Energy Prices

Lord Hunt of Kings Heath Excerpts

Wednesday 26th March 2025 Lords Chamber

[Lord Sikka]

To ask His Majesty’s Government what steps they are taking to control energy prices.

[The Minister of State, Department for Energy Security and Net Zero (Lord Hunt of Kings Heath) (Lab)]

My Lords, the Government believe that the best way to protect bill payers and to mitigate the energy price spikes that we saw in 2022 is through our mission to deliver clean power by 2030. Under the default tariff price cut, Ofgem has capped the profits of energy suppliers in the retail market. In addition, the Government are reviewing Ofgem’s role to ensure that it is a strong consumer champion.

[Lord Sikka (Lab)]

My Lords, I thank the Minister for the reply. We need a glimpse of reality here: between 2020 and 2024, the UK’s 20 biggest energy companies made an operating profit of £483.4 billion—yes, noble Lords heard that figure correctly—which is a major cause of social problems. Steel, shipbuilding and engineering industries are struggling, 6.1 million households are in fuel poverty and 110,000 pensioners a year are dying in fuel poverty. The Government have three non-mutually exclusive policy options: price controls, public ownership, and worker-elected and consumer-elected directors on company boards. What proposals would the Minister like to offer for ending profiteering in the energy industry?

[Lord Hunt of Kings Heath (Lab)]

My Lords, I am very grateful to my noble friend for his support. The issue of prices is of course serious for both business and domestic customers. That is why we have the warm home discount and the support given to businesses that use energy intensively. Clearly, this is a continuing issue that will be solved only if we can wean ourselves off the international gas markets, which we are going to do by moving towards clean power. I just say to my noble friend that Ofgem does in fact cap the profits of energy suppliers in the retail market; they are capped at 2.4%.

[Earl Russell (LD)]

My Lords, we have some of the most expensive electricity prices in Europe, just at the point when our citizens need to turn away from fossil fuels to run their cars and heat their homes. I know that the Government are looking at electricity market reform, particularly zonal pricing. Will the Government work on a cross-party basis to develop those plans? When do they feel they will be in a position to bring forward legislation?

[Lord Hunt of Kings Heath (Lab)]

My Lords, I cannot give a definitive date for future legislation, as the noble Earl will understand, but he is right about market reform. We are considering fundamental changes, including zonal pricing. I understand that the previous Government looked at marginal pricing when they started their work but decided not to make any changes. On input, I would be very glad to meet with the noble Earl to discuss his proposals.

[Lord Geddes (Con)]

My Lords, the Minister will not be surprised by my question: what price tidal power?

[Lord Hunt of Kings Heath (Lab)]

My Lords, it depends on whether tidal power can offer value for money. I recently met with a number of developers who are interested in developing tidal power. I understand their passion and the potential, but we must ensure that it provides value for money. However, the door is open to further discussions.

[Baroness Hayman (CB)]

My Lords, I declare my interests as set out in the register. The market for electricity in this country is obviously a very complicated one, but Ofgem made it clear in the announcement of the recent price increases that the link with international gas prices is influencing the current rise in the cost to consumers. Can the Minister assure me that, as we move to that clean power system, the REMA review that he mentioned will look at whether delinking the overall UK market from the price of natural gas internationally would be in the best interests of consumers?

[Lord Hunt of Kings Heath (Lab)]

My Lords, that is an interesting comment, and the noble Baroness is of course absolutely right. Our problem is that we are tied to international gas prices, and noble Lords who are fixated on our using even more gas need to consider the implications of that. We are looking at how future gas market networks would work in a situation where gas is used much more infrequently. On marginal pricing, the more we use renewables, the less we are concerned about the international market. The contract for difference limits enable us to pay the renewable developers at a price that has already been agreed, rather than worrying about what the international price market will be.

[Lord Offord of Garvel (Con)]

My Lords, the Minister is always reminding us from the Dispatch Box that our electricity is the most expensive in the OECD. He blames international gas markets for that, but our European neighbours are subject to the same markets and seem to have cheaper electricity. Take France, for example. Our electricity is 80% more expensive than France’s. Why is that? It has a more balanced energy system, and it uses nuclear for its baseload. It is a simple fact that just shy of 50% of our electricity bills is comprised of green levies, subsidies and network realignment. I ask the Minister to slow down. Can we now just take some time to reflect, and reassess this mad dash to renewables by 2030? Please let us not put all our eggs in one expensive and fragile basket.

[Lord Hunt of Kings Heath (Lab)]

My Lords, I do not agree with the noble Lord at all. I remind him that our electricity market structure and its reliance on the international gas market is an inheritance from the last Government, and the highest prices we had were under the stewardship of the last Government. In getting ourselves off these international market prices, going to renewables and using nuclear as the essential baseload, we can grow the economy and give ourselves security. I totally disagree about the speed; we need to do this as quickly as we can.

[Lord Liddle (Lab)]

My Lords, do we not depend on high-priced gas because we rely on it when the wind does not blow and the sun does not shine to make our renewables work? The answer therefore has to be to invest more in energy storage, which I think we are doing, to strengthen international grid links so that we can gain supply there, and to invest for the long term in nuclear power.

[Lord Hunt of Kings Heath (Lab)]

My Lords, I agree with my noble friend on all of that. I am glad that he mentioned the importance of nuclear energy as our essential baseload. With Sizewell C, the SMR programme, the opening of Hinkley Point C and the advanced modular reactors, we have the opportunity to have an excellent industry in the UK to give us low-carbon baseload energy.

[Lord Teverson (LD)]

My Lords, the best way to reduce the costs of energy is by not needing so much of it. Is the Minister strongly pressing his colleagues in government to get the Future Homes Standard out and implemented, so that families who buy new houses know they are not going to have to retrofit and will have low energy bills? When is that announcement going to be made?

[Lord Hunt of Kings Heath (Lab)]

The noble Lord is clearly right that energy efficiency in our homes is necessary if we are going to meet the net zero target by 2050 and hold down the cost for domestic consumers. I cannot give him a date, but I can say that my department is working across Whitehall on the policies we need to enunciate to get going in that area.

[Lord Howell of Guildford (Con)]

My Lords, has the Minister noticed that the chairman of Électricité de France has just been sacked and that, understandably, advice has been given to EDF to spend less money on overseas investments and concentrate on power in France? Can he give us an idea of what effect that has on our one major nuclear development, Hinkley, where, of course, EDF is a major player, and on Sizewell C, where it is a minor but considerable player? Is this not rather dangerous, given that nuclear power, along with renewables, is absolutely necessary to get our costs down in future?

[Lord Hunt of Kings Heath (Lab)]

My Lords, I have noticed the change in leadership at EDF, and we look forward to having discussions in the future with the new person who has been appointed. EDF has made a major investment in Hinkley Point C and, as the noble Lord says, is an important minority shareholder in Sizewell C. We have enjoyed a good relationship with EDF. My right honourable friend the Secretary of State for Energy Security and Net Zero met with his counterpart in the French Government only a few weeks ago, and we maintain close contact with both the French Government and EDF. We will have to see how this unfolds over the next few weeks, but I am confident that we will see progress towards the opening of Hinkley Point C and a final investment decision on Sizewell C.

UK Energy: Grid Decarbonisation

Lord Hunt of Kings Heath Excerpts

Monday 24th March 2025 Lords Chamber

[Lord Offord of Garvel]

To ask His Majesty’s Government what assessment they have made of the impact of their plans to decarbonise the grid by 2030 on the United Kingdom’s energy security.

[The Minister of State, Department for Energy Security and Net Zero (Lord Hunt of Kings Heath) (Lab)]

My Lords, in an era of heightened geopolitical risk, switching oil and gas for home-grown clean energy from renewables and other clean technologies offers security that fossil fuels cannot provide. NESO’s independent modelling confirms that achieving clean power by 2030 is feasible, while ensuring security of supply without increasing costs to consumers, with scope for lower bills.

[Lord Offord of Garvel (Con)]

My Lords, this self-imposed target of decarbonising the grid by 2030 is all very admirable but is it realistic and is it achievable? Looking at my national grid app, it is telling me that right now, today, renewables are 43% of the grid and the rest is non-renewables. Noble Lords may have noticed that this is quite a good day for sun and wind, which is why it is at a high number. Last year, the average was 37% from green energy. That is precisely why this is unachievable, and a target that we cannot hit in 2030. In one simple word, it is called “baseload”. In China, they use coal for baseload and in America they use shale gas for baseload. That is why factory electricity is seven times cheaper in China and five times cheaper in the United States. We have abundant hydrocarbons in the UK and we have great nuclear capability. Is now not the time to review this target to make it realistic and, more importantly, affordable for British consumers and businesses?

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[Lord Hunt of Kings Heath (Lab)]

No, my Lords, and I very much regret that the Opposition have withdrawn their support for policies taking us towards net zero, particularly in view of the fact that the noble Baroness, Lady May, took the decision when Prime Minister to legislate for the 2050 net-zero target. It is interesting, in relation to China, that the IEA reckons that 60% of the global expansion in renewable energy between now and 2030 will be in China. As for the noble Lord’s obsession with fossil fuels, the reason that we have these high prices, which the party opposite bequeathed to the country, is the unreliability and volatility of the international gas and oil markets. Getting clean power gives us energy security and much more reliability in prices.

[Lord Ravensdale (CB)]

My Lords, I declare my interest in the register. Can the Minister please update the House on the progress his department is making with banning the imports of Russian nuclear fuel? Importantly, when will it be taking those measures, with all the benefits that will bring for not only energy security but national security and our domestic industries?

[Lord Hunt of Kings Heath (Lab)]

I am grateful to the noble Lord for raising this question again. He will know that the Government have committed to prevent the import from Russia of nuclear fuels by 2030. We are discussing whether we could bring this forward. I am afraid I cannot give him any more information at the moment, but as soon as a decision is made, I will let him know.

[Viscount Hanworth (Lab)]

My Lords, since the announcement by President Macron in the autumn of 2021 of the France 2030 agenda, France has been committed to closing the nuclear fuel cycle. This means that it intends to use its uranium more efficiently and to deploy nuclear waste in its reactors. It is motivated by the supposition that, by 2050, the stocks of uranium will be pre-empted by the Chinese and the Americans. What is the Minister’s reaction to this supposition? Is the UK likely to follow the lead of France?

[Lord Hunt of Kings Heath (Lab)]

My Lords, the noble Lord will know that through Urenco, at Capenhurst, we are investing a considerable amount of money into the HALEU programme to enable us to have the whole fuel cycle undertaken in the United Kingdom. This is good for energy security and good for exports. I understand the point that the noble Viscount makes about uranium. We are confident in the future supply, but I acknowledge his underlying point of the importance of nuclear energy as an essential baseload.

[Baroness Sheehan (LD)]

My Lords—

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[Baroness Sheehan (LD)]

Does the Minister agree that consumers choosing green electricity as their preferred source of power is a powerful driving force for the increasingly rapid uptake of electric vehicles, for example, given that UK EV sales increased by more than 20% last year? Surely it is far better than relying on fossil fuel generation from unstable regions such as the Middle East and Russia for long-term energy security.

[Lord Hunt of Kings Heath (Lab)]

My Lords, I totally agree with the noble Baroness that the wholesale move to electrification, not just in power generation but in transport, industrial processes and home heating, will lead us to be much more energy secure. We will ensure that we make the contribution we need to make to deal with climate change and we can grow the economy and bring thousands more green jobs to this country.

[Lord Kirkhope of Harrogate (Con)]

My Lords, there appears to be a contradiction. Certain Ministers are encouraging the farming industry to use as much of the good agricultural land as possible to produce food, and yet other parts of government are hell-bent on having solar panels everywhere, including on our best agricultural land. What exactly is the policy of the Government on this?

[Lord Hunt of Kings Heath (Lab)]

My Lords, I do not think there is any confusion at all. The policy is quite clear. We value our agricultural land, and the total amount of it that could be used by solar in future, over a considerable number of years, is less than 1%. The noble Lord may have noticed that, on 21 March, only two or three days ago, Great British Energy announced that its first major product will be the solar accelerator, which will enable hundreds of schools and hospitals across England to install new rooftop solar power. We are not just talking about the use of agricultural land. We want to see an expansion of solar, but it can be in relation to schools and hospitals and buildings as well.

[Lord Lennie (Lab)]

My Lords, when will the Government make a decision about the awarding of a contract for advanced small modular reactors in this country?

[Lord Hunt of Kings Heath (Lab)]

My Lords, a process for small modular reactors is being undertaken by Great British Nuclear at the moment. It has undertaken a technology appraisal, tenders have now come in, and I expect that the outcome of the process will be known by the end of spring. That is tied into SR discussions.

[Lord Alton of Liverpool (CB)]

My Lords, did the Minister note over the weekend the views of Unison and the Independent Anti-Slavery Commissioner, along with the letter sent by a Holocaust survivor to Mr Ed Miliband, all supporting the all-party amendment, which was passed by your Lordships’ House by a majority of 50, saying that there should be zero tolerance for the use of slave labour in supply chains? When Mr Miliband went to China last week, did he raise the use of Uyghur slave labour in the manufacture of solar panels and other green technology? Did he raise the use of child labour in the DRC in lithium and cobalt mining and their use in green technology, including these solar panels?

[Lord Hunt of Kings Heath (Lab)]

My Lords, I understand the noble Lord’s concern. He will know that the Great British Energy Bill is being debated in the other place in a day or two’s time. I understand the point that he raises and we will look at that letter with a great deal of consideration. We are committed to tackling the issue of forced labour in supply chains, and legislation and guidance are already in place to help businesses take action against modern slavery.

[Lord Howell of Guildford (Con)]

Could the Minister, who is usually very clear, be a little clearer with us about what is meant by decarbonising the grid by 2030? A number of authorities are saying that that is not what is going to happen at all. A number of gas-generating electricity stations are already being commissioned, and when they are there in 2030, as they will be, they will emit large amounts of carbon dioxide. How is that going to be handled? How is it going to be buried? Have the contracts begun for carbon capture and storage? It does not appear that there is much sign of that.

[Lord Hunt of Kings Heath (Lab)]

My Lords, the noble Lord will recall that we signed contracts in December to launch the first carbon capture, usage and storage project. We expect that, by 2030, clean sources of energy will produce at least 95% of Great Britain’s generation, and gas power generation will be there mainly as a back-up.

Scotland: New Nuclear Power Generation

Lord Hunt of Kings Heath Excerpts

Tuesday 18th March 2025 Lords Chamber

[Lord Foulkes of Cumnock]

To ask His Majesty’s Government what discussions they plan to have with the Scottish Government regarding the extension of new nuclear power generation to Scotland.

[The Minister of State, Department for Energy Security and Net Zero (Lord Hunt of Kings Heath) (Lab)]

My Lords, Scotland’s policy on new nuclear energy projects is a matter for the Scottish Government. We remain open to discussions with the Scottish Government on nuclear energy’s future in Scotland. In the meantime, we welcome EDF’s recent decision to extend Torness’s operation to March 2030.

[Lord Foulkes of Cumnock (Lab Co-op)]

My Lords, I agree that we should respect the role of the Scottish Government, but surely now is the time to stop pussyfooting around, when the Scottish Government say that they are quite willing to accept in the future electricity generated by nuclear in England. Given that energy is a reserved area, surely we should look at ways of stopping the blockers in Scotland, as well as in the rest of the United Kingdom. Will the Minister have a look at it?

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[Lord Hunt of Kings Heath (Lab)]

My Lords, my noble friend knows that on powers relating to nuclear the issue is that, in Scotland, nationally significant infrastructure projects, including nuclear, are broadly reserved. However, Scottish Ministers have devolved executive competence for planning decisions for improving applications to build, operate or modify electricity-generating stations with capacities exceeding 50 megawatts in Scotland. We are not in a position to make a change to that. Scotland has a rich nuclear heritage, and the work being done at Torness is extremely valuable in providing clean energy to Scotland. As I have said already, we very much support EDF’s decision to extend the life of Torness by a couple of years.

[The Earl of Kinnoull (CB)]

The Net Zero, Energy and Climate Change Interministerial Group met on 6 March and the communiqué came out yesterday. It has a section in it about what was discussed, and nuclear power is not mentioned. The interministerial group met in October and March last year, and nuclear power is not mentioned in either of those two communiqués. Can the Minister assure us that nuclear power will be on the agenda of the next meeting of the interministerial group?

[Lord Hunt of Kings Heath (Lab)]

My Lords, we are always open to discussing nuclear power in that group, and with the Scottish Government. However, it is very difficult to make progress in view of the current Scottish Government’s position on nuclear. I can say that, on 6 February in the Scottish Parliament, Anas Sarwar, the leader of the Scottish Labour Party, called on John Swinney, the First Minister, to drop his ideological opposition to nuclear power in Scotland.

[Lord Offord of Garvel (Con)]

My Lords, the GMB came out and said that the Scottish economy is losing out to the tune of £1 billion because of the Scottish Government’s ideological indifference to nuclear. Am I right that, last week, the noble and learned Baroness the Advocate-General said that there had been a fundamental reset in the relationship between the UK and Scottish Governments? I ask the Minister if this is not the time to demonstrate that reset. Can we please have a joined-up, holistic strategy for nuclear that does not stop at the Tweed?

[Lord Hunt of Kings Heath (Lab)]

My Lords, there has been a reset and we have been in close discussions with the Scottish Government on a number of energy matters, but the fact is that the Scottish Government are opposed to new nuclear development. I agree with the noble Lord—and Anas Sarwar said it too—that the refusal to allow new nuclear power plants is costing Scotland billions in investment and thousands of jobs, which will go to England and Wales instead. I agree with that, but the fact is that we are dealing with the Scottish Government, who, at this stage, are not prepared to go for new nuclear.

[Lord Wigley (PC)]

My Lords, in view of the difference of opinion on nuclear power in Scotland, demonstrated by both the Minister and the noble Lord, Lord Foulkes, will the Minister accept that, in Wales, there is a widespread wish to see the former nuclear power stations of Wylfa and Trawsfynydd being used? That brings together the Labour Government in Cardiff and the Plaid Cymru-run local governments in Anglesey and Gwynedd. Given the strong feeling that this should happen, not least in the context of medical isotopes, can the Government give particular attention to bringing investment to those two sites?

[Lord Hunt of Kings Heath (Lab)]

My Lords, the department rejoices in the approach of the Welsh Government, and indeed of the noble Lord. I well understand the potential for new nuclear developments in Wales and think it is a tragedy that the proposals in Wylfa did not go ahead. The noble Lord knows that, in the siting policy currently in play, Wylfa is listed as a site of great potential. The new siting policy is more flexible, but, undoubtedly, Wylfa in particular still has great potential.

[Earl Russell (LD)]

My Lords, last year, Scotland met 113% of its national power needs from renewable sources alone. This is set to radically increase, providing much-needed clean power to the rest of the UK. I welcome the expansion of the £150 warm home discount to more homes in Scotland. Does the Minister agree that the SNP Government must take urgent action on energy efficiency? Their decision to scrap their own green heating plans for heat pumps in new homes will leave Scottish citizens poorer and colder.

[Lord Hunt of Kings Heath (Lab)]

My Lords, the noble Earl is not going to draw me into commenting on what the Scottish Government have done on these matters. However, it is worth making the point that, in 2023, 19.3% of electricity generated in Scotland came from nuclear. That indicates that, in clean power, nuclear has a huge amount to offer Scotland, Wales and England.

[Lord Spellar (Lab)]

My Lords, would the Government’s hand not be greatly strengthened in dealing with the Scottish Government if they themselves moved ahead on a decision on small modular nuclear reactors? When do they expect to announce the outcome, and can we have something slightly more definitive than “soon”?

[Lord Hunt of Kings Heath (Lab)]

My Lords, I absolutely agree with my noble friend on the importance of the small modular reactor programme. He knows that Great British Nuclear is going through a selection process at the moment. We expect important announcements to be made in the spring.

[Lord Forsyth of Drumlean (Con)]

My Lords, power devolved is power retained. If the Scottish Government are not acting in the interests of the United Kingdom, with their opposition to nuclear power and to oil and gas, that will create great difficulties for the rest of the United Kingdom. Has the Minister considered taking back the power for them to prevent the appropriate infrastructure needs of the country as a whole?

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[Lord Hunt of Kings Heath (Lab)]

My Lords, I do not think it is the case that we should reopen the devolution settlement, and the noble Lord would not really expect me from the Dispatch Box to say that we should. I think it is clear that, overall, new nuclear has a huge role to play, in the baseload that it can provide and in clean power. The move towards the final investment decision on Sizewell, progress on Hinkley Point C, the SMR programme and the potential of advanced modular reactors will give us a hugely important foundation for clean power for Great Britain as a whole.

[Baroness Curran (Lab)]

My Lords, I speak as a former planning Minister in the Scottish Government. Does the Minister agree that the best way to address this case is not more conflict with the Scottish Government but promoting the argument for nuclear power in a positive way—and, perhaps, working hard so that Anas Sarwar becomes First Minister of Scotland and we can resolve this problem?

[Lord Hunt of Kings Heath (Lab)]

My Lords, those are very wise words from my noble friend.

[Lord Watts (Lab)]

My Lords, if the Scottish Government do not want nuclear power but are willing to use electricity that it has generated, should there not be a reflection of that in the price they pay?

[Lord Hunt of Kings Heath (Lab)]

My Lords, we are looking at the whole issue of zonal pricing, but I do not think we would go quite that far. It is interesting, though, that the Scottish Government were in favour of the extension to the current plant in Torness. I agree with my noble friend Lady Curran that we should work on that and be constructive in our approach. We have had fruitful discussions on some of the difficult issues around Grangemouth and the North Sea transition. We should build on the reset that the Prime Minister and the First Minister have taken forward, and we should articulate the advantage that nuclear power gives to all countries in Great Britain.

Licensed Oil and Gas Fields: Emissions

Lord Hunt of Kings Heath Excerpts

Tuesday 11th March 2025 Lords Chamber

[Baroness Jones of Moulsecoomb]

To ask His Majesty’s Government how they plan to assess the ‘scope 3 emissions’ of licensed oil and gas fields, and what impact they have on their emission reduction targets.

[The Minister of State, Department for Energy Security and Net Zero (Lord Hunt of Kings Heath) (Lab)]

My Lords, the Government have consulted on supplementary environmental guidance relating to emissions from burning extracted oil and gas. We are working towards publication of finalised guidance as soon as possible. Emissions produced by burning oil and gas are accounted for in our domestic targets for the sectors which use these fuels. Emissions are not accounted for in carbon budgets if this fuel is burned outside the United Kingdom.

[Baroness Jones of Moulsecoomb (GP)]

My Lords, I am sure the whole House will be with me in expressing concern about the collision in the North Sea and in sending hope to the rescue services, the sailors and, of course, all marine life.

I thank the Minister for his Answer. That was exactly what I was concerned about. Once the gas and oil are extracted, the total emissions should then be accounted for, on the assumption that it will all be burned, whether or not it is exported or moved somewhere else.

[Lord Hunt of Kings Heath (Lab)]

My Lords, first, I join the noble Baroness in expressing my sympathy to all concerned in the tragic events that have taken place in the North Sea. I also agree with her that we should pay tribute to the emergency services—and, of course, we are very concerned about the environmental impact.

I ought to explain to the House that scope 1 emissions are direct company emissions that occur from sources owned or controlled by the company. Scope 2 are indirect emissions resulting from generation of purchased energy, typically electricity, or purchased heat. Scope 3 are all indirect emissions not included in scope 2 that occur in the value chain of the reporting company and include downstream and upstream emissions—if noble Lords wished to know what those scopes were.

The point here is that we would be double-counting the emissions—or that is the risk—if we went down the route that the noble Baroness suggests. We had this consultation in the light of the Finch judgment, because we needed to revise the environmental impact assessment to take account of scope 3 emissions. We are carefully considering the consultation at the moment, and it would be premature for me to say anything more at this stage.

[Baroness Hayman (CB)]

My Lords, I declare my interest as chair of Peers for the Planet. Did the consultation involve—I do not think that it did—the issue of ending venting and flaring, which is not essential, from oil and gas fields in the North Sea? We know how damaging that is, and the Minister will recollect that during debates on the Energy Bill noble Lords across the House took a view that it was a dangerous practice that needed ending. What are the Government doing about ending it?

[Lord Hunt of Kings Heath (Lab)]

My Lords, I believe that the noble Baroness is right that venting and flaring are not covered in the EIA consultation, which is about scope 3, and I think they would come into scope 1. We are, of course, concerned about this and are considering the matter. My understanding is that the upstream oil and gas sector overall makes up to 3% of total net territorial greenhouse gas emissions. Of course, we are committed to meeting carbon budgets 4, 5 and 6, and we have just received advice from the Climate Change Committee in relation to carbon budget 7—all those things come into the mix as well—but I certainly take seriously the point that the noble Baroness raises.

[Earl Russell (LD)]

My Lords, given the Supreme Court decision and the new rules on oil and gas production being consulted on, what other measures and assessments of extra resources are the Government considering or undertaking to ensure that continued progress is made towards a just transition in the North Sea?

[Lord Hunt of Kings Heath (Lab)]

My Lords, the noble Earl is right. We issued a consultation paper last week in relation to the North Sea and the transition that takes place. There is a decline that has carried on for many years in North Sea production. On the other hand, the workers in the North Sea are very skilled, and there is no question that, as the number of workers in the oil and gas fields reduces, so there is a big demand to increase the workforce in offshore oil and gas. The consultation, our policy of a just transition and the jobs hubs that we have established are very much geared towards ensuring that we make use of very skilled people and find new employment for them.

[Lord Foulkes of Cumnock (Lab Co-op)]

My Lords, when the carbon capture and storage schemes were given the go-ahead recently, the one in Scotland was not among those that were given the go-ahead. When does the Minister expect further consideration of this?

[Lord Hunt of Kings Heath (Lab)]

My Lords, we are of course in discussions with His Majesty’s Treasury over the next spending review and it would be premature for me to comment on any of the detail. Clearly, carbon capture, usage and storage have a very important role to play in the future, and I have noted my noble friend’s elegant bid for investment in Scotland in that regard.

[Lord Offord of Garvel (Con)]

My Lords, the Government have repeatedly refused to clarify whether Jackdaw and Rosebank will be shut down under their policy of refusing to grant any new oil and gas licences. That is despite both licences being granted in 2022 and 2023 in recognition of their contribution to net zero and to our national energy security. Will the Minister please clarify that this is not another example of government policy being dictated by lawyers rather than by politicians? How does he expect the Chancellor to fulfil her growth agenda with the most expensive energy prices in the OECD?

[Lord Hunt of Kings Heath (Lab)]

My Lords, the best way to deal with energy prices is to move from being utterly reliant on international gas prices subject to the volatility that has arisen from the invasion of Ukraine by Putin. That is why we must move towards clean power as soon as we possibly can, to give ourselves energy security.

I cannot answer that question in relation to Rosebank and Jackdaw. The original consent decisions were subject to judicial review, which was paused pending the outcome of the Finch judgment. In the light of the Finch judgment, as I have said, we are consulting on new environmental impact assessments. When we have produced those, it will then be up to developers to make applications for consents according to the new guidelines we have produced. I cannot forecast the outcome of that process.

[Baroness Sheehan (LD)]

My Lords, who in government is responsible for collecting the data on spillages from the oil and gas industry operations in the UK? Scope 3 emissions take account primarily of greenhouse gas emissions, but they also take account of pollution. How do the Government deal with pollution, particularly in marine protected areas due to those spillages?

[Lord Hunt of Kings Heath (Lab)]

My Lords, in relation to the North Sea, the Offshore Petroleum Regulator for Environment and Decommissioning has an important role to play in the work that is undertaken on oil and gas. Of course, we have wider environmental law. Defra has a role to play. The Department for Transport—obviously, in relation to the tragic incident that has taken place—also has a role to play. On the point the noble Baroness raised, there has to be a cross-government approach to protecting biodiversity and the health of our seas. My department certainly plays its part in that.

[Lord Mackinlay of Richborough (Con)]

My Lords, I declare that I will become the director of the Global Warming Policy Foundation from next month. Have the Government assessed the amount of lost investment, lost jobs, lost tax revenue and lost balance of payments costs in the unwelcome approach that we take to new gas and oil in the UK? We are simply substituting supply with that of our foreign competitors, notably Norway, Qatar and the US. Into the future, that could be domestic.

[Lord Hunt of Kings Heath (Lab)]

My Lords, as an avid reader of the Daily Telegraph, I was of course well aware of the noble Lord’s appointment. I heartily congratulate him on it and welcome him to our debates on energy. However, he is wrong. The best way to proceed is the way we are doing, by ensuring that we grow home-produced, clean-power energy. This is the best way to grow the economy. As for investment in the North Sea, the very fact that we are producing a consultation on environmental impact assessment and last week produced our consultation in relation to our policy of issuing no more licences gives clarity to the industry in which investment can continue to take place.

Warm Home Discount

Lord Hunt of Kings Heath Excerpts

Monday 3rd March 2025 Lords Chamber

[Earl Russell (LD)]

My Lords, I welcome this Statement—in particular, the clear commitment to provide a one-off payment for next winter. These payments will help with continued rising household energy costs, as the energy price cap has risen again by 6.4%. Until we break our dependence on gas for 30% to 40% of our electricity generation and 85% of our home heating, we will remain at the mercy of the volatile international markets.

Indeed, households are set to pay over £800 more per year for their energy compared with the winter of 2020-21—a 77% increase. The UK has spent £140 billion on the international gas market since the war in Ukraine started, for no long-term energy security or reduction in the energy bills being paid. That is 10 times the total GB Energy budget to date.

We have 6 million households living in fuel poverty today, and most of them have been for some time. We have some of the worst-insulated homes in Europe and some of the highest energy bills. High energy bills are a continued legacy issue and are, in part, a direct result of the last Government’s failure to do more to transition to renewable energy earlier. Progress is being made on the transition and we welcome this.

The Climate Change Committee is absolutely clear and unequivocal. Politicians who oppose action on net zero will make their constituents poorer by driving up their energy bills. Although we welcome these measures, we ask the Minister to go further and introduce this much-needed help now, to provide help for those who need it now, and not to make people wait until next winter.

We also call on the Government to scrap the energy price hike for the nearly 10 million pensioners who lost their winter fuel payment and to provide more help to other vulnerable groups, particularly those with disabilities. The estimated cost is about £130 million. We also call on the Government to ensure that all energy companies sign up to a single social tariff as soon as possible, to provide a long-term, stable mechanism for helping to reduce fuel poverty.

We need to do more to smooth the energy price costs as we drive over the energy transition speed bump in the road ahead. We have constantly called for an emergency 10-year home insulation programme. Domestic home heating is still 77% gas powered. We need a huge and urgent increase in the number of heat pumps installed.

Finally, I want to ask about long-term reforms and for some clarity on the direction of travel on measures to reduce our energy bills, and in particular about electricity market reform, which feels like an idea whose time has come. Does the Minister agree? When can we expect progress?

Our electricity prices are linked to the global fossil fuel market. Natural gas prices thus set the UK market electricity price. Will this Government look at the option for decoupling electricity market structures so that we have one rate for gas and one for electricity? Is it not time to stop the artificial inflation of the price of our home-generated renewable electricity, so that the savings can be passed on to our bill payers?

Will the Government publish reports on these matters? Will they also look at reforming contracts for difference?

I am disappointed that we do not have consensus on climate change, but my hope is that we could have consensus on electricity market reform as a measure to save bill payers money.

[The Minister of State, Department for Energy Security and Net Zero (Lord Hunt of Kings Heath) (Lab)]

My Lords, I thank noble Lords for their comments on the Statement on the warm home discount. The noble Lord, Lord Offord, is right, of course, that this comes as there is an increase in the energy price cap. In a sense, we are repeating the debates we have had over the last few months.

The noble Lord, Lord Offord, talked about the Government having an ideology. But it is not an ideology; it is about the stark facts of climate change, the impact it will have on us and the lessons we learn from the Russian invasion of Ukraine and the impact that has had on our energy security.

We believe that the way to proceed is to move to home-grown clean energy as soon as possible. It is interesting to see the change in stance of the Opposition. After all, it was the noble Lord’s party that took through legislation enshrining net zero by 2050. There is the work of the noble Lord, Lord Deben, who chaired the Climate Change Committee for some 10 years with great distinction, the work the then Government did on COP 26 in Glasgow, and the growth in the green economy over the past few years. It is a pity that we seem to have lost that consensus.

The noble Lord will know that Governments never speculate on future energy prices, but we have said that we are determined to cut bills as far and as fast as we can and that a figure of up to £300 by 2030 remains our objective. On levies, of course, policy costs associated with bills are expected to increase over time and clearly, the last Government used levies extensively, but as low-carbon capacity expands—renewables, CCUS, nuclear-hydrogen—those costs will drive reductions in electricity wholesale prices. It is worth reflecting on the advice we have just received from the Committee on Climate Change on the seventh carbon budget, because that makes a similar point: although there are some initial clear up-front investment costs, in time the benefits of having cheap renewable energy will come to the fore in terms of the costs that have to be borne by the consumer and by businesses.

I very much agree with the noble Earl, Lord Russell, on the net zero policies that need to be taken forward. He is absolutely right about the challenge we face with our housing stock, and the requirement to do everything we can to help transform it. He will know that we have the Warm Homes Plan. We have already kick-started delivery of it with an initial £3.4 billion over the next three years towards heat decarbonisation and household energy efficiency. We published a consultation in February this year on improving the energy performance of privately rented homes, and we have announced a raft of policies to support heat pump uptake. However, there is a long way to go, and it represents a major challenge.

On a social tariff, we are working closely with other government departments to unlock data that will enable us to target support more effectively to those who need help with their energy bills. My honourable friend the Minister for Energy Consumers is leading a working group with Energy UK and other stakeholders to see how we can take further sustained action on improving the affordability and accessibility of energy.

On energy market reform, the noble Earl’s point is well taken. We are launching a comprehensive review of the energy regulator Ofgem. We want to establish Ofgem as a strong consumer champion, driving up standards for households and business consumers, both now and as energy use evolves with smart and green technology. That should not be taken as criticism of Ofgem; it is more that we see future potential to develop Ofgem’s role.

On reform of the market more generally, we are considering two key reform options to enhance the efficiency of the electricity market by strengthening locational price signals better to match supply and demand—either a reformed national pricing model, or zonal pricing. This work is being undertaken. I take the noble Earl’s point about the relationship between electricity and gas, and we are looking at that issue too. On the overall position of price to business/price to consumers, in the long run, we must charge on with our aim to get clean power as quickly as we possibly can. That is the way to get long-term stability.

[Baroness Young of Old Scone (Lab)]

My Lords, I welcome the Statement about the measures that the Government are taking to help hard-pressed families keep warm and to alleviate fuel poverty.

I want to make just two points. On the electricity market reform, I would press the point made by the noble Earl, Lord Russell. Governments have been talking about electricity market reform for over two years now. The link with the gas market has become so dysfunctional that I must press the Minister for some urgency on this.

I would also like to raise a question on an area that is not covered by the Statement but is a vital part of ensuring that people do not remain in fuel poverty: new-build homes. We are going to build a considerable number of new-build homes, and the future homes standard 2025 is about to be introduced on a serial basis, but it rather misses the opportunity of going further. All new homes should not just have heat pumps and improved ventilation and insulation but should come fully equipped with solar panels, a battery wall and an electric vehicle charger.

Putting those in at the beginning may mean a small increase in a house price but trying to retrofit them immediately afterwards means a big sum for many households. Can the Minister give us some assurances about pressing the pace on electricity market reform and geeing up the future homes standard?

I advise the Minister not to be upset when the volume housebuilders make a song and dance about this. They made a huge song and dance in the middle of the last decade about energy-efficient and zero-carbon homes. The Government seemed to be about to ignore that and the housebuilders got on with getting ready for zero-carbon homes, but then, at the last minute, George Osborne pulled the rug out from underneath that. This Government can, perhaps, do rather better at facing up to the reality of needing these homes built to the highest possible standards.

[Lord Hunt of Kings Heath (Lab)]

My Lords, those two points from my noble friend are well made. On what is, in essence, mandation in relation to new homes, these points have been strongly put to my department. We are still in discussions across Whitehall in that regard, but I very much take and understand the point that she raises.

In relation to energy market reform, my noble friend urges me and my colleagues to get a move on. Our publication in the autumn has made significant progress in helping us to narrow down how reformed national and zonal pricing could be designed and implemented. We are working with stakeholders on the impact of these reforms. Clearly, they are pretty significant, but we are not delaying this. We have not put this into the long grass; we understand the importance of it.

Climate Change

Lord Hunt of Kings Heath Excerpts

Monday 3rd March 2025 Lords Chamber

[Baroness Sheehan]

To ask His Majesty’s Government what steps they are taking to promote action against climate change internationally following reports that 2024 was the warmest year on record globally.

[The Minister of State, Department for Energy Security and Net Zero (Lord Hunt of Kings Heath) (Lab)]

My Lords, the Government are committed to driving forward action on climate change. At COP 29 we announced an ambitious target to reduce emissions by at least 81% by 2035, and we will continue to urge other countries to be as ambitious.

[Baroness Sheehan (LD)]

My Lords, last December the Environment and Climate Change Committee, which I chair, published its report on methane, a greenhouse gas 80 times more powerful than carbon dioxide in its first decade. It is quite extraordinary that fully one-third of the global warming seen to date is due to methane, but methane is short-lived and its potency reduces rapidly, so we could slow near-term warming by cutting global methane emissions. Under UK leadership at COP 26 in Glasgow, the global methane pledge was signed, thanks in no small measure to the leadership of the noble Lord, Lord Sharma, who I am pleased to see in his place.

[Baroness Sheehan (LD)]

It is coming. It committed us to work with others to reduce global methane emissions by 30% by 2030. So can the Minister justify why, in their response to the Methane: Keep Up the Momentum report, the Government ruled out publishing a methane action plan for the UK, a key requisite for global climate leadership?

[Lord Hunt of Kings Heath (Lab)]

My Lords, the noble Baroness will know that we welcomed the report of her committee. We have provided a full written government response, including how we will support internal action to deliver on the global methane pledge. She will also know that we have included methane policies in our delivery plan for carbon budgets and will contribute towards the global methane pledge. I think that shows decisive action, and we are going to take strong international leadership to deliver against that pledge.

[Lord Sharma (Con)]

My Lords, decarbonising energy systems is a key way for countries to cut their emissions. The UK, alongside other developed nations, has supported developing countries, such as South Africa and Vietnam, to set up just energy transition partnerships to mobilise public and private finance to help those nations have cleaner energy. Will the Minister confirm that the UK will continue to support those partnerships? Will he tell the House how much UK climate finance has been deployed to support them?

[Lord Hunt of Kings Heath (Lab)]

My Lords, I pay tribute to the noble Lord for his work in this very important area. Of course, we are committed to international climate finance and to the £11.6 billion in the current spending review. By implication, I think he is asking the question he asked my noble friend the Leader last week about the impact of the reduction in the overseas aid budget. It is too early to be able to respond to him, and clearly we also have the forthcoming SR discussions, but the Prime Minister, in announcing the decision to the House last week in relation to the defence budget, said that the UK

“will continue to play a key humanitarian role in Sudan, Ukraine and Gaza, tackling climate change”.—[Official Report, Commons, 25/2/25; col. 633.]

[The Earl of Devon (CB)]

My Lords, I watched the play “Kyoto” last week, which tells the story of the birth of the climate change strategies that we currently adopt, and particularly the role of the oil and gas companies in resisting those developments. I noted that on the following day, BP announced that it is reversing its strategy to support renewable energy and refocusing on oil and gas. What steps will the Government be taking to discuss this matter with BP and to get our national flagship energy company to reverse that decision?

--- Later in debate ---

[Lord Hunt of Kings Heath (Lab)]

My Lords, clearly, these are matters for individual companies to decide, but I say to the noble Earl that notwithstanding individual decisions made by such companies, overall, we are seeing a massive expansion in renewable and low-carbon energy throughout the world. Of course, the Paris Agreement and the nationally determined contributions that countries are making towards it will spearhead the move towards a low-carbon, low-emission economy. Whatever setbacks there may be, we must continue to work on that basis.

[Baroness Jones of Moulsecoomb (GP)]

My Lords, do the Government agree with Bermuda and countries that are suggesting a tax on kerosene jet fuel? It is a pollutant that is currently untaxed, and the idea is that the money from that tax should go into a fund that poorer countries can access in order to set up their own renewable energy systems.

[Lord Hunt of Kings Heath (Lab)]

No, my Lords, I am not aware that the Government are looking at that suggestion favourably. However, the offer we made at COP 29 for an 81% emission reduction by 2035 is a very substantive offer indeed. We need to work towards that. We also have to work towards the seventh carbon budget. We received the advice on how we will do that from the Climate Change Committee only last week, and that is where we should focus our efforts.

[The Lord Bishop of Norwich]

My Lords, on this World Wildlife Day, the day that the United Nations marks the adoption of the CITES—the Convention on International Trade in Endangered Species—and given that climate change is having an impact on rare and endangered species and the habitats that support them, making them rarer and more endangered, even extinct, and driving up their illegal value, will the Minister allow us to hear a little bit more about how His Majesty’s Government are working to ensure that their obligations under the CITES are met?

[Lord Hunt of Kings Heath (Lab)]

The right reverend Prelate is absolutely right to identify those issues. It is worth making the point that the World Meteorological Organization has recently confirmed 2024 as the warmest year on record. I also refer the right reverend Prelate to the UN biodiversity summit in Rome on 25-27 February, where key decisions were agreed on resource mobilisation, monitoring and review of the global diversity framework. On his specific question, I will follow up with a letter.

[Lord Offord of Garvel (Con)]

My Lords, China is top of the league table for global CO₂ emissions, accounting for roughly a third of the total. In contrast, the UK’s share is a paltry less than 1%. In the last year alone, China had more coal capacity in construction than at any point in the last decade and, as a result, China’s industrial energy prices are seven times cheaper than the UK’s. Today, respected economics professor Gordon Hughes has said that the UK Government’s drive for net zero at any cost will add £900 to annual household costs. While we play the good little boy scout on net zero, does the Minister believe that this is an equitable trade-off for the British public?

--- Later in debate ---

[Lord Hunt of Kings Heath (Lab)]

There clearly is, my Lords, because the way to get away from the volatility of the international gas market, which has had such an impact on energy prices in this country, is to move towards homegrown energy security. That is what we are designing to do with clean power. NESO has confirmed that this is the best way for us to invest our resources in energy. In relation to the global situation, global investment in renewables in 2024 reached $2 trillion, as against $1 trillion in fossil fuels. We have to combat and react to climate change, and the only way we can do this is to decarbonise as soon as we possibly can. I am proud that the UK is a global leader.

[Earl Russell (LD)]

My Lords, in light of Trump’s denial of climate change, it is vital that the UK continues to provide international leadership and, in particular, support for international climate science at this time. What work are the Government undertaking to support international climate science, and particularly American scientists?

[Lord Hunt of Kings Heath (Lab)]

My Lords, from what I have already said, the UK is a global leader. We are working with many other countries. In relation to climate science, obviously I understand the point the noble Earl is raising. Clearly, we need to ensure that the integrity and power of climate science continue. These are matters that we will be considering over the next few months. We need to set out policies in relation to delivery of the fourth, fifth and sixth carbon budgets, and we have to respond to the advice from the Climate Change Committee in relation to the seventh carbon budget. Clearly, the whole context in which we do this is having very good climate science.

Great British Energy Bill

Lord Hunt of Kings Heath Excerpts

3rd reading
Tuesday 25th February 2025 Lords Chamber

Moved by

[Lord Hunt of Kings Heath]

1: After Clause 6, insert the following Clause—
“Reviews of Great British Energy’s effectiveness
(1) The Secretary of State must appoint an independent person to carry out reviews of the effectiveness of Great British Energy.
(2) In carrying out the review, the independent person must have regard to the statement of strategic priorities prepared by the Secretary of State under section 5(1).
(3) After each review, the independent person must—
(a) prepare a report of the review, and
(b) submit the report to the Secretary of State.
(4) On receiving a report, the Secretary of State must—
(a) send a copy of the report to the Scottish Ministers, the Welsh Ministers and the Department for the Economy in Northern Ireland, and
(b) no less than 14 days after complying with paragraph (a)—
(i) publish the report, and
(ii) lay a copy of the report before Parliament.
(5) The first report must be submitted to the Secretary of State within the period of 5 years beginning with the day on which this Act comes into force.
(6) Subsequent reports must be submitted to the Secretary of State at intervals of not more than 5 years.
(7) In this section, references to an “independent person” are to a person who appears to the Secretary of State to be independent of—
(a) the Secretary of State, and
(b) Great British Energy.”
Member’s explanatory statement
This amendment requires the Secretary of State to appoint an independent person to carry out reviews of the effectiveness of Great British Energy.

[The Minister of State, Department for Energy Security and Net Zero (Lord Hunt of Kings Heath) (Lab)]

My Lords, Amendment 1, in my name, inserts a new clause after Clause 6 which requires the Secretary of State to appoint an independent person to carry out reviews of Great British Energy’s effectiveness. Throughout the Bill’s passage, the Government have made it clear that we are committed to ensuring that Great British Energy is subject to appropriate accountability and reporting requirements.

In particular, we have set out in the Bill that Great British Energy’s annual report and accounts will be published and laid before Parliament. The annual report and accounts of Great British Energy will be subject to external audit and the Comptroller and Auditor General will be appointed as the company’s external auditor, in line with the Managing Public Money guidance. The accounting officer of Great British Energy, once appointed, will also be accountable to Parliament, and the National Audit Office will have the right to review Great British Energy’s work and report its findings publicly, and to the Public Accounts Committee.

Having reflected on arguments made on Report in relation to independent reviews, particularly by the noble Lord, Lord Vaux, I am bringing forward this amendment. It will require the Secretary of State to appoint an independent person to carry out a review of the effectiveness of Great British Energy, including having regard to the statement of strategic priorities with which Great British Energy must comply.

The review prepared by this independent person will be submitted to the Secretary of State, who must ensure that it is published and laid before Parliament. The Secretary of State must share the report with the devolved Governments at least 14 days before publication. The first review must be submitted to the Secretary of State within five years of the Act coming into force, and there will be further reviews at a maximum of five-year intervals. We think that this sensibly balances additional accountability alongside the existing mechanisms of review and reporting, while not overburdening Great British Energy and ensuring that it has the time and space to take long-term strategic decisions as an operationally independent company, and as we have debated extensively during the preceding stages of the Bill.

I also repeat the assurance I gave to the noble Lord, Lord Vaux, on Report, which relates to additionality, and confirm that this will be an important principle for Great British Energy, particularly in respect of its investment activity. As such, we expect that these independent reviews will consider “additionality” as part of any assessment of Great British Energy’s effectiveness, having regard to the statement of strategic priorities in doing so.

This amendment is in keeping with a commitment I gave on Report. I hope noble Lords will support the amendment and I beg to move.

[Lord Vaux of Harrowden (CB)]

My Lords, I rise very briefly to thank the Minister for tabling this amendment, which, as he says, introduces a periodic independent review of Great British Energy’s effectiveness, as he undertook to do on Report. I am most grateful to him for the constructive discussions we have had around this as the Bill has moved through its stages. I also thank all noble Lords who have added their support to this through the process.

The amendment does not go quite as far as my amendment on Report, in two respects. First, as the Minister has just alluded to, it does not include any mention of reporting on the extent to which GBE has succeeded in encouraging private investment. However, the noble Lord was very clear on Report about the importance of the additionality principle for GBE and that he therefore expected that it will be covered by the independent review of effectiveness, and he has just repeated that in his speech just now, which gives me more than sufficient comfort on that question.

Secondly, my original amendment proposed a review every three years. While I think that it would have been better to have the initial review before 2030, which is the Government’s deadline for achieving decarbonisation —therefore, there would be time to do something about it if things were not going right—the five-year interval that the noble Lord’s amendment requires is a reasonable compromise.

I do have one question about the amendment. It was changed at the last minute to give the devolved Governments the opportunity to see the independent report 14 days prior to it being laid before Parliament. I fully understand and agree that the devolved Governments should be given the independent report, but I really do not understand why they should get it in advance of the UK Parliament. I would be grateful if the Minister would explain the reasons for that.

Frankly, however, that is not a major issue. I am very grateful to the Minister for tabling the amendment, which will be a very significant improvement to the transparency and accountability regime that Great British Energy will be subject to, and I therefore urge all noble Lords to support it.

--- Later in debate ---

[Lord Offord of Garvel (Con)]

My Lords, in concluding for His Majesty’s loyal Opposition, I thank noble Lords from across the House for their tenacity in scrutinising the Bill, and in particular the noble Lords, Lord Alton of Liverpool and Lord Vaux of Harrowden, for their amendments. On my own Benches, I note the contributions of many noble friends, who have done sterling work to temper what is a misguided piece of legislation which will not deliver cheaper energy for UK households or businesses.

GB Energy is flawed because it exposes the conflict at the heart of this Government between the Chancellor’s stated priority of economic growth on the one hand and, on the other, the accelerated pursuit of net zero at any cost that the Energy Secretary has made his ideological obsession. While this scrap rages at the centre of Whitehall, there is only one loser: the public, who, it has been confirmed today, will be loaded up with the price of net zero to the tune of another £111 per household this year. That is directly because of this Government’s policies and a far cry from the promise in the Labour manifesto of a reduction in energy bills by £300 per year per household—a manifesto pledge which this Government have refused to include in this legislation.

As the Bill has progressed through your Lordships’ House and the other place, the chasm between rhetoric and reality has indeed been exposed. I believe that in a decade we will look back and ask why we invented this cardboard cut-out company. But despite our deep scepticism, it would be churlish not to wish GB Energy a positive start, so I offer some start-up advice. With its £8 billion of borrowed money, the first order of business should be a feasibility study of all the energy sources available to us in the UK. If it does so, it will discover the following. The dash for renewables at any price is a folly. In doing so, we are loading excessive costs on to our energy bills, to the point now where our industrial energy in the UK is five times more expensive than in the US and seven times more expensive than in China. All the while, we are offshoring jobs from the UK to China, turning UK revenue into Chinese profits. This is impoverishing our nation.

The Government are denying the facts. We are an energy-rich country, and our hydrocarbon industry is the envy of the world in terms of compliance and sustainability. Surely it is irresponsible to refuse to even explore the opportunities that onshore gas could bring, while of course undertaking an assessment of risk. The fact that this Government’s policy continues to tilt towards shutting down offshore oil and gas is surely an affront to the hundreds of thousands of skilled workers in Aberdeen and the north of Scotland. They surely deserve better than this.

Meanwhile, both parties agree that nuclear is efficient and clean, but it should be accelerated. We should cut the red tape by unleashing our homegrown engineers while being unafraid to learn from those, such as the Koreans, who have been able to roll out nuclear energy more quickly and at a lower cost.

If GB Energy does this feasibility study, it will realise the facts and then it should pivot net zero accordingly to ensure that our transition to a cleaner energy system is both fair and affordable to UK households and industry. For the sake of the country, we can only hope that it does so.

Finally, I believe it is important to state unequivocally that my own party must reflect on the last 14 years of government energy policy. The verdict of the electorate in July was clear and resounding. As many noble Lords are aware, an error does not become a mistake until one refuses to correct it, and I would encourage the current Government to heed these wise words.

[Lord Hunt of Kings Heath (Lab)]

My Lords, we were debating my amendment, but we seem to have done the “the Bill do now pass” speeches as well, so if noble Lords allow, I will do both in my response.

I thank noble Lords for their general welcome for my amendment. I think it is a very satisfactory outcome of our debates in Committee and on Report. On the question asked by the noble Lord, Lord Vaux, and the noble Earl, Lord Russell, about the devolution aspect, the noble Earl put his finger on it. It seems perfectly appropriate that the devolved Governments should receive a copy before publication, because that then allows them to have sight of any findings that might be relevant and which they may have to answer on the day of publication. No slight is intended to Parliament in this, it is just the normal business of Government-to-Government relationships and courtesy. That is why we withdrew the original amendment and replaced it with the revised one, in the light of representations made to us by the devolved Governments.

On the timings of the review, noble Lords will know that we had in mind, at first, the UK Investment Bank, which I think has a seven-year review period. The noble Lord proposed three years and in the end we compromised. That is not unreasonable: Great British Energy must be allowed some time to set itself up and get itself into working order and then, at an appropriate point, we will have a review. It is worth making the point that GBE’s work does not come to an end in 2030; that is just a deadline we have given for clean power. We expert GBE to go on for many years to come, and therefore it is going to be a judgment, but we think five years is not an unreasonable time.

I say to the noble Lord, Lord Naseby, that I agree with him about the potential for small modular reactors —we have a programme that Great British Nuclear is running at the moment and I hope it will be able to come to some important decisions over the next few weeks and months—and he is absolutely right to mention them. I also share his view about the potential of hydrogen. We do not disagree at all with the noble Lord on that.

As far as community energy is concerned, this was raised on Report and I do not think there is anything more I can say at the moment. Clearly, we recognise the important role that community groups can play. Our intention is that Great British Energy will build on existing support, by partnering with and providing funding and support to local and combined authorities, as well as community energy groups, to roll out renewable energy projects and develop up to 8 gigawatts of clean power. I am afraid I cannot give any more details at the moment, but I understand and take note of what noble Lords have said about the companies concerned. I take this seriously and will ensure that it is considered, and we will set out further details in due course.

On the issues raised by the noble Baroness, Lady McIntosh, about sustainability, let me be clear that the independent review is focused on the effectiveness of GBE in delivering its mission. It will cover all aspects of the work of Great British Energy and will not focus solely on its financing, as the noble Baroness feared. To give an example, one of its important roles will be to clear the way to allow developers to come in. That will be an important part of the review. Furthermore, as I have already said to the noble Lord, Lord Vaux, additionality will be an important part. Clearly, the amendment that I brought on Report—about GBE needing to keep under review the impact of its activities on the achievement of sustainable development—means that that will be part of any review undertaken by the independent reviewer. I hope that reassures the noble Baroness.

Biomass Generation

Lord Hunt of Kings Heath Excerpts

Wednesday 12th February 2025 Lords Chamber

[Earl Russell (LD)]

I thank the Government for their Statement on short-term support for large-scale biomass generation as part of the UK’s energy generation mix. The Government inherited from the Conservatives a system where large-scale state subsidies are provided for the burning of biomass. This form of energy generation currently plays an important role in our energy system, providing some 5% of our national energy needs. These subsidies are worth some £2 million a day. Over time, Drax has received billions of pounds in government subsidies and from bill payers because wood pellets are classed as a source of renewable energy. Lucrative government subsidies are due to come to an end in 2027, hence the Statement before us today. The new agreement reached with Drax will run from 2027 to 2031 and will see the power station used only as a back-up to cheaper renewable sources of power such as wind and solar.

We can have lots of arguments about the sustainability calculations used to justify Drax. I listened with interest to the noble Lord, Lord Krebs, speaking on the Great British Energy Bill on Report last night, and I am not a scientist and do not have the exact answers. What I will say is that shipping wood across the Atlantic has a carbon footprint. Repeated incidence of old-growth forest being felled and burned undermines credibility and must stop.

Finally, the very fact that the Government are looking at carbon capture and storage to prolong the life of Drax is telling. Labour’s new plan will allow for four more years of unabated wood burning, which produces 18% more CO₂ than burning coal, according to the IPCC data. It takes nearly 100 years for this carbon to be pulled back from the atmosphere. Climate change driven by CO₂ emissions is clearly the greatest threat to humanity’s survival. Even a 100-year, long-term carbon-neutral Drax is hardly beneficial to anything we need to achieve to effect any real change in the race for humanity’s survival.

The Liberal Democrats see biomass as a fundamentally inefficient method of producing electricity, and we strongly believe that it should not qualify as a form of renewable energy. The Government’s plan to continue to subsidise the Drax power plant causes environmental harm and is not beneficial compared to investment in renewable energy. It does not provide good value for money for our bill payers. We are concerned that, although this plan would cut the amount of wood Drax is burning by 50%, the price is still lucrative—indeed, I see in the news that Drax’s share price has risen by 11% this week.

We are deeply concerned about the destruction of primary forests. The new agreement states that the wood must be 100% sustainably sourced. How will the Government verify that this is the case, when it has not been in the past? Further, I ask the Minister to publish the 2022 KPMG report into Drax’s record on claiming subsidies on a false basis. Are the Government prepared to publish that report?

The new proposals will see a halving in the use of Drax and a saving on subsidies of £147 million. Will those savings be redirected into other renewable projects? Under this proposal, Drax can step in to increase energy generation and provide flexibility where it is needed. Is this not just an energy marriage of convenience? Will the Government consider reclassifying Drax as being not a renewable source? It is time to stop calling it such; if the Government need that power generation for flexibility, clearer labels should be given.

The Liberal Democrats are clear that we would ensure that 90% of the UK’s electricity is generated from renewables by 2030—and that would not include biomass. When will the statutory instrument be published? I am pleased that the Government have halved the subsidies for Drax, but I hope that further progress is possible.

Finally, I wish to challenge the Minister. This Government should agree to ask NESO to write an independent report, to be produced relatively quickly, examining: the impacts of ending all subsidies to Drax; how those funds could be replaced and used for alternative renewables technologies; and what the resulting impact would be on our energy security and journey to net zero.

[The Minister of State, Department for Energy Security and Net Zero (Lord Hunt of Kings Heath) (Lab)]

I am grateful to the noble Lord and the noble Earl for their comments. I understand, of course, that this is a sensitive area and that there are concerns, as noble Lords across the House have expressed. Equally, we have taken advice from the National Energy System Operator. It has advised us that Drax will play an important role in delivering security of supply between 2027 and 2031. It is true that we could seek to replace Drax, but that would probably be with new gas-fired power stations. We believe that there would be significant risks in relying on that approach, and that what has been taken is a pragmatic decision.

I noted what the noble Lord, Lord Offord, said. I would point out, though, that it was the then Secretary of State for DESNZ who, under the Conservative Government, put their name on the planning approval for Drax’s plans for BECCS at the Selby site. The decision letter stated that the project would

“support the transition to Net Zero by 2050”.

I will respond to some of the points that noble Lords have made. The important thing is that the agreement reached ensures that Drax plays a much more limited role in the system, providing low-carbon dispatchable power only when that is really needed. Drax currently runs around two-thirds of the time; that means it provides power, even when other renewable sources are abundant. Under the new arrangement, Drax is being supported to operate only at a maximum load factor of just 27%, operating less than half as often as it currently does. This will be guaranteed by the design of the dispatchable contract for difference that has been agreed. What that means is that when renewable power is abundant, Drax will not generate and consumers will benefit from cheaper wind and solar instead.

On cost, the new deal halves the subsidies for Drax compared with existing support. That is the equivalent of a saving of nearly £6 per household per year. Our analysis shows that this will save consumers £170 million in subsidy in each year of the agreement, compared with the alternative of procuring gas in the capacity market.

Your Lordships’ House has expressed a lot of concern about the obviously important questions on the measurement of sustainability over the past few months. I too was interested in the analysis by the noble Lord, Lord Krebs—this was some time last night—as the chair of the challenge group that exists at Drax. We will increase the proportion of woody biomass that must come from sustainable sources from 70% to 100%. We will significantly cut the allowable supply chain emissions to a level in line with the stricter regulations currently operating in the rest of Europe, as some noble Lords here have asked for, and exclude material sourced from primary forest and old-growth forest from receiving support payments. There are substantial penalties if these criteria are not met.

I know that there is concern about the regulatory system, but Ofgem has shown that it is prepared to act, and has acted. We will continue to make sure that our independent regulator has the support it needs to do what is necessary. We should have some faith in Ofgem’s ability to monitor and police this.

On the future of Drax, this new arrangement takes us from 2027 to 2031. We have not made any decisions post 2031, but we want to have proper options. We are setting up an independent review to consider how options for greenhouse gas removal, including large-scale power BECCS and DACS, can assist the UK in meeting our net-zero targets.

On the KPMG reports, Ofgem considered those as part of its detailed investigation into Drax. These are internal reports that the company commissioned and I cannot make a commitment on that, but I will take it away to see what I can do.

Overall, it seems to me that this is a—what is the word?—pragmatic response to a challenging question. The fact is that Drax makes an important contribution to our generating capacity. Equally, noble Lords will know that the Government have taken note of their concern about the general issue of sustainability by increasing the requirements. This is a four-year agreement and, clearly, we will come back to this important issue in the next few years.

[Baroness Bennett of Manor Castle (GP)]

My Lords, I want to following on from the Minister’s response about oversight of the source of the biomass going into Drax. He said he has confidence in the independent regulator, Ofgem. He alluded to the fact that, last year, Drax agreed to pay £25 million after Ofgem found that it had submitted inaccurate data on the sourcing of wood pellets. Does the Minister acknowledge that the problem there is that it is after the event? The trees have already been cut down and burned, and then, some years later, we get a fine. But the trees are no longer there and the carbon dioxide is in the atmosphere. There was a fine of £25 million, but the noble Earl, Lord Russell, referred to what is happening with Drax’s share price. Is there not a risk that Drax just regards this as part of the cost of doing business?

[Lord Hunt of Kings Heath (Lab)]

My Lords, the noble Baroness will know that Ministers do not comment on share prices at the Dispatch Box, for very good reasons.

We need to be clear that Ofgem’s investigation was thorough and rigorous. I have a great deal of trust in the work of Ofgem. The noble Baroness will know that there was no suggestion that Drax was awarded subsidies incorrectly under the existing renewables obligation or contracts for difference arrangements. It was more to with the documentation. The investigation found no evidence to suggest that Drax had been issued with subsidies incorrectly, and Ofgem was confident in its conclusions. Drax made a redress payment because there is a scheme within Ofgem for companies to do that. I must say that £25 million is substantial; I think it was a good indication to Drax that it needs to get its documents in order—and I very much hope that it has done so.

Of course, we will be looking to Ofgem to ensure that that happens, that everything is proper and that, under the new arrangements, we are satisfied that Drax can meet the criteria. This has not been an easy decision. In our debate yesterday, I was interested in the response of the noble Baroness, Lady Boycott, who essentially said that she welcomed the progress; she was not overwhelmed with the decision, but there was an acknowledgement that we are making progress and understand the sensitivities.

One has to come back to the issue of biomass and its sustainability. The UK’s Committee on Climate Change and the Intergovernmental Panel on Climate Change recognise that bioenergy can play a significant role in decarbonising economies. We support the use of sustainable biomass generators only if it meets our sustainability criteria. I have said we are going to toughen that up. At the end of the day, it is a difficult question. I think we have come to a sensible arrangement, which, after all, is a short-term arrangement in the lifetime of the generators of four years from 2027 to 2031.

[Baroness Young of Old Scone (Lab)]

I would like to ask the Minister which issues will be taken into account for the decision after 2031. I welcome this as a first step towards reducing and hopefully eliminating our reliance on biomass as a sustainable fuel. I recognise that it is difficult at the moment to commit to what will happen in 2031. However, it might be useful to know from the Minister exactly what criteria will surround the decision about 2031, because it will take some time to make that decision. We will probably use up quite a lot of the time between now and then arguing about what the decision is going to be.

In particular, I would like some clarification on the Government’s position and expectation on the Drax carbon capture, utilisation and storage programme. Is that going to continue under the current arrangement, or will it be subject to a separate negotiation? Will it involve additional payments to Drax to fund that programme? How material will the outcome of that programme be on reaching a decision on what happens after 2031?

[Lord Hunt of Kings Heath (Lab)]

My Lords, I cannot say very much more about how we will review post 2031, but I am very happy to talk to my noble friend about her views. I am not unaware of her views about the continuation of the subsidy, as she spoke to me a few months ago.

We probably have to go back to the analysis of NESO and the advice we received on the impact on our electricity system covering the period 2027 to 2031 if support for Drax was withdrawn in 2027. It said that

“having large-scale biomass available in this period could have a significant impact in mitigating potential risks to electricity security of supply and could also support the delivery of clean power by 2030. The analysis showed that without large-scale biomass, security of supply would not be ensured in scenarios with additional supply losses. While alternative options could deliver the same outcomes, these options have greater delivery risks”.

That is clearly one of the factors that would have to be considered in any long-term review, and there will be other factors as well.

Having reached this agreement, I should say to the noble Earl, Lord Russell, that I do not know yet when the statutory instrument will be coming. Work has to be done on that. We also normally have to consult on a draft SI. I think it will probably be some months before we get to debate it, but I understand the importance of that debate.

We have made no decision about the deployment of large scale BECCS. I think I said earlier that we are going to have an independent review, looking at options for greenhouse gas removal, including how large-scale power BECCS and DACCS can assist us. Again, I cannot answer that question, but it is clearly something that we are giving very earnest consideration to at the moment. The noble Baroness speaks with great authority. If she and other noble Lords want to feed in ideas to the department about the long-term review, I would be very happy to take them.

[The Lord Bishop of Manchester]

My Lords, I am very grateful for the direction of travel indicated in the Statement. Perhaps I could just ask a couple of questions.

First, I was struck by the comments of the noble Lord, Lord Krebs, yesterday—as the Minister and other Members were—on the subtlety around whether biomass is making a negative or a positive contribution. At the moment it seems that, as long as it comes from the right sort of forest, it is almost always treated as being naturally positive. I wonder whether His Majesty’s Government will consider a more subtle understanding, based on the insights of the noble Lord, Lord Krebs, and others, of what should be counted as helping us towards a net zero and what is actually putting more carbon into the atmosphere.

On carbon capture and storage, I remember vividly going to a lecture for alumni at my old college in Cambridge. I am a mathematician and one of my former lecturers was at the cutting edge of carbon capture and storage technology. He was telling us about the work that he was doing with government and others and said that it was just about five or six years around the corner. I think it was probably about 25 years ago that I went to that lecture. It seems that carbon capture and storage is like cold nuclear fusion; it is always just around the corner but never actually comes. Could the Minister give any assessment of how much we can really take note of carbon capture and storage, or is it just another Cinderella that is never really going to happen?

[Lord Hunt of Kings Heath (Lab)]

It is a very interesting question. If the noble Baroness, Lady Bloomfield, were here, she would say that fusion is just around the corner. We have this STEP programme. We have global leadership here and my officials and people in the industry are very excited about the potential. When I was doing this job 14 or 16 years agreement, people were telling me it would be 20 years away. I emphasise to the right reverend Prelate that there is real optimism that we are seriously going to be able to make advances. It is the same with carbon capture, usage and storage. Again, we have been talking about this for years, but the Government are putting in some serious investment. We know the technology can work and we think it has great potential.

[Baroness Bennett of Manor Castle (GP)]

My Lords, since we have time, I would like to go back to Drax. We have spoken about where the biomass comes from, in terms of the source of the trees and whether they are whole trees or trimmings. But have the Government given any consideration to what happens in wood pellet facilities, where the material is processed into pellets in the United States? There is evidence of a huge amount of harmful air pollution, including dust, particulate matter, volatile organic compounds and, particularly, toxic or hazardous pollutants such as acrolein and methanol. These can cause problems such as asthma and respiratory illnesses in nearby communities. It is worth noting that many of these facilities are located near communities of colour, who already suffer serious economic disadvantages and health problems.

We know that regulation of environmental factors and environmental health in the US has always been poor. We are seeing every indication from the new US regime that it intends to make it much poorer still. Is this something the Government have considered, are considering or will talk to Drax about and put pressure on it? I come back to a phrase we became very familiar with during the Covid pandemic: no one is safe until everyone is safe. A terrible state of public health in the US—think about what is happening with the H5N1 virus—is of concern to all of us. Are the conditions under which these pellets are produced something the Government think about?

[Lord Hunt of Kings Heath (Lab)]

Yes, it is. We do rely on regulators, both here and in other countries, but the science underpinning biomass sustainability does continue to evolve. The Government have listened to feedback from the noble Baroness, and other parliamentarians and stakeholder groups, about ways in which we can strengthen the sustainability criteria. We are going to consult separately on developing a common sustainability framework, where we plan to gather views and evidence on strengthening wider aspects of biomass sustainability. The points the noble Baroness has raised could very much be embraced within that, and I will make sure that they are.

Rosebank and Jackdaw Oilfields

Lord Hunt of Kings Heath Excerpts

Wednesday 12th February 2025 Lords Chamber

[The Minister of State, Department for Energy Security and Net Zero (Lord Hunt of Kings Heath) (Lab)]

My Lords, I am not going to speculate on individual projects. The noble Lord will understand that I cannot say anything that would prejudice future regulatory decision-making. What I can say is what the Government are doing. The noble Lord knows that on 29 January the Court of Session published its judgment in relation to the Rosebank and Jackdaw oil and gas fields, setting out that previous consents granted to those two fields were unlawful as they failed to take into account the emissions from burning the fuel produced.

If developers wish to proceed with these projects, they will have to reapply for consents, this time considering scope 3 emissions, as required by the Supreme Court judgment last year. The judgment itself is of course a matter for the courts, but we took action in October, in light of the original Finch judgment, to consult on revised environmental guidance. The consultation closed on 8 January, and we are working towards publication of finalised guidance as soon as we possibly can. Once that is in place, the Government will resume making decisions with respect to environmental impact assessments for offshore oil and gas developments, and the court confirmed it is in the interests of good administration for that consultation and guidance to be treated properly.

That is the situation. I say again that I recognise that, although the UK continental shelf may be a declining asset, it is an important one. We believe we have reached a sensible position of not allowing new licences, but there are a number of applications that have already received licences that need to go through the consent process. The guidance, when published, will set out the parameters on which the applicants can apply. We will then have to see the outcome of that proposal.

In the meantime, I acknowledge the work that has been carried out in the North Sea. The noble Lord knows we are very committed to a just transition for people involved who will be coming out of the industry. I acknowledge the importance of the industry and the role that it has to play for many years to come.

[Earl Russell (LD)]

My Lords, I welcome the commitment that this Government aim to deliver a fair, orderly and prosperous transition in the North Sea, a transition in line with our climate and legal obligations. The Liberal Democrats are opposed to new oilfields at Jackdaw and Rosebank. Instead, we call on the Government to increase the amount, scale and pace of investment in our renewable energy future.

Will the Government confirm whether they will treat any further licence requests for the Jackdaw and Rosebank oilfields as existing or new applications? I can see no prejudicial reasons why that question cannot be answered today.

[Lord Hunt of Kings Heath (Lab)]

First, my Lords, we need to draw a distinction between licensing and consenting. Licensing gives rights to search and bore for petroleum in the UK continental shelf, and those are vested in the Crown. The NSTA is a non-departmental public body, sponsored by my department, that is responsible for maximising the economic recovery of oil from the North Sea. Blocks of the North Sea are allocated to operators in that way. The operators can then explore for oil and gas under the licence. At that point, there is often a five-year gap between licensing and consenting. What we have said is that we will not consent to any new licenses, and we will shortly be consulting on that.

I am sorry, but I am not going to comment more in relation to individual projects such as Rosebank and Jackdaw. I have to be very careful as a Minister in the department in relation to future processes that will be gone through in which we exercise decision-making. I am sorry, but I really cannot go any further than that.

[The Lord Bishop of Manchester]

Perhaps I might make it a bit wider, to avoid putting the Minister in a difficult situation. We have heard that there are a number of projects that have previously been approved to a certain stage and—at the risk of a pun—are in the pipeline. Have the Government made any estimate of the impact that schemes in this sort of pipeline will have on the UK being able to meet its net-zero targets?

[Lord Hunt of Kings Heath (Lab)]

My Lords, there clearly are a number of projects that have gone through the licensing process but have yet to come through to the end. We are confident that at the end of the road —or the end of the pipeline, as the right reverend Prelate put it—we will have a situation where, because of no new licences, we will have a thriving asset in the North Sea. The production will reduce, as it is doing at the moment. This will fit in with our overall strategy towards net zero. Clearly, this needs sensitive management. I cannot say it is an art rather than a science, but it is difficult to be more precise than that.

I also refer the right reverend Prelate to the work of NESO, which has made some points on the role of unabated gas. It is also worth reflecting that much of the oil and gas coming from the UK continental shelf is exported. This is another feature of this very interesting subject.

[Baroness Bennett of Manor Castle (GP)]

My Lords, I understand the Minister’s desire not to comment on any individual projects. So, I will ask a general question. A report published this week by the Grantham Institute on Climate Change, chaired by the noble Lord, Lord Stern, from these parts, looked at the current geopolitical situation. It argued that any further advance toward drilling or exploration in the UK would signal to other fossil fuel producers—particularly the US and Russia— that we support a “business as usual” approach to the oil and gas industry. That is the geopolitical context. Will the Government consider that?

[Lord Hunt of Kings Heath (Lab)]

My Lords, I have always thought that Aberdeen’s influence in the oil and gas sector is something we should treasure. Whether actions we take here will be influential internationally is a matter we will have to see follow. We think it right that developers who have gone through the licensing process must be allowed to finish that. We believe that our calculations embrace that. We have reached the right decision: we will continue to support the North Sea and recognise the contribution it makes, but we will not agree to any new licences. We have reached a balanced approach there. I am of course very interested in the report the noble Baroness mentioned.

Energy Bill Relief Scheme and Energy Bills Discount Scheme (Amendment) Regulations 2024

Lord Hunt of Kings Heath Excerpts

Wednesday 12th February 2025 Grand Committee

Moved by

[Lord Hunt of Kings Heath]

That the Grand Committee do consider the Energy Bill Relief Scheme and Energy Bills Discount Scheme (Amendment) Regulations 2024.

[The Minister of State, Department for Energy Security and Net Zero (Lord Hunt of Kings Heath) (Lab)]

My Lords, these regulations, which were laid before the House on 16 December 2024, amend two schemes created by the previous Government in response to the energy crisis.

The amendments address an issue that was not considered in the rush to get the schemes into operation but which has now come to the fore as the schemes have been brought to an end. The issue is technical: both the energy bill relief scheme and the energy bills discount scheme, which I shall refer to as EBRS and EBDS respectively, supported non-domestic energy users, including businesses and heat networks. EBRS supported energy bills from October 2022 to March 2023, while EBDS supported bills from April 2023 to March 2024. Both schemes operated on a “claim back” model, meaning that suppliers paid out the discount to their customers before recouping those costs from the department.

Scheme funds were paid out on estimated and actual meter readings. As actual meter readings are received by energy suppliers, they rebill their customers, replacing earlier estimated bills, and the discount paid out by the department becomes settled. The department calls this process “actualisation”. Suppliers then come back to government to recover additional discount they have paid out or to pay back any excess discount resulting from an initial overestimation of the energy. This is right: the intention behind the schemes has always been for government to fund the discount to the consumer and not the energy suppliers.

The regulations require the Secretary of State to determine when a supplier should leave the scheme, based on an assessment that there will be no further material amount owed from the department to a supplier or vice versa. One of the supporting criteria to make that assessment is that a supplier has billed customers on actual meter readings to a threshold of 95% of gas supplied and 97% of electricity supported under the scheme, wherever possible. Once a supplier has left the scheme, it is unable to claim back any further money from the department for discounts that it has paid out on behalf of the schemes.

However, as the regulations currently stand, suppliers are still required to pay out discounts on any newly billed energy supplied during the periods of either scheme, when this situation could arise through no fault of their own; for example, when customers have moved premises and failed to notify the supplier or have been tardy in allowing access to meter readers. This could result in suppliers funding government support without the ability to recoup these costs from the department. This is contrary to the intention of the schemes. As a result, suppliers have been reluctant to leave the schemes, which must come to an end in a timely manner.

The amendments in this statutory instrument remove the obligation on suppliers to provide the discounts to customers, except in instances where the consumer has lost out due to poor practices by their energy supplier. In these instances, we have provided carve-outs to balance the interests of suppliers with the support and protection of consumers.

The first consumer protection is, when a supplier is rebilling a customer, it must still apply the discount for energy which was previously billed before the discount duties, even if the newly calculated additional consumption is exempt. The second protection relates to unbilled customers. When a customer receives a bill that falls within the scheme period, a supplier would be required to pass on the appropriate discount if it has not previously provided that customer with a bill. This is to ensure that the original policy intent of providing consumer support is realised. The third and final consumer protection is when unreasonable delay, or another failure on the part of the energy supplier, has led to the energy not being billed accurately or at all when the discount duties applied. An example might be if the bill was sent unreasonably late after exit from the scheme, rather than before. In those circumstances, the customer should not and will not lose their entitlement to the discount.

There is still an obligation on suppliers to repay the Government any discount they have recovered; for example, if actual consumption was lower than the estimated consumption and a discount is clawed back. Should any dispute arise between suppliers and customers in relation to these carve-outs, the resolution mechanisms would be those normally used in the industry: via a complaint to the Energy Ombudsman, where available; investigation and potential sanction by the regulator; or court action.

The amendment applies to energy suppliers in Great Britain. Separately, the regulations also amend the Energy Prices Act 2022 to allow the devolved Administration in Northern Ireland to make amendments to address this issue in the Northern Ireland scheme. This is because their power to amend their equivalent legislation has expired.

In very limited circumstances, it is possible that a customer could lose out on some entitlement to discount. If a supplier had already exited the schemes and had underestimated a customer’s energy consumption, the customer would not receive the discount on the additional newly billed energy unless the supplier was at fault, as I have just described. Given that the vast majority of energy supported by the schemes is based on actual meter readings, we do not expect many customers to be in this position.

Furthermore, our analysis shows that suppliers tend to slightly overestimate and that customers reduced consumption during the energy crisis, switching off non- critical operations to reduce costs. None of the suppliers that have left the scheme to date, nor any of their customers, has reported this risk materialising. We expect and hope that this amendment will give suppliers confidence to exit the scheme without the risk of ongoing financial liability through no fault of their own.

Energy prices for non-domestic consumers have dropped following record peaks, but of course we recognise that they remain high and pose issues for some businesses. We believe that our mission to deliver clean power by 2030 is the best way to break our dependence on global fossil fuel markets and permanently protect bill payers, including non-domestic consumers. In the short term, the Government are taking action to better protect businesses from being locked into unfair and expensive energy contracts. Last year, the Government launched a consultation on introducing regulation of third-party intermediaries such as energy brokers. This is aimed at enhancing consumer protection, particularly for non-domestic consumers. The consultation has now closed, and a government response will follow in due course.

The Government are also empowering businesses to challenge unfair and poor service from their suppliers. Since December last year, SMEs with fewer than 50 employees or that meet energy consumption or financial thresholds can now access free support to resolve issues with their energy supplier through the Energy Ombudsman service. This expands the service to 99% of British businesses, allowing them to access up to £20,000 in financial awards.

I propose to the Committee that this is a very sensible statutory instrument dealing with some issues that have arisen. It follows on from the previous Government’s decision and is consistent with what they sought to do. I beg to move.

[Baroness McIntosh of Pickering (Con)]

My Lords, I congratulate the Minister on the stamina he has shown over the last 48 hours. I welcome these regulations; had we remained in Government, I am sure that we would have done exactly the same—as was also said in the debate in the House of Commons.

The Minister alluded to the fact that energy prices are still quite high. I understand that within one of these regulations there is provision for an off-grid payment of £150. If that is the case, will his department look favourably on charities, public sector bodies such as schools and hospitals and, as he rightly mentioned, micro-businesses of under 15 employees—or even 50—so that they might remain eligible for that?

The noble Lord referred to unfair, and what I would call sharp, practices that are perhaps still going on. This is only anecdotal, and I cannot prove it, but there was a restaurant not too far from this building which I think partly closed and changed hands because they had an unbelievably high electricity bill in January last year, so I am delighted to hear that the Government have launched this consultation with a third party. It would be interesting to hear more about how those brokers might operate. What provision will be made to ensure that the brokers are reliable and able to operate within this sphere?

With that, I pay tribute to the previous Government for their work and the protection that was given to non-domestic customers, which was very welcome at the time. I recognise that we are still in a period of high energy prices and, with those few questions, I wish the SI a safe passage.

[Lord Offord of Garvel (Con)]

My Lords, I commend the Minister for a pretty spectacular explanation of what is quite a complicated and technical exercise. These schemes were introduced, as was said, between October 2022 and March 2024 and, as we know, they gave much-needed assistance to non-domestic customers. We are dealing now with a small yet significant minority of consumers who have not received their finalised bills, due to ongoing delays in the actualisation process. My understanding is that these delays arise mostly from the use of estimated rather than actual meter readings, but they have created significant complexities for both suppliers and consumers, especially when one of the issues around this is the concept that the supplier can become “off-boarded” when they hit the actualisation thresholds, as mentioned by the Minister, of 95% for billed gas and 97% for billed electricity, which means they are no longer required to apply further discounts.

We agree that this is a legacy issue that needs to be dealt with. Our only issue—I am sure that the department is working on this—is the need to deal with unintended consequences, such as where a supplier is off-boarded but still has unbilled energy due to these administrative delays. The amendment allows for discounts to continue only in cases where a billing failure has occurred, but does that provide sufficient protection to the consumer if the errors are on the supplier’s part, for example?

Further issues might be that the amendment extends the rule limiting discounts on variable price contracts. Discounts can only be reduced, not increased, post off-boarding. Does that sufficiently accommodate fluctuations in wholesale energy prices that suppliers may face? Does it risk creating an imbalance in terms of supplier and consumer rights? Then there is the issue of disputes. While the original scheme allowed for disputes to be referred to the Secretary of State—a horrendous concept—the amendment seeks to close that avenue. I am sure that the department is all over this, but we need to ensure that, in the technicalities of actually making this happen, we get a fair balance between supplier and consumer rights. Otherwise, we support the passage of this SI.

[Lord Hunt of Kings Heath (Lab)]

My Lords, I am grateful to the noble Baroness, Lady McIntosh, and the noble Lord, Lord Offord, for the welcome that they gave to the statutory instruments. I say to the noble Lord that we think the statutory instrument will be sufficient. The carve-outs, which are relevant to the points he raised, are aimed at ensuring that consumers will be well protected from poor operational practice by suppliers.

The noble Lord also asked about disputes. The fact is that, if a supplier cannot resolve an issue with a customer satisfactorily, the customer can either directly refer the matter to the ombudsman, if eligible, or to Ofgem, or get in touch with the department, which will then refer the matter to Ofgem. Ofgem will then review the customer’s complaint and decide whether a formal investigation into the supplier is required. If the customer has exhausted other routes, they are obviously also able to seek civil restitution through the courts, but I hope that that would not normally be necessary.

On the non-domestic alternative fuel payment, it was indeed part of the support programme. Obviously, it served its purpose, and I accept the point the noble Baroness raised.

I have mentioned the carve-outs. I understand the issue about energy bills, and we know the pressure that this causes. We debated some of these matters extensively —I was going to say last night but it was actually this morning. I might leave it there. I am most grateful to noble Lords.

Motion agreed.