Ecodesign for Energy-Related Products and Energy Information (Amendment) (EU Exit) Regulations 2019
Lord Teverson Excerpts(5 years, 3 months ago)
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The Parliamentary Under-Secretary of State, Department for Business, Energy and Industrial Strategy (Lord Henley) (Con)
While we believe, as we have said on many occasions, that a deal with the EU is in our mutual interest, it would be irresponsible at this stage not to make appropriate plans for a no deal situation. This draft instrument ensures that in such a scenario our ecodesign and energy labelling legislation will continue to function effectively. It provides business and the public with the certainty they need.
Before I talk specifically about this instrument, it may be helpful if I speak briefly about the current EU framework for ecodesign and energy labelling. In recent years, the EU has introduced a suite of product-specific regulations through the ecodesign directive and the energy labelling regulations framework. The EU ecodesign regulations are about minimising the costs and environmental impact of products used in both homes and businesses by setting minimum performance requirements. Energy labelling regulations are about empowering consumers to make informed purchasing decisions through energy labels.
Both ecodesign and energy labelling regulations agreed to date will save household consumers around £100 on their annual energy bills in 2020, and, just as importantly, lead to greenhouse gas emissions savings of 8 million tonnes of CO2 in 2020. As well as bolstering our commitment to reduce carbon emissions, the policy also serves a purpose for industry. Setting minimum performance requirements can help to drive innovation and increase the competitiveness of businesses, in line with our industrial strategy.
This brings me on to the instrument being debated today. Using the power in the withdrawal Act, this instrument amends EU retained law to ensure that the ecodesign and energy labelling regime remains operable in the event of a no-deal outcome.
I will turn now to the amendments. The instrument replaces references to the “Union market” with the “UK market”, so that ecodesign and labelling requirements continue to apply to the UK market after exit. This amendment is essential so as to prevent less efficient and more polluting products being placed on the UK market. It also gives the Secretary of State the power, currently held by the Commission, to lay ecodesign and energy labelling product-specific regulations. As set out in the Clean Growth Strategy, this power will be exercised to,
“keep step with equivalent standards wherever possible and appropriate, or even exceed them where it is in the UK’s interest to do so”.
The instrument removes the requirement for suppliers placing products on the UK market to enter product information into the EU product database, a new EU online portal, live since January, where market surveillance authorities—the Office for Product Safety and Standards for the UK—can view information uploaded by suppliers. Instead, the market surveillance authority will be able to request technical product information, as it does now, directly from suppliers.
The next three amendments relate to changes the Government are making to the trading of goods subject to EU-wide product-specific rules. They are not specific to this instrument. One of these changes pertains to the conformity assessment of goods to ensure they meet relevant requirements. After exit, products needing to be assessed by a third party in order to show compliance with UK legal requirements will be assessed by UK “approved bodies”. This replaces the pre-exit requirement to use an EU “notified body”. To minimise disruption, however, businesses will for a time-limited period be able to continue using EU notified bodies when selling their goods to the UK after exit.
After exit, a new UK marking will need to be affixed to products for the UK market to indicate conformity with UK requirements. This will replace the CE marking which indicates conformity with EU requirements. To ensure continuity, most manufacturers will still be able to use the CE marking for the UK market. This is intended to be for a time-limited period.
The last of these changes relates to testing standards used for the verification of compliance of products with legal requirements. The current list of EU “harmonised standards” will be carried across but renamed for the UK as “designated standards”.
Finally, this instrument makes minor changes to ensure market surveillance can carry out its enforcement activities with regards to the labelling of household lamps and electric ovens. These are routine changes not related to exit.
In conclusion, these regulations are an appropriate and necessary use of the powers of the withdrawal Act and will maximise continuity in our ecodesign and energy labelling regulations as we leave the EU. I commend the regulations to the Committee and I beg to move.
Lord Teverson (LD)
My Lords, perhaps I will be more positive about these regulations and make the Minister feel better. I very much welcome the tone of the Explanatory Memorandum and its emphasis on the benefits of energy efficiency, which is clearly one of the least costly and most effective ways to reduce our carbon footprint. In fact, energy efficiency is one of the reasons why although energy prices have gone up, energy bills for households have gone down. This time, the irony is on not the Government but the broader British media because the famous Brussels-regulations-related vacuum cleaner efficiency scandal foisted on British citizens by the tabloids will remain. I welcome those product standards coming across.
My question are quite practical. I think that the Minister went through this, but who will police or register this matter and what will the additional cost of that be? Secondly, and perhaps more importantly, who will hold the register? Is the IT for that complete? How will what is on the European Union register get on to the UK register? That covers a series of intellectual property rights issues. We came across this with the REACH chemicals database: you cannot just copy this information across. How can we have a robust system that works in this regard? Without that, this scheme cannot work.
I understand the Minister’s point about continuing labels for a while but, more importantly, will it be legal to sell all the electric appliances covered by this SI in our home market from the point of our departure? I want to understand whether the preparation in those technical areas is right and things will work. Legislation is great but if it cannot work, even passing these regulations is not a lot of use.
Lord McNicol of West Kilbride (Lab)
My Lords, again, I am standing in for my noble friend Lord Grantchester so I apologise to my team in the Box if I do not get the language quite right. I spent time going through the regulations. The SI is quite a tome. I feel as if it covers more than just one issue and a number of SIs have been merged together.
I start with a point about no deal because large swathes of the SI cover that scenario. I know that it also covers what will be needed if there is a deal, but the parts of the SI covering a no-deal scenario would not be needed if the Government agreed with us and ruled out a no-deal Brexit. That would save so much effort, energy, time and money.
Looking at the specifics, like the noble Lord, Lord Teverson, I have a number of questions flowing from the draft SI. I want to work through those issues, some of which are technical and some of which are a bit wider than that.
The Secondary Legislation Scrutiny Committee declared the draft SI of interest to the House. I am sure that it will be scrutinised further after today. One of the big themes that came through—and one of my concerns—is about the powers that would be moved to the Secretary of State. There are a number of issues around that. The Minister said that these powers are about protecting and preserving the current standards, possibly increasing and building on them, but I do not see that in the language of the draft SI. Part of it says that the Secretary of State will,
“implement the strategy set out on page 44 of the Clean Growth Strategy which is to ‘keep step with equivalent standards [after exit]’”—
but then, “wherever possible and appropriate”. My reading of those words leads me to believe that the Secretary of State may not decide that keeping a level playing field or keeping the standards at a specific level is possible or appropriate, so those standards could dip. A bit of clarification from the Minister would be very helpful.
As has been touched on, the instrument also creates a stand-alone UK regime for third-party product verification, to be established in further detail in later SIs. Can the Minister assure us that these SIs will deal with that under the “made affirmative” procedure rather than the negative one? The text of the instrument is far longer than most, running to more than 80 pages; the five quite distinct schedules and areas contained in it could and should have been separated into separate SIs.
The Government have also chosen not to produce an impact assessment since, as they say, there will be “no imminent change”. Can the Minister clarify what this means? Are we talking about a week, a month or a year? As has been mentioned, there are financial, operational, organisational and oversight issues involved in setting up new bodies.
On page 7, paragraph (7) of proposed new Regulation 2A states:
“Where the Secretary of State removes the reference to a standard from publication, that standard is no longer a designated standard”.
Does this mean that the standard no longer exists in that area? If so, does that raise any implications or concerns?
The noble Lord, Lord Teverson, asked how other bodies would be constituted and what consideration was given to them. I look forward to the Minister’s response to that. On page 11, paragraph (4)(a) of proposed new Regulation 22 says that the Secretary of State must,
“consider the life cycle of the product and all its significant environmental aspects, including its energy efficiency, and the feasibility of their improvement”,
and paragraph (4)(f) says that they must,
“consult on the draft implementing measure”.
I seek clarification from the Minister on which bodies and organisations would be consulted on the draft measures. This would be helpful for the future.
Lord Henley
I am very grateful to the noble Lord for ending on a positive note. I think I can say—I will write to him if I am wrong—that any further SIs will be affirmative. It is important to make a distinction between affirmative and negative orders. The noble Lord will know that, whenever legislation goes through, Governments of whatever political persuasion are often tempted to make some small concessions by offering to turn a negative order into an affirmative one. Oppositions often push for this, thinking that they have achieved some great victory. I have certainly done it in opposition. We then very often burden both Houses with some unnecessary affirmative orders. In the past, I can think of a large number of affirmative paralytic shellfish orders that kept littering the Order Paper. I cannot remember what they were about, but they would probably have been far better left as negative. I can see a Minister at some point making some generous gesture in the course of the Committee on a Bill to suit some Opposition of whatever colour. As far as I know, the orders will be affirmative. If, inappropriately, we try to make them negative, I am sure that the appropriate committees, chaired by the noble Lord, Lord Cunningham, and others, will correct us.
I briefly—but not completely—apologise for the size of the regulations. Rather rashly, I am tempted to say, “You ain’t seen nothing yet”. Speaking more honestly and frankly, very often, it makes life more convenient for the users if we put everything into one instrument. We get a better end product. The noble Lord is exactly correct in saying that this one is 81 pages long. There are a further few pages of the Explanatory Memorandum. To have to repeat this debate five times with five instruments—five into 80—might be a less satisfactory process. So I do not really apologise; I think this is the appropriate way of getting these things done.
I say the same to the noble Lord, Lord Teverson, who at least welcomed the tone of the Explanatory Memorandum. He told us just how much actions of this sort—even with rising electricity costs—could reduce one’s electricity bills.
I suggest another mechanism: to get one’s children out of the house, which happens when they get to a certain age. The noble Lord, Lord McNicol, shakes his head, but I think the noble Lord, Lord Teverson, knows exactly what I am talking about.
Lord Teverson
I agree, in that my wife’s 40 year-old daughter has just left the house to move elsewhere, so that is a very appropriate comment and I look forward to the reduction in my electricity bill.
Lord Henley
I was not thinking of those who had reached the maturity of 40; I was thinking of the somewhat younger ones who, despite their extraordinarily green credentials, take a slightly less purist approach to turning off lights and other procedure.
I shall deal quickly with some of the questions. On the impact assessment, I assure the noble Lord, Lord McNicol, that the instrument’s impact was assessed at below the annual cost of £5 million, which was why a full impact assessment was not required, but a de minimis impact analysis was undertaken to reach this conclusion and, in doing so, the department followed the guidance, so we are happy about that.
On consultation, I assure both noble Lords that we worked very closely with the industry and other organisations, meeting them and keeping them up-to-date via email. Last summer, officials met all the appropriate trade bodies to consult them. Views were sought on the proposal to keep the design of the energy label, remove obligations in relation to the EU product database and retain the legislative functions carried out by the Commission for the Secretary of State. In the main, as far as I know, the trade bodies supported all those proposals and stressed the importance of not imposing new costs on businesses and the UK being able to legislate after exit.
I shall deal with some of the more detailed points. The noble Lord, Lord Teverson, asked about the policing of this. Ecodesign enforcement and control activities are carried out by the Office for Product Safety and Standards. Energy labelling enforcement and control activities are carried out by that office and local authorities’ trading standards departments in Great Britain and by the Department for the Economy in Northern Ireland. The regulations will not result in any change in that policy.
The noble Lord also asked who holds the products register and whether there is one for the UK. There is no UK database, but there is an EU-wide database, which went live on 1 January this year. There have been delays on the public section of that database, but it remains broadly on track and, after exit, we will review whether to introduce a UK database. Again, I can give the assurance that we will consult on that. He also asked whether all appliances under the SI will be covered from the point of exit, and I can assure him that the changes come into force from exit day and there will be no gaps.
The noble Lord, Lord McNicol, was concerned that there could be a reduction in standards, but I can assure him that we continue to support all these policy measures, which cut energy bills and increase energy security. As stated in the Clean Growth Strategy, we will keep step with equivalent standards, but intend to go further where, as I think I said in my opening remarks, we believe that is in the interests of the UK.
I have dealt with the noble Lord’s concerns about consultation, but I just correct myself on the affirmative nature of SIs. Only the SIs that are not identical to EU standards will be affirmative. If they are not identical to EU standards, they will be negative. I think I have it the right way round.
Climate Change
Lord Teverson Excerpts(5 years, 3 months ago)
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Lord Teverson (LD)
My Lords, I remind the House that I am a trustee of the Green Purposes Company, which owns a green share in the Green Investment Bank.
It is a long time since I have been involved full-time in business, though I was for many years. During that time, one of the things that did not happen was that at each board meeting we did not look at corporate risk registers. They sort of existed, but not in the way that they do at the moment—the ones with probability up one side of the graph and impact along the other. They have big red boxes at the top right-hand corner which tells you what you really need to pay attention to as a business or as an organisation.
As I prepared for this debate, I thought that surely these are what we need globally—maybe the United Nations or whatever has a view on that—to give us the priorities. And, hey presto, the World Economic Forum now meeting in Davos has a global risks report. Guess what? Up in that top right-hand bright red corner, there are three particular risks, all environmental. The first one and the highest is that of extreme weather events, the second is natural disasters, and the third is our inability or potential inability to solve mitigation and adaptation policies in terms of climate change. I congratulate Davos on pinpointing some of the issues I want to go through in this debate.
Last year we celebrated 10 years of the Climate Change Act here in the UK—something that we can really be proud of across all parties in this Chamber, and in the House of Commons as well. A decade before that, in December 1997, the world agreed the Kyoto Protocol at the third conference of the parties. Again, that was the first time that the global community came together and really concentrated on how to solve the issue of climate change. Yet we have a background today where global temperatures are already 1 degree above pre-industrial levels; we have more than 400 parts per million of carbon dioxide in our atmosphere; and we are now warned by the IPCC that we risk hitting that new target of 1.5 degrees by 2030. That is the context of our debate this afternoon.
What are the threats? Well, they are many. I suppose it is depressing to go through this list, but I will because that is the topic of the debate. I promise to try to raise our spirits as we go through this discussion. Clearly, there are the obvious ones to do with extreme weather: flooding; on the ocean side, sea-level rises, the potential of ocean currents stopping or changing, and ocean acidification; all the areas to do with the nature of biodiversity; the threat to our species from diseases migrating from the tropics northwards—and southwards—and, of course, invasive species, which we debated in the House yesterday on a secondary legislation instrument. Not least is the threat to the ice cover of our planet at the polar regions. Those threats give rise to consequential issues such as potential crop failure, human morbidity because of high temperatures, large migration and financial instability. I want to mention the strong role of Mark Carney as Governor of the Bank of England in raising these issues globally as well as in this country.
The effects of such threats are already being seen. We have seen droughts in Australia and South Africa; we have seen forest fires in Australia and California; and, in the United Kingdom, we have seen flooding and various other extreme events far more regularly than we used to.
However, the world has made progress. In 2014-16, emissions of carbon dioxide across the globe plateaued. In Kyoto, a big issue was the rising levels of emissions from both China and India. They were much smaller economies then but were growing very quickly, and they felt, rightly, that the developed world should take the strain on mitigation. However, we saw in Paris both those countries getting involved, with China starting to say that it should be the leader, taking over in many ways from the European Union and the United States.
We then had the Paris Agreement some two or three years ago, where it was agreed that we should move on from Kyoto and the disastrous Copenhagen conference and aim for 2 degrees and hopefully 1.5 degrees. In Katowice at the end of last year, a rulebook was agreed on how those targets should be met and how we assess carbon emissions. So we had good news worldwide. As for the United Kingdom, one of its greatest strengths in the past, as shown by the Climate Change Act, has been political consensus. Political bodies, business and NGOs all see it as a real issue that we should tackle. We can proudly say that the United Kingdom has reduced carbon emissions by some 43% from the 1990 baseline, yet we have had economic growth of 70% over that time, so we have seen a decoupling. We do not often hear it, but it is also calculated that we have saved some £4 billion per annum in our energy bills as a nation because of increased energy efficiency. As for our green technologies, the cost of solar has decreased by some 78% since 2010 and, over two years, the cost of offshore wind fell by 50%. I remember our debates during the coalition years about the “energy trilemma”. We no longer have that, because renewables represent the cheapest form of electricity generation. We no longer have issues around the cost of renewables, sustainability and probably energy security as well. Also understated is the economic engine that renewables can give us. Even in the dark days of 2008 in the depths of recession, the green economy grew by some 5% to 7%—with good jobs and not the bad ones.
However, the threats that I listed earlier are already starting to change our lives. They affect regions differently and the clock is ticking. Unlike in that other debate where an issue is the clock ticking, unfortunately we do not have the ability to extend the equivalent of Article 50. This is it and we have to make sure that we are able to meet the challenge.
Despite all that good news, there is not-so-good news as well. In 2017 global emissions went up by 1.6%; in 2018 it is estimated that they will be up by something like 2.6%. I regret to say that much of that growth has come from China and India. Even in the EU, where our track record has been good, our ability to reduce carbon emissions has plateaued and started to go down. Even if everybody who signed up to the Paris Agreement performs, we will still have a rise of some 3% in global emissions. Here in the UK, our great achievement of a 43% reduction is almost exclusively from the power sector, nearly all from taking coal out of the system. We are almost at the end of that road and cannot push that policy further; therefore, we have big questions about where we go, particularly now we are challenged by the withdrawal of Hitachi and Toshiba from our nuclear programme. We are now seen as being top of the subsidies league on fossil fuels within Europe, with some £10 billion-worth of subsidies per annum—although, probably like the Government, I question how that arithmetic was arrived at.
Perhaps most worrying of all is that investment in renewable technologies has plummeted and we are now at the lowest level of investment for a decade. I do not want to get into party politics here, except in one area: that consensus perhaps started to divide in 2015 with the Osborne Budget, when we had the privatisation of the GIB, the end of zero-carbon homes, the end of onshore wind, the end of carbon capture and storage and a relatively hostile taxation regime coming back in. But we have had, I am sure the Minister will remind me, a lot of strategies. We have had the clean growth strategy, the 25-year environment plan, the national adaptation programme, the “road to zero” strategy and the resources and waste strategy. That is great, but there has been little action around those strategies, and that is the big issue.
In transport, our emissions are going up. Our target for 2040 on electric vehicles, which does not include vans and is still fairly iffy, is seen as quite inefficient. In heating, which is a large proportion of our carbon emissions now, we have no strategy that we have started to implement, and the same is true for agriculture, although there has been good news from the NFU and its strategy to go to zero carbon by 2040. So there is much to do.
I have one or two questions for the Minister. The first is on carbon budgets. The climate change committee tells us we will not meet the fourth and fifth carbon budgets: it is saying that categorically. How are we going to meet those two carbon budgets, the last of which ends in 2032, only a little over a decade from now? That climate change committee report to Parliament put forward four principles, very constructively. It said to the Government—and to all Governments—first, support the simple, low-cost options. That obviously means offshore wind in particular, but others as well. Secondly, the committee said that we should commit to effective regulation and strict enforcement. Even on those houses where we now have higher standards of insulation than we did, do local authorities ever check them? I suspect not. Third was the end of chopping and changing of policy—that is a real pointer to all of us here in politics—and fourth was the suggestion that we act now to keep long-term options open. Clearly, those four are simple ways in which really to start to concentrate on this issue here in the UK. Are the Government taking up those recommendations?
It is quite obvious that tackling climate change now, as the noble Lord, Lord Stern, said in his original report, is far cheaper than doing it in the future. It is not only cheaper; it offers growth for our economy to get ahead. Yet we already have insurance costs, and those threats of costs to households, companies and the country are affecting us now.
The United Kingdom needs to regain its leadership in this area. When I was young, my mother always used the phrase “the road to hell is paved with good intentions”. I say to the Government that the road to a scorched planet is paved with worthy strategies rather than action. I beg to move.
Nuclear Energy
Lord Teverson Excerpts(5 years, 5 months ago)
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Lord Henley
My Lords, there was an awful lot to answer in the noble Lord’s question, but I think he is right to emphasise the importance of nuclear. It provides some 20% of our electricity requirements, and obviously in a low-carbon manner. We are also looking for cost reductions in new-build projects and I am glad that the noble Lord emphasised that. In our nuclear sector deal we are looking for cost reductions of some 30% over the next 15 years or so, as well as cost reductions in other areas. He is also right to emphasise the role that wind can play and the fact that the cost of wind is coming down.
The Minister of State, Ministry of Defence (Earl Howe) (Con)
My Lords, it is in fact the turn of the Liberal Democrats.
Lord Teverson
My Lords, I welcome very much the Government being far more questioning about Chinese investment in critical infrastructure in this country, such as 5G telecoms, which is being rolled out. Will they extend that questioning to our critical nuclear infrastructure, not least Bradwell, which is a Chinese-designed system?
Lord Henley
My Lords, we will continue to work with CGN on Bradwell, as they have committed to do, and we hope that Bradwell B will become available in due course.
Carbon Emission Reduction Targets
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Lord Henley
My Lords, I do not agree with my noble friend. I believe that there is a very strong case for encouraging shale gas extraction not only in terms of energy security but also in terms of reducing our carbon emissions. It will lead to less use of other, more harmful sources of energy. It can play a role in both reducing carbon and increasing our energy security.
Lord Teverson (LD)
My Lords, I was delighted to learn that the Government have carbon targets for their whole estate under their Greening Government Commitments. Does the Minister agree that, given his welcome for this scheme, Secretaries of State should have their pay varied according to their performance against those greening commitments?
Lord Henley
I do not have absolutely at my fingertips how well each department across the government estate is doing in terms of the Greening Government Commitments, but I can assure the noble Lord that this has been going on through Governments for many years; I remember it happening as long ago as in the 1990s. The Government are moving in that direction. Whether the pay of Secretaries of State should be involved in this is a matter beyond my pay grade.
Smart Meters
Lord Teverson Excerpts(5 years, 5 months ago)
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Lord Henley
My Lords, I am aware of that report but, as I made clear in my original Answer, we are installing more than 400,000 meters every month and that figure is increasing. We are still confident that we will be able to ensure that by the end of 2020 every household in the country will have been offered a meter. That is the aim that we have set out. We are also still confident that we expect to see a net benefit of around £5.7 billion for the entire rollout—benefits for individual consumers as they get greater choice and the advantage of being able to monitor their electricity and therefore keep their bills down, and advantages to the companies themselves.
Lord Teverson (LD)
My Lords, perhaps it is worth reminding the House that this programme of smart meter implementation will cost the country £11 billion. Sure, we need the customer benefits in savings from that but we also need to use them to create a properly distributed energy system in this country. Can the Minister explain to me how SMETS meters will achieve that?
Lord Henley
SMETS meters will allow the consumers greater benefits in that it will be easier for them to switch supplier and to monitor their use. Therefore it will be easier for them to cut their consumption of electricity and we will see a reduction in energy use, with benefits to the consumer in the cost, and benefits to the country in lower carbon use. As I said, there will be a net benefit overall after that cost of some £5.7 billion.
Electricity and Gas (Energy Company Obligation) Order 2018
Lord Teverson Excerpts(5 years, 6 months ago)
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Lord Teverson (LD)
My Lords, I thank the Minister for his very detailed explanation of what this secondary legislation does, although I have a few questions. This is an example of where we pretend we are not taxing consumers. As this is not public expenditure, we have to put it through energy companies, which are in the private sector. They decide and spend a lot of time working out who should get these things when it could all be done a lot more simply if we did not go through this public expenditure pretence. When I go through ECO, it always seems to me that it would be so much better if it was administered by local authorities. They know households with problems and have all sorts of obligations towards private renters, who are a real problem in terms of energy efficiency and getting landlords to implement these sorts of schemes. It would be so much easier if we were honest with ourselves. This is a form of taxation, it is public expenditure, and we should just sort it out, rather than go through all the bureaucratic inefficiency that we have.
Having said that, I welcome the scheme very much in terms of moving this agenda forward. The present scheme, as I understand it, ran out at the end of September. We now have this instrument in front of us. I do not know how long it will take to get the thing started. I understand that there are some roll-over functions, and I welcome that, but so often with this sort of funding—even more so with European funding—there is always a risk that the companies and installers involved in this have a cash-flow crisis because we stop and start these programmes. I may be worrying unnecessarily, but I would be interested to understand how that gap is coped with and when the scheme is expected to really take off.
I noted with some amusement paragraph 7.20 of the Explanatory Memorandum, which said:
“There is a high level of interest in the scheme from energy suppliers who deliver the scheme, fuel poverty groups and installers, and some interest in the scheme from the public”.
That is extremely honest of the instrument, but I am sure we would all agree that it would be good if the public, who are affected by this, were motivated to push to get the scheme going. From that evidence, there may be a real need for some sort of public information scheme. I would be interested to hear from the Minister how that will be solved.
I find some of this order a little bit difficult to follow. Clearly there is an emphasis on social housing, which I welcome. Given the budget of the ECO—it is not insubstantial but it is limited—I also welcome that it is going on areas of fuel poverty rather than just carbon savings. No one is more committed to climate change issues than me but it is right to concentrate expenditure on fuel poverty.
What do we do about the rest of the housing stock that is not covered by this? The Minister mentioned that there is still a real gap in the Clean Growth Strategy in dealing with household efficiency in the rest of the market. I notice that the strategy states that it will:
“Support around £3.6 billion of investment to upgrade around a million homes”.
The programme covers 900,000 homes with an average spend of £640 million per calendar year. That works out at only about £2 billion for the time that is left until the end of March 2022. I would be interested to see what happened to the other £1.6 billion between the strategy and this paper.
On the private sector side, how do we check that landlords are meeting their legal obligations? How do we check that the measures work? I am sure that there is already a process for this but the instrument mentions the “monitored measure” option. I do not want to go into great detail but that option gives bonuses to suppliers or accounts in additional savings or help.
From the evidence, we all know that fuel poverty families getting better insulation does not tend to reduce their energy spend. Quite understandably, it just makes sure that the family is warmer than it was before, so I do not understand how we measure the effect of this given that people will probably use more energy to keep warmer instead of being cold. Are the Government confident about how these schemes are audited?
I welcome the fact that the scheme will continue beyond this until 2028, as in the Clean Growth Strategy, and I welcome the concentration on fuel poverty. Again, following the unfortunate relative failure of the Green Deal during the coalition Government, we absolutely need a national scheme to find a way to upgrade the rest of the UK’s housing stock.
Baroness McIntosh of Pickering (Con)
My Lords, I bow to the superior knowledge of the noble Lord, Lord Teverson. I have a couple of questions. I want to press my noble friend, if I may.
At the outset, I declare my interest in the register as a vice-president of National Energy Action. I have long taken a close interest in the Warm Front programme. Like the noble Lord, Lord Teverson, I welcome the continuation of the scheme. Obviously, it is a matter of record and ongoing regret that around 4 million households are still in fuel poverty. Any scheme that can be seen to reduce that is very welcome. How does the scheme compliment what is already happening? What more could potentially happen through building regulations? A more joined-up approach to warm homes would be very welcome indeed.
Being half Danish, I am particularly interested that we currently export residual household waste from the city of York and north Yorkshire to Holland at a cost to the local taxpayer. However, at the end of the day, the benefit is to Dutch residents, because the waste is burned and energy from waste is recovered in the form of district heating. My aunt in Denmark gets the benefit of that—although not from our residual waste in north Yorkshire—through cheaper electricity, hot water and heating. I am very interested to know the potential number of new district housing connections that could be made through the continued scheme before us this afternoon. Does my noble friend have a projection of that? What plans do the Government have to retrofit? There is a firm in Denmark that has changed its name to Ørsted, but I prefer the old name of DONG—the Danish Oil and Natural Gas company—which is easy to remember. It claims it could retrofit properties here in London. Is that something that the department has considered?
My last question is about the figure in the order before us today for potential savings. Is the overall home-heating cost reduction target of £8.2 billion realistic? How do the Government plan to achieve that?
Lord Henley
My Lords, I welcome the generally positive tone of the noble Lord and my noble friend Lady McIntosh, both of whom recognised that this order is a genuine reform of the ECO system. As I made clear in my opening remarks, it is designed to target it far better at those who are less well off and those who find it harder to adapt their houses to make them more energy efficient. It has achieved a great deal in the past and will continue to achieve a great deal.
I am sorry that the noble Lord, Lord Grantchester, takes a less positive approach to this and accused us of a lack of ambition, given that I talked about increasing very dramatically the number of people that we intend to try to reach, and recommended generally spending more taxpayers’ money in a rather haphazard manner. I point out to him and to the noble Lord, Lord Teverson, that technology will encourage those who can afford it to make changes that will lead to a reduction in the use of energy. One only has to look at, for example, the reduction in the cost of things such as LED lights over the past few years, which has made it far easier for people to change to those lights and therefore decrease their use of energy. Similarly, it is right that those who can afford it should pay for appropriate insulation as is necessary, as they will see the benefit in a reduction in their fuel bills and the country and society as a whole will see a benefit in the reduction in carbon use. These measures are designed to encourage those who find it less easy to afford to make those changes.
Lord Teverson
As the Minister knows, in the UK, particularly in commercial buildings and increasingly in private buildings, we have a problem that landlords and tenants have very different goals in this area, so unfortunately it does not always work out that way. However, I do not want to interrupt him further.
Lord Henley
I totally agree that landlords and tenants have different views on this. Landlords can benefit from these measures. If the noble Lord would like, I will write to him in greater detail on that point. We would also like to see landlords with old houses make the investment that is right in those houses where they can do so.
I shall deal with some of the more detailed questions that were put to me, particularly by the noble Lord, Lord Teverson, and my noble friend Lady McIntosh. I hope that in the process I will also deal with some of the queries of the noble Lord, Lord Grantchester.
My noble friend talked about energy from waste and the possible advantages that the Danes are getting from us exporting some waste. My noble friend will remember that when I served in Defra I had an interest in waste. She will also know that there are sometimes difficulties in getting planning consent for energy from waste plants. I will write to her in greater detail on that, as it goes slightly beyond my brief at the moment. I also note that she mentioned the firm DONG in Denmark—I think it has now changed its name to something else that I cannot pronounce: Ørsted. I have recently seen some of its windmills off Barrow, which is now the largest wind farm in Europe, providing, I think, a very large increase in renewables from that source.
I agree with what my noble friend said about more homes being retrofitted. The new innovation routes could allow multiple measures to be installed in homes. That approach would need to be sponsored by us to demonstrate that it could be cost-effective. That information would need to be provided to Ofgem, the scheme administrator, to ensure that it met the relevant standards. If I can give her some further detail on that and on potential figures for those new district heating connections, I will write to her in due course.
The noble Lord, Lord Teverson, was concerned about the end of the old scheme and the start of the new. I assure him that early delivery means that the measures which meet the new scheme’s rules, and which are delivered before Parliament agrees these regulations, will count towards the supplier’s obligations. We will have a seamless transformation of these matters. I also assure the noble Lord that there will be the appropriate audit he seeks. Ofgem requires measures to be installed to specific standards and 5% of the measures are checked by Ofgem under the scheme’s technical monitoring checks. I hope that 5% will be sufficient for the noble Lord to consider that it provides the appropriate audit and checks.
The noble Lord asked about the housing stock that is not covered by the ECO scheme. We are reviewing the fuel poverty strategy and will make an assessment of how best to meet the fuel poverty targets. As I made clear, the clean growth strategy has set aspirations to decarbonise all sectors of the UK economy. The buildings mission aims to at least halve the energy use of new buildings by 2030, as well as halving the cost of renovating existing buildings to a standard similar to new buildings. I repeat that new buildings are covered by current building regulations, and therefore any new buildings will be appropriately insulated. However, we want to get old buildings up to the same standard as new buildings while increasing quality and safety.
The noble Lord had other queries. He quoted from paragraph 7.20 that there was some interest from the public and said that he wished to see more. We would all like to see more interest from the public—that is true of a great many schemes throughout government, way beyond this one. I assure the noble Lord that a number of members of the public responded to the consultation. They obviously had an interest in energy issues, energy efficiency and fuel poverty. The majority of the responses were supportive of consultation, as I set out in my opening remarks. I hope that as a result of this debate—should people be taking much interest in it—and other measures, others throughout the country will take an interest in this, and that those firms involved in the scheme will do their bit to contact the public and let them know what is available, particularly for those with low-cost housing.
As I said, I welcome the generally positive tone taken by the noble Lord, Lord Teverson, and my noble friend. I hope that in due course the noble Lord, Lord Grantchester, will come round to that view and accept that this will go a long way towards meeting the problems of fuel poverty, will help to decarbonise and will help to meet the targets that we hope to—and will—meet by 2030 and beyond. I commend the regulations to the Committee.
Electricity and Gas (Powers to Make Subordinate Legislation (Amendment) (EU Exit) Regulations 2018
Lord Teverson Excerpts(5 years, 6 months ago)
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The Parliamentary Under-Secretary of State, Department for Business, Energy and Industrial Strategy (Lord Henley) (Con)
My Lords, the regulations were laid before the House on 5 September. As we approach EU exit, my department is working to ensure that our energy legislation continues to function effectively after exit day. In recent years the EU has introduced through the third energy package a suite of legislation governing the energy systems of member states. Much of this is technical legislation, known as European network codes and guidelines which apply to energy operators and regulators.
To maximise continuity, the European Union (Withdrawal) Act 2018 will incorporate the majority of this legislation into domestic law when we leave the EU. This instrument is the first of a package of energy-focused regulations amending this retained EU law to ensure that the UK’s energy legislation and markets work effectively after exit. This instrument does so in two ways: first, by ensuring that directly applicable EU law concerning electricity and gas will be effectively incorporated into domestic law; secondly, by enabling the UK Government and the Northern Ireland Executive to amend elements of this retained EU law in a simple and proportionate way, ensuring that our energy legislation can keep up with the rapid pace of technological advances and market developments. To do so, this instrument will transfer legislative functions conferred by four EU regulations from the European Commission to the UK Government and Northern Ireland Executive under the powers of Section 8 of the withdrawal Act.
The first power being transferred by this instrument is a limited ability to create European network codes. The withdrawal Act will incorporate all direct EU legislation so far as is operative immediately before exit day. This means that provisions in force on exit day but applying from a later date will not be incorporated. This is the case for several European network codes. Without government action, this could create gaps in the energy regulatory framework, leading to uncertainty and detriment to industry, which has adapted rules and practices to comply with the network codes. It is therefore important that the UK can incorporate these missing provisions promptly through legislation. This is accomplished by Part 2 of the instrument, which will revoke the European Commission’s power to make new codes and instead substitute limited powers for the Secretary of State and the Northern Ireland Department for the Economy to make regulations bringing into domestic law provisions corresponding to the codes or parts of codes not captured by the withdrawal Act. These statutory instruments will themselves be subject to the affirmative procedure to ensure effective parliamentary scrutiny.
Secondly, this instrument will enable amendments to network codes by transferring powers currently held by the European Commission to the Secretary of State and the Northern Ireland Department for the Economy. These powers would be exercised using subsequent affirmative statutory instruments.
Thirdly, as well as powers relating to network codes, this instrument will transfer to the Secretary of State and the Northern Ireland Department for the Economy powers to amend definitions and reporting requirements under the EU regulation on wholesale energy market integrity and transparency, known as REMIT. REMIT prohibits insider trading and market manipulation in wholesale energy markets and provides energy regulators with valuable tools to fight these crimes. The power to amend definitions is limited and may be used only to ensure coherence with other relevant financial services and energy legislation, or to take into account developments in wholesale energy markets.
The fourth power under this instrument concerns the security of gas supply regulation, which creates common standards and indicators to measure threats to gas security and defines how much gas is needed to maintain security of supply. The regulation contains templates for risk assessments, preventive action plans and emergency plans to be carried out by the Government. Further, the regulation contains powers for the European Commission to amend these templates using delegated acts. This instrument transfers these to the Secretary of State. Powers to amend the security of gas supply regulation and REMIT would be exercised through subsequent negative statutory instruments. This is appropriate as these powers permit only narrow amendments to very limited provisions of these regulations.
This instrument extends to Northern Ireland. As energy is a devolved matter, this instrument transfers powers variously to the Secretary of State and to the Department for the Economy in Northern Ireland, respecting the devolution settlement. In addition, my department has consulted with the Northern Ireland Department for the Economy throughout. While this instrument permits the Secretary of State to exercise its powers in respect of Northern Ireland, this would occur only in respect of a reserved area such as international relations, or when the Department for the Economy determines that it is unable to act in the absence of Northern Ireland Ministers. Each time this occurs, it would be accompanied by a ministerial Statement explaining why it was necessary.
In conclusion, the regulations are a sensible and necessary use of the powers of the withdrawal Act that will maximise continuity in our energy regulations as we leave the EU. I commend the regulations to the House.
Lord Teverson (LD)
It is left to me to start this rather technical discussion. On this occasion, I will stick to a rather strategic level, if the Minister does not mind. First, it has been the Government’s intention in our EU negotiations to remain in the single energy market, which I hugely welcome. I would be interested to understand from the Minister whether there has been any progress on that; whether that might appear in the political declaration of our future relationship in the withdrawal agreement; whether the Government are still keen to do that; and, if we are successful despite our red lines and the Government’s general intention to come out of the single market, whether the instruments would be necessary if we remain in the EU internal energy market.
Moving on from that, we have interconnectors. On codes and other technical matters, once we leave, if we are not part of the internal energy market, we will no longer have access to discussions on or information around codes used by that market. I would be interested to understand what effect that will have on interconnectors between us and the European Union at that time. Certainly the Select Committee that I chair was very concerned about the inefficiencies in trading—not so much around interruption of supply but around increases in energy prices due to inefficiencies because of the relationship not being as smooth as it was before—that might come about from that.
I want to ask a fundamental question. As the Minister mentioned, the secondary legislation concerns Northern Ireland as well. As he knows, the island of Ireland has a completely integrated energy market—a so-called single energy market. What preparations have the Government made, particularly in the case of no deal, so that this energy market for electricity and gas can continue to function, with powers coming back to the UK and such disintegration—that is, no longer being completely under the purview of the internal energy market? Will that single energy market in Ireland still work despite the fact that the network codes will change? This system seems fundamental to Northern Ireland’s energy needs, let alone those of the Republic.
Lord Grantchester (Lab)
My Lords, I thank the Minister for his introduction to the regulations—the first of many to come concerning the UK’s exit from the EU. The Committee will consider many technical energy matters. It will not be entirely simple to identify the crucial elements and their implications. However, I will echo the remarks of the noble Lord, Lord Teverson, on the more challenging aspects of the regulations on wider-ranging topics, such as the internal energy market and the position of the island of Ireland.
On the face of it, the instrument seems simple enough. It moves powers held by the European Commission to a domestic authority, giving the Secretary of State power to alter them—in this case, referring to European network codes and guidelines—and adopt the amendments overall as “retained direct EU legislation”. Later amendments that will not come into force by 29 March 2019 will not be regarded as retained direct EU legislation. They will be resolved, perhaps even revoked, by exit day under separate secondary legislation, along with elements of retained EU law where the Secretary of State considers that the EU instruments retained in law will not be capable of operating in isolation from the rest of the EU instrument. Powers are also taken in the SI to amend the provisions of REMIT, an EU regulation concerning wholesale market integration and transparency, to apply internally to the UK and not to have to report to EU authorities.
Some amendments will be made by affirmative procedure and some negative. As your Lordships’ Secondary Legislation Scrutiny Committee concluded, all is so clear, so far. Perhaps the Minister can confirm first whether all these amending instruments will be amending only: that is, not enabling new powers through secondary legislation. That does not seem to have been commented on.
More importantly, this question brings up the whole issue of the internal energy market. Unlike Euratom and other bodies established by treaty, the IEM is merely a collection of agreements among member states on how the European energy market is to be conducted. It has been stated many times that it would be advantageous for membership of the IEM to be retained, or a close association with it. How far could any statement go when it is not really a distinct entity? This order would be regarded as a contingent action, to be effected and commenced if no suitable alternative arrangement for energy trading through interconnectors can be put into place—rather like the contingent nature of the Nuclear Safeguards Bill, now an Act, as the Minister will remember. Can the Minister clarify whether this is the Government’s intention or whether, as the memorandum seems to suggest, the order will apply regardless of any deal and be part of a signal to break with the IEM under all scenarios? Will he also clarify the Government’s general intention toward the internal energy market?
Very pertinent in this respect is the position regarding Northern Ireland. Ireland, north and south of the border, already operates under an all-Ireland grid. Given the possibility that Northern Ireland will not operate its own grid requirements at Brexit, is it intended to break up the Ireland grid? While paragraphs 7.12 and 7.13 of the Explanatory Memorandum deal with the position as now, when there is not a functioning Executive, is it intended that Northern Ireland will function on different codes from the rest of Ireland at Brexit? Can the Minister explain what is intended and how it will work on a United Kingdom basis with Northern Ireland and the Irish grid?
While an effective system must be in place upon Brexit, does this order—while enabling continuity for UK authorities—close the door on options for a better working of the energy system after Brexit through close association with the internal energy market? Can the Minister provide the Committee with any further clarity? If any of his remarks can assure the Committee on this point, I can confirm the order today.
Companies (Directors’ Report) and Limited Liability Partnerships (Energy and Carbon Report) Regulations 2018
Lord Teverson Excerpts(5 years, 7 months ago)
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Lord Teverson (LD)
My Lords, I thank the Minister for going through the detail of this instrument. It is Green Week and I suppose we ought to welcome that. To put this in perspective, the thing I would really like to do during Green Week is go through actual hard legislation that will determine how we meet our fifth carbon budget, rather than something that is very worthy in many ways but concerns the details of medium-sized companies or non-listed companies doing some carbon reporting mandatorily. But there we are; we are where we are and I welcome the fact that we are extending carbon reporting. As the Minister said, we were in the lead as a nation in 2013 by having carbon reporting for listed companies in the UK, which is good. Where we have led, others have followed.
We have to remember, as the Explanatory Memorandum says so well, that this is part of a broader package announced in the 2016 Budget where the death knell of the carbon reduction commitment as I know it—I know that it got a different name latterly—was announced. I was always very sad about that scheme, because when it originally came about it was to look at that tier of commercial business that was not captured by the EU ETS. It was brilliantly designed before it was launched so that it was taxation-neutral and rewarded those companies at the top of the league table that had done best in carbon and energy savings while penalising those at the bottom. There were incentives and, like all good energy taxation, it was neutral overall. Unfortunately, by the time it was introduced it was taken over by the Treasury and became a tax-raising regime that had all the complications that the Explanatory Memorandum goes through. I can see that that scheme became a burden for industry when it was effectively just a method of taxation rather than a proper method of incentivising through league tables and having good performance.
There is something I would be interested in understanding from the Minister. I know it is in the figures, but I found them quite difficult to go through—although I see the figures very clearly on the financial savings of the sector, which I agree are important. What is the net estimated carbon saving or deficit with this overall package of raising the climate change levy taxation rate and getting rid of the CRC and bringing in this management information system? I think that it is in the figures, but there was a whole range of figures and I found them very difficult to understand. I hope that the carbon savings are still positive because of that. I would be disappointed if they were not.
I am interested in the term “streamlined”, because going through the detail I was unclear whether it meant “rough estimate” or “back of the envelope” rather than the proper way that these things are calculated. I presume it is the latter but I am interested in the term “streamlined”.
The Minister mentioned global reach on these figures. As we know, the long supply chains in industry these days are one of the problems for carbon reporting. It can be relatively straightforward for corporates and large companies to estimate and publish their emissions, but one of the major ways in which any corporation can reduce its emissions is through offshoring or subcontracting more of its supply chain to suppliers. I would like to understand whether these figures include supply chain emissions and how the Government see themselves coping with that issue in future. I understand that it is not an easy question, and I am not suggesting that it has an easy answer. I would be interested to know how the Government see that area working as part of their broader green growth strategy.
Lastly, the Minister mentioned ESOS, a European scheme which is very useful in this area. Perhaps he can assure us that the scheme will continue post Brexit.
Lord Grantchester (Lab)
I, too, thank the Minister for his introduction to the regulations. Although limited in scope and somewhat technical, they are crucial to highlighting and building energy efficiency into everyday activities. We greatly welcome that.
As the Minister said, the regulations introduce mandatory requirements on emissions, energy consumption and energy efficiency action for large, unquoted companies. They also extend the reporting requirements for quoted companies to bring both, along with large limited liability partnerships, in line with common reporting requirements. Such organisations must set out their activities and performance in each year’s annual report. The intention of the changes is to compensate for and extend the reporting requirements previously obligated by the carbon reduction commitment, which is to end in April 2019. The new reporting requirements are to be in place after that date.
I have always thought that an organisation’s annual report is a very important document that sets out its strategic direction and how it has performed against its objectives. It should be a good promotional tool for its activities. Last week, the Intergovernmental Panel on Climate Change brought out a special report to warn again of the dangers of climate change without serious corrective action being taken on emissions, decarbonisation and energy efficiency. Previously, Labour supported and advocated companies reporting their activities in a coherent regime.
Regrettably, although the new measures are welcome they do not exactly replicate all that was in place under the carbon reduction commitment. Primarily, there was a league table of companies’ performances alongside the report. In the regulations, there is no measure of comparative performance and no means of producing such comparisons other than by a time-consuming and expensive trawl through all company reports, which may—or, more likely, may not—be reported in strictly comparable terms. While the regulations are prescriptive regarding what should be reported and how, there appears to be some leeway in the regulations whereby reports could mislead or be non-comparable in their meaning, particularly in terms of the possible distribution of reporting among subsidiaries of the main company. Does the Minister recognise the deficiency that there will be a lack of full comparability of reports because of the absence of a mechanism to allow performance to be compared and graded?
As what gets measured gets attention, how are companies to understand how they compare to their peers? Surely the full impact of these energy use indicators in annual reports is not being utilised as a competitive challenge for improvement. As the clean growth strategy states, businesses need measures,
“to improve their energy productivity, by at least 20% by 2030”.
The CRC was due to run until 2043. Here I echo the questions asked by the noble Lord, Lord Teverson, in his analysis of the CRC and its workings. The impact assessment outlines that the policy will be reviewed in 2024. That is some time away, especially given the timeframe in which the intergovernmental panel stresses mitigating measures need to be taken. How will any comparative analysis take place under these regulations? Indeed, will the Government undertake any analysis of the results of this reporting prior to 2024, and how will they measure success? Will government incentives be brought to bear on poor performance, not merely on reporting?
While we are in favour of these regulations today, there are nevertheless serious issues to address in which these regulations have perhaps not been as constructive as they might have been. Climate change is one of the most pressing issues of our age. The intergovernmental panel issued a special report last week between its fifth and sixth reports to underline its most recent assessment that there could be a very limited number of years, may be as few as 12—that is, until 2030—in which the world’s increase in temperature could be limited to less than 1.5 degrees above 1990 levels. I thought it was strange that the Conservative Government came out with a Ministerial Statement on Monday extolling all the achievements that have been secured when we all know that greater progress was made under previous Labour Governments and even under coalitions. Indeed, under the Conservative Government from 2015 progress has slowed, with a litany of cuts and policy reversals that I need not list at length today. Suffice to say that the UK is possibly no longer on track to meet the fourth, but more definitely the fifth, carbon budget.
I have one question for the Minister on the Government’s Statement on Monday. Labour has a policy of net zero emissions above 1990 levels by 2050, subject to the advice of the climate change committee. On the back of the report last week the Government have asked the CCC to advise on when and how we could achieve a net zero target. Whether they have precluded the CCC assessing and issuing immediate advice, it must advise on actions to secure net zero emissions to start at the end of the fifth carbon budget. That carbon budget is set to conclude in 2032. So the CCC cannot issue guidance or recommendations to begin until two years after the IPCC estimates that the world will be in a dangerous condition, recording in excess of its maximum 1.5 degrees above 1990 levels. The CCC advice will need to work hard and fast to secure a net zero target by 2050. I ask the Minister to answer on this feature of Monday’s announcement. Do the Government have some strategic assessment by which they have decided to limit the CCC’s advice until after 2032? The Government’s self-congratulatory words must be met by coherent and comprehensible policies. Winning slowly on climate change is the same as losing.
Lord Teverson
I do not want to prolong this, but will part of that be on supply chains and how the Government see they should be incorporated into carbon reporting?
Lord Henley
I notice exactly what the noble Lord says. It would be very difficult for these regulations to include supply chains, but it obviously is a relevant matter. If we close down one business and shift the thing overseas we do not achieve anything for the world as a whole. Obviously it needs to be considered how it could be done, but that is another matter. I will write in greater detail to the noble Lord.
I believe that what we are offering offers simpler, better energy and carbon reporting and will encourage compliance by companies and LLPs to support the transition to the low-carbon economy that we wish. It will deliver long-term benefits across the UK and throughout the world. I commend these regulations to the Committee.
Draft National Policy Statement for Geological Disposal Infrastructure
Lord Teverson Excerpts(5 years, 8 months ago)
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Lord Teverson (LD)
I must apologise to the Grand Committee for not putting my name down in time and therefore speaking briefly in the gap. I was very interested in the comment of the noble Lord, Lord Liddle, about London. I was trying to tie up in my mind whether it was anything to do with the nine-month postponement of the Elizabeth line and the tunnelling equipment under London. Maybe that is not the connection.
I was going to start by congratulating the Government because, going back to 2011, the National Policy Statement for Nuclear Power Generation (EN-6), which I am sure the Minister is well aware of, stated:
“Geological disposal of higher activity waste from new nuclear power stations is currently programmed to be available from around 2130”,
so at the moment we have 112 years to solve this problem. I expect it will probably be solved at the same time as the smart meter programme, but we will see.
I question whether the technology and the science in this area are moving on to such an extent that we need to invest in this type of facility, or certainly on the scale that is talked about. A Canadian company is looking at using high-level nuclear waste in small modular reactors for further energy generation. There is also the science of transmutation, where a particle accelerator is used to bombard with neutrons some of this higher-activity waste and break it down into other elements that have much shorter radioactive lives. This science is bound to move on at some pace. Nuclear fusion can also use some of these by-products, which we hope will come on stream with the ITER project in 10, 20 or perhaps 30 years. That is really important.
Paragraph 3.2.15, on page 25 of the document, referring to the spent fuel and radioactive waste directive, states:
“To the extent that these obligations under the Spent Fuel and Radioactive Waste Directive cease to be legally binding on the UK following its departure from the EU”.
Surely that is a mistake. Surely the withdrawal Act means the legality of that will remain in place. It is important to have the assurance, despite the other international obligations, that those Euratom obligations under the directive will remain in place. That clarification would be extremely useful.
The other area, from a macro point of view, that I want to understand is the Government’s estimate of what the facility will cost and, perhaps more importantly, who will pay for it. What will ensure that, as with other decommissioning in the past, the public purse does not pay for what will be an extremely expensive facility?
Lastly, in our new position as “Global Britain”, will we be inviting other countries to export their nuclear waste to this facility, which will become far easier if Brexit happens next year?
Domestic Gas and Electricity (Tariff Cap) Bill
Lord Teverson ExcerptsWednesday 27th June 2018
(5 years, 10 months ago)
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Lord Hunt of Wirral (Con)
My Lords, I listened with great care to the noble Lord, Lord Grantchester, but I have to tell him that I do not think that this amendment makes sense. I very much agree with the noble Lord, Lord Redesdale.
The noble Lord, Lord Grantchester, stressed the importance of getting this right. It takes me back to our earlier debates on the Bill. Noble Lords will be aware that I have broad concern that the Government, in partnership with Ofgem, are facilitating a major regulatory intervention into the energy market without proportionate oversight. I have on several occasions during the proceedings of the Bill drawn attention to the absence of any mechanism whereby the CMA can adjudicate on whether, in the words of the noble Lord, Lord Grantchester, a cap is placed in the right place. I remind noble Lords that the CMA is there for a clear purpose. The Government set this out in the consumer markets Green Paper, saying:
“We have an independent expert competition body, the Competition and Markets Authority … to promote competition in the interests of consumers and business across the economy”.
We all agree with that, but where is the role of the CMA in adjudicating on this cap, however long it lasts? There are huge dangers in setting off in the wrong direction. Noble Lords may say that Ofgem does get it right. However, we have already seen examples whereby the CMA has had to roll back poor regulation around the retail market review; it had to deliver £105 million back to consumers through their scrutiny of network pricing. That is just one example of why we need the CMA.
Once again, my noble and learned friend Lord Mackay of Clashfern—I put my name to the amendment to which he spoke earlier—had it absolutely right about how important it is for technical experts to scrutinise this cap. I have reservations about having a cap in the first place, but what I am sure about is that it has to be right. I am much more concerned about the start of this process than about looking forward, as the noble Lord, Lord Grantchester, is doing, to what will happen further down the line. It will be a huge tragedy for consumers if the cap is put in the wrong place. The situation is fraught with extensive difficulties and dangers.
Although I can understand why the noble Lord has proposed the amendment and why the noble Baroness, Lady Kennedy, said what she did, it does not make sense, particularly if the whole technical process has not been managed properly, with adequate control mechanisms and oversight scrutiny. Therefore, I will vote against the amendment.
Lord Teverson (LD)
My Lords, it seems to me that the noble Lord, Lord Hunt of Wirral, should have voted against the Bill at Second Reading because he clearly does not believe in it. I have my own reservations about how this absolute price cap will work, but the relative price cap proposed in the amendment is a much better way of doing things. Ofgem will not have to set a cap under that regime; the companies themselves will set the cap by their entry rate. That is why this system works.
The only reason I disagree with the amendment, although I support it because it would make the Bill much better than it would be otherwise, is because we should have a relative cap immediately and not worry so much about the absolute cap. In fact, we could have both at the same time. At least the amendment would introduce a relative cap. As the noble Baroness, Lady Kennedy, has said, it would remove the “tease and squeeze” factor, which is one of the worst aspects of the energy market and price comparison sites. We would achieve our long-term aim of having rates that reflect market conditions, leading to competition on an even playing field that people can understand. It seems to me that the relative price cap is hugely superior to the absolute price cap that Ofgem is being asked to implement.
I support this amendment. I just wish that the relative price cap could be brought forward to now rather than after the present price cap ends, but this is a way for the future and the right approach. All Ofgem has to decide is what the maximum differential should be, and then the energy companies would decide their own cap. What could be better? I cannot understand any argument against a relative price cap. It just makes so much sense.
Lord Henley
My Lords, the noble Lord, Lord Grantchester, has put forward his amendment and it is quite obvious that he is in favour of it. I have to warn him that if he is intending to press this amendment to a vote, it would possibly create further delay and uncertainty and, whatever anyone’s views on the Bill, we on these Benches and noble Lords opposite feel that it is important to get it on the statute book as quickly as possible so that those whose duty is to do so can get on with finding the appropriate cap and get it in place before the cold weather arrives. It might be that in this wonderful spell the noble Lord has forgotten what cold weather is, and I will remind him of that come November. We want Ofgem and others to be able to get on with their work, and any delay which this amendment might create would be unfortunate.
I am grateful to hear from various elements on the Liberal Democrat Back Benches. I do not know what the official view of the Liberal Party is, but I am grateful to the noble Lord, Lord Redesdale, who gave very concise and encouraging reasons why this amendment ought to be opposed and emphasised that the situation is changing and we are facing a time when wholesale prices might rise. We also had an intervention from the noble Lord, Lord Teverson. I normally find the noble Lord a breath of clarity, but if I wrote his remarks down correctly, I think he said that he disagrees with the amendment but supports it and went on to say that he agrees with it—anyway, I was confused by his lines.