Climate Change Committee: Discussions
Lord Callanan Excerpts(1 year ago)
Lords ChamberRead Full debate Read Hansard Text Watch Debate Read Debate Ministerial Extracts
Baroness Sheehan
To ask His Majesty’s Government what discussions they have had with the Climate Change Committee about (1) the impact newly licensed oil and gas infrastructure will have on domestic and global emissions, and (2) the design of their ‘Climate Compatibility Checkpoint’.
The Parliamentary Under-Secretary of State, Department for Energy Security and Net Zero (Lord Callanan) (Con)
My Lords, the Government work closely with the Climate Change Committee and are grateful for its expert independent advice. The committee provided advice on 24 February 2022 in relation to both new licensing and the climate compatibility checkpoint; the advice was published on the committee’s website. Officials also had several discussions with the committee throughout the design process for the checkpoint. Its advice was considered in the final design, which has now been published on the GOV.UK website.
Baroness Sheehan (LD)
My Lords, the climate compatibility checkpoint, in reference to new oil and gas fields, is, quite frankly, doublethink in Orwellian proportions. Can the Minister confirm that the IEA, the IPCC, the vast bulk of UK scientists and the Government’s own net zero tsar, Chris Skidmore, have all stated that the opening of new fields is incompatible with keeping global warming within the 1.5 degree scenario necessary to protect us and the natural world from catastrophic climate breakdown?
Lord Callanan (Con)
I do not agree with the noble Baroness. She is dead wrong about these matters. The reality is, whether the Liberal Democrats like it or not, that we get about 75% of our energy from oil and gas. That is declining, and the North Sea is a declining field. Unless she is proposing to tell voters that they should disconnect their gas boilers or not drive their cars anywhere, we have a requirement for oil and gas in the future, albeit for a declining amount. Therefore, the only question is whether we get them from our own fields and employ British workers, paying British taxes, or whether we import them from abroad, which usually has a higher carbon footprint. That is the choice that faces us.
Lord Deben (Con)
Is my noble friend aware that the Government asked for the Climate Change Committee’s advice and then ignored it? First, the Climate Change Committee said that it was perfectly possibly to do this if there were a proper checkpoint. The checkpoint is not what we asked for. Secondly, the committee said that the Government should make sure that all extraction from the North Sea should be of the highest environmental level. We have not insisted on that. Norway has a much higher level. Thirdly, the committee said that the Government should accept that they should not increase the amount of oil being produced on the excuse of the war in Ukraine. Why have the Government not accepted the CCC’s advice?
Lord Callanan (Con)
Let me give my noble friend some other quotes from the letter from the Climate Change Committee, with which he is of course closely associated:
“UK extraction has a relatively low carbon footprint (more clearly for gas than for oil) and the UK will continue to be a net importer of fossil fuels for the foreseeable future, implying there may be emissions advantages to UK production replacing imports”.
I think he should read the letter that he sent.
Baroness Blackstone (Lab)
My Lords, what steps are the Government taking to reduce the impact of flaring? I am sure the Minister is aware that routine flaring, which incidentally has been banned in Norway since 1970, has a very bad effect on the environment, as it releases methane 80 times more potent than CO2 over a 20-year period. As a result, if Rosebank goes ahead, we will exceed our carbon budget.
Lord Callanan (Con)
As the noble Baroness is aware, we have a plan to reduce our flaring. We had a Question on that a few weeks ago. We have committed, along with many other countries, to eliminate flaring by 2030. The amount of flaring is declining rapidly across the North Sea and action is being taken.
Baroness Boycott (CB)
My Lords, can I follow up on the last question? The Rosebank oilfield, which has just been licensed, is the largest undeveloped field in the North Sea. It is going to create 200 million tonnes of CO2, which is more than the combined annual emissions of all 28 low-income countries in the world. Most of the oil is going to be exported; it is not going to lower our domestic bills. Can the Government tell me what the benefits from this are? How on earth is this showing global leadership, at a time when all the institutions are saying that we have to stop extracting oil and gas to defeat climate change and temperature rise?
Lord Callanan (Con)
I refer the noble Baroness to the answer I gave to the noble Baroness, Lady Sheehan. We still have in this country a requirement for oil and gas. Some 80% of our space heating comes from gas. We need to phase that out in a transition. Over the years, we need to electrify more, but in the short term we have a requirement for oil and gas. The question is whether we want to get it from Qatar or Saudi Arabia and pay taxes abroad, or employ our own people in the North Sea to extract those same reserves?
Baroness Ritchie of Downpatrick (Lab)
My Lords, the Dasgupta review commissioned by the Treasury warned against the continued use of subsidies towards fossil fuels because they are driving biodiversity loss. Before the Minister says that they do not subsidise them, there are tax breaks, investment allowances and decommissioning loopholes—all of which are subsidies. What can the Minister say today about dealing with biodiversity loss and ending those subsidies towards fossil fuels?
Lord Callanan (Con)
I am sorry to disappoint the noble Baroness but the Minister is going to say that we do not subsidise fossil fuels, because that is the case. In fact, the opposite is true. We gain billions of pounds per year in tax revenues from fossil fuels.
Baroness Bennett of Manor Castle (GP)
My Lords, would the Minister agree with the right honourable Member in the other place Chris Skidmore, the chair of the independent review of net zero, who has come out in opposition to the new Rosebank field development? He recently said:
“We must not let the industries of the past dictate our future”.
Lord Callanan (Con)
I actually agree with him on that particular statement. Of course we need to move towards phasing out fossil fuel use; nobody disagrees with that. We have a legal commitment to do that and we are doing so through a transition. As I said in response to previous questions, the question is where we get those reserves from in future. Even with new licensing, UK production in the North Sea will continue to decline at a rate of about 7% per year. At the moment we are importing LNG to satisfy our domestic demand, which has about twice the carbon footprint of that produced in the North Sea. I really do not understand the point the noble Baroness is making.
Baroness Blake of Leeds (Lab)
My Lords, as we have heard, the CCC’s report last month emphasised the need for decarbonising and expanding the electricity system to rapidly reduce the UK’s demand for fossil fuels. As mentioned in the report, the Government still have not provided a coherent strategy or essential details on how they will achieve their goal of decarbonisation by 2035. When will these be provided? When will the Government accept that the quickest and cheapest way to offer the required supply of variable renewables to do so will involve onshore wind and solar?
Lord Callanan (Con)
Decarbonising our electricity system, which we are doing at the fastest rate of all G7 countries, will require much more electrification. Renewable generation capacity is currently six times greater than in 2010. We are expanding to deliver up to 50 gigawatts of offshore wind capacity by 2030. We have said that we will also consider onshore wind in future CfD rounds. We have one of the highest solar capacities in Europe as well—in fact, we have more solar capacity than even countries such as France.
Lord Newby (LD)
My Lords, the Minister’s defence of new exploration and production in the North Sea is that the carbon footprint of the oil and gas produced will be less because it will be consumed here. This goes against all the evidence. Can the Minister therefore give the House an assurance that all future production of oil and gas in the North Sea will be consumed in the UK in order to reap the benefits which he so repeatedly announces?
Lord Callanan (Con)
The reason I said it was lower carbon intensity is that that is a fact. There are lots of studies being done on it. Imported LNG has about twice the carbon footprint of domestic production. Of course I cannot give him a guarantee that it will all be consumed within the UK, because it is an international market. We have pipelines, for instance, interlinking our gas supply with the continent, as the noble Lord well knows. If the Liberal Democrats really believe that we should stop our production tomorrow, I look forward to all the focus leaflets—which are being distributed at the moment—telling people that they have to stop using their gas boilers or driving their cars. Lots of leaflets are being produced but I have not noticed the Liberals saying that in public.
Baroness McIntosh of Hudnall (Lab)
My Lords, the Minister did answer the question on the impact on biodiversity of fossil fuel extraction. Could he have another go now?
Lord Callanan (Con)
Of course it has an impact on biodiversity, but we have very strict climate and environmental studies that need to be done before any fields are licensed. This is the subject of court action at the moment, as the noble Baroness probably realises, so I cannot comment on it in detail. We follow all the required biodiversity protocols.
Strikes (Minimum Service Levels) Bill
Lord Callanan ExcerptsWednesday 26th April 2023
(1 year ago)
Lords ChamberRead Full debate Strikes (Minimum Service Levels) Act 2023 View all Strikes (Minimum Service Levels) Act 2023 Debates Read Hansard Text Watch Debate Read Debate Ministerial Extracts Amendment Paper: HL 97-R-I Marshalled list for Report - (24 Apr 2023)
The Parliamentary Under-Secretary of State, Department for Energy Security and Net Zero (Lord Callanan) (Con)
My Lords, I apologise for keeping the House waiting for the start of the debate; the previous business finished much earlier than everyone expected.
I am grateful to those who have contributed to this debate, although clearly we have repeated a lot of what was discussed in previous debates. The House will be unsurprised to hear that my position is similar to what it was in Committee. As I did then, I resist this amendment relating to consultation requirements, parliamentary scrutiny and assessment of impacts of the legislation.
As I made clear in Committee, it is my firm view that sufficient checks and balances are already built into the legislation before regulations can be made. This includes the need to carry out consultations—indeed, we are undergoing consultations at the moment on some draft regulations—which, of course, relevant parliamentary committees are able to and almost certainly will contribute to, as well as the requirement that regulations must be approved by both Houses before they can be made. Impact assessments will also be published for all subsequent regulations on minimum service levels.
Key stakeholders, including employers, employees, members of the public, trade unions and their members are all encouraged to participate in the consultations—some of which, as I said, are live even now—and have their say in the setting of the appropriate minimum service levels, and all that will happen before the minimum service levels come into effect, and only then if they have been approved by Parliament.
I am therefore of the view that this approach is both appropriate and in line with the normal way in which secondary legislation is made. As such, the Government believe that the amendment adds unnecessary duplication into the process, and therefore I hope that the noble Lord will feel able to withdraw his amendment.
Lord Fox (LD)
My Lords, I thank both noble Lords for their support for this amendment. The Minister is right that much of this debate has been had before in Committee. He is also right when he describes this as the normal way. I am afraid it has become the normal way that this Government operate to shunt as much power as possible to the Secretary of State and marginalise Parliament as often and as broadly as they can. This is a highly skeletal Bill—it is almost impossible to get one that is smaller. For that reason, I would like to test the will of the House.
Lord Callanan
“(a) whether the person is or is not a member of a trade union,(b) whether the person has or has not—(i) taken part in the activities of a trade union, or(ii) made use of services made available to the person by a trade union by virtue of the person’s membership of the union, or(c) whether or not—(i) a matter has been raised on the person’s behalf (with or without the person’s consent), or(ii) the person has consented to the raising of a matter on the person’s behalf,by a trade union of which the person is a member.(6A) In subsection (6) “a trade union” includes—(a) a particular trade union, and(b) a particular branch or section of a particular trade union.”Member’s explanatory statement
This amendment provides for additional matters that an employer must not have regard to in deciding whether to identify a person in a work notice.
Lord Callanan (Con)
My Lords, I beg to move Amendment 2 in my name. The House will know that the Government were clear at the introduction of the Bill that employers must not have regard to a person’s trade union status when producing a work notice. Employers should identify the workers who are best placed and most appropriate for each role, so that that minimum service level can be achieved. In our view, a person’s trade union status has no place in this process.
I thank the Joint Committee on Human Rights for its report on the Bill and for its feedback, as well as feedback from the debates in Committee on protections from trade union discrimination in relation to work notices—including from the noble Lord, Lord Hendy, who was particularly vocal on this point. I hope the noble Lord will agree that this amendment addresses his concerns in full.
Through this amendment, employers must not have regard to whether a person has or has not taken part in trade union activities, made use of their services or had issues raised by a trade union on their behalf. Employers must also not have regard to whether a person is part of a particular trade union or a particular branch or section of a trade union. This also ensures a greater level of consistency with existing sections within the Trade Union and Labour Relations (Consolidation) Act 1992, such as Sections 146 and 152.
As I said in Committee, the activity or services that a trade union member may have been involved in are connected to whether they are a trade union member, and therefore, even under the clause as it stood, an employer must not have regard to such matters when producing a work notice. While I still believe this to be true, I hope that the amendment provides further reassurance to the House, in addition to trade unions and workers, putting the issue of trade union discrimination in relation to work notices beyond doubt. I beg to move.
Lord Fox (LD)
My Lords, very briefly, it is appreciated that the Minister has done this and that the Government have understood that there was ambiguity. In a sense, it is a shame that the Minister has not taken all our advice, but we thank the Government for taking this particular piece.
Lord Hendy (Lab)
My Lords, it would be churlish not to acknowledge that we appreciate what this amendment will do.
Lord Callanan (Con)
My Lords, noble Lords have broadly welcomed this and clearly want to move on to another section, so I do not think I have any points to raise in response.
Lord Callanan (Con)
My Lords, I thank the noble and learned Lord, Lord Thomas, for his constructive engagement on this matter. He wrote to us about it and has had a reply, so he knows the Government’s position. We believe that the current drafting of the legislation strikes the right balance so that, while employers have the statutory discretion to issue a work notice, they also have to consider any other existing legal duties that they may have—for instance, contractual, tort or public law duties. My concern is that the amendment would enable employers to act without due consideration to such duties, as it effectively seeks to remove any legal consequences for not issuing a work notice.
The decision to issue a work notice should be objective but, despite what the noble Lord, Lord Allan, and the noble and learned Lord, Lord Thomas, have said, the amendment would then enable subjective, and potentially political, factors to influence that decision.
It would be likely—and I suspect this is the intention of the movers—to lead to many fewer work notices being given where they were needed, leading to minimum service levels not being met in more cases, but the reason for this legislation is that the Government do not believe that is in the best interests of service users or the public. I therefore maintain the position that I took in Committee and resist the amendment on that basis. I hope the noble and learned Lord will withdraw it.
Lord Thomas of Cwmgiedd (CB)
It is disappointing that the Government will not put in the Bill what the position is. The word “may” is too ambiguous. I am afraid we may be back to the kind of thing that happened 50 years ago, as we are seeing a large number of disputes go to a successor—the ordinary courts, this time—to the National Industrial Relations Court, and that was not a happy outcome for anyone. But the Government have taken their stand. I do not wish to press this to a Division and I therefore beg leave to withdraw the amendment.
Lord Callanan (Con)
My Lords, I thank all noble Lords who have taken part in this debate. Before I address the terms of the amendments, I will first address the frankly ridiculous exaggerations from the noble Baroness, Lady O’Grady, and the noble Lord, Lord Woodley, that the UK is some kind of international parasite or outlier in considering this legislation—
Lord Callanan (Con)
My apologies—I thank the noble Baroness. I meant “pariah”. In terms of being an international outlier, many other countries have minimum service levels. I will give the House some examples. In the USA, ambulance workers are in most circumstances prohibited from taking any action; it is the same in Australia; in Canada, there is variation by province; Spain and France have statutory minimum service levels in ambulance services; Belgium has statutory MSLs. All these requirements are laid down in law.
In the USA, Australia and Canada, for fire services action is prohibited completely by law. Nobody in the UK is suggesting that we go that far. I accept that noble Lords opposite will not mind the example of the USA, but, last time I looked, Australia and Canada both had centre-left Governments. Yet they ban strike action completely in fire services. So the UK is not an international outlier in considering these MSLs. Spain, France and Belgium have statutory MSLs in fire services. I have no idea who is in government in Belgium at the moment—there is normally some sort of 20-party coalition—but nevertheless these are not hard-right Governments with complete freedom of action against workers. It is not unusual in international terms to consider MSLs.
Lord Reid of Cardowan (Lab)
I thank the Minister for answering an allegation that was not made by my noble friend. His point was that we were an outlier or pariah not because we had minimum service levels but because we were the only country with minimum service levels that was applying the sorts of terms and conditions that are objected to in the proposed amendments. That is quite a different thing from the argument about minimum service levels.
Lord Callanan (Con)
I do not think it is a different thing at all. If action is prohibited completely, as it is in the three countries I mentioned—let us take, for example, fire services—there is no provision for workers to take any strike action at all. If they do so, they are in breach of their contracts—presumably they can be dismissed, in those countries. I think the comparison is completely valid.
I turn to the amendments. To achieve a minimum service level, employers, employees and trade unions all have a part to play, in our view, and the Bill makes it clear what those respective roles are. The amendments in this group would remove key parts of the legislation, which we believe are necessary to make it effective, and I suspect that is the aim of those who tabled them. As such, I take the same position as I did in Committee and resist these amendments.
Amendment 4 seeks to remove the consequences for an employee who participates in strike action while being identified in a work notice. The approach taken is both fair and proportionate. It enables employers to manage instances of non-compliance with a work notice in exactly the same way that they would manage any other unauthorised absence. I repeat the point for the benefit of the noble Lord, Lord Collins: this is not about sacking workers, nurses or anyone else. An employee loses their automatic protection from unfair dismissal for industrial action if they participated in a strike contrary to a work notice, as indeed they would lose their unfair dismissal rights if they participated in any other form of strike action that was not in accordance with the law, just as failing to attend work without a valid reason does not necessarily mean that they will be dismissed. It simply enables employers to pursue disciplinary action if they believe it is appropriate, but it is ultimately at their discretion whether or not to do so.
Amendment 4 also provides that individuals identified in a work notice are not subject to the work notice unless they have been given a copy of it, and the employer must prove that the individual has received it. However, under the current drafting, employees lose their automatic unfair dismissal protection for going on strike in contravention of a work notice only if the employer notifies them that they are required to work under a work notice and of the work that they must carry out. I believe that this additional requirement is both unnecessary and duplicative; it could also be inappropriate as workers could be given a work notice which identifies thousands of other workers.
Amendment 5 seeks to ensure that unions have no responsibility for ensuring that their members do not participate in strike action and attend work instead if they have been named on a work notice. It also ensures that there are no consequences for failing to meet that responsibility. I suspect this is an attempt to disrupt the balance between the ability to strike and the rights and freedoms of others to go about their lawful business, which is ultimately at the heart of the Bill.
If employees are not incentivised to attend work on a strike day when they have been identified on work notice, or if a trade union has no responsibility to ensure that its members comply, the effectiveness of this legislation will be severely undermined. I suspect noble Lords opposite know that their amendments will do exactly that, and I am sure it is therefore no surprise to them that I cannot support them on this occasion. Given the direct disruption that these amendments will have on the ability of the public to go about their normal, lawful business, I ask noble Lords—without too much optimism—to feel free to not press their amendments.
Baroness O’Grady of Upper Holloway (Lab)
I thank the Minister for that response, but Amendment 4 is about the individual freedoms, dignity and livelihoods of workers. I therefore wish to test the opinion of the House.
Lord Collins of Highbury (Lab)
My Lords, I want to make a few brief points. Of course, the noble and learned Lord is absolutely right that defining and managing service levels is a devolved matter. It is how you manage and define them. So when it comes to defining minimum service levels, who has responsibility? It is not the Government. It is actually going to be the responsibility of the devolved institutions and devolved Governments. Let me say this: this is not about devolving employment rights. Employment rights are in a single market and they are clearly defined. This is about service levels. We had debates in Committee about how to define service levels on non-strike days. The devolved Governments are going to be responsible for that, and that is the democratic accountability. That is why it is really important that we support these amendments.
Lord Callanan (Con)
My Lords, Amendments 6 and 7 relate, as has been said, to the devolved Governments. Amendment 6 seeks to remove the power for the Secretary of State to make consequential amendments to primary legislation made by the Scottish Parliament or the Senedd Cymru. This amendment was previously tabled in Committee, and no one will be surprised to know that the Government’s position remains unchanged.
As I have previously stated, the powers in Clause 3 can be exercised only to make amendments that are necessary to give effect to the Bill; they are therefore truly consequential. Employment rights and duties and industrial relations are reserved in respect of Scotland and Wales. It is therefore right that the Secretary of State has the power to make consequential amendments to primary legislation made by the Scottish Parliament or Senedd Cymru, if required, to ensure that the new legal framework operates in a coherent way across the whole of Great Britain. As always, the Government will engage with the devolved Governments as appropriate should consequential amendments be required to Acts of the Scottish Parliament or the Senedd Cymru.
Amendment 7, meanwhile, seeks to limit the territorial application of this Act to England. The noble Baroness, Lady Randerson, tabled a similar amendment in Committee, and the Government continue to resist this change for the same reasons that I set out then.
As has been said numerous times in this debate, once regulations for minimum service levels are in force for a specified service, if a trade union gives notice of strike action, it is then the employer’s decision whether to issue a work notice ahead of the strike, specifying the workforce required to achieve the minimum service level for that strike period. If the employer is the Scottish Government or the Welsh Senedd, it is their decision whether or not they use this legislation. Of course, we hope that all employers will want to do so where needed —as was said in relation to the amendments of the noble and learned Lord, Lord Thomas, employers must consider any contractual, public law or other legal duties that they have—but the Bill does not contain a statutory requirement to do so. No one is forcing them to use this legislation.
We will, as we have done throughout this legislation, continue to engage with the devolved Governments as part of the development of minimum service levels in those areas and the consultations that would be required that are informing these decisions. The Government have a duty to protect the lives and livelihoods of citizens across Great Britain. The disproportionate impacts that strikes can have on the public are no less severe in Scotland or Wales, and the people there have every right to expect the Government to act to ensure that they can continue to access vital public services, which they pay for, during strike action.
I hope—again, perhaps without too much optimism—that noble Lords will therefore feel able not to press their amendments.
Lord Thomas of Cwmgiedd (CB)
My Lords, I considered whether to press both amendments to a Division, but it seems to me that the critical one is Amendment 7. If the Act is not applicable to England, Amendment 6 is, in effect, consequential and falls away. I therefore intend to withdraw Amendment 6 but will ask to test the opinion of the House on Amendment 7.
There are two fundamental reasons for that. First, it is essential that we do not undermine devolution. The devolution Acts give the responsibility for services to the devolved Governments. If the devolved Governments fail to deliver those services, they can be booted out at the next election. That is democracy, which I had hoped this Government believed in.
Secondly, the argument that the Minister has put forward—that the Governments in Wales and Scotland are the employers and can themselves determine whether the notices should or should not be given—is misconceived. As I sought to say, they are not the employers. The employers are the trusts and the local authorities. Probably wrongly, I did not press Amendment 5, but the Government now have to bear the consequence.
If they had agreed to my amendment, the point the Minister made might be a good one—but they did not. The consequence is that it is not up to the Governments of Scotland and Wales. They will have interests and points to make, just as no doubt the UK Government will have to the English authorities. But, ultimately, it will be for the employers. Therefore, this is an outright interference in the running of services in Wales and Scotland. They are at the heart of devolution. This, if anything, proves that what this Government want to do is undermine devolution and thus weaken the union. I will therefore press Amendment 7 in due course, and in the meantime I beg leave to withdraw Amendment 6.
Energy Bill [HL]
Lord Callanan ExcerptsMonday 24th April 2023
(1 year ago)
Lords ChamberRead Full debate Energy Act 2023 View all Energy Act 2023 Debates Read Hansard Text Watch Debate Read Debate Ministerial Extracts Amendment Paper: HL Bill 86-II Second marshalled list for Report - (13 Apr 2023)
The Parliamentary Under-Secretary of State, Department for Energy Security and Net Zero (Lord Callanan) (Con)
My Lords, I will update the House on the legislative consent Motion process for the Energy Bill. The UK Government are seeking legislative consent Motions from the devolved legislatures for the Bill, in line with the Sewel convention. My officials are working with devolved government officials and will continue to do so throughout the Bill’s passage.
The Scottish Government have requested amendments to the Bill and are currently withholding support for legislative consent. We will of course continue to work with them regarding their concerns. The Welsh Government have not yet laid a legislative consent memorandum. It is not possible at present to obtain a legislative consent Motion from the Northern Ireland Assembly, but the UK Government are engaging with officials in the Northern Ireland Civil Service. The UK Government welcome the interest that the devolved Governments have shown in the Energy Bill and will continue to work closely with them on proposed changes in order to progress legislative consent Motions for the Bill.
Lord Lennie (Lab)
My Lords, this huge Bill leaves the House in far better shape than when it arrived. A combination of Labour, the Liberal Democrats, other parties, individuals and, most importantly, Cross-Benchers have secured measures that should see ISOP’s independence assured, community energy export markets develop, warmer homes and an efficiency plan to achieve that, the Gas and Electricity Markets Authority strengthened, and the ceasing of any further coal mining in this country—thanks to the noble Lord, Lord Teverson. It is to be hoped that the Government will support these changes in the other place and will not bring this Bill back for ping-pong. The range of supporters across the House should be sufficient to convince the Minister to back the changes to the Bill made by this House.
In the meantime, my thanks go to the Minister—remarkably, he has stayed the course while his Government have changed leadership three times and his Secretary of State twice since we began in September 2022—and his advisers from BEIS, and subsequently DESNZ, who have continually briefed and been available to answer questions and clarify intentions as we wended our way through this tome of a Bill.
My appreciation goes to my noble friend Lady Blake for her continuing support and to the noble Lord, Lord Teverson, on the Liberal Democrat Benches, with whom it has been a pleasure to work on the Bill. My thanks are also due to a number of Back-Benchers and Cross-Benchers, mainly drawn from the Peers for the Planet group, particularly including the noble Lord, Lord Ravensdale, the noble Baronesses, Lady Hayman, Lady Boycott, Lady Bennett and Lady Worthington—sadly temporarily departed from this House—and my noble friend Lord Whitty. Thanks also go to the House staff and the doorkeepers for arrangements during delays in advancement of the progress of the Bill, which were not of their making, and for keeping the quick-quick-slow dance rhythm to the Energy Bill.
My biggest thanks go to the remarkable Milton Brown in Labour’s legislative team of advisers for always being up to date with the progress of the Bill, for his liaison with the other place and for his political briefings and judgment, which allowed my noble friend Lady Blake and me to keep focused on this Bill over a long period. We wish it well on the next stage of its journey.
Lord Callanan (Con)
My Lords, let me add my thanks to all noble Lords who contributed to a very detailed and proper scrutiny of the Bill. We received lots of helpful suggestions—some unhelpful suggestions as well, but that is in the nature of the debate. Everybody engaged positively in the process and has been very thoughtful in their contributions. The Bill leaves this House in good shape.
Let me formally thank the Opposition Members, who have co-operated well. It is fair to say that they had no grief with the fundamental structure and idea of the Bill, but, as is the nature of opposition, wanted to make some improvements and push the Government to go a bit further. The Liberal Democrats—particularly the noble Lord, Lord Teverson—along with the noble Lord, Lord Lennie, and the noble Baroness, Lady Blake, have engaged really positively in the process and have been constructive. I thank them.
Let me also thank the many Back-Benchers who took part, including the noble Lord, Lord Ravensdale, the noble Baroness, Lady Worthington—who has sadly departed these shores for somewhere sunnier and nicer—and the noble Baronesses, Lady Hayman and Lady Liddell. I assure the noble Baroness, Lady Liddell, that I share her passion for CCUS. She will have seen in the announcement just before the Easter Recess that the Government are moving on with the track 1 negotiations. I am sure she will welcome that. Many across the House have contributed very much to the Bill and I am extremely grateful for all their contributions.
She is sadly not with us today, but let me also thank my Whip, my noble friend Lady Bloomfield, who has kept us all to order and taken a number of groups through herself. We are all immensely grateful that none of us managed to fall asleep during the proceedings and were therefore spared some of her acerbic interventions in such circumstances.
The Bill comes at a critical time for our country. Record high gas prices, Russia’s illegal invasion of Ukraine and the challenge of climate change all highlight why we need to work to boost Britain’s energy independence and security through the development of low-carbon technologies. Secure, clean, affordable energy for the long term depends on a transformation of our energy system.
That, fundamentally, is why we brought forward the Bill—the most extensive piece of primary legislation in a decade. The Bill delivers on our key commitments from the British energy security strategy, the Powering Up Britain paper, which brings together the energy security plan, the net-zero growth plan and the net-zero strategy. All have come together in this legislation. The Bill will help to drive an unprecedented £100 billion of private sector investment by 2030 into new British industries and support around 480,000 jobs by the end of the decade.
I must also thank the House of Lords Public Bill Office, the House clerks, and the Office of the Parliamentary Counsel—Richard Spitz, Lucy Baines and Ben Zurawel—for their extremely hard work drafting the Bill. It is a very long piece of legislation.
My thanks also go to all the policy, analytical and legal officials in the Department for Energy Security and Net Zero, the Department for Environment, Food and Rural Affairs and the Department for Transport, for their expert advice and resilience.
I also thank my Private Secretary, Angus Robson, the senior responsible officer for the Bill, Jeremy Allen, and the expert Bill Team: Jessica Lee, Safia Miyanji, Nicholas Vail, Salisa Kaur, Amanda Marsh, Abi Gambel, James Banfield, Matthew Pugh, Laura Jackson, Anthony Egan and Phaedra Hartley. They are extremely talented public servants. They worked long, hard and tirelessly on this important legislation and we owe them all our thanks.
Let me also thank the Department for Energy Security and Net Zero’s departmental lawyers, in particular the lead lawyers Mike Ostheimer and Martin Charnley for keeping me legally correct. It is a tough job; somebody has to try and do it. They do it nicely, well and tirelessly. That is the end of the debate so far in this House. It is my extreme pleasure to hand it to my ministerial colleague Andrew Bowie, who will commence the debate in the House of Commons.
Strikes (Minimum Service Levels) Bill
Lord Callanan Excerpts(1 year ago)
Lords ChamberRead Full debate Read Hansard Text Read Debate Ministerial Extracts
Baroness Bloomfield of Hinton Waldrist
That the amendments for the Report stage be marshalled and considered in the following order:
Clause 1, Schedule, Clauses 2 to 6, Title.
Powering Up Britain
Lord Callanan Excerpts(1 year ago)
Lords ChamberRead Full debate Read Hansard Text Read Debate Ministerial Extracts
Lord Teverson (LD)
My Lords, I do not in any way disagree with the noble Lord, Lord Lennie, but I have tried to be positive about these reports; a whole suite of reports has come out with this. I spent a little more time on the report entitled Powering up Britain: Energy Security Plan, which I thought may be the document that would get more to the heart of this. I also found the 2030 Strategic Framework for International Climate and Nature Action particularly interesting. These are a long read but have a list of really good stuff. They mention areas that we have debated here such as gas storage, grid connections, carbon capture, energy efficiency and demand management. A few are missing, but it is a very impressive list of subjects that this House has considered during the passage of the Energy Bill, whose Third Reading we await next week. It is a great list, but it is five years too late—something like that.
I have a number of questions for the Minister. Small modular reactors are listed in the energy security plan. When do we expect them to come online? Going back to something we discussed on the Energy Bill, the energy security plan mentions the core responsibility of the future systems operator, or ISOP as we know it. When is it actually going to be established so that it can get on with its work? Those I have spoken to in National Grid ESO are really champing at the bit, because they need to get on with it, as this report says, but it is still not there because of the slowness of the Energy Bill through Parliament.
On Sizewell C, which the report mentions, what lessons have we learned from Hinkley C? There are all sorts of lessons to be learned from budget increases and other issues relating to the building of that. On planning, I am pleased to say that it talks about trying to reduce planning periods, but in the debate on the levelling-up Bill yesterday we discussed how the planning system is core to delivering net zero. In fact, as both the Climate Change Committee and the Chris Skidmore report asked, are the Government going to embed net zero properly into the planning system? As the noble Lord, Lord Lennie, asked, will we really meet not just the COP 26 obligations but the fourth carbon budget, whose period just started, let alone the fifth? I do not believe that these plans really do that.
What impressed me at the end of the energy security plan was a whole long list of timetables. I hope that at DESNZ all the senior officials and the Ministers sit around the table every week and are driven by that plan. I suspect they might not be.
Finally, I am very pleased that the 2030 Strategic Framework for International Climate and Nature Action was published, but this comes back to something the noble Lord, Lord Lennie, said. In the introduction, I read something that really quite excited me, and I thought, “Here we get to the nub of it”. It says:
“Since the publication of the British Energy Security Strategy, our Environmental Improvement Plan and our Net Zero Strategy, the US has taken decisive action in allocating $370 billion for clean energy and manufacturing in its Inflation Reduction Act. And the EU has set out its ambitious plans to grow its green industries through the Green Deal Industrial Plan”.
I then looked on to the next paragraph to find out what we were doing. It went off completely on a different subject. When are we going to understand what our reaction is going to be to those two pieces of legislation in the United States and the EU—our major investment competitors?
The Parliamentary Under-Secretary of State, Department for Energy Security and Net Zero (Lord Callanan) (Con)
I thank the noble Lords, Lord Lennie and Lord Teverson, for their comments. I want to thank the noble Lord, Lord Teverson, slightly more than I want to thank the noble Lord, Lord Lennie, because he was slightly more positive, but I thank them both for their comments anyway.
For too long this country has taken cheap, plentiful energy for granted. If the war in Ukraine has shown us anything, it is our decades-long overreliance on fossil fuels. Of course, we have all seen their record prices, but the Government have stepped in to help: we have been paying around half of a typical household’s energy bills this winter, and that support has been extended. Our longer-term challenge now is to bolster our energy resilience as a nation so that never again can we be held hostage by tyrants such as Putin, putting his hand into the pockets of every family and business in this country.
This plan is about setting out a clear path and why we have to diversify our sources of supply. We have to decarbonise them and we have to move toward greater energy independence to secure the cheap, clean energy that Britain needs to prosper in the future. We are making considerable progress along that path, but we all know that we have to do a lot more.
I will move to the specific questions I was asked. The noble Lord, Lord Lennie, asked me about onshore wind. I have a funny feeling that the noble Baroness, Lady Hayman, is going to ask me a similar question, so let me try to pre-empt her. We have included onshore wind in our latest world-leading contracts for difference scheme. We are currently consulting on amending the National Planning Policy Framework so that local authorities can better respond to communities when they wish to host offshore wind infrastructure. A government response will be issued in due course.
The noble Lord, Lord Lennie, also mentioned the US Inflation Reduction Act. Of course, we are well aware of the action taken by international partners to accelerate their own uptake of green technologies. They are getting to the party a bit late, but I am pleased to see that they are finally going in the same direction. We continue to engage with them on this. Although the Act is significant, the race for green tech started decades ago here in the UK, with the rest of the world now playing catch-up, adopting many of the same mechanisms, such as contracts for difference, that we came up with seven or eight years ago.
We will not go toe to toe with our partners in a subsidy race; I have not noticed any commitments from the Labour Party to do this either. Instead, we will double down on our global leadership in clean technologies to tackle climate change, using a range of levers from smart regulation to market frameworks and targeted investments. Noble Lords will also have seen, in the green finance strategy published at the same time as the plan, a lot more information on our very ambitious plans to mobilise considerable amounts of the private investment we will need.
The noble Lord, Lord Lennie, also asked me about our 2030 NDC. We remain firmly committed to delivering our international commitments under the Paris Agreement, including the 2030 NDC. While countries are not due to start reporting to the UNFCCC on progress towards meeting the NDC until 2024, we have already quantified proposals and policies to deliver by 2030 a reduction in emissions of 67% compared to 1990 levels, providing a great majority of the savings required for our NDC target of a 68% reduction by 2030.
The noble Lord asked me about energy efficiency and referred to some vague Labour plan. I would be delighted to see what Labour’s plan in this area actually is. I did see a half-baked press release last week, which was presaging a great announcement, but I do not think that that announcement ever happened. If it did, I certainly did not notice it. What I saw was not a plan at all; it was a wish list, without any numbers attached to it. I will tell the noble Lord exactly what this Government are doing.
When Labour left office in 2010, 14% of UK homes were at EPC level C or above. It is now 47%, and it will be over 50% by the end of next year. The Government are committed to improving the energy performance of homes across the country. I refer again to the new Energy Efficiency Taskforce that we have established to drive improvement. The Chancellor set a target of 15% energy reduction improvements by 2030, for which £6 billion of new funding will be made available from 2025 to 2028, in addition to the £6.6 billion already allocated in this Parliament. This is a key ask from many in the industry, providing long-term funding certainty, supporting the growth of supply chains and ensuring that we scale up delivery over time. In addition, we are still committed to the four-year, £4 billion ECO expansion, and noble Lords will have seen the announcement of the Great British Insulation Scheme and its additional £1 billion of funding.
Moving on, the noble Lord, Lord Teverson, asked me about nuclear and SMRs. I hope that presages that the Liberal Democrats might support us on nuclear in the future. This is well-established technology. We have invested £210 million with Rolls-Royce to develop SMRs in the UK. They are well established and we want to be world leaders in this. Realistically, it will be at least the end of the decade before they are rolled out. This is another world-leading green technology from which the UK can prosper.
Baroness Hayman (CB)
My Lords, I declare my interests as set out in the register. The Minister presaged a question about onshore wind, which was one of the things left out of the Powering Up Britain document. He half-answered the question in anticipation, but he said that the consultation results will come “in due course”. Could I tempt him to be a little more specific than that, because we have been making progress very slowly on this issue? It feels rather like a can being kicked down the road and a wasted opportunity.
This document contains aspirations, intentions and objectives that are widely supported around the House. The concerns are about the pace, scale, impetus and coherence of delivery. I want to talk particularly about the issues that we debated in your Lordships’ House on Monday, when amendments to the Energy Bill were passed. None of those amendments in any way ran counter to the objectives set out by the Government. In ending emissions from coal, in making sure that we have a comprehensive energy efficiency policy, in building and encouraging community energy schemes, and in giving Ofgem, the regulator of this sector, a responsibility for implementing net zero, none of them was revolutionary or counter to government policy. All will help with this issue of scale, pace and delivery. My plea to the Minister is that he and colleagues think very carefully, after Third Reading in this House and before the Bill goes to another place, about whether those amendments could assist, rather than in any way impede, the Government in what they are trying to do.
Lord Callanan (Con)
As I suspect the noble Baroness knows, I am afraid that I cannot give her a direct answer on the date of the consultation response. That is just the way that government works: the consultation response will come when it comes. Even if it were happening tomorrow, I would not be able to presage it, because it has to go into the Downing Street grid and through all those processes. I will endeavour to let her know as soon as it becomes available.
The amendments to the Energy Bill were of course disappointing. I noticed that there were no big majorities in favour of any of them, but we will look at them closely and respond in due course.
Baroness Bennett of Manor Castle (GP)
My Lords, we face a difficult situation, with recess intervening and us now having a short period to interrogate 44 documents, which, as Carbon Brief calculated, comprise 2,840 pages. The timing was unfortunate, although it was forced by the 2022 High Court ruling that the net-zero strategy is unlawful—the deadline was at that point.
I will pick on one specific point. The energy security plan notes that the Government opened in October 2022 a new licensing round for oil and gas projects, and that 115 projects have bid, with the first licences expected to be awarded in the next quarter of this year. There is no mention in the energy security plan of the climate compatibility checkpoint, which was devised and announced by the Government in 2021. This was meant to ensure that any new oil and gas licences would be awarded only if they were in line with the UK’s net-zero goals. Can the Minister tell me if the climate compatibility checkpoint still applies and is being used by the Government?
Lord Callanan (Con)
On the two questions from the noble Baroness, first, as usual, she is dead wrong in her statement about the High Court action. It did not rule that the Government’s plans are unlawful; in fact, the High Court clearly made no criticism whatever about the substance of our plans, which are well on track. During the proceedings, the claimants themselves described them as “laudable”. The independent Climate Change Committee described the net-zero strategy as
“an ambitious and comprehensive strategy that marks a significant step forward for UK climate policy”.
The court simply wished to see more detail on our plans. I am pleased to say that the Carbon Budget Delivery Plan, which we published alongside Powering Up Britain, provides that detail and sets out a package of proposals and policies that will enable carbon budgets to be met, ensuring that Britain remains the leader and among the fastest-decarbonising nations in the world.
The answer to the noble Baroness’s question about oil and gas licences is that the climate compatibility checkpoint remains, but I make no apologies about this whatever. During the transition, we still have a requirement for oil and gas in the UK; the only question is whether we get it from British resources or from Saudi Arabia, Qatar, the US or somewhere else. Do we want to be paying British tax and employing British workers or for that money to be exported? That is the question that faces us.
Baroness Bennett of Manor Castle (GP)
My Lords, if no one else is going to stand up, I will come back to the Minister on a different, broader and more conceptual point. I am very tempted to respond to the previous answer, but I will not.
The Committee on Climate Change said that we should be shifting from looking at territorial emissions to consumption emissions. The fact is that a great deal of manufacturing has been offshored in recent decades and emissions are currently being counted against other countries on a territorial basis, while we are consuming the goods made from them. Are the Government planning to follow the recommendations of the Committee on Climate Change and move from measuring territorial emissions to consumption emissions?
Lord Callanan (Con)
It is a complicated question. We have no plans to. We will measure our emissions on the same basis that everybody else does. Nevertheless, I concede to the noble Baroness that she makes a valid point about carbon leakage and the extent to which we have driven many energy-intensive industries out of the UK and Europe, but we still use the products that many of them produce. These are produced not in Europe and the UK any more but in other parts of the world, often in more carbon-intensive manners.
There is a difficult policy question facing us and the EU: how do you address that if other countries do not have ambitious plans like ours to decarbonise but you still need the products? Do you look at mechanisms such as carbon border adjustment mechanisms, which the EU is looking at? Intrinsically, we are in favour of free trade, so we do not want to go down that avenue. A far better strategy is to try to persuade other countries to adopt similarly ambitious plans to ours.
Baroness Bennett of Manor Castle (GP)
My Lords, given the fact that this is a really important issue and I do not see anyone else rising, I will rise once again. The Government have committed to a fully decarbonised electricity power system by 2035. The Committee on Climate Change has said that their plans need urgent reform to achieve that goal. Can the Minister assure me that he is highly confident that we are on track for that 2035 goal for electricity?
Lord Callanan (Con)
Yes, we believe that we are on track. There is a diversity of sources of supply, including our world-leading offshore wind procedures—we have the first, second, third and fourth largest offshore wind farms in the world—and the rollout of new nuclear and solar. All of that will contribute to our ambitious plans to decarbonise our electricity sector by 2035.
Energy Bill [HL]
Lord Callanan ExcerptsMonday 17th April 2023
(1 year ago)
Lords ChamberRead Full debate Energy Act 2023 View all Energy Act 2023 Debates Read Hansard Text Watch Debate Read Debate Ministerial Extracts Amendment Paper: HL Bill 86-II Second marshalled list for Report - (13 Apr 2023)
Lord Lennie (Lab)
My Lords, my understanding is that the Minister will confirm the Government’s support for an independent ISOP, as suggested by the noble Lord, Lord Teverson, and this being the case, we know no longer need to divide the House on our amendments. So, rather than listening to me putting forward the argument in favour of achieving this, I think we would be better served to listen to the Minister in his reasoning for an independent ISOP: I thank him for his time over the weekend, when we reached this position.
The Parliamentary Under-Secretary of State, Department for Energy Security and Net Zero (Lord Callanan) (Con)
Let me first thank all noble Lords for their amendments, and I thank the noble Lord, Lord Lennie, for the time he gave to discussing this matter. As always, there were valuable contributions from all parts of the House.
On the details of the amendments, Amendment 60, tabled by the noble Lord, Lord Lennie, and the noble Baroness, Lady Blake, seeks to establish an industry-led advisory board for the ISOP. In the original consultation, the respondents strongly indicated that the body should be independent of energy sector interests, and I think that is a view shared by the Opposition. The Government therefore remain concerned that inserting in legislation a formal oversight role, as is being suggested, will place decision-making back in the hands of the energy sector and go against the reasons and mechanism for creating an independent ISOP in the first place. This could make the ISOP risk-averse or unwilling to take action that is potentially challenging to market participants but could be on the side of consumers, even if that action might be beneficial to the system itself.
We are therefore concerned that, rather than enhancing independence, members of such an advisory board would likely hold various energy sector conflicts. There are many ways this could crystallise, including resistance to systemic reform, more strident advice in favour of compensation for energy sector participants, or incumbent bias, for instance seeking to frustrate new market entrants which could stifle the innovation that I think everyone, in all parts of the House, is agreed that we need to reach net zero.
Establishing an industry-led advisory board for the ISOP would be similar to establishing one for, for instance, the Climate Change Committee—an organisation which, in our view, also needs to remain independent of industry interests. I hope noble Lords would agree that we need genuine, independent, expert thinking, rather than vested interests. Thankfully, this amendment is not required to ensure board independence; the Government intend to require that a number of sufficiently independent directors—or SIDs, to use the acronym—sit on the ISOP’s board. A SID is a board member who meets certain criteria to ensure that, as well as being skilled, knowledgeable and experienced, they are impartial, with restrictions including on certain shareholdings in the energy industry. Requirements in the ISOP’s licence will set a minimum number of SIDs to ensure that the ISOP’s board has strong representation from those outside the ISOP and is unconflicted by the interests of the energy industry.
To ensure effective scrutiny of the appointment of the ISOP’s chair, we are also asking the Office of the Commissioner for Public Appointments and the new departmental Select Committee, once established, to conduct pre-appointment scrutiny. Energy sector experts will have opportunities to input to the ISOP’s work, of course. For instance, the system operator’s business plan submissions, assessed by Ofgem, will continue to be open to consultation with market participants, including members of the specific industry forums mentioned in this amendment. Finally, through its price control process, Ofgem will ensure that the FSO is fully resourced to fulfil its objectives and obligations, including the funding of its statutory duties towards consumers, energy security and net zero.
Turning to Amendments 59 and 62, tabled by the noble Lord, Lord Teverson, again we agree with the sentiment of the noble Lord’s amendments, and the Government remain resolute that the ISOP shall be an independent public body. We continue to act to make this so. However, it is critical that the ISOP remains a dynamic organisation capable of adapting and evolving to the future conditions of the energy sector. I therefore hope the noble Lord will agree with me that it is preferable not to constrain the ISOP pre-emptively in legislation at this fairly early stage but to maintain some flexibility. With the rapid deployment expected in the energy sector, reasonable circumstances may arise in which the ISOP is well placed to take on some future energy sector role or interest.
Regarding the specifics of Amendment 62, I believe there are already significant controls and limits upon the Secretary of State in acting as the sole shareholder. These will include limits in the framework agreement, which we will of course make public. These controls will ensure that the ISOP’s operational independence is protected.
Legislating for the ISOP to “be independent” does not, in my view, appear to offer a material benefit beyond the controls already established in Part 4 of the Bill and the framework documents, but it risks preventing the intended corporate composition of the ISOP, thereby undermining its effectiveness.
Finally, on Amendment 61, also tabled by the noble Lord, Lord Teverson, the Government agree that it will be important to ensure that the ISOP is fully resourced to fulfil the objectives and obligations set out in its licence. In our view, the most effective funding mechanism to achieve this and realise our vision for an independent ISOP is for it to be funded by consumers through price control arrangements, much like the current gas and electricity system operators are today.
Levies placed on licensed bodies can be expected to filter through to consumers. However, we are concerned that the requirement to establish an audit board risks duplication with the current well-understood and transparent regulatory model established under Ofgem. Without a price control process run by the regulator, there is also a risk of poor consumer value for money. As with other regulated bodies in this sector, the ISOP will have the operational freedom it needs to manage and organise itself to effectively deliver its roles and objectives. We also intend the ISOP to sit outside the regime of Cabinet Office controls on spending, which bodies funded by taxes and levies are required to operate under.
With the explanations and reassurances that I have been able to provide, I hope that noble Lords will agree not to press their amendments.
Lord Teverson (LD)
My Lords, I am very encouraged by the Minister’s response on the control of the board and the ISOP. I am disappointed about the funding flows, but I guess that it will work out as it works out. I think that is unfortunate, but I have no intention of pressing the matter. I beg leave to withdraw my amendment.
Lord Callanan
Member’s explanatory statement
This amendment ensures that the amendment made by paragraph 8 of Schedule 9, in relation to section 105(1)(a) of the Utilities Act 2000, dovetails correctly with the amendment to that provision made by paragraph 5 of Schedule 5 to the Bill.
Lord Callanan
“(7) Where by virtue of subsection (6)(c) tender regulations provide for the imposition of a financial penalty, they must also include provision for a right of appeal against the imposition of the penalty.”Member’s explanatory statement
This amendment requires regulations under section 6CA of the Electricity Act 1989 (tender regulations: power to require information) (inserted by Schedule 13) that provide for the imposition of civil penalties to include provision for a right of appeal.
Baroness Blake of Leeds (Lab)
My Lords, I will speak briefly to the amendments in this second group, starting with Amendment 65 from the noble Lord, Lord Teverson. All I can do is echo his clear requests for confirmation that the Government will be more flexible and for clarity around multipurpose interconnectors, particularly with regard to the relationships between Great Britain and other jurisdictions. Will the interconnectors operate in a similar way to the offshore electricity transmission regime? I hope that the Minister will be able to give the reassurance and clarification that the amendments in the name of the noble Lord, Lord Teverson, ask for.
I thank my noble friend Lord Whitty for tabling Amendment 68, on an issue that he feels passionately about and comments on whenever the opportunity arises. We know that, as the electricity network develops new facilities and new renewable sources of generation, there will be a need for more storage capacity. As we have said, there is a non-exhaustive list of technologies, and new ones coming on stream that we might not have considered so far, and so comments must extend beyond batteries. The important part of this amendment to consider is a commitment from the Government to give support to assist with developing the storage capacity that we need.
The further amendments, led by the noble Lord, Lord Teverson, look to remove legislative barriers to the electrification and decarbonisation of oil and gas facilities, and to work towards a green financing framework. We must be mindful of the uncertainty of costs, going forward. When considering these amendments, it is important to consider decarbonisation, which is critical to the Bill, but also affordability and ensuring that energy is within the reach of every person in the country.
We know that the zero-carbon electricity system is possibly 19% cheaper than gas-based facilities, and that UK gas power is currently estimated to be nine times the amount of renewable power. Driving down energy costs means that we need cheap, clean power. We must take this rare opportunity presented by the Bill to ensure that we use the legislative framework to drive measures that will, in the short-term, reach towards action to decarbonise the electricity system and bring down costs.
The passage of the Bill through the House has been quite lengthy, but we really must take the opportunity presented to us to ensure that we make the progress that is required.
Lord Callanan (Con)
My Lords, I thank all Members who have contributed to the debate.
I completely agree with the last point made by the noble Baroness, Lady Blake. It is very important that we use the powers to do exactly what she suggested: to drive the decarbonisation agenda. Despite some of the criticisms, we are making excellent progress in this country—much better than most other G7 countries. However, we must be very conscious of the cost to consumers.
Amendments 125 to 129 were tabled by the noble Lord, Lord Teverson. I was amused to see that he has incurred the wrath of the noble Baroness, Lady Bennett, in trying to come up with pragmatic, sensible solutions for the energy system of this country. All I can say is, “Welcome to the club”.
I will start with his comments on the North Sea Transition Authority. We are engaging with industry to ensure the delivery of the North Sea transition deal emissions reduction targets and the successful rollout of electrification, which we all want to see. We are also considering how to utilise the Secretary of State’s existing powers, if needed, to support electrification. We are confident that, in this area, additional primary legislation is not required. As the noble Lord mentioned, the North Sea transition deal commits the offshore oil and gas sector to reducing emissions from operations to 50% of 2018 levels by 2030. As I have said repeatedly in this House, during the transition there will be an ongoing need for existing oil and gas resources, but it makes sense to extract them with the minimum possible carbon emissions.
Lord Callanan
Member's explanatory statement
This amendment makes regulations under Clause 167 (which contains a power to amend certain definitions relating to heat networks) subject to the affirmative procedure.
Lord Callanan
Member's explanatory statement
This amendment removes a reference to Scotland in connection with installation and maintenance licences (which do not apply in relation to Scotland).
Lord Callanan
“(1) The first regulations to be made by the Secretary of State under section 170 are subject to the affirmative procedure.”Member's explanatory statement
This amendment clarifies that the first regulations made by the Secretary of State under Clause 170 are subject to the affirmative procedure.
Lord Callanan
Member's explanatory statement
This amendment provides that regulations under Clause 173(1) (which confers power to designate the Gas and Electricity Markets Authority as the licensing authority for the purposes of the Heat Networks (Scotland) Act 2021) are subject to the affirmative procedure.
Baroness Blake of Leeds (Lab)
My Lords, I declare my interest as a vice-president of the Local Government Association. It will come as no surprise to Members of the House that I support all these amendments, particularly Amendment 94 in the name of the noble Lord, Lord Ravensdale. Going by my personal experience, not giving a broader role to local authorities is such a missed opportunity and I cannot understand why these amendments would not be supported, particularly since it is, in all honesty, such a mild request: better definition of local authorities’ role; and asking for guidance, which is a perpetual demand from local authorities, I have to say, in trying to move things forward. As we know, other key reports and reviews have recognised just how important it is to get local buy-in and to get local stakeholders involved.
I turn to the amendments in the name of the noble Baroness, Lady Boycott, and signed by others. It is essential that we bring these elements together. What we are talking about, without repeating the technical issues that have been raised so powerfully today, is that we need to aim to have a framework that will support the growth of community and smaller-scale energy schemes and also provide regular reporting so that everyone knows how things are progressing. I have to say that all we are asking for is the following of an evidence-based approach. We can look at the success of other, related schemes in these areas that have been successfully led by local authorities. These include the rollout of electric vehicles, with local authorities leading by example in changing their fleets to electricity. District heating is another example where, when you have very strong local buy-in, the success moves forward. What we are asking for here is the ability to inform, shape and enable key aspects to deliver energy decarbonisation.
I believe very firmly in involving local stakeholders from the beginning; they are far more likely to come on board with schemes that might have aspects that they find work against their interests if they understand and are included in the bigger picture. Many people will make compromises when they understand the greater good, and the opportunity has been highlighted over the past year by the dramatic increase in energy prices and the risk of energy scarcity. I think the landscape has changed in this regard. Let us give confidence to local people and communities by developing the framework for the growth of communities and smaller-scale energy schemes. It is regrettable that more progress has not been made so far. The role of Ofgem in this, giving clear methodology and quality standards, is essential and will give the credibility that is needed, as the noble Baroness, Lady Boycott, so eloquently pointed out.
Through the involvement of local communities, we are asking for a more effective and better targeted delivery of national priorities; and we all know that we need more determination to deliver on the ground. I hope we will see some movement in this area and can only echo other comments: if we fail to make progress, this is such wasted potential, and I hope we will hear some positive comments with regard to these amendments.
Lord Callanan (Con)
I thank all Members who have contributed, particularly the noble Baronesses, Lady Boycott and Lady Bennett, for Amendments 134 and 135—the noble Lord, Lord Lucas, proposed them but sadly is not in his place. I am grateful to noble Lords who met me and officials recently to discuss this matter and give us a chance to talk through the departmental thinking.
As I said when we met, the Government recognise the role that community and local renewable energy schemes can play in supporting our net-zero targets. But we continue to believe that small-scale, low-carbon electricity generation should be brought forward through competitive, market-based solutions. A key feature of the smart export guarantee regime is to allow suppliers to set both the tariff level and the structure and for suppliers themselves to determine the value of the exported electricity alongside all the associated administrative costs. Any move to introduce a regulated price for exported electricity has the potential to limit the overall scope for innovation and export tariff packages. This would fundamentally undermine the principles of the supported export guarantee policy objective, which looks to encourage a market-driven approach.
Furthermore, the amendments as drafted are unlikely to result in better outcomes for consumers compared with other tariffs that would be available from suppliers. First, there would be initial set-up and ongoing delivery costs associated with the scheme for both Ofgem and the suppliers, which we expect would be material. These costs would be recovered via the service fee charged by suppliers and therefore probably reflected in the local tariff price.
Secondly, small-scale, low-carbon generation will, by its nature, be intermittent and unable to supply local consumers at all times. Suppliers would therefore need to buy additional wholesale energy from other sources—for example, during periods of peak demand—and incur all the associated network and system costs. The local tariff would also be required to have regard to the export price paid to the local generator. This would create a somewhat perverse outcome where higher export prices would benefit the generator but also increase the tariff price.
As a result, there is no guarantee that the local tariff would be lower than the current regulated standard variable tariff. In fact, there is some reason to believe that it would actually be higher.
Baroness Bennett of Manor Castle (GP)
Before the Minister sits down, I would like to apologise to the House; I should perhaps have declared my position as a vice-president of the Local Government Association. The Minister referred to the costs of local schemes, but would he acknowledge that there has been historically—and certainly will be in the future—a great deal of voluntary effort and contributions in the administration and running of such schemes, and that that is a net input into communities that does not have a financial cost, which can affect the price?
Lord Callanan (Con)
If organisations take advantage of community-minded individuals prepared to contribute work to their local community, that is something that we welcome. However, what will be critical to those communities is the ultimate tariff that they pay, irrespective of how much voluntary effort goes in. Our concern is that these amendments are being slightly oversold to many communities; they may think that they are somehow going to get a favourable tariff compared to what they would get in the wider market. As currently structured, we do not believe that the amendments would produce that.
Baroness Boycott (CB)
Before the Minister sits down, I think that that is slightly unfair on local communities. A lot of people enjoy being involved in local community schemes and, as the noble Baroness, Lady Bennett, just said, a lot of volunteering work goes into this. It is not just about getting lower prices; it is also about reducing our carbon emissions and being part of the campaign to get to net zero. You cannot just quantify everything in pounds, shillings and pence.
Lord Callanan (Con)
I agree with the noble Baroness, and we are supporting a number of community energy partnerships at the moment. As I say, we are not against the idea in principle, but we need to work through the proper policy implications and ensure that some of these very worthwhile schemes are not piggybacking on to the costs that everybody else pays into the system.
Lord Ravensdale (CB)
My Lords, I thank the Minister for providing that detail on the department’s approach to local area energy planning and for recognising the ongoing work. With the reassurance that has been provided by the Minister, I beg leave to withdraw my amendment.
Lord Callanan
Member's explanatory statement
This amendment ensures that the acceptance by an enforcement authority (under energy smart regulations) of an enforcement undertaking in respect of a person’s act or omission does not prevent the authority imposing a penalty on that person in respect of a different act or omission.
Lord Callanan
“(5A) Energy smart regulations that are not within subsection (5) are subject to the made affirmative procedure if they—(a) are the first energy smart regulations to make provision about a particular description of energy smart appliance,(b) make provision by virtue of section 189(4)(b) imposing requirements of a kind not previously imposed by energy smart regulations,(c) make provision by virtue of section 190(1)(a) or (b) by reference or in relation to a published document, standard or list (as the case may be) in respect of which such provision has not previously been made,(d) confer new powers for the enforcement of energy smart regulations, or(e) make provision by virtue of section 192(2) for the imposition of new civil penalties.(5B) A revised version of a published document, standard or list is to be disregarded for the purposes of subsection (5A)(c) if provision has previously been made in respect of the document, standard or list by virtue of section 190(1)(a) or (b) (as the case may be).”Member's explanatory statement
This amendment provides that energy smart regulations that are not the first energy smart regulations but that include certain kinds of provision for the first time are subject to the made affirmative procedure.
Lord Callanan (Con)
My Lords, this group covers the two amendments concerning the energy performance of existing premises and of new builds.
I will start with Amendment 97, from the noble Baroness, Lady Hayman, and the noble Lords, Lord Foster and Lord Whitty, which would require the Secretary of State to publish a national warmer homes and businesses action plan six months after Royal Assent. That proposed plan looks very similar to and would duplicate the Government’s existing Net Zero Strategy and the Heat and Buildings Strategy—added to, of course, by the Powering Up Britain publications. Therefore, we feel that it is unnecessary.
On minimum energy-efficiency standards for domestic buildings, the Government agree with the ambition of reaching EPC band C by 2035 for as many homes as possible where that is cost effective, and for commercial properties below EPC band B where that is cost effective. On minimum energy-efficiency standards, these ambitions have already been published in various publications, including the Net Zero Growth Plan. The Government have already set out their timeline to deliver the future homes standard by 2025 and we have accelerated work on its full technical specification. We will consult further on that later this year. Regarding the proposal on heat networks, the Bill already outlines our heat network zoning proposals for England, which details where buildings should be connected to heat networks and gives local authorities the power to implement heat network zones.
On top of all those major commitments, as has been referenced in the debate, we recently launched the Energy Efficiency Taskforce, of which I have the honour to be co-chairman, to deliver our ambition to reduce the UK’s final energy consumption from buildings and industry by 15% by 2030. So there is no difference in ambition from the Government on energy efficiency. I agree with many of the points made on how important energy efficiency is, and we are progressing work to increase it across a whole range of sectors, as I have outlined.
In addition to all that, in the Statement on powering up Britain, which was made just before the Easter Recess and will be repeated here on Wednesday evening, we announced a further insulation scheme—the Great British insulation scheme—to deliver £1 billion in additional investment by March 2026 in energy-efficiency upgrades in some of the least efficient homes, including those in the so-called able-to-pay sector. Furthermore, we announced that we will extend the boiler upgrade scheme until 2028, supporting both domestic and small non-domestic buildings, building on the existing £450 million-worth of funding already committed between 2022 and 2025 to provide the signal that people have been asking for that the scheme will last in the longer term. All of that will help us to reach our ambition of phasing out all new installations of natural gas boilers by 2035, but before we can proceed to legislate for that we must provide effective cheap alternatives; otherwise, the population will, in my view, react badly to being compelled to do that.
I turn next to Amendment 98, tabled by the noble Lords, Lord Foster, Lord Lennie and Lord Whitty, and the noble Baroness, Lady Hayman, with contributions from my noble friend Lady Altmann. I would also like to thank the noble Lord for his important work as chairman of the committee. This amendment would require all privately rented homes to have a minimum energy performance certificate—EPC—rating of band C by December 2028, subject to specified exemptions. The amendments would also require non-domestic privately rented properties to meet EPC B by December 2028.
Again, the Government agree with the principle of increasing the ambition for minimum energy-efficiency standards to help reduce energy bills for tenants and to deliver carbon savings to meet our net-zero and achieve our fuel poverty targets. That was reflected in the Government’s consultation, which has been referred to, on proposals to raise the minimum energy-efficiency standard for privately rented homes to EPC C for new tenancies from 1 April 2025 and for all tenancies by 1 April 2028. We are currently considering the results of that consultation, but, as I have said in the House before, it is not an easy policy to progress. There are already shortages of rented accommodation in many parts of the country, and it is certainly not my ambition to further increase those shortages, so we will have to be careful how we proceed in that legislation. The Government also consulted on a minimum energy-efficiency standard for non-domestic privately rented buildings of EPC C by 2027, and EPC B by 2030.
Under the Energy Act 2011, the Secretary of State already has the necessary powers to amend the PRS regulations to raise the minimum energy-efficiency standards and set the dates by which landlords must comply with the new energy standards. As I explained in Committee, the amendment would not allow us to reflect the immense amount of valuable feedback that we received from the consultation in the final policy design that we are currently working on. This will be essential to ensure that it is fair and proportionate for tenants, of course, but also for landlords themselves. As I said at the time, we intend to publish the summary of responses to this consultation later in the year, as confirmed in the powering up Britain Statement.
I hope that I have been able to reassure noble Lords as to our ambitions in this area. We want to see the same policy outcomes as do many in this House and we are already working on many of these areas. I hope that my reassurances will enable the noble Baroness to withdraw her amendment.
Baroness Hayman (CB)
My Lords, I am grateful to everyone who has spoken on this important issue. The Minister said, in essence, that there is no difference between the Government and my amendment. If that is so, it will not be such a big deal for them to accept it. However, the truth of the matter is that this amendment would mandate action in this area, and in a specific timeframe. I am sad to say that the Government have a credibility problem in this area with their own ambitions, objectives and restatements of policy. I have been very much supported from all Benches—I am particularly grateful to the noble Lord, Lord Deben—and I wish to test the opinion of the House.
Lord Callanan
“(A1) ESOS regulations that provide for the imposition of a financial penalty must also provide for a right of appeal to a court or tribunal against the imposition of the penalty.”Member’s explanatory statement
This amendment requires ESOS regulations that provide for the imposition of financial penalties to include provision for a right of appeal.
Baroness Blake of Leeds (Lab)
My Lords, I thank all noble Lords for their very important contributions on the amendments in this group. It is an enormous privilege to follow the noble Lord, Lord Deben, with his experience and expertise in the subject matter before us today. I want to keep my comments brief as we have had a lot of opportunity in different discussions and debates, particularly during the passage of this Bill, to try to get across just how strong the feelings are around the House on these matters.
I pay tribute to the noble Baroness, Lady Sheehan, for her amendment on the burning of methane and other hydrocarbons produced during oil extraction. As we have heard, very distinguished bodies have come out against this. In particular, there is a real concern that not taking notice of the need to address this issue undermines the UK’s commitments made at COP 26 and COP 27 under the global methane pledge. We need to take this seriously. We have heard how important the contribution of methane is towards the UK’s net greenhouse gas emissions. Just to add to the statistics around this, during the last decade the UK has wasted £2.6 billion in lost gas sales due to flaring and venting, and released 45 million tonnes of carbon dioxide into the atmosphere. When you put that into the context—as the noble Baroness, Lady Sheehan, did—of what could have been done with that fuel, it is a lesson that needs to be learned.
I concentrate my comments this afternoon on Amendment 131 in the name of the noble Lord, Lord Teverson, and supported by the noble Baronesses, Lady Sheehan and Lady Boycott, and my noble friend Lord Lennie. As we have heard, this amendment is specifically to prevent the opening of new coal mines in England and is a response to the proposed opening of a new coal mine in Cumbria. I have said before that I am really concerned about the message this coal mine sends out. It undermines totally our claim to be an international leader on climate. One only had to look at the press reports from around the world after the announcement was made to understand just how damaging this is.
I fully support the comments from the noble Lord, Lord Deben, on the planning system. I hope that we can move forward on this, so that local authorities and anyone who has a role in making decisions through the planning system have the necessary tools to stand up and not be concerned about the extortionate costs that would come their way if, after having turned down an application, it was turned over on appeal.
The other area that we have not emphasised enough is this: we cannot even claim that the coal mine in Cumbria would provide secure, long-term jobs. That just is not part of the equation here. As we have heard, it will not benefit British Steel. We are already seeing a significant decline in the coal used by the UK steel industry, including a 19% drop in demand for coking coal to run UK blast furnaces. As the noble Lord, Lord Teverson, said, the future is not coking coal.
I am not sure if anyone has mentioned the rather fanciful claim that this mine would be the first carbon-neutral operation of its kind. How can we stand here and say this seriously and honestly, and with particular regard to the fact that, as we have heard, a high percentage of the coal would be exported and so we would have no control over its use.
I am very disappointed that part of the debate around opposing the mine has ignored the far greater opportunities of investing in new green technologies for the local area. It is a perfect area for so many of the possibilities that are coming our way with real, sustainable jobs.
I repeat that Alok Sharma, a former president of COP, said last December that opening
“a new coalmine would send completely the wrong message and be an own goal”.
Surely we should be doubling onshore wind capacity, tripling solar capacity and quadrupling offshore wind capacity. I hope I have made it clear that on our Benches we support the amendment in the name of the noble Lord, Lord Teverson.
Lord Callanan (Con)
I thank all noble Lords for their amendments and contributions.
I will just make an observation first, having listened with great interest to the noble Baroness, Lady Blake. I was actually hoping that the noble Lord, Lord Lennie, would reply to this debate, as a fellow politician from the north-east of England. He will know very well that, in virtually every election that I fought in the region, the Labour Party campaigned against the closing of coal mines. I will be gracious and accept that time moves on, but it was only fairly recently that some of their parliamentary colleagues in the other place were campaigning for the opening of new coal mines and against the closing of old ones. Time moves on in politics but, had you said to me 10 or 15 years ago that I would be standing up in the House of Lords opposite a Labour Party telling me it does not want to see the opening of any coal mines, I would not have believed you.
Baroness Sheehan (LD)
Flaring and venting is something that I am keen on eliminating, and I will use every opportunity in the House to progress the issue further. Therefore, would it be sensible for the Minister to agree to meet with me and other noble Lords who have expressed an interest in this issue, so that we can talk sensibly about it, going forwards?
Lord Callanan (Con)
I did organise a recent meeting with officials to discuss the issue, at the request of the noble Baroness’s Front-Bench colleague, the noble Lord, Lord Teverson. The noble Baroness had the opportunity to attend if she had wished to.
Baroness McIntosh of Pickering (Con)
My Lords, I am grateful for the discussion that we have had on the various amendments in this group, and that my noble friend the Minister referred to the use of coal on heritage railways. I am delighted to say that I am president of the North Yorkshire Moors Railway and hope that we can continue to enjoy the spectacular scenery and days out that heritage railways offer.
I am disappointed that my noble friend missed an opportunity to explain to the House specifically which areas the amendments to the levelling up Bill will cover. Rather than detain the House further at this stage, I will pursue that through Written Questions, where I will have to get an Answer. I beg leave to withdraw my amendment.
Lord Callanan
“(8A) Where regulations under subsection (1) or (5) provide for the imposition of a civil penalty, they must also include provision for a right of appeal against the imposition of the penalty.”Member's explanatory statement
This amendment requires regulations under Clause 246 (arrangements for responding to marine oil pollution) that provide for the imposition of civil penalties to include provision for a right of appeal.
Lord Callanan
“(8A) Where regulations under this section provide for the imposition of a civil penalty, they must also include provision for a right of appeal against the imposition of the penalty.”Member's explanatory statement
This amendment requires regulations under Clause 247 (habitats: reducing effects of offshore oil or gas activities etc) that provide for the imposition of civil penalties to include provision for a right of appeal.
Lord Callanan
Member's explanatory statement
See the explanatory statement for the amendment in Lord Callanan’s name at page 210, line 23.
Lord Callanan
“(4A) Where regulations under this Act are subject to the made affirmative procedure, the statutory instrument containing them must be laid before Parliament after being made. (4B) Regulations under this Act contained in a statutory instrument laid before Parliament under subsection (4A) cease to have effect at the end of the period of 28 days beginning with the day on which the instrument is made unless, during that period, the instrument is approved by a resolution of each House of Parliament.(4C) In calculating the period of 28 days, no account is to be taken of any whole days that fall within a period during which—(a) Parliament is dissolved or prorogued, or(b) either House of Parliament is adjourned for more than four days.(4D) If regulations cease to have effect as a result of subsection (4B), that does not—(a) affect the validity of anything previously done under the regulations, or(b) prevent the making of new regulations.”Member’s explanatory statement
This amendment makes provision about the “made affirmative” procedure for the purposes of the amendment in the name of Lord Callanan at page 161, line 15.
Lord Callanan
Member’s explanatory statement
See the amendment in the name of Lord Callanan at page 230, line 18.
Lord Callanan
“(ca) section (Treatment of recycled carbon fuel and nuclear-derived fuel as renewable transport fuel);”Member’s explanatory statement
This amendment provides that the new Clause inserted after Clause 113 by the amendment in Lord Callanan’s name comes into force two months after Royal Assent.
Energy Bill [HL]
Lord Callanan ExcerptsTuesday 28th March 2023
(1 year, 1 month ago)
Lords ChamberRead Full debate Energy Act 2023 View all Energy Act 2023 Debates Read Hansard Text Watch Debate Read Debate Ministerial Extracts Amendment Paper: HL Bill 86-I(a) Amendment for Report (Supplementary to the Marshalled List) - (27 Mar 2023)
Lord Lennie (Lab)
My Lords, my thanks to noble Lords who have spoken in the debate: the noble Lords, Lord Ravensdale and Lord Teverson, and the noble Baronesses, Lady Hayman, Lady Altmann and Lady Bennett. I will quickly review what I think they said and set out our amendment.
The noble Lord, Lord Ravensdale, set out the principal purpose for the Bill. Split in four ways, it will: increase energy systems’
“resilience and reliability … support the delivery of the UK’s climate change commitments … reform the UK’s energy system while minimising costs to consumers and protecting them from unfair pricing”,
and improve the overall efficiency of the UK energy system and economy. It also requires an annual report to Parliament on the above. The first three of those points are lifted directly from the opening paragraph of the Explanatory Notes, while the fourth is also an objective of the ISOP simply made wider.
Labour tabled an amendment in Committee, and I will remind noble Lords of its contents. The context of that was, at that time, the cost of living crisis; the energy price cap was going up to £3,549 per year. National Energy Action predicted that the number of UK households in fuel poverty would rise to 8.9 million. Tory leadership candidates at that time were vying for leadership to be Prime Minister but were running away from the issue of net zero; the High Court found that the net-zero climate strategy was inadequate, and the Climate Change Committee found that credible plans existed for only 39% of emissions, citing “major policy failures” and “scant evidence of delivery”. As regards energy security at that time, gas prices were expected to surge to record highs the week after the Nord Stream 1 pipeline was shut down, and European prices had risen by nearly 400% over the past year. The UK relies on gas for about 40% of its power generation, and even more on the coldest days when demand is high and wind generation tends to be low. In 2017, a BEIS report included a scenario for a complete cut-off of Russian gas and found that the UK could see “significant unmet demand” if the cut was prolonged and continental European countries paid whatever was necessary.
However, the Bill is a hotchpotch of things thrown together, lacking an overarching theme to tackle these issues. Our amendments would have set out a purpose for the Act, increasing resilience and reliability; supporting the delivery of UK’s climate change commitments; reforming energy systems; binding the Secretary of State and public authorities to these purposes; requiring the Secretary of State to designate a statement as a strategy and policy statement with regard to the purpose of the Act; and requiring the Secretary of State to review the strategy and policy statement on a five-year basis. That would have forced successive Governments into long-term thinking about the specific purpose, not limiting the impact and ambition of the Bill to what has been tacked together, which simply does not go far enough or tackle the immediate problems.
The amendment from the noble Lord, Lord Teverson, would place gas and electricity markets under a duty to assist in the delivery of net zero, and our amendment would require the Secretary of State to designate a statement giving GEMA a mandate for considering the role of energy in supporting government policy in achieving net zero. The amendment from the noble Baroness, Lady Hayman, would include in Ofgem’s general duties a specific requirement to have regard to meeting the UK’s net-zero emissions.
Briefing from RenewableUK sets out the argument for Ofgem remit reform. It states:
“Ofgem’s remit has not changed since its establishment in 2000, and does not prioritise electricity decarbonisation”—
in line with recent government legislation or stated ambitions. It has only a consideration of greenhouse reduction. It continues:
“As a result, Ofgem has been unable to substantially reform its working practices and regulatory frameworks in response to the 2008 Climate Change Act and the UK’s subsequent net zero ambition, to detriment of renewable energy investment and decarbonisation pace.”
It goes on to say that the Government have an opportunity to reform Ofgem’s remit in the Bill we are addressing today.
There is some key evidence for that. Mike Thompson, the Climate Change Committee’s chief economist, noted the integration of energy with transport and heat, including the potential for
“cars sitting on driveways acting as batteries and putting electricity back into the grid”.
He argued that there is a
“need for real integration and a regulator that can think from a systems perspective”,
suggesting that hydrogen and heat networks should be within Ofgem’s remit.
Jonathan Brearley, chief executive of Ofgem, said:
“Planning the system and setting how it evolves should not really be done by the regulator. The regulator’s job is to make sure that that is done efficiently and effectively by the companies concerned.”
We appreciate that argument.
A number of witnesses told the committee that the net-zero target should be included explicitly within Ofgem’s statutory duties. Dr Hardy said that he would
“put net zero up top”,
balancing out its other duties against the context of
“hitting that legislated carbon target”.
Professor Mitchell said that
“net zero has to be the raison d’être of Ofgem”
and argued that
“delivering on legally enshrined commitments to decarbonise”
should form part of Ofgem’s principal duty.
The committee concluded:
“To ensure that, on an enduring basis, the appropriate focus is given to net zero within its competing priorities, we recommend that Ofgem’s duties should be amended to include explicit reference to having due regard to the net zero target. While Ofgem maintains that net zero considerations already factor into its decision-making, adding net zero explicitly to its statutory duties will serve to make this clear.”
We feel that the UK needs not to be left behind but to show similar ambition in its plans for the future of the electricity industry, including Ofgem’s remit.
The Parliamentary Under-Secretary of State, Department for Energy Security and Net Zero (Lord Callanan) (Con)
First, I thank the noble Baroness, Lady Worthington, and the noble Lord, Lord Ravensdale, for bringing forward Amendments 1 and 136 and the noble Lord, Lord Teverson, for his contribution to the debate. As I set out in Committee, although the Government believe these amendments are well intentioned, ultimately, they are unnecessary. First, the Bill has a clear purpose, so I do not think any introductory clauses are necessary. Where appropriate, the Bill already sets out fairly clear objectives and general duties for the Secretary of State and other specified bodies in carrying out their functions under the relevant parts.
Secondly, in regard to an annual report, I assume noble Lords are aware that the Energy Act 2013 introduced the power for the designation of a strategy and policy statement that sets out the Government’s strategic priorities for energy policy, the roles and responsibilities of those implementing such policy, and the policy outcomes that we want to see achieved. We have committed to a second statutory consultation this spring. I therefore believe that an annual report to Parliament would cause unnecessary duplication of the existing strategy and policy statement.
Baroness Hayman (CB)
Before the noble Lord sits down, I would be very grateful if he can tell me why he thinks so many other people disagree with him on this—so many people who are regulated by the regulator, and so many reports, from your Lordships’ House, the Skidmore report, and from the CCC. Why does the rest of the world not get it?
Lord Callanan (Con)
I think it is very easy for other people who are not directly engaged in the business of regulation to think that adding a statutory duty will be the magical cause of all the different elements of the energy system that they want to contribute to. But, of course, what we should also remember is that placing a duty in primary legislation also makes it justiciable.
I am sure there are plenty of lawyers in this House, and lots of litigation is already flying around on net-zero duties—the Government, indeed, need to respond to further litigation by the end of the week. If the House wants to give yet more work to their learned friends—of course, all the costs of that are ultimately borne by consumers—then the House is free to do that. We continue to keep the matter under review, but we are very clear, as is Ofgem, that Ofgem feels as though it already has this responsibility. I hope that Peers will think again.
Baroness Altmann (Con)
Before my noble friend sits down, is there any chance that the Government might reconsider this? Will he consider that the future system operator will have this remit? The FCA, the PRA under the current Financial Services and Markets Bill, the NHS, and the Advanced Research and Invention Agency will all have this specific remit written in. Why do the Government so reject putting it in the Bill for Ofgem?
Lord Callanan (Con)
Because the other bodies do not have the responsibility for regulating the energy system. I do not see why that is so difficult for my noble friend to understand.
Lord Ravensdale (CB)
My Lords, to sum up my Amendments 1 and 136, the important part of the whole Bill for me is to bring into being the future system operator, which will be a key enabler for much of what we have been talking about today. In the end, it will provide advice to the Government, and it is the responsibility of the DESNZ to own the development of a plan for our future electricity-generating system.
The amendments proposed by the noble Baroness, Lady Hayman, and the noble Lord, Lord Lennie, align with what I am talking about around linking up the duty for Ofgem. They pointed out the links between it and the future system operator, and talked about making sure that it is coherent and that we think more strategically to reduce costs to the consumer in the long term.
Another important point is tackling long-term under- investment in the grid, as brought out by the noble Lord, Lord Teverson, and the noble Baroness, Lady Altmann. Alongside the increase in generating capacity that we require, there is just as much of a challenge in our grid infrastructure and ensuring that the grid connections are there to make use of that.
The Minister gave me some reassurance with the announcements that he said were due later this week on the energy system and on the electricity system in particular. I look forward to that event with great interest and, for now, beg leave to withdraw my amendment.
Lord Callanan (Con)
I thank everyone who contributed to the debate. If the House will have a little patience, I will first take some time to set out and explain the government amendments in this group, before I come on to the non-government amendments.
Amendment 4 to Clause 9 ensures that, ahead of making any regulations under this power, there should first be consultation with the economic regulator and the appropriate devolved authorities.
Amendments 5 and 6 to Clause 19 preserve the independence of the economic regulator by removing the power for the Secretary of State to direct the economic regulator not to impose conditions in consenting to the transfer of a licence.
Amendment 7 clarifies that the requirement to provide information to the Secretary of State or the CMA under Clause 28 is in relation only to Ofgem’s functions under Part 1 of the Bill, not to any of its other functions.
Amendment 8 clarifies that, under Clause 29, disclosure of information to the economic regulator does not breach any obligation of confidence owed by the licence holder making the disclosure, or any other restriction on the disclosure of information. It also clarifies that this provision does not authorise a contravention of data protection legislation.
Amendment 9 provides updated definitions of a “final order” and “provisional order” in Clause 31—these are consequential on amendments made to Clause 32 in Committee, which inserted a new Schedule 3, setting out the enforcement measures in the Bill.
Amendments 10 to 12 and 15 concern the list of persons whom the Secretary of State must consult under Clause 46 before modifying the terms of a company’s licence in relation to a transport and storage administration order. These amendments make it clear that there should be consultation with the relevant storage licensing authority where a carbon storage licence is in place.
On Amendment 35, we must mitigate the risk that decommissioning liabilities fall to the taxpayer, given that the Government ultimately sit as the decommissioner of last resort. Section 29 of the Petroleum Act 1998 enables the Secretary of State to serve notices that require the recipient to submit a decommissioning programme for an installation or pipeline. The Section 29 regime is therefore a key lever in mitigating that risk.
Amendment 35 proposes amendments to Section 30 of the Energy Act 2008, which would enable modifications to Sections 30, 31 and 45 of the Petroleum Act 1998, in its application to the decommissioning of carbon storage installations. These modifications seek to ensure that the Secretary of State can issue a Section 29 decommissioning notice on entities with a licence for CCUS activities, under Section 18 of the Energy Act 2008. This will enable the Secretary of State to impose decommissioning obligations on CCUS licensees, among other persons.
Amendment 36 proposes an amendment to Section 29 of the Petroleum Act 1998. Under current legislation, a new Section 29 notice cannot be issued on assets that have already been included in a decommissioning programme, unless that programme is rejected or approval for it is withdrawn. This would mean that, if an oil and gas asset were subsequently repurposed for use in a CCUS network, the Secretary of State may not be able to serve a new Section 29 notice on the CCUS operators of that asset without first rejecting, or withdrawing approval for, the existing decommissioning programme. This could lead to a gap in liability for decommissioning a repurposed asset, which of course increases the risk to the taxpayer. The amendment seeks to ensure that the Secretary of State can issue a new Section 29 notice on assets that are already within an approved decommissioning programme, thus mitigating the risks.
Amendments 37 to 39 clarify the duties in Clause 92 for the Secretary of State and the economic regulator to carry out their respective functions with regard to considerations in a CCUS strategy and policy statement. The amendments clarify that these duties apply only to functions relevant to the strategic priorities set out in the statement, and related to carbon dioxide capture, usage and storage policy. The amendments seek to exclude other functions set out in Part 2, which relate to hydrogen production that may not rely on CCUS, such as hydrogen produced via electrolysis. They seek to expressly exclude hydrogen levy functions.
Amendments 41 to 47 to Clause 99 ensure that sufficient powers are available to the Secretary of State to be able to update or make new access to infrastructure regulations, should that be appropriate to ensure that access arrangements remain fit for purpose. In particular, updates to the existing regulations may be needed in light of the new economic licensing framework established in Part 1. These amendments are necessary because the existing regulations were made using the powers in Section 2(2) of the European Communities Act 1972, and there are currently no domestic powers to update, replace or make new access to infrastructure regulations.
Amendment 14 to Schedule 5 ensures that, where appeals are made to the Competition and Markets Authority in respect of a decision made by the economic regulator for carbon dioxide transport and storage, a “specialist utility” group is convened to hear such an appeal. This is consistent with provisions for licence modification appeals in the Gas Act 1986, the Electricity Act 1989 and the Water Industry Act 1991, as I am sure the House is aware.
I move to the non-government amendments. Amendment 33 requires CCUS decommissioning funds to be ring-fenced. I thank the noble Lord, Lord Teverson, for his contribution. The Government’s view is that the primary purpose of a funded decommissioning regime is to provide assurance that decommissioning liabilities for CCUS assets will be paid, mitigating the risk that these liabilities fall to the taxpayer—we share the noble Lord’s concern about this. The noble Lord asked me for reassurance that the funds will be ring-fenced. The Government agree that appropriate safeguards will need to be put in place to ensure that the funds carry out the desired function.
The Government’s 2021 consultation on establishing a funded CCUS decommissioning regime set out our proposals for access to the decommissioning funds and, in particular, the expectations for ring-fencing and regulatory authorisation for any withdrawals. The Government expect that the decommissioning funds will be overseen by the economic regulator, to ensure that the funds are accruing appropriately. In addition, the intention is that the Offshore Petroleum Regulator for Environment and Decommissioning will need to authorise any withdrawal requests made by the operator to ensure that use of the funds is restricted to decommissioning-related purposes.
The noble Lord will be pleased to know that the Government plan shortly to publish an update document, which will include further detail on regulatory oversight of the decommissioning funds, the holding arrangements and, crucially, the protection against insolvency. The Government intend to set out the requirements for appropriate restrictions and safeguards for the fund in regulations and guidance. These requirements will be essentially technical in nature, so it is the Government’s view that it would be more appropriate to set these out in secondary legislation.
I move to Amendment 2, from the noble Baroness, Lady Liddell, and the noble Lord, Lord Foulkes, who is not in his place, sadly—I was looking forward to debating with him. It is the Government’s view that this amendment is not necessary. The Secretary of State is already bound by law under the Climate Change Act to ensure that targets to reduce greenhouse gas emissions are met. Under Clause 1(6), the economic regulator is required to have regard to the need to assist the Secretary of State in complying with his statutory duties under Sections 1 and 4 of the Climate Change Act 2008, and to have regard to the statutory emissions-reduction targets in each of the devolved Administrations.
Anticipatory investment will be essential to scale up CO2 transport and storage networks to meet our CCUS ambitions and net-zero targets. However, this investment must be driven by the needs of the users of the network, both those already connected to a network and, of course, those wanting to connect.
Baroness Sheehan (LD)
Before the Minister sits down, I will ask him to clarify a couple of things. First, I welcome his statements on decommissioning, but can he confirm whether the safeguarding of decommissioning funds will include all fields, both existing and new? Secondly, can he confirm that it is the FCA that will provide the regulatory oversight for decommissioning funds?
Lord Callanan (Con)
It would depend on what the noble Baroness means by “decommissioning funds”. What would the decommissioning funds be for? In response to the noble Lord, Lord Teverson, I outlined our intention to ring-fence the CCUS decommissioning funds.
Baroness Liddell of Coatdyke (Lab)
I beg leave to withdraw my amendment.
Lord Callanan
Member's explanatory statement
This amendment requires proposed regulations under subsection (6) to be consulted on in the same way as regulations under subsection (2).
Lord Callanan
Member's explanatory statement
This amendment removes a provision that would have authorised the Secretary of State to direct the economic regulator not to impose conditions on consent to the transfer of a licence. Lord Callanan’s amendment at page 21, line 19 is consequential on this amendment.
Lord Callanan
Member's explanatory statement
This amendment clarifies that the duties under subsection (3) relate only to functions under Part 1 of the Bill, not to other functions of the Gas and Electricity Markets Authority.
Lord Callanan
“(5) Except as provided by subsection (6), the disclosure of information under this section does not breach—(a) any obligation of confidence owed by the person making the disclosure, or(b) any other restriction on the disclosure of information (however imposed).(6) This section does not authorise or require a disclosure of information if the disclosure would contravene the data protection legislation (but in determining whether a disclosure would do so, a requirement imposed by virtue of subsection (2) is to be taken into account).”Member's explanatory statement
In this amendment new subsection (5) clarifies that disclosure of information under the Clause would not amount to a breach of any other legal restrictions and new subsection (6) clarifies the relationship between the power to require information under the Clause and requirements in data protection legislation.
Lord Callanan
Member's explanatory statement
This amendment updates subsection (4) to take account of amendments made in Committee which affected the way “final order” and “provisional order” are defined in Part 1.
Lord Callanan
Member's explanatory statement
This amendment is supplementary to Lord Callanan’s amendment at page 43, line 4.
Lord Callanan
Member's explanatory statement
This amendment takes account of the passing of the Energy Prices Act 2022, which inserted a reference to that Act in section 105(1)(a) of the Utilities Act 2000, since this Bill was introduced.
Lord Callanan (Con)
My Lords, in moving Amendment 13, I will also speak to Amendments 58, 63, 75, 78, 79, 95 and 143 in my name.
Turning first to Amendments 58 and 143, I thank the noble Lord, Lord Ravensdale, for bringing forward his original amendment on the classification of nuclear-derived fuels in Committee. While we believe that we should not categorise nuclear-derived fuels as renewable, I have welcomed the constructive discussion with noble Lords since Committee, and, in response to that, the Government are pleased to bring to forward these amendments.
Amendment 58 will enable the renewable transport fuel obligation and the forthcoming sustainable aviation fuel mandate to support two types of low-carbon fuel, helping the UK to decarbonise transport further, thereby achieving, I think, the noble Lord’s objective. First, it will enable the support of recycled carbon fuels. These are produced from otherwise unrecyclable waste plastics or industrial waste gases that cannot be avoided, reused or recycled. Secondly, it extends support to fuels derived from nuclear energy. Both fuel types have the potential to deliver significant carbon savings over traditional fossil fuels and are a vital replacement for sectors that are difficult to decarbonise, such as commercial aviation and heavy goods vehicles. Amendment 143 sets the timing on which the power comes into force at two months after Royal Assent.
I turn now to Amendment 95, which relates to Part 8 on the regulation of energy smart appliances, specifically under Clause 191, which deals with how energy smart regulations will be enforced. It will enable the regulator to agree an enforcement undertaking with an economic actor, where appropriate, and, if required, it will still issue a penalty on a separate non-compliance issue to the same economic actor. The ability to agree an enforcement undertaking with a business is a useful tool for a regulator. It allows it to work with a business to bring it into compliance without the need for potentially harsher penalties. This will be particularly important in the regulation of energy smart appliances, which is a nascent and evolving market at the moment. Should other, unrelated instances of non-compliance arise while an enforcement undertaking is in place, the regulator still has the power to issue a penalty. The amendment will put that ability beyond any doubt by clarifying that the regulator can issue a penalty against a business with which it has agreed an enforcement undertaking, providing that the two relate to separate issues. The amendment will help to enable the implementation of a consistent and fair enforcement regime for the energy smart appliances market.
Amendments 13 and 63 simply take account of the Energy Prices Act 2022, which has been passed since the Bill was introduced.
Amendments 75, 78 and 79 are minor and technical amendments relating to Schedule 16 on heat networks regulation. Amendment 75 corrects an error in relation to installation and maintenance licences for heat networks by removing the reference to Scotland, where the licensing regime will not apply. The licensing regime will apply in England and Wales, and the Northern Ireland Executive will have powers to introduce an equivalent regime. The regime will not apply in Scotland, as the Scottish Government, I am told, will introduce their own regime.
Amendment 78 simply corrects a typographical error in paragraph 40 of Schedule 16, replacing a reference to “a penalty” with “compensation”.
Finally, Part 9 of the schedule provides for regulations introducing a special administration regime for the heat network sector. It provides for the appropriate authority to modify existing legislation relating to the special administration regime for energy companies to allow for the equivalent introduction of an energy regime for heat networks. Amendment 79 provides a definition of the appropriate authority for paragraph 50 of the schedule, to match the definition in paragraph 61 of that schedule. The appropriate authority in this case is defined as the Secretary of State for England and Wales and Scotland, and the Department for the Economy in Northern Ireland. I beg to move.
Lord Ravensdale (CB)
My Lords, I shall speak to Amendment 58, to which I have added my name. First, I thank the Minister for his constructive approach, and for listening to my amendments in Committee and responding by introducing this amendment, which addresses all of the points in my Committee amendments. I am most grateful. I must also thank his officials for the work that they have put into drafting and finding an acceptable way forward, and for engaging with me throughout the process. I also thank the noble Baroness, Lady Worthington for her support throughout.
I break down the benefits of this amendment into three broad areas. First, it continues the work that the Government are doing to create a level playing field for low-carbon technologies. We heard the welcome news in the recent Budget Statement that nuclear will be considered as environmentally sustainable, or taxonomy aligned, under the UK green taxonomy. In a similar vein, the renewable transport fuels obligation amendment will allow nuclear to benefit from a subsidy scheme that is already available to renewable operators. This sends a clear message to investors that the Government sit squarely behind nuclear as an environmentally sustainable energy source. It also brings out the important principle of technological independence—to let the market do its job to find the most efficient solutions, but also because for net zero we need to throw the kitchen sink at the problem, if we are going to achieve it.
Secondly, the amendment directly enables a whole range of near-term projects that will help to kick-start the green hydrogen and recycled carbon fuel industries within the UK. With recycled carbon fuels, there are a number of industrial projects being scoped that will be enabled by this amendment—for example, Project Dragon, to use industrial waste gases from Port Talbot to produce ethanol from which recycled carbon fuels, including sustainable aviation fuels, can be derived. By setting strict rules for how to account for emissions, savings of around 70% can be generated when compared with the baseline of using fossil fuels. Those projects, enabled by this amendment, will be an important enabler for decarbonising transport fuels and moving towards a circular economy, saving significant amounts of greenhouse gas emissions in future.
For nuclear, there are near-term plans to produce hydrogen from Sizewell B for use in Sizewell C construction, and also in other nuclear projects, including SMRs and AMRs. Particular economic benefits may be gained through using nuclear power to produce hydrogen—for example, high temperature electrolysis, using heat from the nuclear reaction to produce hydrogen much more efficiently than cold electrolysis. Further down the line, using the heat from high temperature reactors to produce hydrogen directly through the sulfur-iodine cycle has the potential to increase efficiency further beyond traditional electrolysis techniques. If the Government are to meet their ambitious hydrogen production targets, nuclear needs to be part of the picture, which will be enabled by this amendment and help kick- start green, or pink, hydrogen production—I sometimes lose track of the colours—in the UK.
Thirdly, the amendment enables these fuel sources to be eligible for the sustainable aviation fuels, or SAF, mandate. Both recycled carbon fuels and nuclear will have a key role to play here. RCF has the potential to produce large volumes of SAF in the near term; in the longer term, the combination of direct air capture and hydrogen production from nuclear could allow power-to-liquid sustainable aviation fuel to be produced economically.
As I said, I am very grateful to the Minister and his officials for working together to make this important change to the Bill.
Lord Lennie (Lab)
My Lords, this amendment would allow two other low-carbon fuels to be supported under the existing and forthcoming renewable transport fuel schemes. As we have heard, these are recycled carbon fuels and nuclear-derived fuels. While the noble Lord has created a degree of happiness with the noble Lord, Lord Ravensdale, some unhappiness still exists around the Chamber. These fuels can provide similar carbon emissions savings to the renewable fuels already considered under these schemes. Furthermore, these fuels are crucial for the production of sustainable aviation fuel, which is imperative to achieving the jet zero strategy and fulfilling the forthcoming sustainable aviation fuel mandate.
I will not speak for long on this, because we want to move on, but this amendment would insert a new clause in Chapter 3 of Part 3 of the Bill, providing for recycled carbon fuel and fuel derived from nuclear energy to be treated as renewable transport fuel. Amendment 74, in the name of my noble friend Lord Whitty, would make it clear that the regulator needs to ensure that consumers of heat networks have equivalent consumer protection to those of other suppliers. The Explanatory Notes say of Clause 166:
“This clause provides that GEMA will be the regulator for heat networks in England, Wales and Scotland. The Secretary of State may introduce regulations to appoint a different regulator by affirmative procedure. The regulator in Northern Ireland will be the Northern Ireland Authority for Utility Regulation (NIAUR) subject to a similar power to make changes by secondary legislation.”
I think that is something we can all agree with.
Lord Callanan (Con)
I thank all noble Lords who have taken part in this debate. Before I engage in the detail of the amendments, let me respond to the noble Baroness, Lady Bennett. I am sure I have never said that we should not listen to scientists; of course we should, but we should accept that there are sometimes different scientific opinions. I notice that the noble Baroness is very keen to listen to scientists on some occasions, but the Greens are totally opposed to listening to the vast majority of scientists who say that nuclear should provide an essential way of decarbonising the country’s economy.
By way of example, perhaps she would like to look at the mess her Green friends have got themselves into in Germany by their irrational objections to nuclear policy: they have ended up, now that they are in government, supporting the eradication of villages to open more lignite mines, the dirtiest form of coal production, because they got rid of all their nuclear capacity. Obviously they could not have predicted the gas shortages that would come along, but this is the problem you get yourself into with idealistic policies without any practical effect in the real world. Thankfully, I do not think there is any chance of the noble Baroness or her party being in government in the UK to make similar errors and mistakes.
Baroness Bennett of Manor Castle (GP)
I have to correct the noble Lord and point out that there are Green Ministers in government in the UK.
Lord Callanan (Con)
I accept the noble Baroness’s point—yes, that was an error on my behalf. Of course, Patrick Harvie is my opposite number in Scotland and I discuss these matters with him quite often, although we have never had a nuclear discussion yet.
Turning to the amendments, I thank the noble Lords, Lord Ravensdale, Lord Teverson and Lord Lennie, and the noble Baroness, Lady Worthington, for their contributions on Amendment 58. I thank the noble Lord, Lord Ravensdale, for his engagement and pay tribute to the excellent work of my officials in drafting the amendments. In response to the very appropriate request by the noble Baroness, Lady Worthington, for clarification on fossil fuel waste, both the renewable transport fuel obligation and the forthcoming sustainable aviation fuel mandate are underpinned by strict sustainability and eligibility criteria. This includes requiring qualifying fuels to provide minimum greenhouse gas savings when compared with the fossil fuels they displace.
Fuels produced from nuclear energy are considered to be zero carbon; however, it will be important that we do not incentivise the diversion of electricity generated by nuclear power stations from current uses. The RTFO already includes criteria to ensure that renewable energy—
Baroness Bennett of Manor Castle (GP)
Perhaps the Minister might wish to correct himself. He just referred to nuclear energy as zero carbon. It is of course, as under the Government’s own classification, low carbon.
Lord Callanan (Con)
I think I said fuels produced from nuclear energy, but never mind.
The RTFO already includes criteria to ensure that renewable energy used for fuel production is additional to that which would otherwise be supplied, and the same principles would be developed for nuclear power.
With regards to the waste hierarchy, this policy makes effective use of what otherwise would be difficult to manage waste. RCFs are non-recyclable fossil wastes. Utilising these types of wastes to synthesise fuel is a better end-of-life fate than landfill or incineration. It will be important to mitigate risks and ensure adherence to the UK waste hierarchy, so we are in the process of concluding a consultation on detailed policy proposals to ensure that RCFs contribute to and meet our wider objective of effectively reducing the greenhouse gas emissions of fuels. Sustainability criteria are being carefully formulated in consultation with a wide range of scientists, technical experts, other government departments, fuel suppliers and wider stakeholders to ensure that the risks are carefully managed and mitigated. I hope that provides appropriate reassurance to the noble Baroness.
Lord Callanan
“Enterprise and Regulatory Reform Act 2013
9 In Schedule 4 to the Enterprise and Regulatory Reform Act 2013, in paragraph 35(3) (membership of CMA panel), in the definition of “specialist utility functions”, after paragraph (b) insert—“(ba) an appeal under section 20 of the Energy Act 2023;”Member's explanatory statement
This amendment provides for appeals under Clause 20 to be “specialist utility functions”. This will attract special provisions relating to the composition of groups constituted to carry out such functions.
Lord Callanan
Member's explanatory statement
This amendment is consequential on Lord Callanan’s amendment at page 43, line 4.
Lord Callanan
Member's explanatory statement
This amendment provides for the Parliamentary procedure to which regulations under new Clause (Payments to relevant market participants) are to be subject.
Lord Callanan (Con)
My Lords, in moving Amendment 16 I will speak also to Amendments 20, 21 and 30 standing in my name.
Amendment 30 further clarifies the scope of the modifications that the Secretary of State can make to certain licences for the purposes of facilitating or supporting the enforcement and/or administration of the hydrogen levy. Before making a proposed modification, the Secretary of State is required to consult the holder of any licence being modified. This will help to ensure that relevant bodies are engaged on proposed modifications. To ensure sufficient scrutiny of proposed modifications, the Secretary of State must also lay a draft of the modifications before Parliament, where they will be subject to a procedure similar to the draft negative resolution procedures used for statutory instruments.
I turn to Amendments 21, 20, and 16. I thank the noble Lord, Lord Lennie, and the noble Baroness, Lady Blake, again for their amendments in Committee. Having considered those amendments, the Government are introducing a new clause on the hydrogen levy provisions, which I hope noble Lords will find satisfying. The new clause will enable revenue support regulations to make provisions for amounts to be paid to levied market participants by a hydrogen production counterparty or hydrogen levy administrator. This includes the pass through of payments received by a hydrogen production counterparty from hydrogen producers under revenue support contracts, such as payments made to the counterparty when the market price of hydrogen is higher than the strike price. This will help to ensure that regulations can make provisions for fair and efficient payments and reconciliation arrangements.
Subsection (3) of this new clause was prompted specifically by consideration of Amendment 62 from the noble Lord, Lord Lennie, and the noble Baroness, Lady Blake, in Committee. This provision enables the Secretary of State to make regulations requiring that customers of levied market participants benefit in accordance with these regulations from payments made to levied market participants by a hydrogen production counterparty or levy administrator. I beg to move.
Baroness Liddell of Coatdyke (Lab)
My Lords, I will speak to Amendment 17. I will not take up much of the House’s time, because this is just about consistency.
The Government have defined a UK low-carbon hydrogen standard, which was updated in July this year, and it includes guidance and a calculator tool for hydrogen producers to use for greenhouse gas emissions reporting and sustainability criteria. It has been designed to demonstrate that low-carbon hydrogen production methods can meet a greenhouse gas emissions test and threshold, and this amendment would require the regulations to have regard to that standard when assessing the eligibility of low-carbon hydrogen production. Using the low-carbon hydrogen standard will ensure that there is consistency for the industry and its users, and will provide them with the degree of certainty that they are looking for when developing their projects.
Baroness Blake of Leeds (Lab)
I make reference to the Minister’s amendments, particularly the issue he highlighted of including the new subsection that would allow regulations to make provisions requiring that energy consumers benefit. I want to ask just one question on that. While we welcome that provision, there is a concern. If we are allowing regulations to make this provision, what guarantee is there that they will actually be used? Are the Government committing to using them, if they use Clause 66 powers?
I support all of my noble friend Lady Liddell’s comments on her amendment. The main amendment for me is that just referenced by the noble Baroness, Lady Worthington. We spent a significant amount of time talking about this area in Committee, so I will not go through all the detail. However, as the noble Baroness mentioned, in the circumstances we are in, with the extra pressure on the cost of living from energy bills, why are we looking at a situation where we could be asking householders to pay more money? I acknowledge that there will be further consultation but I hope that, as well as it being done thoroughly, its conclusions will lead to the spirit of our amendment. As shown in our amendments, we believe that the Secretary of State could put a levy on gas shippers but not on gas and electricity suppliers, thus preventing responsibility for the levies falling on households.
We need to reflect on the spirit of the Bill—the whole idea is that, while reforming energy systems, we do everything we can to protect consumers and their ability to pay their bills. Every possible action should be taken to minimise the impact on consumers, focusing always on affordability. I am disappointed that the Minister has not gone further on this point. Unless he indicates a willingness to do so, due to the strong feelings surrounding the protection of consumers from inflated bills, I am minded to test the opinion of the House.
Lord Callanan (Con)
My Lords, I will start by addressing Amendments 18 and 19, which the noble Lord, Lord Lennie, and the noble Baroness, Lady Blake, have retabled from Committee. I thank the noble Baroness, Lady Worthington, for her contribution. She requested further detail; I will provide clarification in writing, if that is okay with her.
These amendments seek to ensure that funding for the hydrogen production business model can be provided through the Consolidated Fund. They also seek to restrict where a levy may be placed, removing the option for levying energy suppliers and requiring that a levy could be placed only on gas shippers. They are intended, I assume, to take responsibility for levies away from households.
The powers in the Bill already enable Exchequer funding of the hydrogen production business model, which will initially be Exchequer-funded. It is therefore unnecessary to include additional provisions that enable the business model to be funded through the Exchequer.
The proposal in these amendments to require that the levy could be placed only on gas shippers will limit options for the levy design, with possible implications for its costs and ultimate impact on consumers. There is no such thing as a free lunch. A gas shipper levy would be a completely novel scheme, with administration and set-up costs that could be considerably higher than those required to implement a supplier levy; this is well understood.
The Government have set out their intention not to levy gas shippers in the near term. Levies on energy suppliers have been used in the past to support the deployment of low-carbon electricity and increase the proportion of green gas in the gas grid. These levies are well understood by the private sector. By taking a similar approach with the hydrogen levy, we can help provide investors with the confidence they need to invest in low-carbon hydrogen production projects and support the delivery of our 10-gigawatt production capacity ambition.
By seeking to ensure that the levy could be placed only on gas shippers, these amendments appear to try to protect energy consumers from the costs of a levy. However, as I outlined when they were tabled previously, we anticipate that any costs associated with a levy on gas shippers would ultimately be passed on to energy consumers in a very similar way to levies on energy suppliers. As I say, there is no such thing as a free lunch. It is the opinion of all the policy analysts that it is unlikely that the amendments would have their intended effect.
Lord Callanan
“Payments to relevant market participants(1) Revenue support regulations may make provision about amounts which must be paid—(a) by a hydrogen levy administrator to relevant market participants, or(b) by a hydrogen production counterparty—(i) to relevant market participants, or(ii) to a hydrogen levy administrator for the purpose of enabling payments to be made to relevant market participants.(2) Regulations by virtue of subsection (1) may make provision—(a) for a hydrogen levy administrator to calculate or determine, in accordance with such criteria as may be provided for by or under the regulations, amounts which are owed by—(i) the hydrogen levy administrator, or(ii) a hydrogen production counterparty;(b) for a hydrogen production counterparty to calculate or determine, in accordance with such criteria as may be provided for by or under the regulations, amounts which are owed by—(i) the hydrogen production counterparty, or(ii) a hydrogen levy administrator;(c) for the issuing of notices by a hydrogen levy administrator to require the payment by a hydrogen production counterparty of amounts calculated or determined by the hydrogen levy administrator in accordance with paragraph (a)(ii);(d) for the issuing of notices by a hydrogen production counterparty to require the payment by a hydrogen levy administrator of amounts calculated or determined by the hydrogen production counterparty in accordance with paragraph (b)(ii); (e) for the provision of copies of notices such as are mentioned in paragraph (c) or (d) to persons specified in the regulations, or the publication of such notices.(3) Revenue support regulations may make provision imposing on a relevant market participant who receives a payment from a hydrogen levy administrator or a hydrogen production counterparty a requirement to secure that customers of the relevant market participant receive, by a time specified in the regulations, such benefit from the payment as may be specified in or determined in accordance with the regulations.”Member's explanatory statement
This amendment enables regulations to require payments to be made to levy payers and to require benefits from such payments to be passed on to customers of levy payers. Lord Callanan’s amendments at page 52, line 2 and page 59, line 23 are consequential on this amendment.
Lord Callanan
Member's explanatory statement
See the explanatory statement for new Clause (Payments to relevant market participants).
Lord Callanan
“(1A) The power under each paragraph of subsection (1) may be exercised so that more than one appointment has effect under that paragraph at the same time.”Member's explanatory statement
This amendment makes it clear that more than one appointment of a hydrogen production allocation body or carbon capture allocation body may have effect at the same time.
Lord Callanan
“Licence conditions regarding functions of certain allocation bodies(1) In section 7B of the Gas Act 1986, after subsection (5) insert—“(5ZA) Without prejudice to the generality of paragraph (a) of subsection (4), conditions for or in connection with the purpose set out in subsection (5ZB) may be included in a licence under section 7AA by virtue of that paragraph.(5ZB) The purpose is to facilitate or ensure the effective performance (whether in relation to Northern Ireland or any other part of the United Kingdom), at relevant times, of functions of a hydrogen production allocation body under Chapter 1 of Part 2 of the Energy Act 2023.(5ZC) In subsection (5ZB) “relevant times” means times when the hydrogen production allocation body holds a licence under section 7AA.”(2) Where—(a) the GEMA proposes by a modification under section 23 of the Gas Act 1986 of a licence under section 7AA of that Act to add, remove or alter a condition such as is mentioned in section 7B(5ZA) of that Act, and(b) that condition relates to functions of a hydrogen production allocation body that are exercisable in relation to Northern Ireland,section 23 of that Act has effect as if the persons listed in subsection (4)(b) of that section included the Department for the Economy in Northern Ireland.”Member's explanatory statement
This new Clause makes it clear that licences under section 7AA of the Gas Act 1986 may include certain conditions relating to functions of certain bodies appointed under Part 2 of the Bill, and makes related provision about proposed licence modifications.
Lord Callanan
“(ca) for a revenue support counterparty to require a person specified, or of a description specified, in the regulations to provide information to it;”Member's explanatory statement
This amendment enables regulations to provide for a revenue support counterparty to require a person or description of persons to provide information to it.
Lord Callanan
“(3) Revenue support regulations may make provision for special allocation body requirements (or a subset of such requirements) to be enforceable by the GEMA as if they were relevant requirements within the meaning of sections 28 to 30O of the Gas Act 1986.(4) In this section “special allocation body requirements” means requirements imposed by or under revenue support regulations or regulations under section 68 on a hydrogen production allocation body, so far as the requirements relate to times when the body holds a licence under section 7AA of the Gas Act 1986 (including requirements in respect of functions of the body that relate to Northern Ireland).”Member's explanatory statement
This amendment provides for requirements imposed on a hydrogen production allocation body which holds a gas system planner licence to be able to be enforced by the application of provisions of the Gas Act 1986.
Lord Callanan
“(ba) a person in accordance with whose directions or instructions the members of a Chapter 1 entity which is a limited liability partnership are accustomed to act;”Member's explanatory statement
This amendment ensures that the Secretary of State will not, by virtue of exercising functions under Chapter 1 in relation to an entity which is a limited liability partnership, be treated (for the purposes of any relevant rule of law) as a person in accordance with whose directions etc the members of a limited liability partnership are accustomed to act.
Lord Callanan
“(6A) Provision included in a licence, or in a document or agreement relating to licences, by virtue of a power conferred by this section may do anything authorised for licences of that type by—(a) section 7(2A), (3), (4), (5) or (6A) of the Electricity Act 1989,(b) section 7B(5)(a), (6) or (7) of the Gas Act 1986,(c) Article 11(3), (4), (5), (6A) or (6B) of the Electricity (Northern Ireland) Order 1992 (S.I. 1992/231 (N.I. 1)), or(d) Article 10(3)(a) to (d), (4), (5) or (6A) of the Gas (Northern Ireland) Order 1996 (S.I. 1996/275 (N.I. 2)).(6B) For the purposes of subsection (6A)(c) and (d), the provisions referred to in those sub-paragraphs are to be read as if references to the Northern Ireland Authority for Utility Regulation included the Secretary of State.”Member's explanatory statement
This amendment further supplements the Secretary of State’s powers under clause 83 to modify certain licences and related documents.
Lord Callanan
“Electricity system operator and gas system planner licences: modifications(1) The Secretary of State may, for the purpose of facilitating or ensuring the effective performance of functions specified in subsection (3), modify—(a) the conditions of a licence under section 6(1)(da) of the Electricity Act 1989 (electricity system operator licence);(b) a document maintained in accordance with the conditions of such a licence, or an agreement that gives effect to a document so maintained.(2) The Secretary of State may, for the purpose of facilitating or ensuring the effective performance of functions specified in subsection (3), modify—(a) the conditions of a licence under section 7AA of the Gas Act 1986 (gas system planner licence);(b) a document maintained in accordance with the conditions of such a licence, or an agreement that gives effect to a document so maintained.(3) The functions referred to in subsections (1) and (2) are—(a) functions of hydrogen production allocation bodies, and(b) other functions under this Chapter which are related to such functions.(4) Modifications under subsections (1) and (2) may only make provision in relation to times when the person holding the licence is a hydrogen production allocation body.(5) The provision referred to in subsection (4) includes consequential or transitional provision in relation to times when it is no longer the case that the person holding the licence is a hydrogen production allocation body. (6) Provision included in a licence, or in a document or agreement relating to licences, by virtue of a power under this section may in particular—(a) include provision of any kind that may be included in revenue support regulations or regulations under section 68;(b) do any of the things authorised for licences of that type by—(i) section 7B(5)(a), (5ZA), (6) or (7) of the Gas Act 1986, or(ii) section 7(3), (4), (5) or (6A) of the Electricity Act 1989.(7) Before making a modification under this section the Secretary of State must consult—(a) the holder of any licence being modified;(b) the GEMA;(c) such other persons as the Secretary of State considers it appropriate to consult.(8) Subsection (7) may be satisfied by consultation before, as well as by consultation after, the passing of this Act.”Member's explanatory statement
This amendment enables the Secretary of State to modify electricity system operator licences and gas system planner licences, and related codes etc, for the purpose of facilitating etc the effective performance of certain functions relating to hydrogen production allocation bodies.
Lord Callanan
(b) section (Electricity system operator and gas system planner licences: modifications).”Member's explanatory statement
This amendment is supplementary to new Clause (Electricity system operator and gas system planner licences: modifications)
Lord Callanan
“(3A) Where regulations under section 85(1) provide for the imposition of a civil penalty, they must also provide for a right of appeal against the imposition of the penalty.”Member's explanatory statement
This amendment requires regulations under Clause 85(1) (financing costs of decommissioning etc) that make provision for the imposition of civil penalties to include provision for a right of appeal.
Lord Callanan
“(1) Section 30 of the Energy Act 2008 (abandonment of installations) is amended in accordance with subsections (1A) to (1D).(1A) In subsection (1), for “, (2)” substitute “to (2)”.(1B) After subsection (1A) insert—“(1AA) Part 4 of the 1998 Act, in its application in relation to carbon storage installations, has effect with the modifications set out in subsection (1AB).(1AB) The modifications are as follows—(a) in section 30 of the 1998 Act, for subsections (5) and (6) substitute—“(5) This subsection applies to a person in relation to a carbon storage installation if—(a) the person has the right—(i) to use a controlled place for the storage of carbon dioxide (with a view to its permanent disposal, or as an interim measure prior to its permanent disposal),(ii) to convert any natural feature in a controlled place for the purpose of storing carbon dioxide (with a view to its permanent disposal, or as an interim measure prior to its permanent disposal), or(iii) to explore a controlled place with a view to, or in connection with, the carrying on of the activities within sub-paragraph (i) or (ii), and(b) either—(i) any activity mentioned in subsection (6) is carried on from, by means of or on the installation, or(ii) the person intends to carry on an activity mentioned in that subsection from, by means of or on the installation,or if the person had such a right when any such activity was last so carried on.(6) The activities referred to in subsection (5) are—(a) the use of a controlled place for the storage of carbon dioxide (with a view to its permanent disposal, or as an interim measure prior to its permanent disposal) in the exercise of the right mentioned in subsection (5)(a);(b) the conversion of any natural feature in a controlled place for the purpose of storing carbon dioxide (with a view to its permanent disposal, or as an interim measure prior to its permanent disposal) in the exercise of the right mentioned in subsection (5)(a);(c) the exploration of a controlled place in the exercise of the right mentioned in subsection (5)(a) with a view to, or in connection with, the carrying on of activities within paragraph (a) or (b) of this subsection; (d) the conveyance in the controlled place mentioned in subsection (5)(a) of carbon dioxide by means of a pipe or system of pipes, in the exercise of the right mentioned in subsection (5)(a); and(e) the provision of accommodation for persons who work on or from an installation which is or has been maintained, or is intended to be established, for the carrying on of an activity falling within any of paragraphs (a) to (d) of this subsection.”(b) in section 30(7) of that Act, in the words before paragraph (a), for “(c)” substitute “(e)”;(c) in section 31 of that Act, for subsection (B1) substitute—“(B1) This subsection applies to an activity if—(a) where the activity is within paragraph (a), (b) or (c) of section 30(6), the controlled place mentioned in that paragraph is one for which the installation is, or is to be, established or maintained;(b) where the activity is within paragraph (d) of section 30(6), the conveyance of the carbon dioxide relates to a controlled place for which the installation is, or is to be, established;(c) where the activity is within paragraph (e) of section 30(6), the installation is in a controlled place in respect of which P has a licence under section 18 of the Energy Act 2008.”(d) in section 31 of that Act, omit subsection (C1);(e) in section 45 of that Act, in the appropriate place insert—““controlled place” has the same meaning as in section 17 of the Energy Act 2008;”.”(1C) After subsection (4A) insert—“(4B) The powers in subsections (2)(b) and (4) include power to amend or repeal subsections (1AA) and (1AB).”(1D) In subsection (5) for “established or maintained” substitute “or has been maintained, or is intended to be or has been established,”.”Member's explanatory statement
This amendment sets out modifications of Part 4 of the Petroleum Act 1998 as it applies to carbon storage installations and extends the definition of “carbon storage installation” in section 30 of the Energy Act 2008.
Lord Callanan
Member's explanatory statement
This amendment and Lord Callanan’s amendments at page 83 line 27 and page 84 line 9 make it clear that the duties in subsections (1) and (2) of this Clause only affect functions related to carbon dioxide capture, usage and storage policy.
Baroness Blake of Leeds (Lab)
I will speak to Amendment 40 in the name of the noble Baroness, Lady Worthington. I acknowledge that this will be her last meeting for some time; I think I am allowed to say that. In my relatively short time here, I have come to value her passionate interjections and her incredible knowledge on the subjects on which she has spoken. I wish the noble Baroness well in her temporary visit overseas and look forward to when she is able to come back and join us. I hope that we can keep in contact in the meantime.
While we do not support new fossil fuel extraction licences, we have to be mindful of existing licences and renewals. We have to take these issues seriously.
It is fair to say that we do not want to turn off the taps, so there will be merit in reducing carbon emissions from those existing licences. To what extent are the Government considering geological storage as a solution? I am sure we have all received briefings giving us the background on how successfully CO2 has been stored over many years. There is an opportunity, but how much can be stored, and can we make full potential of the opportunities that are presented to us off the shores of this island?
Lord Callanan (Con)
I also pay tribute to all the work that the noble Baroness, Lady Worthington, has done. It is indeed a great mystery to all of us why she seemingly wishes to swap the lovely, warm, calm weather of southern England for California, but I suppose that will become clearer over time. I thank her for the contribution she has made, and I am sure that we will hear a lot more from her in the future.
I am happy to contribute to this debate on Amendment 40 and the issue of the carbon take-back obligation for fossil fuel extraction. The concept of such an obligation is indeed worthy of debate, but the noble Baroness will understand when I say that its inclusion in the Bill is a little premature. Our primary instrument to decarbonise the UK economy is the emissions trading scheme, which provides a market price for emissions of carbon dioxide, incentivising investment in decarbonisation and ensuring that it happens wherever—and however—it is most cost effective to do so.
Introducing a carbon take-back obligation now, at such a pivotal time for the development of CCUS in the UK, could create uncertainty for industry and have a detrimental delaying effect on investment, resulting in investors looking to opportunities that exist in many other countries—perhaps even in California; one never knows. Such an obligation could also increase the costs of CCUS, making UK production of steel, chemicals, refinery products and other industrial products more expensive than that of their competitors, potentially impacting on our industrial competitiveness. All these issues need further detailed policy consideration before further legislation can be considered.
As I mentioned to the noble Baroness before the debate, the CCUS Council is the Government’s primary forum for engaging with representatives across the CCUS sector, and we have indeed asked the council to consider and provide advice on carbon take-back obligations. The concept indeed warrants further consideration, but I am sure the noble Baroness will accept that it is not for this Bill at this time. With that explanation, I hope she will feel able to withdraw her amendment.
Baroness Worthington (CB)
My Lords, I am grateful to noble Lords who have spoken in this debate, to the noble Baroness, Lady Sheehan, for adding her name, to the noble Baroness, Lady Blake, for her support, and to the Minister for his comments. This is indeed my last outing before I depart after recess. I want to say thank you to everyone who has made me feel so welcome in the 12 years I have been here on and off, intermittently, on different Benches. It has been a privilege and I will genuinely miss it. When things are coming to an end, often you value them even more. Hopefully, I will be back—in the words of Arnold Schwarzenegger.
On the amendment, I am encouraged that this idea is being picked up by the CCUS Council. It seems that it will be difficult for the oil, gas and coal sector to come forward with this as a united voice, but it would definitely be good for it. It would give it clarity and certainty and enable it to take back control of its choices of projects or investments. It would be able to do it from the private sector, knowing that it is obliged to do it, and it would create a market mechanism through which it could operate, which I believe would reduce costs overall to the consumer and to industrial customers. Industry is very good at finding solutions: give it an obligation, get the engineers on it and it will find solutions. It will determine whether the price will come down or whether indeed it will be better for it to pivot fully into a cleaner system based on electricity and clean electricity rather than continuing to take things out of the ground and burn them.
I have some sympathy with the belief that it is probably high time we stopped burning things and moved on, especially as we—Great Britain, the United Kingdom—have grown rich on the back of the industrial revolution that seems to be dragging on. However, we now know that there are alternatives. There is a cleaner, cheaper, more efficient system available to us using electricity wherever it is possible, and where it cannot be used, deriving clean fuels from that electricity. That is the future. The chemical industry and the chemical-based energy system will decline because it will not be able to compete with that manufactured clean alternative. We have to manage that decline and it is incumbent on Governments to help manage it fairly and transition us out of it. This sort of policy would do that, and the industry should embrace it. I hope that the other place will debate it and that a campaign will emerge around it. I look forward to watching that from sunny California, and I wish your Lordships all the best of luck with the end of the Bill. Thank you. I beg leave to withdraw my amendment.
Lord Callanan
Member's explanatory statement
This amendment and Lord Callanan’s amendment at page 91 line 6 revise the definition of “relevant infrastructure” for the purposes of Clause 99.
Lord Callanan
“(A1) Scheme regulations that, by virtue of section 106(3), provide that a person is liable to a financial penalty must also provide for a person to have a right of appeal to a court or tribunal against the imposition of the penalty.”Member's explanatory statement
This amendment requires regulations under Clause 101(1) (low-carbon heat schemes) that make provision for the imposition of financial penalties to include provision for a right of appeal.
Energy Bill [HL]
Lord Callanan ExcerptsTuesday 28th March 2023
(1 year, 1 month ago)
Lords ChamberRead Full debate Energy Act 2023 View all Energy Act 2023 Debates Read Hansard Text Watch Debate Read Debate Ministerial Extracts Amendment Paper: HL Bill 86-I(a) Amendment for Report (Supplementary to the Marshalled List) - (27 Mar 2023)
Lord Lennie (Lab)
My Lords, I thank the noble Lord, Lord Teverson, and all other noble Lords and Baronesses who have spoken. While I may agree with the noble Lord, Lord Teverson, that these trials are not a good thing, they are upon us and therefore we have to deal with what we face rather than what we might not have faced had we stopped the trials in the first place. I do not think the Government are about to abandon the plan, and therefore we have some concerns about the plan as it goes ahead.
Clause 111 makes certain modifications to the Gas Act 1986 so that the person running the trial has clear grounds to enter property. That causes me concern that they can carry out essential works and safety checks and disconnect gas supply. Can the Minister deal with some questions? He may not be able to deal with them tonight and may want to write to me later. When can property be entered? What safeguards will be in place? What burden of proof will be applied on entry? When can a property not be entered? Will future guidance be published and, if so, when can we expect it to be with us? The Labour amendment
“requires the Secretary of State to take a number of steps with regard to the areas and people affected by hydrogen grid conversion trials and to make arrangements for Ofgem to provide information, alternative heat sources and offer the right of opt out (which would disapply the right of gas transporters to enter premises to disconnect). It would also require the Environment Agency to monitor and report on hydrogen escape, and the Health and Safety Executive to monitor safety implications.”
Subsection (1) provides the Secretary of State with a power to make regulations by statutory instrument to require a person conducting the trial to follow specified steps to ensure consumers are appropriately informed about the trial and the need for them to be disconnected from their gas supply before it happens. This clause also provides the Secretary of State with a power to make regulations to introduce consumer protections for people who are, or are likely to be, affected by the trial, and a list of examples is provided.
Our amendment sets out a number of reasonable steps, ensures that people are not disadvantaged, whether they participate or take an alternative, and ensures an alternative is offered and they can opt out. The trials are much more popular in Redcar, I am led to believe, than they are in Whitby. An exchange of correspondence took place between Graham Stuart, the Minister at DESNZ, and Justin Madders MP and Louise Gittens, who is the leader of Cheshire West and Chester Council. To quote from the letter from Graham Stuart, he said:
“I fully agree that local support for the trial is essential … However, we will only go ahead with a trial in an area where there is strong local support … I do agree it is very important this context is set out clearly, particularly for the communities in the areas across the country served by the gas networks which the networks are assessing.”
If that is true, certainly in Whitby, I do not think a trial will proceed, but I may be wrong. I would welcome the Minister’s assessment of the correspondence and what he makes of it in relation to the trial. It is not so much about cost, although there is a cost, and it is not so much about safety, although there is a safety issue; it is about local democracy and whether they want the thing to go ahead in the first place.
The Parliamentary Under-Secretary of State, Department for Energy Security and Net Zero (Lord Callanan) (Con)
I thank all noble Lords who have contributed. I start by addressing the point raised by the noble Lord, Lord Lennie. This is a matter for which I have ministerial responsibility, so I am familiar with all the issues. I too am getting, not a massive stream of correspondence, but a lot of correspondence from the people in the two trial areas. I have met Justin Madders, the MP for the Whitby trial area, Ellesmere Port, and of course I know Jacob Young very well from Redcar. The point that Graham Stuart made in that letter is still absolutely valid. We are waiting for the submissions of the two rival networks, which we should receive later this month. A lot is happening this week; it is a busy week. One of the factors that we will carefully take into consideration is precisely the point that Graham Stuart set out in his letter: the degree to which there is local support. Clearly, one way to measure that is to talk to the local Members of Parliament and the local authorities; that will be critical in any decision-making.
Let me also address the question from the noble Baroness, Lady Worthington, on the costs of the trial. I cannot give the noble Baroness an overall cost yet because we have not received the final submissions from the networks, but I can say that consumers in the trial location will not be expected to pay more for their heating than they would have if they had remained on natural gas. They will also not be expected to pay for the installation and maintenance of either any hydrogen-capable appliances or any alternative heating option that they wish to go for.
Let me now address Amendments 53, 54 and 57, tabled by the noble Lord, Lord Teverson and the noble Baroness, Lady Sheehan. As noble Lords will know, decarbonising heat in buildings and industry is essential if we are to deliver net zero. One of the great things about this country, but also one of our problems, is the massive diversity and age of buildings in the UK, as a product mainly of the industrial revolution, and the diverse consumer needs. I think most reasonable people would accept that no single solution can provide the best option for everyone. I agree with the noble Baroness, Lady Worthington, that the majority of the solution will probably be electrification, but there will be some properties for which it is not suitable.
Baroness Worthington (CB)
I want to press on the question of what is being trialled. The Minister mentioned feasibility, benefits and costs, but what about the environmental impacts of this trial? We are talking here about a global warming gas, and a very slippery gas because it is the smallest element—it escapes everywhere. Will the regulations contain measures to monitor the environmental impact of both the NOx emissions in the home and the greenhouse gas impact of the hydrogen, which will leak when it is distributed that widely? Can that be included in the trial so we can also assess those disbenefits?
Finally, it is true that the only reason really that some houses might not qualify for a heat pump is if they are not very efficient. It is ironic that, for safety reasons, the leakier the house, the more likely it is to then be able to take hydrogen. This precious commodity, which is very expensive to produce and will be very inefficient, is being used in houses which are leaky and being made leakier to be made safer. It seems just so counter to everything we want to achieve on efficiency, resilience and climate change. I hope there will be a trial of the environmental impacts on air quality, climate change and energy efficiency, not just the benefits to the gas industry.
Lord Callanan (Con)
I know the noble Baroness has strong views on electrification but let me reassure her that this is precisely the purpose of the trial. We need to use an existing network to find out what happens to hydrogen in an existing network. Clearly, environmental monitoring and checking for leaks and so on is a crucial part of it. It is one of the reasons we need to do it on an existing network in an existing community, to find out what happens outside of theoretical lab experiments where it is very easy to set up a trial with new pipework, new valves and new equipment. I have visited hydrogen demonstration houses up in Gateshead, my home area. It works very well but these are brand new properties, constructed with hydrogen appliances and new pipework. That is not a very good trial as to how it would work in the real world in existing communities. That is why we need to do the trial. The things that the noble Baroness asked about are exactly what we need to be checking and monitoring to judge the effectiveness of any hydrogen experiments in the real world.
I turn to Amendment 56, tabled by the noble Lords, Lord Lennie and Lord Teverson, and the noble Baroness, Lady Sheehan. This amendment covers several aspects which I fully agree are important for the safe and effective delivery of the village trial. However, I assure noble Lords that the evidence that this amendment seeks to gather through a statutory consultation is already being gathered and will be reviewed by the department as part of our assessment process, following the submission of final proposals at the end of this month. As I said, in May 2022, we sent a joint letter with Ofgem to the gas networks setting out an extensive list of requirements that proposals for the trial should meet. This included requirements mentioned in the amendment, such as local support, costs, environmental impact and consumer protections, as well as many other important areas.
After the gas networks submit their proposals for the trial—later this week, as I said—the department will undertake a thorough assessment against the full list of requirements set out in the letter. That process will involve expert input from the various statutory bodies involved, including the Health and Safety Executive and Ofgem. We will publish the result of that assessment later this year, including the relevant evidence to explain our decision, and that will be available to all noble Lords. I reassure the House that we fully understand the importance of conducting the trial properly.
I touched on this earlier but the noble Lord, Lord Teverson, raised the point about local support for the trial. I reiterate that we will go ahead with a trial only in an area where there is strong local support. The gas networks are working closely with local authorities, communities and Members of Parliament as they develop their trial proposals. My officials also meet regularly with the relevant local authorities. Final proposals for the trial will need to contain evidence of strong support from the local community, validated by an independent external source, such as a local council. Again, I am happy to meet the local Members of Parliament.
The networks are extensively consulting local residents to develop an attractive consumer offer tailored to the community. They have opened drop-in centres in both Whitby and Redcar where anyone can engage directly with them and ask questions about what the project means for them, and have held a number of public events.
Safety is of course fundamental, which is the point made by the noble Baroness, Lady Sheehan. Before any community trial can go ahead, the Health and Safety Executive will need to be satisfied that the trial will be run safely. No trial will go ahead until all necessary safety assessments have been successfully carried out. I hope noble Lords will accept my reassurances on that.
If it goes ahead, the trial will start in 2025 and provide vital evidence that will be required to enable the Government to make decisions in 2026 on any potential future role for hydrogen in decarbonising heat. I hope noble Lords will accept that undertaking another formal consultation would duplicate the work that the department and the gas networks are already doing, and could delay important milestones for ultimately meeting net zero.
I agree that the trial must be conducted properly, and I have already spoken about the additional consumer protections that will be in place for the trial. Those protections, which must be met by the gas networks, also mean that the trial must be delivered with minimal disruption to consumers.
I hope I have been able to reassure noble Lords that the department will carefully consider all these factors in coming to a decision on the trial. Importantly, we will be closely examining the evidence and outcomes of the gas networks’ engagement with local authorities and consumers in the trial areas. I hope that, with the reassurances that I have been able to provide, the noble Lord, Lord Teverson, will consider withdrawing his amendment.
Lord Lennie (Lab)
Could the Minister please write to me about the questions I asked about entering properties and whether further guidance will be published and available?
Lord Callanan (Con)
As I said, the powers that we propose to provide are essentially similar to those that the networks already have on the basis of essential safety works. Still, I am happy to provide the noble Lord with further information and details.
Lord Teverson (LD)
My Lords, when the IPCC report on the global warming challenge came out last week, and it gave a pretty dire view, the Secretary-General of the United Nations, António Guterres, who I think had just been watching the Oscars, said it was
“everything, everywhere, all at once”—
but I do not think he would have included the village hydrogen trials within that broad definition. I understand what the Minister has said, and I welcome all his assurances to local citizens about how the trials will work, but, frankly, the science clearly says that hydrogen sent through the gas pipe network to a range of residential properties does not work, does not make sense and is not going to happen in the future.
Lord Callanan
Member's explanatory statement
This amendment requires regulations under Clause 112 (regulations for the protection of consumers: hydrogen grid conversion trials) that make provision for the imposition of financial penalties to include provision for a right of appeal.
Lord Callanan
“Treatment of recycled carbon fuel and nuclear-derived fuel as renewable transport fuelAfter section 131C of the Energy Act 2004 insert—“131D Recycled carbon fuel and nuclear-derived fuel(1) An RTF order may—(a) designate as recycled carbon fuel a description of liquid or gaseous fuel which is produced wholly from waste derived from a fossil source of energy;(b) designate as nuclear-derived fuel a description of liquid or gaseous fuel which is produced wholly using, or by a process powered wholly by, nuclear fuel.(2) Where a designation under subsection (1) is in force, the recycled carbon fuel or nuclear-derived fuel is to be treated for the purposes of this Chapter and any RTF order as renewable transport fuel.””Member's explanatory statement
This amendment, which inserts a new clause in Chapter 3 of Part 3 of the Bill, provides for recycled carbon fuel and fuel derived from nuclear energy to be treated as a renewable transport fuel for the purposes of renewable transport fuel obligations under Chapter 5 of Part 2 of the Energy Act 2004.
Electricity Supplier Obligations (Excluded Electricity) (Amendment) Regulations 2023
Lord Callanan Excerpts(1 year, 1 month ago)
Lords ChamberRead Full debate Read Hansard Text Read Debate Ministerial Extracts
Lord Callanan
That the draft Regulations laid before the House on 8 and 20 February be approved.
Relevant document: 32nd Report from the Secondary Legislation Scrutiny Committee. Considered in Grand Committee on 20 March.
Strikes (Minimum Service Levels) Bill
Lord Callanan ExcerptsThursday 23rd March 2023
(1 year, 1 month ago)
Lords ChamberRead Full debate Strikes (Minimum Service Levels) Act 2023 View all Strikes (Minimum Service Levels) Act 2023 Debates Read Hansard Text Watch Debate Read Debate Ministerial Extracts Amendment Paper: HL Bill 97-II Second marshalled list for Committee - (21 Mar 2023)
The Parliamentary Under-Secretary of State, Department for Energy Security and Net Zero (Lord Callanan) (Con)
I thank the noble Lord, Lord Collins, for his helpful advice. I will be sure to pass it on to the Prime Minister.
Lord Callanan (Con)
He was slightly less successful than the current one.
Each amendment in this group seeks to add additional evidence-gathering or reporting requirements or scrutiny to the regulation-making powers in the Schedule to the Bill. Before addressing them, perhaps the Committee will permit me a moment to reply to the rather general points made by the right reverend Prelate the Bishop of Manchester. I am afraid that I fundamentally disagree with him. Recent strike action has demonstrated the disproportionate impacts strikes can have on the public, presumably including his parishioners. They have been unable to access work and healthcare or attend education classes and are worrying whether an ambulance will be there when they need it. Businesses are also crucially affected by industrial action; 23% of them could not operate fully due to industrial action in the UK in December and 2.4 million strike days were lost between June and December. I am sorry that the right reverend Prelate does not believe his parishioners need protecting from these actions, but this Government certainly do.
The Lord Bishop of Manchester
I have every concern for my parishioners and the members of the various parishes, schools and chaplaincies—everyone in my diocese, whether they are Anglican or otherwise. However, I do not believe that this legislation is taking us in the right direction or that passing it will create better ambulance, train or hospital services for the people in my diocese. We may disagree, but I assure the Minister that I speak on behalf of everyone in my diocese.
Lord Callanan (Con)
They will also get to vote in democratic elections and make their feelings clear. By the very nature of the legislation, if a strike is taking place with no minimum services, given that this Bill imposes minimum services, his parishioners will get a better level of service once it goes through. However, we should have debated these points at Second Reading. I am sorry that the right reverend Prelate could not be present then.
Amendment 15, tabled by the noble Lord, Lord Allan, seeks to require the Secretary of State to lay a Statement before each House outlining how the regulations that set minimum service levels and specify the relevant services are both necessary and proportionate. As my noble friend Lady Noakes, who has had to go to the Financial Services and Markets Bill in Grand Committee, pointed out, this amendment adds unnecessary duplication. Sufficient checks and balances before the regulations can be made are already built into the legislation. This includes the need to carry out consultations and the requirement that regulations must be approved by both Houses before they can be made.
Key stakeholders, including employers, employees, members of the public—perhaps even churches—trade unions and their members are all encouraged to participate in the consultations and have their say in the setting of these minimum service levels before they come into effect. Parliament, including Select Committees, as they already have done, will have an opportunity to contribute to the consultation. Following the consultation, the Government will consider all representations and publish a response setting out the factors taken into account in determining the minimum service level to be specified in those regulations.
Subsequent regulations on MSL will be accompanied by an Explanatory Memorandum which will outline the legal effect of the regulations, to address the complaints of the noble Baroness, Lady Chakrabarti, and the noble Lord, Lord Cashman, and its rationale and why they are necessary. Impact assessments will also be published alongside the regulations, which will then be subject to the affirmative procedure. We think this approach is appropriate; it is a common way for secondary legislation to be made.
Amendment 36, tabled by the noble Lord, Lord Collins of Highbury, and the noble Baroness, Lady O’Grady, also requires the relevant Commons Select Committee to publish a report on how the Act will impact that sector before regulations are made. This will delay the implementation of minimum service levels—I suspect that is its intent—and extend the disproportionate impact that strikes can have on the public.
Amendment 36A, in the name of the noble Lord, Lord Hendy, would require the Government to lay draft regulations before each House of Parliament at least 28 days before the regulations are intended to be made, with an Explanatory Memorandum setting out factors taken into account in determining the MSL. These additional steps are, in our view, unnecessary and duplicative for the reasons that I have set out. The Government resist Amendments 16, 17, 20, 36 and 36A.
Amendments 38 and 39, in the names of the noble Lord, Lord Collins, and the noble Baroness, Lady O’Grady, would place limitations on the consultation provision, which the Government again resist. In the Government’s view, Amendment 39, as drafted, would not have the effect that noble Lords perhaps intended. In reality, it would require consultations to be published within a six-week window after the Act is passed, meaning that, by their very nature, future consultations after this period would then not be possible. Amendment 38 would prevent consultations taking place at all after the Bill has achieved Royal Assent. Both amendments would remove the ability to specify minimum service levels on an ongoing basis and, in our view, unduly limit our ability to respond appropriately as circumstances change—again, I suspect that this is the purpose of those who tabled the amendments. Key stakeholders are all encouraged to participate in the consultations to help shape the way MSLs operate. As I have made clear in previous responses, the Government have already published consultations on implementing minimum service levels in ambulance, fire and rescue, and rail services.
Amendment 40, in the name of the noble Lord, Lord Fox, would require the Secretary of State to lay a copy of a report in both Houses of Parliament, no later than six months after the Act is passed, setting out the findings of a review into the impact of the Act in regard to six key sectors. The noble Lord will be unsurprised to hear that I resist this amendment on the grounds that all the potential impacts of minimum service levels, including those on staffing, etc cetera, and the other factors the noble Lord mentions, will be considered as part of the process of making detailed regulations for those specified services. As I have set out on numerous occasions, these regulations will be accompanied by detailed impact assessments. We have also committed to conducting the usual review of the full impact of the Act within five years of the first secondary legislation coming into force. We believe that is a much more appropriate timescale to review the impacts.
I apologise to the Committee if I have spoken at length but there were a lot of amendments in this group. I hope I have been able to provide at least some reassurance on the consultation processes that we intend to undergo prior to making regulations, as is required by the Bill.
I was going to say that I hope noble Lords will feel able not to press their amendments, but I see that some noble Lords are seeking to intervene.
Baroness Chakrabarti (Lab)
I want to ask a question of the Minister, just to be clear in my own mind. The trade unions say that the Government do not need these powers to enforce minimum service level agreements because they are reasonable and negotiate voluntarily and will continue to do so—they say it is not necessary to legislate. The Government disagree with that and legislate. Then, when some of us say that there needs to be a transparent process and proper consultation because this is such grave legislation for trade union rights, the Minister responds by saying, “No, no—we do it anyway, so we don’t need to put that on the face of the Bill”. Is there not a contradiction at the heart of this argument? The Government will legislate only one way: for powers for the Secretary of State but never for scrutiny of the Secretary of State. How is that consistent with what the Government say to unions, who are saying do not legislate for this because reasonable agreements will be negotiated in any event?
Lord Callanan (Con)
On a number of occasions, including the first day of Committee, I have made it clear that if voluntary arrangements are in place, which there are in some services, that is our preferred approach. However, it is the case in certain ambulance services that those voluntary arrangements were not agreed until literally the night before the strike action was due to take place, and indeed some trade unions then changed their minds about voluntary arrangements. We therefore think it is appropriate to have the back-up power. If they can be agreed, that is our preferred approach. The approach outlined by the noble Baroness is the normal process of consultation. If Parliament chooses to give the Government these powers—we will see the outcome of the debates in both Houses—then we will consider whether it is appropriate to make these regulations or not, given the circumstances in each case. Those regulations will then be further approved by Parliament.
Lord Fox (LD)
I have two points. In answering the noble Baroness, Lady Chakrabarti, the Minister used the ambulance service as an example of the Government having to use the power. I understood that it was the employer that used the power, and in the case of ambulance workers the Government are not the employer. Can the Minister perhaps square that language?
In a rather less difficult answer, in dismissing one of the amendments tabled by the noble Lord, Lord Collins, the Minister said that the process of publishing information at parliamentary level would take too much time. It is on the record that a recent former Transport Secretary of State said that the Bill will not solve the current problems. What is the Government’s time target for this, given we know that the Minister thinks one of the amendments would take too much time? What is sufficient time? When do the Government expect the Bill to be in place, all other things being equal, and what is the hurry?
Lord Callanan (Con)
On the noble Lord’s first question, as he well knows, it is the Government’s job—or duty, if we get the legislation through—to make the regulations, and then it will be at the discretion of employers whether they use the powers that are given to issue work notices. We have debated this many times.
With regard to the timetable, these things are beyond my authority level. It depends how quickly the Bill goes through Parliament, how many amendments there are, how long ping-pong takes, and the scheduling of the legislation by the usual channels. I hope we will get the legislation through as quickly as possible. Of course, I hope that we never need to use it, as I have said before, but we think it is appropriate that the power should be there as a backstop.
Lord Hendy (Lab)
My Lords, I am sorry to trouble the noble Lord a moment further, but could I invite him to express a view on the report of the Delegated Powers Committee? It points out that there is no detail in the Bill and criticises it for that. Does the noble Lord accept that criticism?
Lord Callanan (Con)
We will be responding in due course to the report from the Delegated Powers Committee. I entirely accept that this is a wide secondary-legislation-making power for the Government, but we think that it is appropriate in these circumstances.
With that, I urge noble Lords not to press their amendments.
Lord Allan of Hallam (LD)
My Lords, I am sorry the Minister did not feel comfortable accepting the amendments in this group, but I think it has been a helpful debate.
The noble Baroness, Lady Chakrabarti, and the noble Lord, Lord Collins, both talked about the potential for inserting friction into industrial relations. These Benches very much agree that that may be the effect of these regulations, so we think it is right to insert a certain level of friction into the legislative process to try to head off what may be a very poor outcome.
The noble Baroness, Lady Noakes, who I understand is now in Grand Committee, talked about the measures as being “not draconian”, which is an interesting framing. However, the fact is that they impact on people’s fundamental rights. Whether it impacts one person, a thousand people or a hundred thousand people, the general principle is that one should be much more careful with any legislation that affects fundamental rights. My amendment was trying to make sure that we had a framework which reflected that.
There is an old maxim that if you only have a hammer, everything looks like a nail. In this Bill, the Government are granting themselves the power to create a hammer which will be offered to employers, but employers may prefer to meet their staff with other tools, such as cash or commitments to a negotiated settlement. In this debate, concerns have come out once more about what happens when the only tool you offer employers is the hammer and the potential knock-on effects of that.
It is right that we are testing whether the Government really will use those powers only in extremis, because “can’t” is often used when “won’t” is closer to the truth, until “won’t” becomes “will” and “can’t” is miraculously turned into “can”—as we have just seen with the recent move to settle the health disputes. That is another example of the Government saying that something is impossible—like minimum service levels are impossible—and then it becomes possible. I hope the Government will strengthen the Bill before Report to make sure that “can’t” really means “can’t” when it comes to negotiated minimum service levels. With that hope, and not yet entirely jaded by experience, I beg leave to withdraw my amendment.