Warm Home Discount (England and Wales) Regulations 2026
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Earl Russell (LD)
My Lords, I rise to respond to the Warm Home Discount (England and Wales) Regulations 2026. As we all know, we are at the start of another fossil fuel price crisis, at a time when individuals and the state can least afford it, so bringing down energy bills and speeding up the deployment of renewables must be an absolute national priority. The renewed crisis in the Middle East has once again exposed families and small businesses to the full volatility of the fossil fuel price market. We support the extension of this scheme, but the questions that we want to ask are around its efficiency and its design for the decades ahead. As I said, we welcome the extension of the scheme to 2031 and the improvement in transparency and data sharing that this instrument introduces.
Community matters, as does recognising that fuel poverty remains a persistent, not a temporary, problem. While I appreciate that this scheme was designed and extended before the present crisis, it will need to operate in its aftermath and the continuing process. The regulations fix the core rebate at £150 for the next five years. We all know how dramatically prices can move even in a single winter, let alone over half a decade. Energy markets are in flux at the moment, and these regulations will need to work over a long period of time. What concrete mechanisms will the Government use to review the adequacy of this £150 rebate during the life of the scheme? Are there any circumstances in which Ministers would consider increasing it—for example, if the fuel crisis continues? Without an automatic or at least a clearly defined review process, are we not effectively asking households in fuel poverty to gamble with their warmth in the face of a possible real rise in prices?
Similarly, we welcome the fact that the aggregate non-core spending obligation will rise under this scheme, but it will rise only modestly, from £78 million in 2026 to £84 million by 2030. Taking into account inflation over those years and the levels of fuel poverty at the moment, if the present fuel crisis continues, is there any intention or ability to revisit that non-core spending figure mid-scheme if economic conditions or energy prices continue to accelerate? Do the Government plan to publish an annual assessment of whether the level of support is still adequate in real terms, rather than waiting until 2031, particularly in light of this real change in circumstances?
Both previous noble Lords spoke about energy debt. Many households across the country are carrying unprecedented levels of energy arrears on their accounts. That continuing level of family debt is a real point of contention and a struggle for households. Against that, the industry-wide cap is to write off debts at a mere £6 million, with a £2,000 limit for individual households. That is absolutely welcome, but many families are already beyond those levels. Can more be done, and will there be a review within this programme? How did the Government arrive at £6 million? What assessment was made of the total scale of energy debt and have Ministers considered whether that cap should be more flexible, in case this crisis worsens?
If the Minister will excuse me, I want to go slightly off-piste. I do not like to do that too often, but I really welcome some of the moves in this SI around data and data sharing. A lot more work needs to be done there so that we can target support efficiently and fairly to those who need it most. I have been looking at some of the work that Stonehaven has done. It has been raising arguments about moving from crude, one-size-fits-all interventions to a more nuanced understanding of household vulnerability, looking at income, health, energy use and property characteristics together and setting up a safeguard score for each household, using better data so that help can be better provided. That would mean we could target bill credits, tailored repayment plans and more generous debt relief to those in most severe need.
I have a couple of questions for the Minister that perhaps go a bit beyond this SI. I really encourage the Government to do more work in this area. As they plan for a continuing fuel crisis, improving data sharing between government departments, moving beyond the DWP alone to include HMRC, health agencies and others, would be a really important exercise, particularly for the future.
I note that the Minister said that he is expecting 98% of these payments to be made automatically, but in volume that 2% is still a large number of households that are falling outside the system and bill support. I would like to see the Government doing more on data sharing, particularly multi-agency.
Far too often, people in fuel poverty are also in different kinds of poverty. There really should be a share-once support register, so I would also like the Government to do more on greater working between different utility providers so that, once someone is on a priority register, information can be shared across utilities and people do not have to give the same information over and over again. That is really important and it is something that we should include in Ofgem’s work with suppliers, but it is still a missing piece. Local authorities and charities often know much more about their local residents and households in poverty, so there is much more to do to make this data available and to include local authorities and charities in this process.
I will be brief but, above and beyond this, I think there is a need for more structural reform around these issues. Others have spoken on this, but we need to decouple electricity prices from gas so that consumers feel the full benefits of cheaper, clean power. I really want the Government to look again at the possibility of taking forward a social tariff if the energy crisis continues. We need to do more to support households struggling with energy and fuel poverty.
We welcome this SI. It is good to see these measures extended, as they are really important, but there is so much going on in this space. We welcome this SI as the start of a conversation, not the end of it.
Lord Moynihan (Con)
My Lords, I thank the noble Earl, Lord Russell, for raising the important issue of data. As I see it—but I am happy to be corrected by the Minister—this SI focuses on matching customers, and the data analysis is exceptionally important. It brings our approach to data up to date, because it enables the Secretary of State to direct suppliers to communicate with matched customers identified through automated data matching, and requires suppliers to provide information on eligibility, the use of automated decision-making and where to find the scheme’s privacy notice.
It goes further—again, I welcome this—in replacing annual fixed spending targets with annual estimates reflecting the number of eligible households on qualifying means-tested benefits. As I see it, and this is important and welcome, the SI addresses the need to recognise that data interpretation is not always 100% accurate. The noble Earl, Lord Russell, mentioned the 2%. I hope that was the reason why, under this SI, late rebate notices can be issued after the scheme year in cases where the Secretary of State is satisfied that a customer did not receive the rebate because of an administrative error by a supplier or, indeed, the Government. Data matching is such an important issue and, as it has been raised in the Committee, it would be helpful if the Minister could give us a little more colour on it.
The second point that has come up in conversation today is the question of affordability and whether the £150 warm home discount is sufficient. I was very grateful for my noble friend Lady McIntosh’s comments on that, which I will come to. Maybe the best way to encourage the Minister to respond is to quote from a couple of third-party commentaries that cover this issue. First, the director of policy and influencing at Independent Age, Morgan Vine, stated:
“We welcome the extension of the Warm Home Discount to 2030/31. The older people on low incomes we speak to tell us it is a vital lifeline that goes some way towards keeping their heating on during the coldest months. However, at just £150, the current value of the Warm Home Discount no longer goes far enough, as energy prices remain stubbornly high. We are urging the UK Government to increase the payment to £400 so it better reflects the real cost of heating a home. This increase needs to be delivered via government funding to avoid the cost being put on energy bills”.
I would be grateful if, in his response, the Minister could comment on this statement from Morgan Vine.
Onshore Wind Farms
Lord Moynihan Excerpts(2 months, 3 weeks ago)
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Lord Whitehead (Lab)
I pay tribute to the noble Baroness for all her work in this field and for introducing that Bill. As far as getting on with it is concerned, there is nobody who wants to get on with it more than I do. The noble Lord, Lord Teverson, has drawn attention to the fact that we have probably 10.7 gigawatts or more of onshore wind capacity that could retire between 2027 and 2042, and those onshore farms will be completely lost if they retire without any repowering. So repowering is clearly essential, not only to keep those wind farms going on the same sites but because of the tremendous power gain that could come about by using modern turbine methods and modern blades to increase the output by perhaps up to two-thirds when those existing sites are repowered.
Lord Moynihan (Con)
My Lords, when considering repowering our intermittent wind energy when, to use the Minister’s words, the sun does not shine or the wind does not blow, does the Minister agree that the main energy policy lesson from the current crisis is that, as a nation, we should prioritise our own firm power energy independence? Does he agree that the best way to achieve this is to reduce our LNG imports from the Gulf and the US by accelerating gas development in the North Sea, and for his department to provide the one piece of paper we are all waiting on—the approval of the Jackdaw gas field to heat 1.6 million British homes this autumn?
Lord Whitehead (Lab)
We have been around this path several times before recently. Suddenly introducing lots more gas into the system will make no difference to the resilience of this country against international prices, whereas developing genuinely homegrown power over a period makes all the difference. I should add that homegrown power is not just variable homegrown renewable power; it can be batteries, biomass and so on, which can be firm power in its own right. It is a question of getting the whole picture together to make sure that variable power and firm power on a renewable basis complement each other, so that you have reliable power that is homegrown and secure in the long term.
UK Energy Sources and Cost of Energy
Lord Moynihan Excerpts(2 months, 3 weeks ago)
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Lord Whitehead (Lab)
The noble Lord mentions what is potentially a very effective, long-term and secure method of homegrown energy. As I mentioned in my initial Answer, the long-term way to protect ourselves from these price spikes is to develop homegrown energy. Clearly, tidal range, which has a very stable supply of energy and a not particularly long period of development, could play a role in that process. However, I emphasise that we are very far at the moment from developing tidal range in the way that the noble Lord seeks to promote.
Lord Moynihan (Con)
My Lords, two days ago, the Chancellor of the Exchequer said that all countries must play their part in boosting oil and gas production. The Energy Secretary demonises and bans drilling for oil and gas in the North Sea. Who is right?
Lord Whitehead (Lab)
No, the Energy Secretary does not wish to see drilling for North Sea oil banned. What he is doing, as the noble Lord will know, is developing transitional energy certificates, which will enable tie-backs to take place in existing fields. The noble Lord will know that the existing structure of the North Sea fields largely consists of fields that have not been tapped—small fields that are adjacent to additional fields—and so the tie-back arrangement will ensure both production and drilling for those tie-back fields in association with the existing fields.
Electricity Supplier Payments (Amendment) Regulations 2026
Lord Moynihan Excerpts(2 months, 4 weeks ago)
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Earl Russell (LD)
My Lords, the draft Electricity Supplier Payments (Amendment) Regulations make technical but necessary changes to the levies that electricity suppliers pay to fund three of the UK’s key energy schemes: the contracts for difference—CfD—scheme, the capacity market and the nuclear regulated asset base, or RAB model.
There is a sense of gravity on these Benches in that we fully recognise the role that CfDs have played, since they were introduced by the Liberal Democrats a long time ago, in helping to fund and secure funding for our energy transition. We recognise that these are necessary updates, and we welcome what the Minister has said to introduce these amendments. We welcome the measures that are being taken to ensure that efficiency savings are gained. Therefore, we fully support this SI.
Lord Moynihan (Con)
My Lords, I am very grateful to my noble friends Lady Redfern and Lord Fuller for their contributions. They bring a great deal of expertise to this Committee from a lifetime outside London in places where industries’ success has depended on low energy prices. For them to give up their time and dedicate it to the work of this Committee is commendable, and I associate myself with everything that both of them said.
That helps me in one way because it means that I can be short on this occasion. I will make just make four points. First, Drax has been raised. There are still major issues with Drax, as the Minister knows. Billions have been spent in public subsidies on it. As I recall, it was axed from the S&P green bond index because it clearly did not add to the net-zero objectives of either this Government or the previous one. Indeed, the burning of pellets releases CO2 immediately and does not achieve anything except for carbon debt. That undermines our net-zero goals, not least because the pellets come from the west of Canada; they are brought right the way across Canada and must then be transported to the United Kingdom by boat. The sooner we grasp the nettle and stop biomass burning, the better. In fact, it is unfair even to call it biomass: it is a CO2 pellet-driven wrong solution for Drax. Today, it has contributed a significant amount of electricity generated into the grid—not much less than comes from solar energy in the UK at the present time.
However, these are technical changes—this has been made very clear—and we on these Benches will not oppose them. I would just say three things. One is that the heart of this is, in fact, nuclear energy; look at the introduction and the rest of the statutory instrument. On the nuclear energy policy question, I welcome the fact that the Government have committed to implementing the recommendations of the Fingleton review in order to make nuclear power much cheaper. That is really important; we need to make it affordable, and it needs to be quicker and easier to build. We look forward to receiving the relevant legislation—even if I anticipate that, on that particular Bill, it will be colleagues from the left of the Labour Party and the Green Party who will give the Minister a lot of airtime because there is no doubt that the environmental impact is going to light the red touchpaper of the Labour left and the Green Party, which the Secretary of State has done so much to court.
Secondly, this Government cancelled the previous Government’s full-system cost analysis of the energy system. This statutory instrument highlights that such an analysis is important and would help all of us in this Committee—indeed, all of us in the House—to understand the cost of energy. I ask the Minister to consider reintroducing it, certainly before any further legislation comes before the House.
Finally—I was not going to make this point but I think it is important—I echo the comments made by my noble friends. The Government have not fulfilled their pledge to cut energy bills by £300. Pushing the costs on to tax bills is simply sleight of hand. The truth is that the Secretary of State’s made-up promise to cut bills by £300 has become, understandably, a national embarrassment for the Government, so they have turned to the already-struggling taxpayer for a bailout of £7 billion.
With all that said, I promised to be brief and make only a few comments on this instrument. These are technical changes, and we on this side will not oppose them, but it has been exceptionally helpful for the Committee to hear the comments made by my noble friends and the noble Earl, Lord Russell; I look forward to hearing the Minister respond to them.
Renewables Obligation (Amendment) Order 2026
Lord Moynihan Excerpts(2 months, 4 weeks ago)
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Earl Russell (LD)
My Lords, I thank the Minister for his introduction. I begin by recognising that this draft Renewables Obligation (Amendment) Order 2026 makes a specific and, on the face of it, sensible change in the way the renewables obligation is updated over time. By moving from RPI to CPI calculations for inflation, it should slow the growth of RO costs and in turn ease some of the pressures on energy bills paid by households and businesses. As the Minister said, during a new energy crisis when far too many families and households are living in fuel poverty and we are seeing rapid rises in our energy costs, we remain acutely conscious that many are watching every pound being spent on their energy bills. This SI, if everything goes to plan, as the Minister said, would save £1.9 billion over the next 11 years.
We therefore welcome the measures, as they are designed to reduce the cost of energy. However, bringing down bills cannot be separated from maintaining the pace of the clean energy transition and maintaining market confidence and those who finance it. As the Minister said, the RO has been instrumental in building our capacity, particularly for mid-scale onshore wind and solar. Many have made investment decisions years ago based on an understood indexing regime. Can the Minister tell us what assessment has been made of the impact on projects that have had financing assumptions predicated on RPI? How many generators are judged to face material changes to their expected revenues as a result? What modelling has been done to check whether these measures could have a disproportionate impact on those at the smaller end of the generating scale?
There is also, for us, the question of overall approach. From the Government’s point of view, this is a small, important, but technical, pragmatic and consumer-focused change. But, for many in the industry, this is yet another incremental tweak to the legacy schemes. I note that, of the 257 responses to the consultation, most did not support either option put forward, citing a preferred option not to change the system at all, based on concerns around investor confidence, minimal consumer benefit and a need—from their point of view—for financial stability and predictability. Do the Government accept that this kind of piecemeal pattern risks the possibility of further eroding investor confidence? That would not be because any one of the individual changes is huge on its own but because it creates a sense that the rules for existing long-term investments are constantly up for potential revision.
As the Minister said, the impact is £1.9 billion. The measures will curtail the existing revenue for RO generators—reductions of around 1% for the financial year 2026-27, which will rise to 5% by the financial year 2030-31. As we know, these are large-scale, long-term investment decisions, so even relatively minor changes can have, over a prolonged period, quite large and sustained impacts on what were expected revenue returns and investment decisions. The Explanatory Memorandum says that, overall, the department does not expect that there will be a disruptive effect on small generators. What does that mean in practice? How confident is the Minister in that statement? Also, how will this be monitored going forward? I note that there is no statutory review clause here, so how will any unintended impacts or consequences of the SI, once it is passed, be monitored? Furthermore, if there are unintended consequences, would there be a willingness by the Government to look again at these changes, particularly if they happen to impact the smaller schemes?
More generally, is it the Government’s intention, over time, to mitigate remaining RO schemes into contracts for difference-type frameworks? Instead of having this piecemeal approach, is there a more fundamental plan, as part of this framework, to reduce bills? I welcome those measures, but is it not time that there was an overall plan for this, rather than looking at individual orders one by one? Is there not a better way of doing this, agreeing it with the investors and the market, so we can both reduce the cost for bill payers and maintain the investor confidence on which we depend to secure future investment? We generally welcome what is here, although we have a few questions about it. We do not oppose this SI in any way, but we want a bit of clarity on those points.
Lord Moynihan (Con)
My Lords, I am delighted to stand before the Committee in agreement with the noble Earl, Lord Russell, on this occasion. If I may, I will build on some of the questions he asked. Before I do, I declare my interest as the chairman of Acteon, which is a global specialist subsea services company providing integrated seabed-to-surface engineering solutions for the worldwide offshore energy sector, including oil and gas and wind energy.
During the consultation exercise for this order, almost half—48%—of respondents expressed a preference for not going ahead with either option. Many respondents raised concerns about the wide-reaching, longer-term impacts that these changes could have on investor confidence and regulatory stability. What does the Minister believe will be the effect on investor confidence in this sector?
Many argued that indexation changes could raise risk premia and depress valuations, and that they would likely increase the cost of capital on new investments, which could deter future investment and, ultimately, have an impact on consumers. Does the Minister agree with this? If not, why not? Most respondents felt that both of the options proposed by the Government would represent a breach of legitimate expectations based on prior commitments from the Government. Some believed that the proposals could attract legal challenge. Does the Minister consider legal challenge likely? If not, why not?
Some respondents warned that the estimated consumer bill savings from switching to CPI would be modest or otherwise offset elsewhere by increases to the cost of capital of future projects, and few agreed that the switch to CPI is necessary at all. The UK law firm Burges Salmon said:
“A switch to CPI or a temporary freeze to tariff/buy out levels will therefore unnerve everyone involved. Many investors have modeled returns based on RPI-linked revenues over the full support term. Any switch (whether Option 1 or 2) will therefore undoubtedly result in slower growth of support income which may, in turn, impact projected equity returns and dividends and trigger a downward adjustment in NAV estimations of affected ProjectCos”—
that is, net asset values. It went on to say:
“In addition, projects financed with RPI-linked debt may face a mismatch between the generating asset projected revenues and debt liabilities. Coupled with uncertainty around the introduction of an FPC scheme”—
that is, the fixed price certificates scheme—
“it is clear that the threat of sizable and costly changes to renewable support schemes being implemented is increasingly real and one which the industry may fight hard to resist whether by way of legal challenge or robust responses to the various consultation papers”.
What is the Minister’s response to Burges Salmon?
That firm was not alone. Commercial law firm Travers Smith wrote:
“Although many, including generators, investors and financing parties with interests in existing assets benefitting from these subsidies will be relieved that the more drastic ‘freeze-and-realign’ option (i.e. ‘Option 2’) was not taken, the immediate shift to CPI indexation is nonetheless expected to be a blow to confidence and cause headaches across the sector, with investors seeking to protect valuations and dividend capacity against erosion of RPI linked cash flows, and lenders scrutinising headroom and covenant resilience in the context of the risk of refinancing. The timing—as Government seeks to encourage a ramp-up in investment as part of its Clean Power by 2030 plan—is unfortunate”.
I was going to conclude on this point, but the Minister could not resist the opportunity to refer to the current global crisis and the need to “accelerate to homegrown energy” as his solution—that is, accelerate to intermittent power when what we need is, in essence, firm power.
As we know, three-quarters of our wind and solar power is generated through renewable obligation subsidies. This means that, every time electricity is generated, suppliers get the wholesale price, plus higher subsidies than in all other OECD countries outside China—subsidies that signal the direction of future energy prices for consumers. Every time the wind blows, some wind farms get up to three times the market price of electricity. If wholesale prices are £80 per megawatt-hour—they were roughly at that level before the crisis—wind farms are getting two renewables obligation certificates on top of that, at about £70 each. This means that they have been getting £220 per megawatt-hour, which is almost three times the market price for electricity.
As was evident to those noble Lords who were fortunate enough to see the Secretary of State on Sky News this weekend, he used the word “incredible” in most of the sentences that he spoke. Is it not incredible that the Government continue to say that gas is the problem? In the last week, the price of gas, which generates our electricity, has been high, at around £120 per megawatt-hour. But is it not incredible that the renewables on the scheme will always get more than the gas price? Right now, there are wind farms getting up to, as I mentioned, £270 per megawatt-hour because they get whatever the wholesale price is plus the subsidies on top.
Lord Whitehead (Lab)
First, I thank noble Lords for their valuable contributions to this debate. The Government have listened carefully to the concerns expressed, particularly in relation to investor confidence, which I will come back to in a moment, to policy stability and to the long-term credibility of the UK’s renewable support schemes.
In considering the valuable and detailed contributions from noble Lords, I must say one thing to start with. The noble Lord, Lord Moynihan, is tempting me into a widespread debate about energy changes, energy prices and so on, but I kindly suggest that that is not the subject of our discussion this afternoon. The points that he makes are certainly ones that need replying to, and I hope that replies are being undertaken—but of course we are undertaking those replies at a time of energy crisis, and indeed a period of great volatility and uncertainty. That perhaps underlines why it is a better idea for the long term to have homegrown sources of energy that are not volatile and which can actually inform what is happening in the domestic market without inevitable consequences on the international market. The move towards renewables and low-carbon energy sourced from within the UK is a very effective way of doing that in the long term.
Lord Moynihan (Con)
I absolutely do not want to start a debate this afternoon, because we will unquestionably have plenty of opportunities in the future to cover this ground, but there is nothing more secure, in terms of our security of supply, nothing that creates more firm power, than our natural gas in the UKCS, which is much cheaper and far less polluting than importing gas from Qatar or liquefied natural gas from the United States. That reserve is critical, and if there is one lesson that comes out of this crisis, it is that we should maximise that reserve for our own country, for our own people, in exactly the same way as the Norwegians are doing at the moment for their people—unless the Minister thinks that the Norwegians are hopelessly wrong and should have shut in their basin, which he may wish to say. I think that our differences on this subject are worthy of future debate, but I think it is important to place them on the record.
Lord Whitehead (Lab)
I thank the noble Lord for placing that on the record. The Norwegian basin, of course, is far less mature than the UK basin, and indeed the Norwegian system works on substantially the same basis of international pricing as the UK system as far as gas is concerned.
The noble Lord has used the word “incredible” on several occasions. It was incredible, over the years, how much gas we were exporting from UK fields, even at a time when it was absolutely necessary to have the maximum supplies bought and used in the UK. Indeed, even during the Ukraine invasion crisis, there were still substantial exports on to the international market of gas that had come into the UK in the first instance. It is also the case, of course, that as far as marginal cost pricing is concerned, gas still makes the market over 65% of the time, so the whole market is still informed by international gas prices and international gas market-making in a way that is inimical to the stable, homegrown future energy that we need to import so that those positions are no longer taken.
Lord Moynihan (Con)
To place it firmly on the record, Norway and ourselves share the same basin in the northern North Sea, delineated by a median line. Geology does not recognise a median line, which is why in 1990 we were, broadly speaking, producing about 2 million barrels a day each, and in 2010 we were, broadly speaking, producing about 4 million barrels a day each. Today, we have gone right down to 400,000 barrels, and the Government are driving it down lower, while the Norwegians are going north of 4 million barrels.
My second point is that yes, the Minister is absolutely right that the Norwegians are exporting it to the international market. They do that because they can satisfy their domestic demand from hydroelectricity. As a result of that, however, they have managed to set up a sovereign wealth fund that assists their healthcare and their social security. The money they are earning is fundamentally important to the success of their economy. If we had done the same thing, we would have been in a far stronger financial position and would be able to take significant tax receipts to the Treasury to assist us with the many other challenges that the Government face.
Lord Whitehead (Lab)
The noble Lord is exactly right about a sovereign wealth fund, and it is our joint regret that the UK did not pursue that path many years ago. However, that is not the fault of the current Labour Government, as those actions were taken many years ago. He is right to point out that we would be in a much better position had that path been taken, but we did not take that path. We are where we are and we need to move on from that in terms of homegrown energy of a different form.
I am anxious to make progress with the business in hand, and I am pleased to see the overall welcome for these measures from both sides of the House. I will very briefly deal with one or two concerns that were raised. For example, on the concern about the effect of these measures on investor confidence, the future investment is of course not going to be carried out through the renewables obligation. As I mentioned, the renewables obligation is a sunset measure: indeed, it closed to new entrants in 2017. We are therefore talking about the remaining years of this measure, not the years in front of us of future and present measures, which we are undertaking in order to expand and stabilise the renewables and low-carbon world. Investor confidence will, therefore, be determined by how those measures are working.
In any event, the path that was taken to not freeze the RO, but to relate it to CPI rather than RPI, actually continues to allow RO to grow, albeit at a slightly lower indexed case. Therefore, in terms of the returns that those historic companies thought they were getting as far as the RO is concerned, there is not a great deal of difference—especially since we are so far past the point at which new entrants were accepted to the scheme.
As for legal challenges, we have been very scrupulous in making sure that we have received full advice, and that we are well entitled to make these changes. It is difficult to see how a legal challenge on the basis of not liking the changes very much might succeed, as opposed to a legal challenge on the basis of making the changes in the first place.
The noble Earl, Lord Russell, asked whether there could be a more comprehensive measure as far as future ROs are concerned, and this is something I have been quite interested in doing myself. It would involve trying to move RO recipients on to a CfD contract, which can be done in various ways. I suggest that if we did that forcibly, it would probably result in a legal challenge, but there are other ways of making the change.
Greenhouse Gas Emissions Trading Scheme (Amendment) (Extension to Maritime Activities) Order 2026
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Lord Moynihan (Con)
My Lords, I am grateful to the Minister for introducing this SI, to which I have tabled a regret amendment. I also echo all the comments made by the noble Baroness, Lady Hoey, on the role of the Minister. I will speak both to my regret amendment and to the noble Baroness’s fatal amendment.
There are two important issues regarding this SI, which places a carbon tax on the ferries that service principally Northern Ireland but also the Isle of Wight. First, as this House knows, the arguments for a statutory instrument must be identical in both Houses of Parliament and, in this case, in Northern Ireland, Scotland and Wales as well. They are expected to be consistent in substance and fact. Neither has been applied on this occasion, as was evidenced in the debate in Northern Ireland this week.
My concerns are twofold. The first is procedural: frankly, there has been a total lack of respect for the House of Commons and the Northern Ireland Assembly. The second is political: this is nothing more than a carbon tax on those who rely, for their livelihoods and travel, on the ferries captured by this legislation. Unlike the European scheme, it is not hypothecated with revenues invested in decarbonisation. Instead, as has been pointed out, it is the Treasury that pockets the proceeds, with no benefit to the environment, nor, most importantly, to the people of Northern Ireland. It is just another carbon tax to make Northern Ireland in particular less competitive than like-for-like companies in GB.
On 13 January this year, the SI was introduced in both Houses. On 3 February, it passed the House of Commons without reference at any point to the implications of the EU CBAM. However, when debated on 3 February, the good news in another place was that this SI had nothing to do with the EU CBAM. If it had, it would have read differently, and the impact assessment would have shown a range of options outlining what would happen to the emissions trading system under the EU CBAM.
Energy Markets
Lord Moynihan Excerpts(3 months ago)
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Lord Moynihan (Con)
My Lords, I declare my interests as chair of Amey, Acteon and Buckthorn.
This Statement comes at a time when the United Kingdom faces major, unparalleled challenges to its energy supply. For 50 years, under successive Conservative and Labour Governments, energy policy has been built on the four pillars of security of supply, diversity of supply to back that security, stronger adherence to ever-improving environmental measures, and, above all, affordability. On all four tests, this Statement fails, and the current war in Iran exposes that the Government’s energy policy is uniquely vulnerable to international supply chains, unaffordable to industry and households alike, glaringly insecure and unashamedly reliant on putting intermittent power before the firm power needed to keep incubators in our hospitals running 24/7, 365.
The Statement argues that there is no point drilling in the North Sea because all our gas is sold on international markets. Does the Minister agree that this is nonsense? Every molecule of gas we extract from the North Sea goes straight into our pipes, making up around half the UK’s supply. Does the Minister agree with the North Sea operators and OEUK that data already submitted to government details 111 named projects, equivalent to £50 billion of investment, that could be unlocked with tax and regulatory reform? On security of supply, we are increasingly vulnerable. Does the Minister accept that we have one pipeline coming to the UK from Norway alone, which is responsible for 30% of our gas supply? As the eminent economist Dieter Helm stated, is this not a sitting duck for a hostile power or an obvious hit for drones in the North Sea?
Does the Minister agree that onshore economically, the UK is facing the highest industrial power prices in the world, crippling our industry and increasing our cost of living? Does he agree that we are failing our energy-dependent industries because we have unaffordable energy prices? Gone is most of the steel industry. Deeply damaged is the fertiliser industry. Through the imposition of additional energy costs this year, the ceramics industry is under threat, as are petrochemicals and refined fuels.
Turning to capacity, does the Minister agree that we already need twice the capacity, twice the grid and all the batteries and storage we can find, plus many more interconnectors, to service a level of power demand of about 45 gigawatts? We used to meet that comfortably with just 60 gigawatts of capacity. Does he not recognise that all this is because we must have therm power available on days like today when the wind does not blow? Only 16% of our electricity was generated from wind today—only double that from the heavily polluting, burning biomass of 7 million tonnes of wood pellets a year in Drax.
Turning to renewables, does the Minister agree that there was good reason for the late publication of the secret MoU between the Secretary of State and the Chinese Government? It demonstrated that not just our renewable energy policy but our overall energy policy is tethered to China, a country which burns more than 55% of the world’s coal and is building another 400 gigawatts of coal generation. Yet our imports of solar panels are nearly 100% imported from China and demonstrate our serious reliance on a foreign state, not least because, as the Minister said from the Dispatch Box recently, he cannot be sure that the solar panels being installed in our schools are not made by slave labour.
Does the Minister agree with me that we need a policy built on renewables and more North Sea gas—not renewables instead of gas? Does he also agree that energy security and affordability depend on a substantial increase in gas from the North Sea, not imported LNG, which has gone up 40% year on year and which, in its total life cycle, emits nearly twice the levels of carbon compared with North Sea gas? The Government need to secure our own gas reserves, first, by a fiscal and regulatory regime which immediately encourages more tiebacks and greater exploitation of existing reserves, then by a licensing regime which ensures that production comes on stream at the same time as new-build nuclear.
None of what I have said this evening is anti-renewable; indeed, when I was Minister for Energy, I launched the first renewables non-fossil fuel obligation and for many years I was president of the British Wind Energy Association. I have set out a direction through which the UK is more energy secure, not less, with more affordable and environmentally acceptable energy; and through which it is more prosperous, with more jobs for working people, greater economic confidence, higher growth and a lower cost of living.
Earl Russell (LD)
My Lords, I thank the Minister for the Statement on the very serious and fast-moving situation in the Middle East. The recent escalation in the Gulf following President Trump’s deeply destabilising actions risks widening the conflict. Fourteen countries are now directly affected, global shipping supply routes are shut, and once again oil and gas prices have skyrocketed because of geopolitical chaos. With tragic inevitability, the same man who denies the existence of climate change has unleashed another conflict for the control of fossil fuels. If this conflict is not urgently contained, it will shut down oil fields and disrupt global markets, and drive up oil and gas prices, food prices, inflation and government debt alike. We need an urgent halt to the targeting of energy and desalination facilities on all sides.
We have been here before. Despite the progress we are making on our energy transition, the UK remains frighteningly exposed to the harsh economic impacts of global events far beyond our shores. The Energy & Climate Intelligence Unit and E3G estimate that our reliance on fossil fuels has cost this country an additional £183 billion since 2022, because of the increased costs of energy as a result of the war in Ukraine. We cannot afford another lost decade of dependence on global fossil fuels that we neither control nor influence.
While much of the Minister’s Statement is welcome—the co-ordination with allies, reassurance on supply, and commitment to clean power—the real question is whether this Government will now act at the speed and scale the crisis demands. Unlike the last energy crisis, this one includes oil as well as gas. We on these Benches see the Conservatives’ claim that the solution lies in new North Sea licences as the equivalent of trying to fill a swimming pool via a drinking straw. North Sea gas production is down by two-thirds since 2000. It is set to have declined by 97% by 2050, and even with new licences it will decline by 95%.
On oil-related issues, I want to ask about rural constituents who rely on heating oil to heat their homes. Some 1.5 million rural homes and 62% of homes in Northern Ireland depend on it. Prices have rocketed: in some cases, they have nearly doubled. These consumers are the forgotten victims of energy policy, not covered by Ofcom regulation and therefore without price protection and redress. Will the Government now work with the CMA and Ofgem to establish proper oversight, investigate price abuses and ensure that these households are protected?
Disruption to supplies arising from the Gulf crisis has also pushed up the cost of aviation kerosene by more than 80%. What consideration is being given to resilience, as 70% of our kerosene is imported, and how are the Government mitigating escalating costs for consumers and operators alike? On the cost of electricity and gas, we have some stability with the energy price cap, but that is short lived. While our gas supply is more secure than that of oil, gas prices have already reached a 12-month high. There is a very real risk of a renewed cost-of-living squeeze later this year, placing further pressure on families and businesses who are struggling to pay their bills.
The Government must make plans for scenarios where prices stay high and new interventions will be required. Families and businesses deserve reassurance that the Government’s support will not vanish if the crisis endures. I ask the Minister to give that reassurance today. These events bring into sharp relief the deeper issue: the structure of our energy market. Despite our work on renewables, UK consumers remain uninsulated from the global fossil-fuel markets, as our energy market has not been reformed to reflect the increase in renewables uptake. Three years on, we have been told repeatedly that energy market reform is coming. The Government have ruled out the introduction of zonal pricing, but this crisis is a clarion call that urgent action is needed. Why are we still funding crucial decarbonisation and social/environmental levies through household bills rather than general taxation? Moving more of those policy costs into general taxation would help to make the system fairer and more equitable. Will the Government commit to reviewing this balance?
Our gas storage capacity—just 12 days—remains among the lowest in Europe, so will the Minister consider the case for a greater strategic reserve? The price of gas still sets the UK electricity price 97% of the time. Do the Government agree with Greenpeace’s call to bring gas plants into a regulated asset base, creating a strategic reserve administered by NESO to break the link and save customers an estimated £5.2 billion by 2028?
We must double down on the rollout of renewable energy, grid upgrades, long-term storage, diversity of supply and greater energy interconnection with Europe, so that we can gain energy security and price control. Investors need predictability on planning, on grid connection and on the carbon pricing framework. Britain must move to a continuous pipeline of renewable projects: built faster, connected sooner and supported by modernised transmission networks. Every insulated home, every electrified heat pump and every community-scale battery gives us energy independence.
True energy security for Britain will not be won in the North Sea. It will be won on our rooftops, in our grids, in our offshore wind fields and in our insulated homes. If this latest conflict teaches us anything, it is that energy dependence is a choice, and energy independence through clean energy must now become our utmost mission.
Carbon Budget 6
Lord Moynihan Excerpts(3 months, 1 week ago)
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Lord Whitehead (Lab)
On EV rollout, the noble Earl will be aware of what has been put in place for ending internal combustion engine use in vehicles and the phase-out of hybrid by 2035. The rollout of electric vehicles continues unabated, and the number of electric vehicle charging points in this country, currently at more than 80,000, is well on target for what we think necessary over the next period to ensure that the fleet works as well as it should.
Lord Moynihan (Con)
Does the Minister accept that in the UKCS we have a far smaller carbon footprint for our own North Sea gas than the full life-cycle emissions of imported LNG from Qatar and the United States? Given that the Government’s energy security is challenged with growing dependency over the next 10 years on LNG ships passing through the Strait of Hormuz, why are we the only country in the world that is failing to accelerate development of our own gas reserves, in the North Sea, for energy security and environmental objectives so that we can deliver firm and affordable power to all our high-energy-use industries, which currently face crushing energy costs, four times higher than in the United States?
Lord Whitehead (Lab)
I think the noble Lord knows that, even if we were substantially to increase the footprint of gas production in the North Sea, that would not come on stream for many years. Secondly, gas is traded on international markets at a particular price, so it would make no difference to energy costs in the UK, because the gas would go to one of the three international gas markets and bringing down that price would be beyond the control of the UK—unless we introduced draconian measures to prevent the price discovery of the particular levels of gas being undertaken on international basis, which I am sure the noble Lord would not be happy with.
Fire and Rescue Services: Clean Energy Projects
Lord Moynihan Excerpts(3 months, 2 weeks ago)
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Lord Whitehead (Lab)
I think that we should get this into some proportion. As I have said, the number of battery fires over the last five years is four. The percentage of fires that you might encounter in an industrial premises or commercial premises is higher than the proportion per thousand of battery fires. Battery fires stand within the general problem of fires across industry. As far as the extinction of those fires is concerned, there is protocol already in the fire service about how to deal with those particular fires. It is a process of enabling burnout, so that the battery does not self-reignite. The noble Lord is correct to say that there are issues relating to battery fires, particularly the ability of that battery fire to reignite itself even in the absence of oxygen. There is a protocol now to surround the fire with safety measures and allow it to burn out. That, as far as the fire service chiefs are concerned, is a perfectly adequate and safe response to those fires.
Lord Moynihan (Con)
My Lords, can the Minister revisit his figures on battery fires? On 6 September 2024, the noble Lord, Lord Redesdale, led an outstanding debate in your Lordships’ House on lithium-ion battery safety. Superb contributions were made across the House, particularly by the noble Lord, Lord Winston. Since then, battery fires in bin lorries and at waste sites in the UK have reached an all-time high—not four, but more than 1,200 in 2024. That is an increase of 71% from 700 in 2022, which was described by the Environmental Services Association as an “epidemic”. Will the Minister take this opportunity to go back to his department and agree that, at a minimum, we need the fire service, the Environmental Agency, and the Health and Safety Executive to be statutory consultees for all planning and new stand-alone battery energy storage systems? There is urgent action required in this sector.
Lord Whitehead (Lab)
I do not intend to go back to the department and tell it that its particular concerns are wrong. What we are talking about today are fires in large stand-alone battery storage plants, of which there have been four in the last five years. If the noble Lord would like the individual addresses and locations of those four fires, I have them here. It is not the case that this covers every battery fire there has ever been. We know that certain batteries—for example, illegally imported batteries in scooters—tend to be a little less safe than other batteries. There is proper concern about some areas of battery safety and maintenance, but not about this particular sector, which is very well regulated and safe now. As I have set out today, there have been further measures to ensure that the safety and integrity of those stand-alone batteries is maintained.
Local Power Plan
Lord Moynihan Excerpts(4 months ago)
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Lord Moynihan (Con)
My Lords, although I have no outside interests which impact directly on solar farms and onshore wind, I declare my interest in having worked in the wider field of energy transition since my time as Minister for Energy.
I start by reflecting that we all want clean energy, we all want full engagement with local communities, and we all want to work towards an energy policy based on energy security, sourced from trusted supply chains and, above all, delivering affordable energy. This announcement should be tested against these criteria, for we support community energy enthusiasm where it makes economic sense. Does the Minister agree that reducing energy bills comes only by increasing reliable generation and decreasing costs, yet the local power plan does not come with a generation target nor an analysis of the extent to which it will contribute to reducing bills? If these are not central factors within the policy, I am afraid that it will for sure be time and money misspent.
In the Government’s own press release, they rely on “internal analysis” to claim that additional solar and onshore wind procured through AR7 could lower bills in the early 2030s, but that analysis has not been published. It looks only at a narrow scenario, it seems to exclude wider system costs, and it does not give a full picture of future bill levels. Does it include the load in grid costs to get the power to market, given that many of the wind projects being considered are in Scotland? How does the plan impact on Labour’s promises to cut energy bills by £300, not least given that they have risen by £190 since Labour came to power? How does this initiative change that?
I had a good look at the map of all the proposed projects in the CfD allocation round 7a. There were only two small wind projects in England, some in south Wales, and the vast majority of the other wind projects were in Scotland. Given that there were only two wind projects in England, can the Minister comment on whether this will lead to further increases in the already staggering bill for curtailment—paying wind farms not to produce—because of the grid constraint from Scotland to the south, the B6 boundary, and the cost of debottlenecking that, which is estimated to be north of £50 billion?
Can the Minister comment on whether this initiative is good for employment? There has been real concern recently, which the Minister will be aware of. The OEUK talked a lot about his policies and the redundancies in the offshore sector, and fears that the industrial contagion will spread to onshore supply chain and manufacturing communities. To put this in context, on average, 1,000 direct and indirect jobs are being lost each month from the oil and gas sector. Without intervention, this rate of job losses will continue to 2030. RenewableUK has said that these initiatives being proposed for renewables may create 4,000 more jobs from now to 2030, as against the 50,000 losses of jobs in oil and gas. How does that help employment in the UK? The GMB union’s Scotland secretary, Louise Gilmour, gave the same warning:
“There is a human cost to these decisions that goes beyond the bottom line of this year’s budget and impacts workers, families and communities in Scotland and across Britain. The economic case for easing the financial pressures on our offshore industries is clear and compelling but so too is the moral argument for slowing the rushed and needless abandonment of workers and their communities”.
Does the Minister agree?
I turn to an exceptionally important point. This announcement is principally about solar energy, and solar imports come from China. The Minister of State, the noble Baroness, Lady Chapman of Darlington, stated in a debate initiated in this House recently that
“human rights are a non-negotiable part of this Government’s approach to China”.—[Official Report, 2/2/26; col. 1301.]
This is an initiative to import Chinese goods. Well over 80% of PV modules used in the UK have significant Chinese content, and the true figure is very likely to be above 90% when you include panels made by Chinese-headquartered manufacturers—for example, Jinko, Trina, LONGi, JA Solar and Canadian Solar, all of which are Chinese in origin—and the non-Chinese brands whose wafers, cells or polysilicon is sourced from China. Some 80% to 85% of the global polysilicon that is needed comes from China, and the UK imports almost all its PV hardware. Installers and trade bodies routinely report that Chinese supply chains dominate the UK market because of price and scale. In the map for AR7, we are talking about a widespread, historic, major increase in solar imports from China. This local power plan depends on Chinese goods.
I simply ask the Minister whether he can tonight guarantee that no imported polysilicon, no panels being installed in our schools at the moment under GBE’s first initiative, and no solar content on any of the panels that is foreseen by this particular measure will come from the Xinjiang Uyghur Autonomous Region. A very large share of the world’s solar grade polysilicon has recently come from China, and a significant part of that comes from the Xinjiang Uyghur Autonomous Region.
It is a simple question and I hope the Minister can answer it by saying that there is absolutely no polysilicon that comes from that autonomous region. If he cannot answer it, it would have been wise and sensible to consider that question first. When comfortable that the Government could answer it in the affirmative, he could then come to the Palace of Westminster and bring forward this initiative for a historic increase in the import of solar panels.
In conclusion, can the Minister also say in this context why the Secretary of State, who is fast becoming a night manager, went to China a year ago, signed an MoU and locked it in his safe, marked “secret”, to be hidden from the public and not to be scrutinised? Why did the Government not publish it? They have published all the other MoUs that the Secretary of State has signed but not the one he negotiated with China a year ago. Why is it secret? Is there a reference to solar supplies from Xinjiang? Is there no reference to human rights? The Prime Minister has recently called for open government and honesty with the public. Surely, by locking it away out of sight, this is doing exactly the opposite; above all, to the local communities which are going to benefit from these solar initiatives. What is there to hide?
Earl Russell (LD)
My Lords, on these Benches we very much welcome the publication of the local power plan. This is a landmark moment: up to £1 billion of funding from Great British Energy for local community energy. This is the largest public investment to date. Our communities stand ready to generate their own power, cut bills and keep wealth circulating locally. They have been waiting for the Government to back them with serious funding and a level playing field.
We, and many others across the House, campaigned to secure community energy on the face of the Great British Energy Act 2025. We are pleased to see that commitment transformed into this concrete plan. Our communities should rightly be able to partner in, and directly benefit from, the renewable revolution. The vision is one we support.
Great British Energy aims to support an initial 1,000 local and community projects by 2030. However, I would like to see these plans going beyond programmes that the private sector can deliver itself; for example, a programme of community wind energy for our coastal communities. I would also like to see a broader range of technologies used, and greater integration with the warm homes plan. The four pillars—direct funding, expert advice, market innovation, and regulatory reform—are what community groups have asked for.
Delivery is where this plan will stand or fall. Although the plan is launched this month, the first grant schemes will not open until the spring and the new Great British Energy local products will not be piloted until the summer. There are hundreds of shovel-ready projects just waiting for capital finance. Will the Minister commit to an early fast track for schemes that can demonstrate that they are ready to build this year?
We welcome the commitment of up to £1 billion, but there is a clear gap between this figure and the £3.3 billion previously promised for community energy. Has this ambition been scaled back? How much of this fund is expected to go to actual deployment and how much on facilitation, advice and central programme costs? We recognise the importance of help with these processes but want reassurance that this will not become a scheme where too much is swallowed by planning and too little reaches the projects themselves.
The Government acknowledge that a lack of fair routes to market has held back community energy for too long. Without a genuine right to local supply, underpinned by statute, community groups will remain disadvantaged. The local power plan refers to developing new local energy supply models and a local energy platform, including smart community energy and virtual PPAs. When will the Government bring forward the regulatory changes needed to make them a reality? Can the Minister also confirm that legislation to create a clear right to local supply remains part of the Government’s programme?
The Government are right to recognise that delays and the cost of connections to the grid are among the principal reasons why community schemes have failed. The plan speaks of obligatory response times from DNOs, and of working groups with network companies, but what concrete powers will Ministers use to ensure that these things happen in practice? This matters especially when the technical and regulatory thresholds are already stacked against smaller schemes.
We strongly welcome the intention to introduce a mandatory shared ownership offer for larger renewable developments, and the indication that shared ownership templates and guidance with be published this spring. This could enable fairness into the next generation of large-scale infrastructure. What minimum stake will communities be guaranteed? How will the Government ensure that the offer is genuinely attractive rather than nominal? When will the Government publish the full community benefits framework, so that communities are not left at the mercy of voluntary schemes and of whatever crumbs are left over from the big companies? Will the framework include clear criteria on what counts as meaningful benefit, and will it be underpinned by statutory guidance?
One of the most promising elements of the plan is the commitment to build up local community capacity through expert teams and a “community energy in a box” toolkit, providing standardised documents and advice. Our most underserved areas have previously had the least spare capacity. Communities facing high deprivation, or with small and overstretched councils, lack the volunteers and technical skills needed even to begin. What criteria will Great British Energy use to define these underserved areas? Will they benefit from higher grant-to-loan ratios and more proactive outreach so that they do not miss out?
In the June 2025 spending review, £2.5 billion was allocated for small modular reactors—almost a third of Great British Energy’s existing budget of £8.3 billion. That decision pre-dated the finalisation of the local power plan and of GB Energy’s strategic plan for local energy. Does the Minister accept that the Treasury’s raiding of the Great British Energy budget has constrained what could otherwise have been a more ambitious and better-resourced programme for local power? It may have delayed the scaling up of exactly the projects the Minister is now bringing forward.
The local power plan has the potential to be transformative. Local, community-owned energy is one of the most powerful ways to cut bills, rebuild trust and take people with us on the journey to net zero. To realise this promise, we must move swiftly from plan to practice, getting money out of the door quickly, cutting through grid and regulatory barriers, and ensuring that every community has a fair chance to generate, own and—crucially—sell its own energy locally.