interest, as my noble friend knows?

Finally, just on renewables, I did a little bit of research on offshore winds in the current situation. At this point in time, things are not going well. The primary problem appears to be that National Grid is unable to give a guarantee to connect to the main transmissions until 2030. Quite frankly, that is totally unacceptable for an industry that has done well, in which we have major investments. Somebody needs to shake it up somehow so that those on the offshore and the future investments know that they can speedily get connection to the grid.

[Lord Callanan (Con)]

I thank my noble friend for his questions. I also thank him for welcoming me back to the Front Bench, although I was not aware that I had ever left it. Nevertheless, I am sure that his concern is well thought, and I thank him for that.

On SMRs, we are indeed continuing to support Rolls Royce; the figure is about £200 million-worth of support to accelerate the design of SMRs, because they will have a key role to play. My noble friend also asked me about hydrogen. We have a very advanced hydrogen strategy and will shortly be rolling out a business model. I can tell him that hydrogen for heating is not yet an established technology in its scalability. We have the ability to blend about 20% hydrogen into the current gas main, and in the Energy Bill, which we will shortly be considering, we are taking powers to conduct village-scale trials of hydrogen to check its feasibility for heating. I think it is more likely that the use of hydrogen will be in the sectors that are hard to decarbonise, such as steel or cement, or for really big, heavy, long-distance transport, such as locomotives or heavy goods vehicles.

My noble friend also makes a good point about the grid connections. As we seek to move the electricity system generally away from big nodes to a much more diversified system, clearly that requires an awful lot of new connections to be made. That is generally by pylons, but these can be extremely unpopular in various parts of the country. Nevertheless, that is something that we need to proceed with, but we need to try to do it in collaboration with local communities. Every offshore wind farm needs to be connected to shore and into the national grid to parts of the country that use the power. So there is a massive reconfiguring of the grid going on, with massive amounts of investment to bring that about. It is a project that will take many years to bring to fruition.

[Lord Arbuthnot of Edrom (Con)]

My Lords, does my noble friend agree that there are three elements to energy security? The first is the generation of energy, which is very important; the second is energy efficiency, which is also important, and I was very pleased with what he said about that; but the third is the distribution of energy, which is just as important and just as vulnerable. I declare an interest as the chairman of a resilience advisory company. In the light of constant cyberattacks on National Grid and the recent physical attacks on the Nord Stream pipeline, can my noble friend say a word or two about how we are addressing these vulnerabilities in the distribution of energy?

[Lord Callanan (Con)]

My noble friend makes some very good points, and I agree with him on the three issues he talked about: generation, energy efficiency and of course distribution, which is equally important. We have a very advanced cybersecurity strategy. I am not going to go into detail on that now, or indeed our contingency plans to protect our energy infrastructure, but we are very well aware of the risks and are devoting a considerable amount of attention to this matter.

[Lord Bruce of Bennachie (LD)]

My Lords, the Minister was a little sneering about the alternatives to nuclear power, but has he not considered that the record of nuclear power is one of going massively over budget, massive delays and an unidentifiable cost of waste management disposal? To take up the previous point, local generation and local distribution, rather than massive and highly vulnerable major projects, is a much better way to ensure sustainability in the future.

[Lord Callanan (Con)]

The answer to the noble Lord is that we need both. We need new large-scale nuclear power, not least to replace some of the ageing stations that are being phased out, but we want lots of new renewable power locally as well. Indeed, our strategy is to produce exactly that. I know that the Opposition tend to be a bit down on our renewable energy record but, dating from the coalition days, we have a fantastic renewable energy policy. We are continuing to roll out new renewables at a very large rate—one of the fastest in Europe—and we will continue to do so, subject to inevitable supply chain constraints as the rest of Europe seeks to catch up with the excellent policies that we have been following.

[Lord Adonis (Lab)]

My Lords, how many new nuclear reactors do the Government think they might be able to get operational in the next 20 years with their new planning framework and Great British Nuclear? Will the Minister also indicate, to whet our appetite, if the Government were to allow a more liberal planning regime onshore wind, how big a contribution might this also make to our energy supply?

[Lord Callanan (Con)]

The noble Lord will know, from his history of looking at infrastructure projects, that I cannot give definitive answers to those questions. We have announced the funding of Sizewell. Discussions are under way with operators for additional nuclear plants. I will be sure to let the House know when we have secured those investments and when we can make decisions on them.

It is difficult to answer the noble Lord’s question on onshore wind: it will make a contribution. Clearly, individual turbines make a relatively small contribution, but when they are scaled up, it can be quite large. Again, it is intermittent generation, but they will make a contribution, particularly in local areas. We want more wind; we want more solar; we want more hydro; we want more geothermal: the whole idea is to provide a diverse mix of energy sources.

[Baroness Bennett of Manor Castle (GP)]

My Lords, I turn to another issue raised by the noble Baroness, Lady Sheehan: that of energy conservation. The Statement says:

“The days of wasting energy are over.”


I am sure that is something we would all like to see, but the Minister may recall that a couple of days ago, he answered a Written Question from me on the issue of digital advertising screens and neon shop signs, which France, Spain and, in a slightly different way, Germany, have all taken action on to see them switched off during the energy crisis to reduce energy demand and reduce the risk of blackouts. In answering me, the Minister said that the Government had no data on the impact of these. If he wants to see one for himself, he might like to wander up to Tottenham Court Road station, where there is a four-storey high screen billed as

“the largest LED canvas in Europe”,

which blazes out advertising 24 hours a day, I believe. Surely that could be switched off to save energy. Will the Government look at this issue again?

[Lord Callanan (Con)]

I do recall the Question from the noble Baroness. We do not have precise data on how many digital advertising screens there are in the country and what energy they might be using. I do not think we want to get into micromanaging people’s energy consumption to that extent. We do not want the whole country to be in darkness, and there will be some important display screens that provide key information for people—so getting into heavy-handed government dictating to companies when they can switch their advertising screens on or off might be a policy beloved of the top-down, controlling Greens, but I do not think it is a practical solution.

[Baroness Sheehan (LD)]

My Lords, if there is time I would like to ask another question and put the record straight on what I said about energy efficiency. I am fully aware that the Statement mentions energy efficiency, but I was referring to the lack of ambition the Government are showing. I think 15% by 2030 is really not good enough. We need to do so much better, and it is so easy to do so much better that it really is a missed opportunity.

Secondly, I want to talk about the interconnector from Morocco to the UK. The 3.8 gigawatts of energy it will generate is not an insignificant amount. It could help enormously with intermittency. The Minister mentioned the length of the cable that will be required. It will be immensely long, but the good news is that that cable will be manufactured in the UK, in Hunterston in Scotland, Port Talbot in Wales and parts of the north-east of England—so it is a good news story all round and I hope the Government will give it their full support.

[Lord Callanan (Con)]

I think I said in response to the noble Baroness’s earlier question that I welcome this fantastic project and wish the developers well in producing it, particularly as I believe that it can be built without taxpayer support, so we should welcome it even more—and of course we will do everything we can to support such a fantastic achievement. If it can be built, it will produce a very useful contribution to the UK’s energy security.

I have to disagree with the noble Baroness, who does not think a target of 15% by 2030 is enough. I can assure her, looking at the analysis of it, that it is an extremely ambitious target. It will require a huge amount of resource to be put into the sector, both public and private, in order to achieve such a target—but if you do not reach for the stars you will never make it, and it is important that we set an ambitious target. We will do all we can to achieve it.

I said in my initial answer that we are spending £6.6 billion on energy efficiency schemes in this Parliament; the Chancellor committed another £6 billion for 2025 to 2028. We are also consulting on the £1 billion ECO+ scheme. We are doing an awful lot in the energy efficiency space and the answer will actually not be in total cash resources, but in the building up of the supply chain, which is constrained in many aspects at the moment. That is what is providing me with food for thought: to make sure that we actually have the resources on the ground, in terms of materials and personnel, to implement all these ambitious schemes.

[Baroness Bennett of Manor Castle]

My Lords, the noble Lord opposite referred to hydrogen and its importance as a method of storing renewable energy when an excess is available from wind and solar et cetera. I do not know whether the Minister saw a really interesting study out this week on direct reduction furnaces and how if emission allowances are gradually reduced, producing steel with green hydrogen would be 15% cheaper than producing it with coal using carbon capture and storage. What are the Government doing to encourage, support and put into operation the creation of green steel in the UK, given that it is already happening in Germany and has been for a couple of years?

[Lord Callanan (Con)]

We are looking at a lot of ways of supporting the steel sector—we think that it is a very important sector in the UK. I would question the noble Baroness’s figures. If we wanted to produce steel completely with hydrogen, it would require enormous investment. I know that a number of interesting research projects are going on, but I do not think that they are particularly well established in other countries yet either. However, there are exciting prospects, and we should do all we can to support them.

I agree with the noble Baroness that one way of using so-called excess power from the likes of wind farms that produce lots of power perhaps at times when it cannot be used will potentially be in producing hydrogen. However, hydrogen is a relatively inefficient way of storing power; it is much more effective if we can use the power when it is produced. If we use a unit of electricity to produce hydrogen and then, for instance, use it for heating, we lose 60% of the energy value of that unit of electricity in converting and storing hydrogen. It is a very difficult gas to compress, to transport, to store, and then to use. It is not necessarily an efficient way, but it could be a way of storing excess electricity production if it cannot be used—that gets us back into the question that we discussed earlier of expanding the grid et cetera.

There are lots of solutions and lots of potential technologies that we could use. As I said, our strategy is to explore as many of them as possible so that we are not putting all our eggs in one basket. We have a diverse energy mix; it will take many years to roll out, but that in my view is the future of energy supply in this country.

Protection for Whistleblowing Bill [HL]

Lord Callanan Excerpts

Friday 2nd December 2022 Lords Chamber

[The Parliamentary Under-Secretary of State, Department for Business, Energy and Industrial Strategy (Lord Callanan) (Con)]

My Lords, I join the rest of the House in congratulating the noble Baroness, Lady Kramer, on securing Second Reading of her Private Member’s Bill. As a former co-chairman of the All-Party Parliamentary Group on Whistleblowing, she has continuously highlighted the important role that whistleblowing plays, shining a light on wrongdoing and advocating reform in this area.

I thank all other noble Lords who have contributed to this excellent debate, many of whom spoke passionately about the experiences of whistleblowers. Like the rest of the House, I was appalled and saddened to hear about the bullying and unethical treatment of my noble friend Lord Shinkwin, and I was sorry to hear about the experiences of the noble Baroness, Lady Jones. It is of course ridiculous that the Metropolitan Police was wasting resources on keeping a file on her; I assume it must have arisen from her membership of the jam-makers’ liberation army and other such extremist organisations. Frankly, it is infuriating when you hear reports, as you often do, of the police not having the resources to investigate thefts, burglaries and other matters when they were wasting resources on such things. I hope their practices have been reformed since then.

I was concerned, as I am sure the rest of the House was, to hear about the issues raised regarding University Hospitals Birmingham. I confirm that the Department of Health and Social Care has approached NHS England for a full update in relation to that matter.

The noble Baroness, Lady Kramer, asked why so many scandals still occur. It is important to remember that the whistleblowing framework provides workers with a route to raise such concerns to their employer or prescribed person.

The noble Lord, Lord Browne, asked what evidence there is that action is being taken on whistleblowing disclosure to regulators. The Government are aware of the importance of transparency in how the framework for prescribed persons—they are usually regulators—for whistleblowers works and how they deal with whistleblowing disclosures. That is why, in 2017, we introduced a requirement for most prescribed persons to report on the whistleblowing disclosures that they receive. Those reports show that over 50,000 whistleblowing disclosures were made to prescribed persons in the 2021 financial year and the range of actions that regulators can take in relation to whistleblowers.

My noble friend Lady Altmann and the noble Lord, Lord Bassam, asked for reassurance that the Government take whistleblowing seriously and what our plans are for the review of the whistleblowing framework. There is no doubt that the Government value the important work that many of these whistleblowers do when they speak up. From our point of view, recent action to strengthen the whistleblowing framework includes guidance for prescribed persons, and for whistleblowers and employers.

As I mentioned, we introduced a new requirement in 2017 for most prescribed persons to produce an annual report on whistleblowing disclosures. We also made a recent update to the prescribed persons order—the bodies and individuals that are prescribed for whistleblowing. These changes will come into force later this month. As mentioned, we are also intending to carry out a review of the existing framework and will share further information on this in due course.

I turn now to the contents of the Bill, which would repeal the Public Interest Disclosure Act 1998 and introduce a new legal framework for whistleblowers. The Government’s concerns with this Bill are twofold. First, it is premature to make legislative change ahead of the planned review. Secondly, there are some difficulties with the approach to whistleblowing policy in this Bill. I will briefly set out some of the key concerns about this approach.

Part 2 of the Bill contains provisions on the office of the whistleblower. As well as providing advice and guidance, the office would have significant powers to set and enforce standards. I understand that the intent of this provision is to provide consistency in standards for regulatory investigations that have been triggered by whistleblowing information. Our concern is in relation to how the office would interact with the role of regulators.

Under the existing framework, there are currently over 80 prescribed persons for whistleblowing, many of whom are regulators. In our view, an overarching body would not have the expertise to advise each sector on how disclosure should be investigated and what further action may be required. To impose an overarching standard could also jeopardise the ability of regulators to develop whistleblowing frameworks that are responsive to the specific challenges in their particular sector. Should the new body have these functions, it would require significant staffing resources, with diverse expertise across a range of sectors, to enable it to carry out these functions effectively.

The Bill introduces new criminal offences relating to whistleblowing. This means that it would become a criminal offence to subject a whistleblower to any detriment. It would also be an offence if a person who had received an information notice from the office provided false information or prevented the office investigating relevant materials.

I note the concerns from my noble friend Lady Altmann on employment tribunals, but this would be a big step away from what the current framework aims to achieve, which is openness and transparency in how disclosures are handled. I would not want the Government to take a step away from the employment tribunal system without considering all the evidence that would be gathered through the planned review.

I thank the noble Baroness, Lady Kramer, for bringing the Bill to the House and for enabling this important debate. But, as it stands, the Government are not convinced that the Bill is the right solution to the matters that have been raised.

Internal Market Information System Regulations (Amendment etc.) Regulations 2021

Lord Callanan Excerpts

Tuesday 29th November 2022 Lords Chamber

Moved by

[Lord Callanan]

That the draft Regulations laid before the House on 20 July 2021 be approved.

[The Parliamentary Under-Secretary of State, Department for Business, Energy and Industrial Strategy (Lord Callanan) (Con)]

Noble Lords will understand the importance of protecting citizens and businesses through the effective and efficient operation of the Northern Ireland protocol. This instrument will form part of the UK’s delivery of the protocol. It also serves to tidy up the statute book by removing provisions relating to access to the EU’s internal market information system database that are redundant or inoperable as a result of the UK’s departure from the EU. I hope noble Lords agree that it is important that our statute book provides a clear and up-to-date picture of UK law for the benefit of UK public authorities, businesses and citizens.

The internal market information system, which I will refer to as the IMI, is a secure online tool used to facilitate the EU single market. It was created to address problems of ineffective, unsecure and inefficient communication between EU member states and between EU member states and the European Commission. The IMI is hosted and maintained by the European Commission.

At the end of the implementation period, the EU blocked the UK’s access to the European Union’s networks, information systems and databases. Under the Northern Ireland protocol, however, the EU can grant the UK access to the systems it considers necessary to enable the UK to comply with its obligations under the protocol.

The European Commission, in its decision of 16 October 2020, granted the UK limited access to the IMI to allow the UK to fulfil certain obligations under EU legislation which continue to apply in respect of Northern Ireland under the Northern Ireland protocol and which I will set out in more detail shortly. The UK’s access to the IMI has otherwise been removed.

EU regulation 1024/2012 on administrative co-operation through the IMI sets out the legal framework for the use of the IMI. This regulation remains in force in the UK as retained EU law under the European Union (Withdrawal) Act 2018 and applies in areas where access to the IMI is retained.

This instrument does not make any policy changes, impose any new obligations or create any new powers. It removes redundant provisions that are inoperable, where UK access has already been removed by the European Commission on the grounds that it is no longer required. In particular, it removes references concerning legislative areas in respect of which the UK does not have access to the IMI, including the services directive, the recognition of professional qualifications, patients’ rights relating to cross-border healthcare, posted workers, public documents and non-road mobile machinery.

It also clarifies that the regulation applies in respect of Northern Ireland only in order to facilitate communications and the exchange of information for three general purposes, as I will explain. The first is to facilitate mutual recognition of goods lawfully marketed in another member state. EU regulation 2019/515 sets out a framework for ensuring that goods lawfully marketed in one EEA state can be sold in any other EEA state, as long as they are safe and respect the public interest.

The regulation provides that economic operators who consider that their rights under this regulation have been breached by a public authority of another EEA state can use the single market problem-solving network, SOLVIT, to try to find solutions without the need to resort to action in court. SOLVIT is hosted on the IMI. If a decision was made by a UK public authority to deny entry to the Northern Ireland marketplace goods sold in an EEA state, and the EEA economic operator considered this was incompatible with this regulation, he could lodge a case through SOLVIT. The IMI SOLVIT co-ordinator for the UK, based in my department, would then review the case and engage with the responsible authority in the UK to agree a response to the case to be submitted through the IMI.

--- Later in debate ---

[Lord Stevenson of Balmacara (Lab)]

My Lords, I am sorry that the very interesting and, to me, quite new explanation for the IMI, and its rather interesting resonances for cultural goods and other material that needs to be notified from country to country, has not attracted a wide number of speakers. However, I will do my very best to enliven the House for a few seconds while we get to the point at which we make a decision about these important regulations.

My first question is very simple, and I was surprised that the Minister did not mention this in his introduction. Why the delay? This instrument was originally laid on 20 July 2021. It is still referred to as a 2021 regulation, although it seems to me that we are in 2022, almost 2023. There must be an explanation. It might be eluding the Minister at the moment, but I am sure that inspiration will arrive very shortly from the Box. We will wait for that to occur. It may or may not be important, but it links to what I want to say at the end. I therefore make the point now and look forward to the response.

It is very unusual for this House to have the leisure of so much time to consider regulations in any detail. Those of us who have struggled under many years of Conservative government legislation will know that we are often under pressure to read and respond to material at short notice. The idea that one has nearly 24 months to respond is one I could get used to very quickly.

Secondly, why is this being done at all? The main purpose here is to eliminate from the UK statute book things that are no longer relevant or which resonate with material relating to those who work or operate in parts of the United Kingdom other than Northern Ireland, so that the statute book is not cluttered up with that. However, as I understand it, but perhaps I am out of date, there is to be an EU Bill shortly which will do exactly the same thing. Perhaps I am reading something incorrect into these regulations, and if so, perhaps the Minister will correct me when he responds. However, this seems to be ahead of the plans of the former Secretary of State and his department. Of course, given that change, perhaps that Bill is no longer happening, but as I understand it the intention was to go through all the legislation retained after we left the EU to make sure that the statute book was uncluttered by it, yet here we have a statutory instrument doing that very job. Why is that?

Thirdly—I mention this because it raises issues relating to some of the affected material—we have not had an impact assessment and no consultation has taken place, as I understand it, on this statutory instrument. That is unusual, but not in relation to material carried forward from the exit from the EU. However, it would be helpful to those of us who have to consider these matters if we knew who precisely was affected. When he responds, can the Minister name any company or organisation that would be more profitable or even affected by the passing of this legislation? I look forward to his response.

[Lord Callanan (Con)]

My Lords, I join the noble Lord in expressing my regret that this major piece of legislation has not attracted more speakers. Nevertheless, it is quality that counts, not quantity, and I thank the noble Lord for his intervention. As I previously set out, this instrument makes a series of technical amendments to reflect the current position regarding the UK’s access to the IMI. By updating the statute book, this instrument provides clarity for public authorities, businesses and citizens about how and when data previously shared between UK, EU member states and the European Commission is now treated following the UK’s departure from the EU. As I said in my opening speech, it introduces no new obligations, costs or powers and will not change the service provided by public authorities to UK businesses and citizens under the Northern Ireland protocol.

In response to the noble Lord’s question about what businesses would be affected, the answer is none. This instrument removes references to legislation which previously facilitated IMI access. Access was necessary to enable the UK to comply with its obligations under single market legislation while we were a member state. Now that we have left the EU, this instrument updates the statute book to reflect the areas where access has already been terminated by the European Commission on the grounds that UK access is no longer required. In other words, access is no longer necessary to support compliance under the Northern Ireland protocol. Therefore, this instrument removes references containing legislative areas in respect of which the UK does not have access to the IMI, including the services directive, recognition of professional qualifications, patients’ rights relating to cross-border healthcare, posted workers, public documents and non-road mobile machinery.

Public authorities will nevertheless continue to have access to the IMI modules relating to disputes concerning mutual recognition of goods, the return of cultural goods and firearms transfers, as I outlined earlier. This will support continued communication, administrative co-operation and data-sharing between regulators in those areas. As required by the specific legislation, it continues to apply in Northern Ireland. The instrument facilitates such co-operation where required without the need to establish new secure channels of information and communication with individual EU member states and the European Commission.

In response to the noble Lord’s question about why this instrument is so late, the answer is that the UK was given a right of access to the IMI under the withdrawal agreement for a period of nine months in order to finalise any outstanding applications for professional qualification recognition under the European professional card route from general system nurses, pharmacists and physiotherapists. The UK agreed to the EU’s decision to extend the UK’s right of access to the IMI beyond the deadline, as applications were still outstanding beyond that period. The making of this instrument therefore had to be delayed so as not to remove the UK’s ability lawfully to access the IMI for this purpose. The need for temporary access has now been resolved, and we are in a position to progress the instrument. I hope that resolves the noble Lord’s query.

As I have set out, this instrument ensures that UK public authorities can continue to access the IMI where necessary to allow them securely, effectively and efficiently to deliver their obligations under the protocol, while ensuring that the UK statute book accurately reflects the changes in access to the IMI following the UK’s departure from the EU.

I hope I have resolved the noble Lord’s query, and I commend these regulations to the House.

Motion agreed.

COP 27: Commitments

Lord Callanan Excerpts

Thursday 24th November 2022 Lords Chamber

[The Parliamentary Under-Secretary of State, Department for Business, Energy and Industrial Strategy (Lord Callanan) (Con)]

I join other Members in paying tribute to the noble and right reverend Lord, Lord Harries, for bringing forward this debate on the commitments made at COP 27. It has been excellent, and I will endeavour to address as many of the points made as possible.

Before that, I join the noble Lord, Lord Bassam, and others in paying tribute to the noble Lord, Lord Leong, on his superb maiden speech. In welcoming him to this place, we can reflect on his excellent business career at home and internationally. We recognise his success in establishing Cavendish Publishing, which went on to become one of the country’s biggest academic law publishers. We also recognise his work in social enterprise and establishing networks such as the Mulan Foundation Network and Future First, all of which work to promote social inclusion and raise awareness of the various issues that he described. I am sure that I speak on behalf of the whole House in saying that we very much look forward to hearing all his contributions in the future. My only regret is that his excellent business entrepreneurial career obviously has not made him a Conservative, which it surely ought to have.

I was also delighted to hear the contribution of the noble Lord, Lord Prescott. Again, I am sure that I speak on behalf of the whole House in saying how delighted we are to see him back in his place. We can all pay tribute to the enormous contribution that he has made to this important policy area throughout his long and distinguished career.

I also place on record my thanks to the COP unit, and all the other departments in government involved in representing the UK on the global stage, for all their work in representing us at COP and demonstrating the UK’s commitment to keeping 1.5 degrees alive.

Given the broad range of questions raised by noble Lords, I will address them in two halves. I will first address questions regarding COP 27 and then follow that up with some comments on the domestic points raised.

Let me start by disagreeing with the noble Lord, Lord Desai, and, unusually, agreeing with the noble Baroness, Lady Sheehan, in saying that COPs matter. They have the convening power of world leaders to make agreements, they bring forward voices from across the world, and they help to put climate at the top of the news agenda. The noble Baroness, Lady Worthington, suggested that there were perhaps unrealistic expectations for a single event to cover all sectors, and I think that she is right; perhaps placing too much hope on a single instrument is indeed not sustainable. However, as she also reminded us, work is also going on outside this space; to take one example, the UK has signed up to the global methane pledge at COP 26, we published the UK’s methane memorandum, and the COP 27 cover decision reiterates an invitation to parties to consider further actions to reduce by 2030 non-carbon dioxide greenhouse gas emissions, including methane.

The UK continued to show global leadership through its COP 26 presidency in Glasgow. As the House will be aware, all 197 parties agreed to the Glasgow climate pact to urgently keep 1.5 degrees centigrade alive, and to finalise the outstanding elements of the Paris rulebook. When we began our COP presidency, just one-third of the global economy was covered by net-zero commitments. Today it is 90%, with 34 new or updated NDCs submitted since COP 26, including the UK and countries such as Australia, India, the UAE and Indonesia.

This represents progress towards implementing the Glasgow climate pact and helps to keep 1.5 degrees centigrade within reach, and these have all been core objectives of the delivery of our presidency year. At COP 27, as has been noted, we had to fight to keep 1.5 degrees centigrade alive, and obviously we were disappointed not to make progress on fossil fuels. The deal in Egypt preserves the historic commitment that countries agreed to last year in the Glasgow climate pact, but we did not make progress. However, as the noble and right reverend Lord, Lord Harries, and the noble Baroness, Lady Hayman, both reminded us, 1.5 degrees centigrade remains on life support. It is clear that we need to see much more progress ahead of COP 28 in the UAE, and this Government will certainly be working towards that.

Now, as raised by many Members of the House, including again by the noble and right reverend Lord, Lord Harries, and the noble Baroness, Lady Sheehan, action on loss and damage matters, and it is not something that developing countries can solve themselves. Crucially, COP 27 saw a breakthrough on funding arrangements for loss and damage, with an agreement that a fund will be created to support the most vulnerable. This deal responds to the concerted calls from the poorest and most vulnerable countries.

In response to the noble Baronesses, Lady Bennett and Lady Walmsley, and the noble Lord, Lord Bassam, I can assure the House that the Government will continue to work with other countries on the details and design of the fund and wider funding arrangements. These will be worked up next year through a transitional committee. A range of sources and contributors are to be considered, with parties affirming that funding for loss and damage comes from humanitarian development and climate communities. The UK would assess the value of providing a contribution once the modalities of the fund have been agreed. I thank the noble Lord, Lord Desai, for his question about the level of funding for the new loss and damage fund but reiterate yet again that no level of the fund has yet been agreed.

We all know that we must continue to support climate-vulnerable countries—a point raised by the noble Lord, Lord St John—by making sure that these commitments on adaptation and loss and damage are honoured, driving real, practical action on the ground. A key part of making progress has been to ensure that the views of those at the front of tackling climate change are part of these crucial conversations. This was something that the noble Lord, Lord Leong, raised—the importance of youth in climate. This was also a view held by the COP presidency, which supported indigenous youth attending COP 27, and the Climate Youth Negotiators Programme helped young negotiators from the global south across those climate change negotiations.

The noble Baroness, Lady Bennett, also raised the issue of the exclusion of some voices within COP and fears about the limits on civil society. We expect that the discussion of lobbyists will have new momentum behind it. The UK’s priority, as always, is on ensuring that the voices of important non-party stakeholders such as indigenous people, women and young people are heard in addressing and responding to the important issue of climate change. At COP 26, the UK was pleased to fully fund an indigenous people’s pavilion, which proved to be an important space for indigenous-led events. The Glasgow climate pact also saw strengthened language on the role of indigenous peoples. During our presidency year, we worked closely with Egypt to stress the important role played by indigenous peoples and young people in civil society in calling for higher levels of ambition.

The noble Baroness, Lady Bennett, and the noble Lord, Lord Bassam, raised the important human rights case of Alaa Abd el-Fattah. The UK Government remain deeply concerned about this case, and we continue to work hard to secure his release. We continue to raise his case at the highest levels of the Egyptian Government. The Prime Minister raised the case with Egyptian President Sisi, and COP 26 president Alok Sharma followed up with Egyptian Foreign Minister Shoukry. We continue to use all channels to raise the gentleman’s case with the Egyptian authorities.

COP 27 was hailed as an implementation COP. As the outgoing presidency, we were clear that targets needed to be underpinned by real progress on the ground. At COP 27, the UK presidency demonstrated that the UK is once again leading global efforts and decarbonising faster than any other G7 country. As the noble and right reverend Lord, Lord Harries, and the noble Lord, Lord Bassam, raised, the UK led, with other world leaders, the launch of the Forests and Climate Leaders’ Partnership to accelerate momentum to halt and reverse forest loss and land degradation by 2030.

Although I accept the point raised by my noble friend Lord Howell and the noble Lord, Lord Bassam, about coal and fossil fuel phase-out not being included in the cover decision, I remind the House that we have made progress. We have accelerated the clean energy transition, maximising the implementation of and opportunities from commitments made at COP 26. The pipeline of new coal power projects has continued to collapse, with 76% of planned projects cancelled since 2015. Countries have delivered robust policies on financing fossil fuels. We have announced over £65 million of investment to help speed up the development of new green technologies; that funding is much needed, and it responds to the point made by my noble friend Lord Howell.

The breakthrough agenda launched at COP 26 will have tangible actions taken forward by countries accounting for over 50% of global GDP. One of these will be creating standards for green steel, which I am sure the noble Baroness, Lady Worthington, will be delighted to hear. The noble Lord, Lord Leong, and the noble Baroness, Lady Walmsley, both discussed the important issue of green jobs. Again, here the breakthrough agenda will make clean technology affordable, available and accessible to all, and in so doing create millions of those important green jobs worldwide. The noble Lord, Lord St John, raised the need to address emissions from buildings—something close to my own heart. We are delighted that France and the Kingdom of Morocco are planning on launching a buildings breakthrough under the breakthrough agenda to help address this.

Of course, none of these actions will be possible without mobilising climate finance. We continue to work with countries, international financial institutions and private financial institutions to meet the commitments they have made and help secure greater access to finance. The Prime Minister announced at the world leaders summit that the United Kingdom is delivering on our commitment of £11.6 billion of finance.

The noble Baroness, Lady Bennett, also raised the issue of the slow progress on energy transition projects. We were delighted to see strong progress with South Africa, which presented its just energy transition partnership investment plan at COP 27. The new Indonesian transition plan was also launched at the G20 in Bali, and that will mobilise $20 billion over the next three to five years. The UK once again continues to lead, and there are EU efforts towards a similar agreement with Vietnam.

I turn now to some of the points raised about our domestic policy, starting with those of the noble and right reverend Lord, Lord Harries, the noble Lord, Lord Birt, and the noble Baroness, Lady Walmsley. I can say that the Government remain committed to nuclear energy as a key part of our energy security strategy, providing the baseload energy which many noble Lords talked about and which is required to keep the lights on, even when the sun is not shining and the wind is not blowing. In last week’s Autumn Statement, the Government announced that we will proceed with the new plans at Sizewell C. With respect to the enormous potential of solar energy, including from countries such as Morocco, I can confirm that we have had early-stage discussions with the Xlinks interconnection project.

We continue to be grateful to the Climate Change Committee for its analyses. It has agreed that our net-zero strategy and the British energy security strategy represent comprehensive and viable plans for reaching our world-leading 2050 net-zero target. To answer the questions on climate adaptation raised by the noble and right reverend Lord, Lord Harries, and the noble Lord, Lord St John, the Government accept the Climate Change Committee’s view that more action is needed to improve the UK’s resilience to climate change, and Defra is currently working across government to develop a third national adaptation programme which we expect to be published in summer next year.

To address my noble friend Lord Howell’s question on the importance of technology and carbon capture to reduce emissions—which was also echoed by the noble Lord, Lord St John—we are committed to this domestically, and we announced the phase 2 shortlist for CCUS in August. We will use our strengths as an innovative nation and the net-zero strategy committed at least £1.5 billion-worth of funding to support net-zero innovation between 2022 and 2025. Internationally, I note the announcement of £65 million-worth of support to the Clean Energy Innovation Facility to accelerate a deployment of clean technology globally. The Government will of course continue to look carefully at the full range of technologies available to meet our net-zero targets, and we will carefully consider the points about tidal power raised by the noble Baroness, Lady Walmsley.

On the issues raised by the noble Baronesses, Lady Hayman and Lady Sheehan, and the noble Lord, Lord Birt—I expected nothing else from the noble Baroness, Lady Hayman—the Government recognise the importance of onshore wind to our energy mix. As one of the cheapest sources of electricity generation, we will undoubtedly need more of it. However, the Government understand the strength of feeling that some people have about the impact of wind turbines in England—a point made by the noble Lord, Lord Birt—so we will consider all options for increasing deployments in Wales that local communities will support.

In response to the point raised by the noble Baroness, Lady Sheehan, on the issue of the proposed Cumbria coal mine, I am sure that she will understand that I cannot comment since a government decision is due in a couple of weeks. However, I stress that our net-zero strategy makes it clear that we are phasing coal out from our electricity mix by 2024.

On fossil-fuel subsidies, the UK supports international efforts to reform inefficient fossil fuel subsidies and to promote greater transparency. Moreover, in response to points made on fossil fuels by my noble friend Lord Howell and others, no other major oil and gas-producing nation has gone as far as the UK has in addressing the role of oil and gas in their economy. Our signal on the withdrawal of international fossil fuels, our transformation of the North Sea transition deal and our new checkpoint for licensing all provide a global example of the shift away from hydrocarbons. The noble Baroness, Lady Sheehan, will know that the point I continue to make is that it makes much more sense to gain gas as a transition fuel, which we will continue to acquire from our own resources, rather than importing carbon-heavy liquid LNG on tankers from across the world.

To answer the point made by the noble Baroness, Lady Bennett, our 2050 net-zero target was considered in line with advice from the Climate Change Committee as the earliest feasible date for achieving net-zero emissions.

On the point made by the noble Baroness, Lady Hayman, about the Procurement Bill, your Lordships will be aware that the national procurement policy statement covers climate change and will be put on a statutory footing in that legislation.

In answer to the noble Baroness, Lady Worthington, we are introducing three environmental land management schemes that will help reward farmers for delivering public goods.

The noble Lord, Lord Birt, talked about EV infrastructure. The Government have committed £2.5 billion of funding towards electrical vehicle transmission since 2020, over £1.6 billion of which will be used to support charging infrastructure. I quite understand the noble Lord’s frustration that it is not always available in the places where we would want it immediately, but we are making progress.

On home insulation, reduction in energy demand is obviously a national effort. That is why the Government have announced a new long-term ambition, which noble Lords will have seen from the Chancellor’s Statement, to reduce the UK’s final energy consumption from buildings and industry by 15% by 2030 against 2021 levels. We have also announced the establishment of Energy Efficiency Taskforce.

To address the question from the noble and learned Lord, Lord Thomas, on the judicial review ruling: we of course accept the court’s judgment on the levels of detail provided and will respond in due course.

In answer to the remarks of the noble Lord, Lord Bassam, on the net-zero strategy, it remains government policy and has indeed not been quashed.

As I have set out today, the Glasgow climate pact remains the blueprint for accelerating climate action in the critical decade to keep 1.5 degrees in reach. The noble Baroness, Lady Hayman, raised an excellent point about the balance of optimism and hope. I agree with the noble Baroness, Lady Sheehan, again—twice in one speech—that the UK has been and will continue to be a leader in tackling climate change, with the Prime Minister’s attendance at COP demonstrating this. The UK’s ground-breaking presidency year has been a pivotal moment when we redouble our efforts, resist backsliding and ultimately go further and faster. We cannot collectively retreat from that and achieving our net zero target must be a shared international endeavour requiring action from all of us and everyone in society.

[Baroness Bennett of Manor Castle (GP)]

I welcome the Minister’s celebration of the contribution of indigenous people and civil society to successive COPs, but I asked whether the UK would work to exclude oil and gas lobbyists from future COPs?

[Baroness Walmsley (LD)]

May I request that the Minister writes to me about tidal stream energy?

[Lord Callanan (Con)]

I am happy to write to the noble Baroness, Lady Walmsley, on the important objective of tidal stream energy. With regard to fossil fuel lobbyists, it was not a cheery sight, although there are different issues and many fossil fuel companies are also engaged in renewal energy. Many of the biggest players in our own country are fossil fuel companies as they seek to transition through. We will certainly look closely at the issue of lobbyists, but who does and does not attend is not necessarily always our decision.

Battery Strategy (Science and Technology Committee Report)

Lord Callanan Excerpts

Wednesday 23rd November 2022 Grand Committee

[The Parliamentary Under-Secretary of State, Department for Business, Energy and Industrial Strategy (Lord Callanan) (Con)]

My Lords, I am grateful to the noble Lord, Lord Patel, for securing what I agree with other noble Lords has been a fascinating debate and for the excellent way in which he introduced the subject and the brilliant leadership that he provides to his committee, which the number of responses to reports from that committee suggest. I know that he is well respected across the House for the work that he does, so I am grateful to him for that. I also pay tribute to the other members of the committee and to all those who provided the written and verbal contributions that have enabled the preparation of such a thorough and well-thought-out report.

Given the clear priority of the topic, I hope noble Lords will be pleased, as the noble Baroness, Lady Walmsley, reminded us, that since the report was issued, the Government have made significant progress on many areas recommended by the committee. We have continued to be clear about our ambitions and expectations —for example, in setting out not only that we will phase out all new diesel HGVs from our roads by 2040 but the intervening milestones that will see us on a trajectory to make that a reality, building on the formal consultation and close engagement that we already have on this topic with industry.

The Government recognise the challenges that such ambitions bring. To address a question posed by the noble Lord, Lord Mitchell, and the noble Baroness, Lady Randerson, we do not apologise for setting this bold ambition; rather, we need to continue to focus our efforts, and the considerable efforts of British business, industry and society, on solutions to many of the challenges that we face along the way.

Naturally, many noble Lords focused their contributions today on these challenges. I shall do my best to address as many of these comments and questions as possible. However, it is worth framing the issue briefly on what the Government are already doing. We have published our net-zero, hydrogen, innovation and critical minerals strategies. Just last month, we announced a further £211 million of funding to support battery R&D through yet further investment in the world-leading Faraday battery challenge programme, which was mentioned by many noble Lords in this debate, bringing the overall budget of the challenge to £541 million. I am sure that the noble Baroness, Lady Randerson, will want to welcome that as being on a par with her favourite European Commission investment.

Our flagship support programmes have continued to drive real-world successes. Just last month, the Secretary of State attended Green Lithium, supported through our pioneering automotive transformation fund, as it announced Teesport as the site of the UK’s first large-scale merchant lithium refinery, providing battery-grade materials for use in the electric vehicle, renewable energy and consumer technology supply chains. I am sure that my noble friend Lord Lilley will welcome that development.

I move on to some of the other points raised during the debate. A number of noble Lords, including the noble Lord, Lord Patel, in his introduction, the noble Viscount, Lord Hanworth, the noble Baroness, Lady Sheehan, and the noble Lord, Lord Mitchell, asked about companies in this space, including Britishvolt, and about the Government’s plans to attract investment in gigafactories for the production of batteries in the UK.

Noble Lords will understand that I cannot comment on the commercial discussions that the Government may or may not have with private companies or their prospects. What I can say in public is limited in that regard, but the Government have ongoing discussions with a number of companies in this field. It is not our approach to comment on speculation or the commercial affairs of private companies, but we will continue to progress an ambitious pipeline of potential investments which will help to grow our electric vehicle supply chain. This is a priority for the Government.

As we do that, a key plank of our approach is to continue to work with the many investors with which we are in contact through the automotive transformation fund. In 2021, the net-zero strategy announced £350 million of funding in the automotive transformation fund, in addition to the £500 million announced in 2020 as part of the 10-point plan. The ATF supported the £1 billion electric vehicle hub in Sunderland—in my own area, the north-east—in partnership with Envision AESC, which the noble Lord, Lord Patel, and others mentioned. It safeguards 6,200 jobs at Nissan, including more than 900 new jobs, and 750 new jobs at the new Envision AESC gigafactory. The fund has already enabled the announcement of Pensana’s £145 million investment in east Yorkshire to process the critical minerals used in magnets and a £60 million investment by Johnson Matthey in Hertfordshire to develop hydrogen technologies. Through it, as I mentioned earlier, we also backed Green Lithium to build a refinery in the north-east. We have also received a number of other expressions of interest in the scheme and will continue to engage closely with investors. As I said, I cannot go into details in public at the moment, but I and other ministerial colleagues will update noble Lords on this important topic as soon as possible. We will continue to progress these investments.

The noble Lord, Lord Patel, asked whether the UK can still meet its commitment to phase out petrol and diesel cars by 2030. I am delighted to repeat my confirmation to him that we will end the sale of petrol and diesel cars and vans by 2030 as planned. To support this, the Government have committed to introduce a zero-emission vehicle mandate to require a minimum percentage of manufacturers’ new car and van sales to be zero emission at the exhaust from 2024. We have been working with the whole UK automotive sector to ensure that it can do that and meet the needs of UK business.

I thank the noble Lord, Lord Patel, for welcoming the publication of the critical minerals strategy. He also raised the important question of how we will achieve its commitments. As my ministerial colleague in the other place, Nus Ghani, confirmed earlier this month, I am pleased to reassure the noble Lord and others that we will publish a refresh of that strategy by the end of the year. This will include a delivery plan for the commitments set out in that strategy.

The noble Lord also asked whether the UK intends to produce a strategy for the next generation of electric vehicle battery manufacturers. Through the strategies we have set out and the concrete mechanisms already at our disposal, such as the ATF, which many noble Lords mentioned, I hope the Committee will recognise that our strategy in this regard is very much one of activity. The strategy is important, but so is activity on the back of it. I also recognise the importance, brought home in this debate, of joined-up work across government. I reassure the Committee that we are looking very seriously at the best way of continuing to work across departments—BEIS, Defra, the Department for Transport, et cetera—and between government, industry and consumers, all of whom will have to be on board to deliver the important changes we will need.

The noble Lord, Lord Patel, and other Members asked about our commitment to hydrogen. As he noted, we have doubled our ambition to up to 10 gigawatts of low-carbon hydrogen production capacity by 2030, subject as always to affordability and value for money—I think the Treasury inserts that phrase into every ministerial contribution. At least half of this will come from electrolytic green hydrogen, drawing on the scale-up of UK offshore wind, other renewables and new nuclear. I very much agree with the noble Baroness, Lady Walmsley, that it is criminal that we pay constraint payments to wind farms not to produce electricity because the grid cannot handle it.

We aim to have up to 1 gigawatt of electrolytic hydrogen in construction or operational by 2025, with up to 2 gigawatts of production capacity overall, including CCUS-enabled hydrogen, in operation or under construction by 2025. The UK Hydrogen Strategy, published last August, outlines a comprehensive road map for the development of the wider hydrogen economy over the 2020s to deliver what is a very ambitious commitment for 2030. The British Energy Security Strategy in April 2022 built on that, with further commitments on electrolytic allocation, hydrogen transport and storage, and an attached certification scheme, which is also important. We also set out detail on our hydrogen production strategy in the July 2022 update to the market.

The noble Lord, Lord Patel, and other noble Lords asked the important question of when the Government will make a choice on the mix of different technologies; I think this point was also raised by the noble Baroness, Lady Sheehan. Let me use transport as an example to respond to that question. Here, the Government still remain technology neutral. As set out in the UK Hydrogen Strategy and transport decarbonisation plan, we see hydrogen as likely to be important where energy density requirements come into play and where infra- structure constraints or refuelling times make it the most viable option for heavy goods vehicles, locomotives and so on, where battery technology is not necessarily appropriate.

As outlined in that strategy, we expect that the role of hydrogen in transport will continue to evolve over the course of the 2020s and beyond. To date, road transport has been an early market for hydrogen in the UK. Going forward, we expect hydrogen vehicles, particularly depot-based transport, including buses, to constitute the bulk of 2020s hydrogen demand from the mobility sector. Fuel cell hydrogen buses have a range similar to their diesel counterparts.

The noble Lord, Lord Patel, and others also raised the important issue of battery safety and rightly asked me about plans to address this. The safety of electric vehicles and of their charging is of course of paramount importance to the Government and we keep this under regular review. Multiple safety systems are designed into EVs to protect passengers, emergency services personnel and other users from harm. However, we have to recognise that the risks are different and need to be understood and controlled. To consider EV fires, the Office for Zero Emission Vehicles has formed a steering group of experts from across government, industry and academia. The steering group identified research questions to further develop BEV fire understanding. The National Fire Chiefs Council has also developed national operational guidance for fire and rescue services across the UK. I finish my remarks on safety on a positive note: current evidence does not suggest that electric vehicle fires are any more likely to occur than in petrol or diesel vehicles.

I move on to the excellent contribution from my noble friend Lord Lilley, who raised a number of important issues about having access to sufficient resources and reserves of minerals to produce batteries. My noble friend is absolutely right to raise these issues; it is a challenge that we recognise. We are very familiar with the International Energy Agency analysis that he cited and indeed, as we set out in the UK’s first critical minerals strategy earlier this year, the UK is working with the IEA to explore ways to improve the security and supply of energy-specific critical minerals.

My noble friend raised a question on lithium and nickel reserves and the need for battery solutions to be found that may be mineral-intensive. I can tell him that the UKRI is already funding a considerable amount of research in next-generation batteries. The Faraday Institution has a £35 million portfolio in battery technologies beyond lithium-ion—as well as developing the next generation of lithium-ion batteries—namely in sodium-ion, solid state and lithium sulphur, with applications in stationary storage, electric vehicles and aerospace as well as other high-value niche markets.

The noble Viscount, Lord Hanworth, correctly noted the importance of supply chains being in close proximity to battery manufacturers. The Government are committed to supporting the automotive sector through the transition to zero-emission vehicles and the development of the associated supply chains, including through the ATF to support the automotive sector to meet the very important rules of origin provisions that a number of noble Lords quoted. This will of course recognise the significance of the UK and the EU markets for those manufacturing vehicles in the UK.

The noble Baroness, Lady Sheehan, mentioned that the Government need to do more to secure Britain’s place at the forefront of the battery revolution, and I agree with her, particularly on the importance of this issue. The Government are committed to growing the electric vehicle supply chain and, as I said earlier, we continue to work with investors through the automotive transformation fund to progress their plans to build a globally competitive electric vehicle supply chain in the UK. Indeed, the recent investment of over £200 million in the Faraday battery challenge, which I mentioned earlier, is further evidence of this commitment.

The noble Baroness also raised a question on the resilience of supply and the importance of recognising demand reduction—she and I agree on that. We also agree that the circular economy, design and innovation are all topics of significant attention in our critical minerals strategy, which will be part of the delivery plan that we will publish later this year. She also raised an important point about the market for recycled materials for battery manufacture. I am pleased to report that my colleagues in Defra are working with other government departments and the devolved Administrations and are currently reviewing the existing UK batteries legislation; they are working at pace to publish a consultation in the second half of next year. The intention is to create a regulatory space that supports the appropriate treatment of EV batteries, protects our domestic supply of critical raw materials and contributes to our net-zero ambition.

On the noble Baroness’s question about recommendation 31 in the report on “industrial strategy”, in October last year we published the net zero strategy, setting out our policies and proposals for decarbonising all sectors of the UK economy to help to meet the net-zero target. This is supplemented by a range of strategies relevant to today’s important debate: the hydrogen strategy, the innovation strategy and the critical minerals strategy. In addition, and of particular relevance to some of the specific points raised today, in July 2021 we published Decarbonising Transport: A Better, Greener Britain, containing 78 commitments setting transport on an ambitious path to net zero by 2050. The Government have an activist and outcome-focused approach to the delivery of the industrial outcomes through which I think those who have spoken today would wish to see the UK succeed, prosper and grow.

The noble Lord, Lord Teverson, raised the subject—which he has raised with me many times—of the energy security Bill. I am tempted, but, yet again, I cannot give him a precise commitment on timing. However, I can certainly say that I have heard what he and other noble Lords have had to say, and I am keen to move on this issue as quickly as possible, because I know that it is an important subject to individuals and many businesses across the UK. I hope to have a reply for him in the very near future, if that is appropriate.

In answer to my noble friend Lord Naseby’s points about the roles of other countries in this area, I note that two of the three pillars of our critical minerals strategy are on collaboration and enhancing international markets. Our engagement in the Minerals Security Partnership is just one example of where we are working right alongside allies on this important topic.

The noble Lord, Lord Naseby, the noble Baronesses, Lady Randerson and Lady Walmsley, and other Members raised the important issue of skills and supply chains. That is probably one of the key areas of focus for me in government at the moment. The Government are committed to safeguarding and growing the 155,000 jobs in the automotive sector across the UK. Ensuring that the sector has sufficient skilled workers to enable its transition towards net zero is one of our key priorities, and we are engaging closely with industry to consider further action that may be needed, including through the Automotive Council skills working group.

The noble Lord, Lord Liddle, accused the Government of failing to work effectively with research centres and businesses to develop the native industries of the future. The noble Lord is wrong, and my colleague Minister Freeman set out in the other place last week exactly what we are doing in this space. In response to his questions regarding resources, the circular economy is a challenge but one that we are embracing. Funding via the Faraday battery challenge through the Faraday Institution’s ReLiB stream has enabled research into the safe and efficient segregation and repurposing of cell components. The Government are also investing in two new interdisciplinary circular economy centres in this area as part of a wider £30 million investment, as mentioned by the noble Baroness, Lady Walmsley.

I apologise; I see that I am running out of time. I had a few other responses to noble Lords but I will put those in writing. I thank the Science and Technology Committee once again for its significant efforts in raising awareness and progressing our understanding on this important topic. Your Lordships have my commitment that the Government will continue to pay close attention to the many excellent points that have been raised in this debate, and I thank noble Lords for their attention.

Energy Bills Support Scheme and Energy Price Guarantee Pass-through Requirement (England and Wales and Scotland) Regulations 2022

Lord Callanan Excerpts

Tuesday 22nd November 2022 Grand Committee

Moved by

[Lord Callanan]

That the Grand Committee do consider the Energy Bills Support Scheme and Energy Price Guarantee Pass-through Requirement (England and Wales and Scotland) Regulations 2022.

Relevant document: 18th Report from the Secondary Legislation Scrutiny Committee. Special attention drawn to the instrument.

[The Parliamentary Under-Secretary of State, Department for Business, Energy and Industrial Strategy (Lord Callanan) (Con)]

My Lords, in moving that the Grand Committee do consider the Energy Bill Relief Scheme Pass-through Requirement (Heat Suppliers) (England and Wales and Scotland) Regulations 2022, I shall speak also to the Energy Bills Support Scheme and Energy Price Guarantee Pass-through Requirement (England and Wales and Scotland) Regulations 2022, and the Energy Bill Relief Scheme Pass-through Requirement (England and Wales and Scotland) Regulations 2022, all of which were laid before the House on 31 October; and the Energy Bill Relief Scheme and Energy Price Guarantee Pass-through Requirement and Miscellaneous Amendments Regulations 2022; and the Energy Bill Relief Scheme Pass-through Requirement (Heat Suppliers) (Northern Ireland) Regulations 2022, laid before the House on 4 November.

Last Wednesday, I set out the details of the Government’s energy support schemes: the energy price guarantee, the energy bill relief scheme, or the EBRS, and the energy bills support scheme—the EBSS. I am in front of your Lordships today to explain the pass-through requirements in respect of these schemes.

The Government have responded rapidly to the unprecedented rise in energy prices by introducing emergency legislation on energy support. This support will protect homes and non-domestic consumers across the United Kingdom, so that families and consumers will be supported in their cost of living this winter. These pass-through requirements place a legal requirement on intermediaries to pass any benefits received through the various energy schemes to the end-user, thus ensuring that the support is received by the intended beneficiary.

These regulations have been created under the Energy Prices Act, which noble Lords will know received Royal Assent on 25 October 2022. They are essential secondary legislation to implement the energy schemes.

I am, of course, aware that the JCSI is still considering two of the instruments, and we will not move to approve them until that work has concluded. If that committee has any concerns, the Government will respond to them when we ask for approval, including time for debate if that is useful to the House.

I thank the Secondary Legislation Scrutiny Committee for its views on the pass-through requirements regulations. The committee raises three concerns: the definition of “just and reasonable”, inequality of arms, and vulnerable groups.

The committee’s first concern is that the meaning of “just and reasonable” is vague and open to interpretation. The pass-through regulations do not prescribe the exact method of the amount passed on by an intermediary. These requirements take into account the diverse range of contracting structures relating to the supply, resale, provision and charging of energy. We do not want any intermediaries to fall outside of the pass-through requirements by limiting the possible contracting scenarios through these regulations.

The definition of “just and reasonable” is long established in law. It essentially means what is fair and lawful under the circumstances. We believe that this would allow for the many different arrangements between an intermediary and end-user that these regulations are designed to police.

The committee’s second concern is inequality of arms: where a landlord who has multiple properties and receives all the energy schemes, and how they allocate the financial benefits received to their individual tenants. The regulations take this scenario into account. Where an intermediary receives energy support but has multiple end-users, they should determine a just and proportionate method of dividing the benefit among these end-users, and clearly communicate how they have arrived with the amount allocated to those end-users.

The committee’s final concern is the vulnerable groups affected by the pass-through regulations. We are keen to ensure that all end users, including those who are vulnerable, such as older people or people with disabilities, receive the benefits of the schemes where they are entitled to them. We have been delivering and building a communications campaign, which includes engaging with landlords, housing associations and charities, all of which protect those who are most vulnerable. Another statutory instrument will be laid later this month to correct some mistakes in the original heat supplier regulations.

The pass-through regulations ensure that the Government’s energy support reaches families and consumers. Rather than expecting intermediaries to act on their own accord, we are requiring that they pass on the financial benefit to their end users. An intermediary is any individual or organisation that is party to an electricity or gas contract and receives energy price support in relation to that contract, or a pass-through of reductions attributable to that energy price support. The intermediary then passes on the costs of the energy supplied and any reductions attributable to the energy price support to an end user—for example, landlords or property managers of a residential building. This also covers intermediaries supplying a product or service where, contractually, a component of the price relates directly to the use of energy or the supply of heating or hot water: for example, park home managers, heat networks and electric vehicle charging operators. Taken together, the regulations apply to all three energy schemes: the energy price guarantee, the energy bills support scheme and the energy bill relief scheme, including customers who are part of heat networks.

If the intermediary does not pass on the benefit, the end user can pursue recovery of the benefit as a debt through civil proceedings. Should a court rule in the end user’s favour, they will be entitled to the payment due, plus interest. The interest is set at 2% above the Bank of England’s base rate; this will begin to accrue from 60 days after the intermediary first receives the relevant scheme benefit. The enforcement approach is the same across the schemes, with a slight nuance for heat networks under the EBRS. If heat network customers do not receive the pass-through or information from their heat supplier, they will be able to raise a complaint with the energy ombudsman.

We have published guidance on the pass-through regulations to help those affected understand how to comply with these regulations. This government guidance includes advice for landlords on how to meet their pass-through obligations. There are also template letters for tenants, should they wish to raise concerns with their landlords about their energy bills.

These regulations protect those most exposed to high energy costs. The pass-through requirements allow cost savings to reach the people the Government intend to support, such as tenants and other individuals. Importantly, the regulations also provide routes for end users to benefit from the discounts they are entitled to in the scenarios where intermediaries are not meeting their legal obligations. I therefore commend the regulations to the Committee.

[Lord Hodgson of Astley Abbotts (Con)]

My Lords, I am grateful to my noble friend for his explanation and for the way he has addressed some of the concerns of the Secondary Legislation Scrutiny Committee, which I chair. The SLSC, a cross-party committee, is of course not concerned with politics. That is for the House, the Government and, in due course, the electorate to decide.

My remarks now are therefore not about the energy policy but about the administration and process by which it is being delivered. We have quite narrow objectives in our terms of reference. The two that I think apply today are, first, that the instruments are

“politically or legally important and give rise to issues of public policy likely to be of interest to the House”;

and secondly, that they may imperfectly achieve their policy objectives. I particularly want to compare the unfavourable treatment of Statutory Instruments Nos. 1102, 1103 and 1125 with the other two in this group, Statutory Instruments Nos. 1101 and 1124. The first lot are about energy and the second lot are about heat.

As my noble friend the Minister has explained, this is about making sure that a fair share of the proceeds are passed on to tenants by landlords. He has gone through the rationale for “fair”, “reasonable” and so on and so forth, but it is worth while us putting ourselves in the position of an elderly widow. Let us say that she is in a block of 50 flats. Let us say that the landlord has two or three blocks of flats; they may have a couple of hundred tenants. The landlord may say, “Here is your rebate”. She may, for one reason or another, decide that it is not right. She must therefore begin proceedings to recover what she believes her fair and reasonable share is. That is what the committee was concerned about: inequality of arms.

We have to think about a single individual, maybe a vulnerable individual. I accept that I am exaggerating slightly to make a point, by taking one particular angle on the people who might be affected, but I am trying to explain to the Committee that this person is somehow going to have to have the courage, conviction, energy and money to take the landlord on and take them to the county court over what may not be a huge sum of money. Although I am sure my noble friend wishes to find ways of ensuring that tenants are informed and helped and that landlords are required to provide proper shares, records and so on, I am not sure that this is going to work in the real world as happily as the Government, I and the SLSC would wish it to. The inequality of arms—above all, in the power to delay and ask for more particulars; as I said, this should be looked at in a lot of detail—is likely to work in favour of landlords, particularly multiple landlords, against tenants, particularly tenants who are vulnerable, elderly or disadvantaged in one way or another.

When we come to the first three SIs, Nos. 1102, 1103 and 1125, there is no further appeal—that is the end—whereas when we get to Nos. 1101 and 1124, there is an appeal to the Energy Ombudsman and the General Consumer Council for Northern Ireland, in respect of activities in the Province. So, although I quite understand what the Government are doing and wish to do well, they will need to keep a very close eye on what is going on under these regulations to ensure that fairness is not only being sought but being achieved and that, in cases where people are less well equipped to fight their corner, they are properly protected and looked after.

--- Later in debate ---

[Lord Lennie (Lab)]

My Lords, first, I apologise for being slightly late in attending. I hope you will allow me to make the comments that I want to, in following up those from the noble Lords, Lord Hodgson and Lord Teverson.

I thank the Minister for his introduction to the SIs. They are regulations that seek to put right a substantial loophole in the arrangements set out under the energy price assistance scheme. As we have heard, this concerns customers who do not pay their energy directly but where, for instance, it is paid by an intermediary. These categories of consumer are at risk of not receiving the relief that should be guaranteed under the energy price support or for businesses under energy relief schemes. It is right that we should correct this, and quickly, so our support for these instruments is not in doubt.

The design of the SI to deal with all the problems is, however, somewhat at risk. Generally, the SIs require the intermediary to provide a fair and reasonable pass-through of what has been received for bills in the first instance—not necessarily the full amount but a fair and reasonable amount. This has the potential to give rise to complications. What is a fair and reasonable difference between what an intermediary receives and what it passes through? Perhaps the Minister, in his response, could explain what can be taken into account in establishing what is seen to be a fair and reasonable payment.

I understand that there is no sanction on any intermediary if it fails to pass on what it is supposed to pass on. As we heard from the noble Lord, Lord Hodgson, a customer’s redress is through the civil courts, and some draft letters have been provided for that to happen. But in the light of the comments by the noble Lord, Lord Hodgson, about the inequality of arms and so on, does the Minister believe there is any likelihood of a customer taking a landlord to court over a failure to pass through part or all of the payments they should have received? The Secondary Legislation Scrutiny Committee talks about the “inequality of arms”, and there is a massive gap in power between landlords and vulnerable tenants.

In the limited cases of district heating schemes, as we have heard, if the pass-through is not sufficient there is a recourse to the Energy Ombudsman, but this is not available in the majority of cases. Why is the ombudsman not available to all customers who do not receive the pass-through from their landlords?

Finally, given that these SIs seem unlikely to resolve all pass-through problems, will the Government commit to monitoring this and establishing exactly what the facts are on the ground—as the noble Lord, Lord Teverson, said, we are not entirely sure how many people will be in this situation? Will they, if necessary, review these SIs quickly thereafter to make them fit for all circumstances and pass-through payments?

[Lord Callanan (Con)]

I thank all three noble Lords who have contributed to the debate for their questions. These regulations are essential to the successful implementation of all the energy support schemes. They will help to ensure that the support reaches the intended beneficiaries. We are all agreed on that.

To continue to empower all energy consumers, we have provided more information via our online guidance, especially to some of the most vulnerable energy end-users, such as older people and those with disabilities. The Government will continue to engage with all relevant stakeholders in this sector, including the energy regulators, energy companies and civil society, on the delivery of the schemes—for example, SSE, Electric Ireland, Ofgem, the Utility Regulator of Northern Ireland, MoneySavingExpert and the Consumer Council. We will also continue to monitor the schemes to ensure that this support is provided to the people and businesses it is designed to help.

In addition—this responds to some of the questions raised—we are committed to reviewing the energy price guarantee and energy bill relief schemes by the end of the year, and of course we will work with stakeholders to ensure that their feedback is taken into account. We will use these reviews to consider how best to offer further support to the customers most at risk from energy price increases beyond April 2023. Looking ahead, the Government are working to deliver the energy bills support scheme alternative fund payments and the increased alternative fuel payment of £200.

My noble friend Lord Hodgson asked a question relating to the so-called inequality of arms—I completely understand the point he is making—and in particular the support for vulnerable people. The noble Lord, Lord Teverson, asked a related question on ensuring that end-users are aware of what they are entitled to. The regulations take this scenario into account. Where an intermediary receives energy support but has multiple end-users, the regulations say that it should determine a just and proportional method of dividing the benefit among those end-users, and clearly communicate how it has arrived at the amount allocated to the end-users.

Of course, we are keen to ensure that all end-users, including those who are vulnerable, receive the benefits of the schemes to which they are entitled. As such, we have been delivering and building a communications campaign. In addition, we have of course engaged with landlords, housing associations and charities that protect those who are most vulnerable.

For example, in developing the energy bills support scheme, we regularly engage with consumer groups and charities precisely to ensure that the scheme reaches the groups most in need and that we reach vulnerable consumers across the UK via a broad suite of communication channels. As well as working with charity and consumer groups, we work with stakeholders including local authorities, faith groups, the rural network and food banks to help disseminate information about the scheme and how it works.

We also recognise that many vulnerable consumers are on traditional prepayment meters. We have a communications campaign outlining the actions that these people need to take to receive their discount. For example, we have made details available via social media posts, radio broadcasts and posters translated into several languages.

In response to the question from my noble friend Lord Hodgson about compliance, the EBSS has a robust compliance and monitoring framework. Data has now been published showing that, in the first month, 97% of payments were successfully delivered to eligible households in England, Scotland and Wales. Where a supplier appears to be falling behind expectations, we will engage directly with them and ensure compliance. We will publish monthly updates until the end of this scheme. The EPG and the EBRS also have robust monitoring and evaluation in place to ensure that the schemes are operating effectively. As I said, they will be subject to review by the end of the year.

The noble Lord, Lord Teverson, asked about how we divide the scheme benefit between end-users. For the EBRS, the obligation is on the intermediary to pass on the benefits of the scheme, not the energy retailers themselves. The noble Lord will recall that the EBRS is a discount that is applied to the unit price of gas and electricity; it is not a direct payment to the suppliers. The energy suppliers will provide the appropriate EBRS price reduction to their customers, some of whom will be intermediaries, based on their contract type. Intermediaries will then be expected to pass on to their end-users a just and reasonable amount. That would be the case in the majority of park homes, where the site owner is on a commercial tariff.

The noble Lord, Lord Teverson, also asked me how park home residents will receive the payment. As I said, the majority of those households receive their energy bill support scheme payment automatically via their domestic energy supply contract. However, a small number of households do not have a domestic energy supply contract and, as such, will receive the £400 in funding through alternative funding mechanisms; it will not be delivered through electricity suppliers. We are currently working with delivery partners to make sure that the £400 support is provided to households at their primary residence. This includes those who do not have their own direct domestic electricity meter or a direct relationship with an energy supplier, including park home residents.

In response to the noble Lord, Lord Lennie, who asked what a “just and reasonable” amount might be, the regulations go further than simply setting out the just and reasonable test: they have been drafted to give examples of what is just and reasonable. Intermediaries are obliged to provide details to end-users setting out why they consider what they have done to be just and reasonable. The guidance published alongside the regulations gives further colour to the concept.

Intermediaries must pass on the discount irrespective of how the end-user pays for their energy use. They can adjust the amount that they pass on based on their charges to end-users; crucially, they have to demonstrate to end-users that this amount is just and reasonable. Intermediaries can take into account the extent to which they have increased their charges to end-users as a result of the energy crisis. For example, if the intermediary has shielded their end-users from the impact of increased energy prices, in those circumstances, it may be just and reasonable for them to retain some or all of the scheme benefit. The circumstances will be very individual.

--- Later in debate ---

[Lord Hodgson of Astley Abbotts (Con)]

I am grateful to my noble friend for his very thorough answers. I might have misheard, but I do not think he said why there is an appeal procedure in respect of heat in Statutory Instruments Nos. 1101 and 1124 and not in respect of energy. Clearly, one of the things that answers the inequality of arms is an ombudsman who is there to step in if things go badly wrong. I was not quite clear why it was in one group and not the other.

[Lord Callanan (Con)]

The answer to my noble friend’s question is that there is already a regulator in place for heat networks, so it is appropriate to use the regulator. Unfortunately, for most of the other circumstances there is no regulator in place, which is why we have had to default to the court process. I totally accept his point about the inequality of arms. I am not unrealistic about the difficulties that many tenants and others will face in trying to enforce their rights under this, but all we can do is put the regulations in place, publicise them and make sure that people know their rights. We will keep the scheme under constant review. We will ensure that the payments are passed through and that people receive the benefit to which they are entitled. We will not hesitate to act further if there is widescale avoidance of this responsibility.

[Lord Lennie (Lab)]

Following up the point from the noble Lord, Lord Hodgson, is there then a possibility in the review that an ombudsman for the energy sector —not Ofgem—could be established or that the heat regulator could cover energy? I am not saying that that is going to happen, but it is a possibility. Secondly, the Minister kept saying that landlords “must pass on”, but if they fail to do so there is no sanction in the legislation; they just do not pass it on and they get away with it. Should there not be some sort of sanction for landlords if they fail to pass on just and reasonable costs to consumers?

[Lord Callanan (Con)]

The sanction is that the person who does not receive the benefit can take the matter to court. That is the point I am making. I am not pretending that this situation is ideal, but many landlords, charities and others involved in the sector are, by their very nature, not subject to energy regulators. Of course, if they are energy supply companies, such as heat networks, they are regulated by Ofgem, which is the energy regulator. All these intermediaries encompass a range of operators, from park home operators to landlords of houses in multiple occupation. It is difficult to see how we could establish an overall regulator for all these different circumstances, particularly as the whole thing is only temporary, for as long as the support scheme lasts.

We have attempted to address the situation as well as we can, by providing the appropriate guidance and by making sure people have access to enforcing their rights. I do not pretend to disagree with noble Lords that the situation is not ideal, but we have addressed it as best we can. I commend the regulations to the Committee.

Motion agreed.

Newport Wafer Fab

Lord Callanan Excerpts

Tuesday 22nd November 2022 Lords Chamber

[Lord Lennie (Lab)]

My Lords, the House of Commons Foreign Affairs Committee found no evidence to suggest that a review into the acquisition of Newport Wafer Fab had taken place, yet Politico reports that the Government’s National Security Adviser concluded that there were not enough security concerns to block it. Will the Government confirm on the record whether the review that was promised by the then Prime Minister Johnson took place or not? The same Foreign Affairs Committee warned that the sale of Newport Wafer Fab potentially compromises national security and is the loss of a prized asset to a competitor amid a global shortage of semiconductors. Given the sale has not been blocked, what steps are the Government taking to mitigate these risks?

[The Parliamentary Under-Secretary of State, Department for Business, Energy and Industrial Strategy (Lord Callanan) (Con)]

My Lords, obviously, there is a limit to what I can say about this, but I will endeavour to be as helpful to the House as possible. I certainly can confirm to the noble Lord that the review did take place and was one of the factors that the Secretary of State took into consideration when he made his decision. It was made in a quasi-judicial manner and the Secretary of State considered that a risk to national security had arisen from the trigger event, which is why he made the order that he has.

[Lord Fox (LD)]

My Lords, I think we welcome this decision. When it comes to the National Security and Investment Act, the Minister is the best authority because, while Secretaries of State have come and gone, the Minister took it through this House and he is still here. Perhaps he can add some perspective, because at the outset of this case the Minister stood up and said that the technology in Newport Wafer Fab was not worthy of being called in through the National Security and Investment Act. Over time, that has evolved, so what has changed? Is it the Government’s view of Newport Wafer Fab or the Government’s view of China?

[Lord Callanan (Con)]

I am not sure that I said that, but I will certainly look back through the record. This has been going on for a long period. The Secretary of State has taken into account all the relevant factors, as he is obliged to do under the legislation. The noble Lord is right; we debated it extensively, but this decision has been taken purely on the grounds of national security. That is what the Secretary of State is required to do. That is what he has done, taking all the relevant factors into consideration, and he has made a final order in this case.

[Lord Wigley (PC)]

My Lords, which is the greater security threat: that the technology at Newport goes into Chinese hands or that we lose the overall capacity to be able to manufacture in this sector?

[Lord Callanan (Con)]

The noble Lord will know that I cannot go into specific details of this case, but I am delighted to say that we have an extensive range of companies in the UK manufacturing and producing in this area. South Wales is one of the notable success stories with the catapult acceleration plans that we have there.

[Lord Patel (CB)]

My Lords, with the sale of a major semiconductor company of the United Kingdom and with no gigafactory for the manufacture of batteries, what effect will this have on our ability to manufacture electric vehicles?

--- Later in debate ---

[Lord Callanan (Con)]

I am looking forward to the proper debate we will have on the report on electric battery vehicle manufacturing from the noble Lord’s committee later this week. We have over 100 companies active in this area in the UK and some excellent research and development and manufacturing facilities. This decision was not taken on any industrial policy matter. As is required under the legislation that we debated extensively and that the noble Lord, Lord Fox, referred to, the decision was taken on national security grounds alone.

[Lord Pickles (Con)]

My Lords, this is an unusual case in so far as it is retrospective. My understanding is that the National Security and Investment Act came into being only in January. In another place the prospect was raised of other companies being in the control of hostile countries. What process is in place to review that, in terms of not only future hostile takeovers but ones that might currently exist?

[Lord Callanan (Con)]

My noble friend is right that the Act came into operation in January. There were some retrospective elements in that. A trigger event occurred and therefore the Secretary of State could exercise his power. When future trigger events occur, we will look at every transaction based on national security implications, as is required under the Act.

[Lord Purvis of Tweed (LD)]

My Lords, the final order stated that the security risk was the reintroduction of semiconductor production at that site. Now that have a £39 billion trade deficit with China, what are the Government’s assessments of the key sectors of the UK economy which are vulnerable to Chinese technology on the same basis as this final order?

[Lord Callanan (Con)]

As was printed in it, the final order was based on the technology and know-how that could result from a potential reintroduction of compound semiconductor activities at the Newport site. The noble Lord has read the final order. As I said in a previous answer, this has no implication for any other policies. Every one of these transactions is looked at on national security grounds in the context of the legislation that was passed giving quasi-judicial power to the Secretary of State. It has no implication for any other sectors of the economy. Every transaction is looked at on an individual basis.

[Lord Forsyth of Drumlean (Con)]

My Lords, I bought a new Land Rover in July, and I am still waiting for a second key because of the shortage of chips. Given the Chinese aggression towards Taiwan, and given its dependency, surely this decision is to be welcomed. We should aim for a degree of self-sufficiency, as far as is possible, in the production of chips, given our determination to be a country which is secure against totalitarian states and their aggression.

[Lord Callanan (Con)]

I am sorry to hear about my noble friend’s Land Rover key; I hope it is restored to him as quickly as possible. We have a very active semi- conductor manufacturing and research and development facility in this country. We have over 100 companies actively working with compound semiconductor devices. Around 5,000 UK companies, 90% of which are SMEs, are designing and making electronics components devices, systems and products. The Chancellor announced an increase in funding in this area. The south Wales cluster is particularly important. We are spending hundreds of millions of pounds promoting it. We are very proud of it. This has no implications beyond that specific transaction, which was considered on national security grounds under the legislation, as the Secretary of State is required to do.

[The Earl of Erroll (CB)]

Does the Minister agree that it is not just a matter of intellectual property or the number of research and development staff, but that we must manufacture stuff and not be totally reliant on foreign supplies? Reinforcing what the noble Lord, Lord Forsyth, just said, it is a bit like being unable to grow crops and feed your people. If we cannot manufacture, we will collapse because we cannot import the stuff. It could be bog standard chips or bog standard anything. We need to get our manufacturing capability up in this modern world, where there will be a shortage of all this stuff.

[Lord Callanan (Con)]

I agree with the noble Lord. That is why in 2016 we set up the Compound Semiconductor Applications Catapult, with £50 million of funding. Since then, it has initiated over £100 million of projects and collaborative projects which have generated or saved over 4,700 jobs in the UK. Therefore, we are very active in this space. This decision has no implications for that investment, which will continue. It was a quasi-judicial decision on national security grounds, which is what the Secretary of State is required to do.

[Lord Adonis (Lab)]

Are there any other national security investigations of this kind under way?

[Lord Callanan (Con)]

The noble Lord knows that I cannot comment on other live cases until final orders are made. I can give him some figures from the National Security and Investment Act report, published in March. The NSI unit received 222 notifications and 17 applications were called in. Since then, we have made 10 final orders, and acquisitions have been unwound or blocked on three occasions.

[Lord Howell of Guildford]

My Lords, there has been some change of view over time about this case, so might we expect further changes of view in other areas where the Chinese are deeply involved—for instance, in civil nuclear power, where they are embedded? There have been doubts about that all the way along. Can the Minister assure us that when and if a change of view is beginning to develop, or new facts come to light, he will keep us informed on this change in policy in the way that our entire nuclear programme is going?

[Lord Callanan (Con)]

I do not accept that there has been a change in policy. The policy is the National Security and Investment Act, which this House passed. If and when other trigger events occur, there will be a full investigation by the NSI team in my department and the Secretary of State will take a quasi-judicial decision, as he has done in this case.

Energy Bill Relief Scheme Pass-through Requirement (Heat Suppliers) (England and Wales and Scotland) Regulations 2022

Lord Callanan Excerpts

Tuesday 22nd November 2022 Grand Committee

Moved by

[Lord Callanan]

That the Grand Committee do consider the Energy Bill Relief Scheme Pass-through Requirement (Heat Suppliers) (England and Wales and Scotland) Regulations 2022

Relevant document: 18th Report from the Secondary Legislation Scrutiny Committee

Motion agreed.