Net Zero (Economic Affairs Committee Report)

Lord Howell of Guildford Excerpts

Monday 16th October 2023 Lords Chamber

[Lord Howell of Guildford (Con)]

My Lords, I apologise for delaying the Front-Bench speakers a few minutes in their replies to what I regard as a really excellent report. In fact, I rate it the best one that has so far come from your Lordships’ House on the great energy transition.

In my brief intervention I will simply add one point. The report rightly explains that most of the funds for the great energy transition ahead will have to come from the private sector, which will have to do the heavy lifting. Governments may be strapped for cash—all Governments, not just this one, or any future one—but, as the report rightly says, there is certainly a huge amount of investment money around the world in both pension funds and sovereign wealth funds. Indeed, I declare an interest in advising one of the biggest funds, as in the register.

These funds will come here only if there are investible projects, and this applies acutely in the nuclear power field, which is central to our all-electric future. The present UK plan, as I understand it, is to build another mega-gigawatt plant at Sizewell in Suffolk, described as a replica of the unfinished and vastly overbudget one now being built at Hinkley Point C. This is just not very attractive for investors; even with the regulated asset-based idea, which piles the money on the consumer and taxpayer from the start, the attraction is not really there. The EPR design is anyway full of problems; even the French say that it is too complicated. The prize one that was supposed to work in China had to be partly closed, and others are full of difficulties. The taxpayer and the struggling consumer have to carry the full burden and a good deal of the risk.

Smaller new designs, which are becoming available and can be built much quicker off site, should right now be the absolute priority, as in many other countries. They could be highly attractive to investors and are ready to produce clean electricity from existing nuclear sites. Of course such sites will have the wiring already, which many other sites do not, and they can be ready before these risky and out-of-date white elephants are anywhere near finished, and well before the end of this decade. Therefore they will make a major contribution to our net-zero aims.

Please will my noble friend confirm that the Government are at least aware of those key facts before they mistakenly plunge ahead with Sizewell C, committing billions to it, which I understand could be very soon? Indeed, it would be nice if the opposition spokesmen could also confirm that they are aware of these realities, which so far seem to have escaped too many people.

Climate: Behaviour Change (Environment and Climate Change Committee Report)

Lord Howell of Guildford Excerpts

Wednesday 7th June 2023 Grand Committee

[Lord Howell of Guildford (Con)]

My Lords, this is a very interesting report about people’s motives and communications, from a very distinguished committee, which many of us have read with great interest. My only regret is that there is a certain coyness in the report about cost—the cost of buying into the green energy transition. You may say, “What about cost?”. The point is that costs and savings are the decisive behaviour issue for most people when they have to look at their budget and decide how much to spend and by how much they will be supported from outside.

Of course, it is all okay for the wealthiest 10%—that, we know. They have enough cash to install ground heat pumps or air heat pumps and hope that they will perform and be efficient. That is no great skin off their nose and no great challenge because they have the money. That is for the 10%, but for the other 90%—not just the poorest end but practically every family in the land, certainly throughout the middle and lower-income groups—it is not like that at all. They are dealing with a budget where every penny counts and having to embark on new expenditure and decisions such as this for their homes, small businesses or whatever, is quite a different proposition.

I declare an interest in that I advise Mitsubishi Electric in Europe, one of the biggest producers of heat pumps and air-conditioning. It is working very hard to bring down the cost of this machinery, particularly heat pumps, making them more amenable and accessible for those living in flats, apartments and so on, and making them more efficient in delivering the heating, comfort, hot water and so on that people want. It has some way to go.

The report states, very frankly, that there is “limited understanding” of this whole area. That is certainly true and it applies particularly to the confusion in the public mind, which is aggravated by disgraceful media coverage claiming that decarbonising the present electricity sector is the answer to everything. One gets ridiculous headlines in the newspapers on days when wind power supplies 100% of our electricity, saying that that has solved the problem—“We’ve decarbonised; no need to worry”—so people sit back, unaware that that is only a tiny part of the decarbonisation process. Last year, the electricity sector accounted for 18% of our total energy usage, so the other four-fifths—the other 81% or more—of fossil fuel energy has to be decarbonised. We have hardly started; this is just the foothills. What about the other 80%? This is a gigantic new area, which will require vast low-carbon investment in nuclear power and wind, as well as a virtually new national grid.

My simple message today with this excellent report is that people need to understand the scale of what is to come and how little distance we have gone, and they should understand who is going to pay, whether it is taxpayers again, who are already pressed, or the wretched consumer—one of the Government’s ideas is that the consumer will pay for the new Sizewell C reactor.

My own preference would be that we should give far more effort to mobilising private investment—billions or trillions under management in pension funds are presently going abroad—and injecting that into the vast new expenditure needed so that people can make safe decisions that mean they will not bankrupt themselves and their families by rushing into new projects which are not proven. That is the reality. Cost will guide the decisions and behaviour of most people. The more we understand that and the more we explain where the cost will be covered, the better chance we have—I think we will get there—of achieving our NZ goals.

COP 28

Lord Howell of Guildford Excerpts

Wednesday 17th May 2023 Lords Chamber

[Lord Callanan (Con)]

The noble Lord makes an important point, citing the chairman of COP. The reality is that there will still be a requirement for fossil fuels in the years to come. There will still be a requirement in the UK, which is why we have an ambitious programme —we are spending £20 billion on carbon capture usage and storage. That still enables emissions to take place but of course they will be captured and stored back underground.

[Lord Howell of Guildford (Con)]

Regardless of the status of whoever represents us at COP 28, will the Minister make sure that the Government understand and explain to the public that while we are getting on very well in decarbonising the electric power sector, that is only one-fifth of our total energy usage? Therefore, we are only still in the foothills of trying to climb the net-zero peak target, which requires massive expansion of both nuclear power—preferably small nuclear power—and wind power on a scale not yet contemplated and not yet being invested for.

[Lord Callanan (Con)]

My noble friend of course knows this subject very well from his time as Energy Minister and makes an important point. We already have invested massively in renewables. We have the biggest wind sector in Europe by far. We have the first, second and third-largest wind farms in Europe, so we are massively expanding our renewables sector. It makes sense because particularly wind power and solar power are cheap compared to fossil fuel generation, but renewables are intermittent, which is why we will also need our nuclear generation. He draws attention to the scale of the problem we face.

Climate Change: Net Zero Strategy

Lord Howell of Guildford Excerpts

Wednesday 3rd May 2023 Lords Chamber

[Lord Callanan (Con)]

No, it is not. The figures I quoted started from a baseline of 1990, so it actually includes some of the progress made under previous Labour Governments. There is no question that of course we have a challenge: we have the oldest housing stock in Europe, a consequence of the Industrial Revolution. Six million homes were built before the First World War, so it is a challenge, but the figures still stand: we are making faster progress than any other G7 country.

[Lord Howell of Guildford (Con)]

My Lords, have the Government really taken on board, in pursuing this admirable goal of NZ, the absolutely colossal increase in electricity from renewable sources—presumably wind and nuclear are the main ones—which will be required to get anywhere near replacing all the other energy we use in the economy, which is, of course, full of fossil fuels? This is a vast task, requiring immense investment and enormous planning and, although I am encouraged by what my noble friend says, have we really begun on making the 10-times expansion of wind in the North Sea and the six new nuclear power stations if they are big, or the 30 or 40 if they are small? These are vast tasks; we do not yet hear enough about how we are going to meet them.

[Lord Callanan (Con)]

My noble friend makes an important point. I know he has a lot of experience in this area and he is right to point out the scale of the task. It is an immense challenge to be done over many years; none of this happens overnight. Some of the wind farms that are coming on stream this year were planned a decade ago; it all takes time to do, but over the next 20 or 30 years we need to make progress towards those goals. They are legally binding, so we need to meet them and we are on track to do so.

Green Investment

Lord Howell of Guildford Excerpts

Tuesday 7th March 2023 Lords Chamber

[Lord Callanan (Con)]

The short answer to the noble Lord’s question is yes, in essence. He is right to point to both these actions as potential threats, significantly so in the case of the US. The protectionist measures are the problem; we have no problem with it finally coming to the decarbonisation table. We are still waiting to see the details from the EU and will know more next week, but it does not look as though there will be much protectionism there: certainly, from the outline that I saw, none of the items listed is a particular threat. We are looking at this very closely across the Government and will be responding in due course.

[Lord Howell of Guildford (Con)]

My Lords, is this so-called Inflation Reduction Act not in fact an outright protectionist measure, very much pointing the wrong way for those of us who want freer trade worldwide? The Secretary of State says that she has been talking with like-minded countries about what to deal with and how to face the problems that the noble Lord, Lord Teverson, has raised. Can the Minister assure us that, in the United States, we are talking to a like-minded country—we thought that it was—and explaining to it the collateral damage, which could be considerable, from this ill-considered measure?

[Lord Callanan (Con)]

I assure my noble friend that we are talking to the US about the provisions, but the legislation is the legislation. We all know the history of why it ended up as it did in the US Congress. Nevertheless, we will continue to engage the US, make our points and argue for open, free and fair competition.

Domestic Heat Pumps: Budget Underspend

Lord Howell of Guildford Excerpts

Tuesday 28th February 2023 Lords Chamber

[Lord Callanan (Con)]

I agree with the noble Lord’s figures on the efficiency of heat pumps. He will find that there are a number of show properties around the country already; a lot of the installers or manufacturers already have showrooms demonstrating the technology for prospective purchasers.

[Lord Howell of Guildford (Con)]

My Lords, I declare an energy interest, as in the register. Further to this and the last Question, do the Government accept that, with their full commitment to future renewables, the removal of all gas heating and cooking, and millions of new electric vehicles, we will see an enormous need not only for more generating plant but, more importantly, for a completely new electrical transmission system nationwide? It is estimated that the burden on the transmission system will increase 400%, when it is already at 100% and overloaded. Do we have the plans in place to cope?

[Lord Callanan (Con)]

My noble friend makes a very good point: huge investment is required to both upgrade and reconfigure the transmission grid. We are moving away from a system based on point loads to a much more diversified system of renewables, et cetera. The point is valid. Billions of pounds are being invested in the grid and we have a plan to upgrade it. It is worth saying that there will be ongoing demand for gas; it will be declining, but we will still be using it.