Energy Prices: Energy-intensive Industries

Lord Teverson Excerpts

Tuesday 6th May 2025 Lords Chamber

[Lord Hunt of Kings Heath (Lab)]

My Lords, the electricity market operates on the principle of marginal pricing, whereby the wholesale price of electricity is set by the last technology needed to meet overall demand. That is why gas tends to set the price for the market. We are of course looking at this as part of our REMA review that I have referred to. But the faster we decarbonise our energy and move towards clean power, the less gas will have the influence it does in the current system.

[Lord Teverson (LD)]

What lessons has the Minister’s department learned from looking at our competitors, particularly in Europe, which seems to manage this aspect of its energy markets rather better? What lessons have we learned from across the channel?

[Lord Hunt of Kings Heath (Lab)]

My Lords, we have to look at each country, and some subsidise business costs from the Exchequer. There is no easy way through here; one way or another, there are variations in what Governments do, but we have a very tough public financial situation bequeathed by the last Government, in the form of the black hole they left us, so our options are inevitably constrained. We are not complacent; that is why we have this review of our whole energy pricing structure, and we will look at these matters very carefully. I still maintain, and I think the noble Lord would agree, that the best way to energy security and stable prices is to go towards clean power as quickly as we can.

Climate Change: Progress

Lord Teverson Excerpts

Tuesday 6th May 2025 Lords Chamber

[Lord Hunt of Kings Heath (Lab)]

My Lords, the noble Earl is absolutely right. The Committee on Climate Change said:

“There is … unequivocal evidence that climate change is making extreme weather in UK, such as heatwaves, heavy rainfall, and wildfire-conducive conditions, more likely and more extreme”,


and the points he raised are absolutely right. We take this report very seriously. We have been in office 10 months, and we are reflecting on the specific points that the committee has made, area by area. By law, we have to respond by October, and I assure the noble Earl we will take this seriously and give a serious response. As I said earlier, this will lead into the work that we need for the NAP4, starting in 2028.

[Lord Teverson (LD)]

My Lords, the report points out that one area in which we have actually moved backwards is the resilience of our water system, not least the atrocious situation that we still have in terms of water leakage. Is this not an example of Ofwat and the water companies letting us all down yet again? What will the Government do about it?

[Lord Hunt of Kings Heath (Lab)]

The noble Lord is absolutely right to point out issues in relation to water, water leakages and the performance of water companies. He will know that the Government are engaged in considerable discussions about the future of the industry. I have noted that the Committee on Climate Change in its report says:

“Through the reforms to the public water sector, currently being considered by Defra and Ofwat, the next water regulatory settlement … should fund and encourage more ambitious options to get the sector back on track for its demand and leakage reduction targets”.


We will obviously look at that very carefully.

Energy Grid Resilience

Lord Teverson Excerpts

Tuesday 6th May 2025 Lords Chamber

[Lord Hunt of Kings Heath (Lab)]

My Lords, I do not have the exact figures, but I will certainly find them and send them to the noble Lord. Clearly, protecting the offshore infrastructure is a very important issue for the Government. We are working with subsea and offshore operators, including the Joint Maritime Security Centre, to enhance our domestic maritime awareness. I very much take the point and will find the information and send it to him.

[Lord Teverson (LD)]

My Lords, the Government have a key meeting coming up with the European Union and, as part of the trade and co-operation agreement, there is, next year, a revision of the energy relationship. With regard to the resilience of our national electricity and energy systems, what do the Government expect to get out of the meeting next month, particularly on interconnectors and a more efficient form of trading between us and our European partners?

[Lord Hunt of Kings Heath (Lab)]

My Lords, the noble Lord can hardly expect me to go into the details of what we expect out of such discussions. He will know that we are embarked on resetting the relationship between ourselves and the EU. There is to be a summit between the UK and the EU on 19 May and, of course, we have been in discussions with the EU about a number of energy issues. Clearly, what we want is a co-operative relationship that recognises that there is an interrelationship between ourselves and the mainland of Europe. I cannot go into any more detail than that.

Infrastructure Planning (Onshore Wind and Solar Generation) Order 2025

Lord Teverson Excerpts

Tuesday 6th May 2025 Grand Committee

[Lord Teverson (LD)]

My Lords, I pay tribute to the persistence of the noble Baroness, Lady Hayman, on this subject and to how she has carried this end of Parliament on a number of occasions.

I normally agree with the noble Baroness, Lady McIntosh, on an awful lot of things but I do not quite agree with her here. I spent most of my bank holiday break in an EV in Yorkshire, and I was delighted at how easy it was to recharge it. It was the first time for quite a while that my wife and I had been on a long journey in an EV. The difference in the charging network was absolutely amazing. I praise the previous Government’s EV charging policies as much as I praise the present Government for achieving that, but I recognise —from the Cornwall aspect—that there is a challenge here for really rural areas, and certainly when tourists come to our areas.

I wanted to contribute today to say that I very much welcome this SI and the move to go back properly to onshore wind. It is an important way in which our landowning and farming communities can diversify their income.

I turn to the limit on solar. On every solar farm I have visited in the past few years, I would ask the owners, “What is the energy capacity of this?” They would say, “It’s 49.5 megawatts”, because they do not want to trip over that barrier into the national planning scheme. So I welcome the fact that this SI will make that a lot easier.

However, the one question I would like to ask the Minister—this was raised by the Opposition Benches in the earlier debate on energy security—concerns warehouse roofs and commercial roofs. I am a great supporter of solar but, like me, many people ask, “Why are we not managing to have many more solar applications on existing commercial, industrial and car park roofs?” I recognise that there are often different owners—there is the landlord, and then there is the company that occupies under a lease—so the relationship between owners for commercial buildings is never easy. However, I say this to the Minister: it cannot be beyond the ability of the Government to find a mechanism to incentivise that to happen. It would get huge plaudits from all sides of political opinion if we managed to achieve that. It would also help with the understandable reservations that there sometimes are around the agricultural use of solar, by showing that the right things are happening in other areas too.

I would be interested to understand from the Minister when the planning regime—as we know, the Planning and Infrastructure Bill is in the other place at the moment —will become law, as it surely will. It may be amended in various ways as it passes through both Houses, but might it affect this matter in any way?

I very much welcome this SI and hope that we will see a rejuvenation of onshore wind. As I often say, from my own house, I can see—the last time I counted, at least—between 30 and 40 wind turbines. I live on a hill and, to me, they are part of a living countryside. There are right places to put them and there are wrong places to put them; we should leave it to local authorities to decide what those are.

[Earl Russell (LD)]

My Lords, I will speak in favour of this order. I thank the Minister for outlining its purpose.

The Liberal Democrats have always championed renewable energy. For too long, this country has suffered from the failures of the previous Conservative Government to invest in clean power and to insulate our homes, contributing directly to the energy crisis and leaving householders and businesses facing soaring bills. The vast majority of people in this country want more action on climate change. That is why we welcome this instrument as another important step in supporting the deployment of onshore wind and solar, which are both crucial to achieving the Government’s mission for clean power by 2030.

We are particularly supportive of the lifting of the effective moratorium on onshore wind. This was a deeply short-sighted and irresponsible policy, introduced via the planning changes in 2015 and 2016, which created a de facto ban in England. This ban limited deployment and caused the pipeline of projects to shrink by over 90%, with less than 40 megawatts of onshore wind generated during this decade. The reintroduction of onshore wind projects of over 100 megawatts into the nationally significant infrastructure project regime is crucial. The order reverses those damaging policies and places onshore wind on the same footing as other generation technologies such as solar, offshore wind and nuclear power stations. This provides an appropriate route for large-scale projects and offers greater certainty to industry.

Similarly, we support the decision to raise the NSIP threshold for solar projects from 50 to 100 megawatts. This change is needed in part due to technological advances in solar panels and aims to ensure that applications are processed efficiently through the appropriate planning regime. The previous threshold incentivised developers, as we have heard, to cap their capacity below 50 megawatts to avoid triggering the NSIP process. Raising the threshold should incentivise projects to develop on a more optimal and efficient scale and to ensure that mid-sized projects access a more proportionate planning route via local planning authorities. What assessments have been made of local planning authorities’ capacity and funding requirements to take on this extra work? They must be adequately resourced and supported to handle the influx of potentially larger-scale solar projects.

While we support the ambitions to streamline planning for major projects, concerns remain. The NSIP regime involves decisions made by the Secretary of State, and some respondents to the consultation expressed concern that this process might overly centralise decision-making and bypass local authorities and communities. This is particularly pertinent when considering large projects that can have a significant impact on local landscapes and communities. It is vital that the Government strike an appropriate balance between building nationally important infrastructure, protecting our precious landscapes and ensuring that local communities have a meaningful say. This Government must do more to work in partnership with local communities and ensure that they benefit from the infrastructure that they host—more “working with” and a bit less “doing to”.

How will the Government ensure that local voices are genuinely heard and their concerns addressed in the NSIP examination period, particularly for onshore wind? Can the Minister provide more detail on timelines for these frameworks and assure us that they will ensure that the balance between deploying renewable energy, protecting nature, ensuring food security and considering where best to locate projects is effectively struck?

Finally, the decision to set the solar threshold at 100 megawatts aims to avoid artificial capping and incentivise optimal site sizing. The impact assessment mentions monitoring and evaluation plans, looking at whether projects are clustering below the new thresholds and whether planning timelines for projects have increased. Can the Minister confirm how the planned post-implementation review and ongoing monitoring will assess whether the 100-megawatt thresholds are achieving the desired efficiency and optimal site sizing? All these projects will require timely grid connections, and I encourage the Government to support agrivoltaics.

Other noble Lords spoke about the need for more solar on rooftops and in car parks; for example, France generates 5% of its electricity from car parks alone. The Government may want to look at an amendment to the Planning and Infrastructure Bill on that. I very much welcome signs from them that new homes will have solar panels installed. There are issues around the way that some of the warehouses have been designed; they have not been built to take the weight of solar panels.

These legislative changes are a necessary step, but successful implementation requires careful consideration of local impacts and ensuring that our planning system is robust and balanced and takes communities with it.

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[Lord Offord of Garvel (Con)]

I thank the noble Lord for explaining the details of this statutory instrument. In essence, this order would enable onshore wind projects over 100 megawatts and solar projects over 50 megawatts to be considered under the nationally significant infrastructure projects regime. This effectively bypasses local planning authorities and grants direct approval to the Secretary of State, thereby overriding local consent for large-scale wind and solar projects. The Government have argued that this is necessary to accelerate the deployment of renewable energy in line with their decarbonisation goals and their commitment to becoming a clean energy superpower. However, several important concerns must be addressed, particularly around local involvement, fairness and the broader economic impact of such an approach.

First, let us discuss the issue of subsidy. Much like offshore wind, onshore wind projects are heavily reliant on subsidies, costs that are ultimately passed on to consumers. While the Government have touted these renewable projects as cost effective in the long term, it is crucial to ask what the clear cost-benefit case is. If we are to depend on these subsidies to push through such large-scale projects, we must ensure that they provide tangible benefits to consumers in terms of not just cleaner energy but affordability. As we know, the transition to green energy must be balanced with the economic realities that hard-pressed families and businesses face today.

Secondly, there is the matter of local consent. Communities should have a say in the decisions that affect their landscapes and way of life. Local buy-in is paramount, and people who live in the affected area should not have their voices ignored. There is real concern that this SI removes that critical step in the planning process by placing too much power in the hands of the Secretary of State and bypassing local consultation. Onshore wind projects can be a significant imposition on the local environment, and it is only right that communities are properly consulted and their concerns are considered before these major decisions are made.

The Government have argued that they need to expedite these projects to meet their decarbonisation targets—targets that are at the outset entirely arbitrary. Furthermore, if the Secretary of State is to take on final decision-making powers for these projects, what accountability mechanisms will be in place? Removing local authorities from the process must not also remove transparency. What assurances can the Minister provide that decisions will be subject to robust oversight?

Thirdly, there is the Government’s selective approach to energy. We have seen instances where good solar projects, which were designed to be sensitive to the local environment and not disrupt prime farmland, have been rejected by the Government or the National Wealth Fund. Are the Government picking and choosing winners in this energy transition? Are we truly seeking the most affordable, secure and environmentally responsible solutions or are we being driven by ideological preferences for particular types of energy, regardless of their practicality or cost effectiveness? This approach is flawed. By bypassing local consent and placing unchecked power in the hands of the Secretary of State, this order undermines democratic principles.

[Lord Teverson (LD)]

If I understand this, you are moving from 50 megawatts to 100 megawatts. So the 50 to 100 goes under the Town and Country Planning Act as local decisions. You are actually increasing it; previously the 50 to 100 was under NSIP. Therefore, what you are saying is completely wrong.

[Lord Offord of Garvel (Con)]

We are saying that we want to make sure that we have consent in the local community and robust oversight, and that the order does not undermine democratic principles. That is what we are trying to do, and we also do not want to disregard the voices of local communities. That is the essence of our third concern.

The Government’s selective and ideologically driven approach to energy is concerning because it raises serious questions about the cost-benefit of these projects, especially when subsidies are passed on to consumers without a clear return on investment. While the Government champion renewable energy, they do so at the expense of affordability, fairness and proper local consultation. That will not bring the public with them on the journey. Rather than rushing through this legislation to meet arbitrary targets, we need an energy strategy that prioritises practicality, respects local concerns and ensures that the transition to green energy is both affordable and inclusive for all.

Transport Decarbonisation Plan

Lord Teverson Excerpts

Thursday 24th April 2025 Lords Chamber

[Lord Hunt of Kings Heath (Lab)]

My Lords, no, I cannot give a specific answer, but the noble Lord makes a very important point. He will know that international aviation comes within the calculations in relation to carbon budget 6, so we need to take decisive action in this area. We have the SAF mandate, which he has referred to. For 2025, the overall trajectory is set at 2% of total fossil fuel jet supplied; this will increase annually to 10% in 2030 and 22% in 2040. We are building on what has gone before and taking it very seriously.

[Lord Teverson (LD)]

My Lords, can the Minister tell us what the Government are doing to invest further in the national cycle network? Cycling was heavily promoted during the Covid period but seems to have gone backwards since then. It is an important part of decarbonisation. How can we move it forward?

[Lord Hunt of Kings Heath (Lab)]

My Lords, it is such a pleasant surprise to hear some Member of your Lordships’ House speak positively about cycling, in place of the usual diatribe that we hear from noble Lords on that subject. I am a little biased in this area, as noble Lords will understand. I know that the Government are talking to UK cycling bodies, and we have ambitious plans on active travel. On 12 February, we announced details of almost £300 million of funding over 2024-25 and 2025-26 for local authorities to provide high-quality and easy, accessible active travel schemes in England, but I very much take and support the point that he raises.

Energy Prices

Lord Teverson Excerpts

Wednesday 26th March 2025 Lords Chamber

[Lord Hunt of Kings Heath (Lab)]

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

[Lord Teverson (LD)]

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

[Lord Hunt of Kings Heath (Lab)]

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

Great British Energy Bill

Lord Teverson Excerpts

Report stage
Tuesday 11th February 2025 Lords Chamber

[Lord Teverson (LD)]

My Lords, I shall talk briefly to Amendment 1, because I probably disagree with it rather more strongly than my Front-Bench colleague. That list of objectives is more a list of government objectives than company objectives. It seems absolutely impossible that the company could ever satisfy its objective to reduce energy costs in the UK in a sustainable way in its own right. That seems inappropriate, in that it would not be able to meet those objectives.

I agree absolutely with the noble Baroness, Lady Noakes, that it is extremely unfortunate that we do not understand or know what the statement of strategic priorities is. That is the fault and that is the problem. On Amendment 1, I do not believe the company, with a budget of £8 billion, would be able in any way to meet all those objectives. I say also to the noble Baroness, Lady Coffey, that I agree with her and I do not think my noble friend Lord Russell would expect that amendment to be part of the Bill. As he said, it is a probing amendment to understand what the Government’s position is on that amount of money into the future.

[Lord Ashcombe (Con)]

My Lords, I support my noble friend Lady Noakes in this first amendment, because the four objectives outlined are highly relevant. In particular, I shall focus on the second objective, energy security, where maintaining a balanced mix of electricity generation is crucial. As we know, this includes baseload nuclear, renewables, gas and supplementary power by interconnectors.

My primary concern, as will not surprise your Lordships, is gas. It is essential not only to continue production from our existing North Sea fields but to allow further exploration and development in order that we may discover more. At this point, I very much thank the Minister for the time we spent last week discussing this item.

I think it is relevant to point out that, according to research from the Library, the UK’s indigenous gas supply still met 43% of our national demand in 2023, covering electricity generation as well as commercial and domestic needs. However, to bridge the shortfall, we rely on imports from two main sources: Norway, which supplies 32% of our pipeline but faces a growing political and resource pressures due to the European energy crisis; and the United States, which provides 15% through LNG, with other countries contributing less than 5% each.

The environmental impact of importing gas is significant. As of 2022, emissions from Norwegian imports were 50% higher than those from UK production, while LNG imports from the United States generated more than 3.5 times the emissions. Additionally, electricity accounts for only 25% to 30% of the UK’s total energy demand, with the remainder still dependent on fossil fuels. Many of these same arguments can be used for the continued production of oil, even though it is not, I am glad to say, used in electricity generation.

Given these facts, it is imperative that we continue to utilise the UK’s own resources by lifting the current pause on oil and gas exploration and production. I realise that this is slightly counterintuitive but, by doing so, we can assist the growth agenda, protect our jobs in the North Sea, reduce unnecessary imports, prevent higher global emissions and avoid shifting the environmental burden on to other nations. This amendment will very much assist the objectives of Great British Energy.

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[Lord Krebs (CB)]

I thank the noble Lord for those questions. As I said, it is not my job to defend what Drax does. I am asked not to do that but to hold its feet to the fire on the sustainability questions relating to the sourcing. With regard to the life cycle analysis, Drax has an obligation to report the life cycle emissions of the power station, and the regulator scrutinises that reporting.

On the question of emissions from the stack at the UK power station, as I am sure the noble Lord is aware, under the UNFCCC accounting system, the accounting for those carbon losses are in the source country, not in the consumer country. Whether that is sensible is a matter for debate, but the fact is that the US has to declare the loss of carbon, and therefore in the UK’s accounting that counts as zero because the US has already accounted for it. Many people think that the consumer, not the producer, should have to account for it. It is not my part to adjudicate on that debate, but it is a perfectly valid debate to have.

[Lord Teverson (LD)]

My Lords, we seem to have gone into Committee mode.

I want to talk briefly to Amendment 35 from the noble Lord, Lord Berkeley, to which I have added my name. It is important never to forget that there are those issues in rural communities. I also am on oil, I regret to say. In Northern Ireland, 50% of households are dependent on oil and only 33% are connected to the grid. It is an important area, and I very much support the spirit of that amendment.

I also want to talk very briefly to Amendment 7, which is about adding “nuclear energy” to the list in Clause 3. I do not understand this amendment because Clause 3(2)(b) on the list refers to

“the reduction of greenhouse gas emissions from energy produced from fossil fuels”—

that must include nuclear—and Clause 3(2)(d) refers to

“measures for ensuring the security of the supply of energy”.

I would have thought that the nuclear sector would say it met both those objects. To add nuclear energy to that list would suggest that it does not meet the other two criteria, so that seems totally counterproductive.

[Lord Ravensdale (CB)]

My Lords, I declare my interest as a chief engineer working for AtkinsRéalis. I will make two very brief points.

My first point is on nuclear and the amendment the noble Lord, Lord Teverson, just spoke to, which was brought before the House by the noble Lord, Lord Offord, and spoken to by the noble Baroness, Lady Bloomfield. She made a great point; it is all about that statement of intent from the Government. The only other point I add is that, as regards Great British Energy, we need to think about not only the benefits in terms of the nuclear power stations but capturing that broader benefit for the economy of all the supply chains associated with it. The components, fuels, pumps, rods, control, drive mechanisms—that all requires investment in factories and infrastructure to capture the full economic benefit for the UK. I hope that perhaps Great British Energy could get involved in that, alongside Great British Nuclear.

My second point is around energy security. To follow on from something I raised in Committee, we have clear definitions for much of the terminology in Clause 3 but we do not have a clear definition there for energy security. I raise that because it can mean different things to different people. I think the Government are very focused on fuel security—gas and reducing our reliance on fossil gas. But of course there are many other aspects to energy security: there is cybersecurity, physical security, system reliability and price predictability. It is important to fully define that term so that stakeholders are not left guessing about what is really in the remit of Great British Energy. When summing up, can the Minister commit to having, certainly in the statement of strategic priorities, a firmer definition of what we mean by security of supply?

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[The Lord Bishop of Norwich]

My Lords, I support the Government’s Amendment 8. It is good that the Government have introduced this amendment so that Great British Energy can facilitate, encourage and participate in local community energy projects. I pay tribute to the noble Earl, Lord Russell, for the work he has done on this, as well as a number of different campaigning organisations and other Members of your Lordships’ House. This is a very important amendment, and it will be a great help to a whole range of different community organisations.

I also support the comments made by the noble Baroness, Lady McIntosh, and the noble Earl, Lord Russell, in pressing the Minister about the community energy fund. Some reassurance there would be very helpful.

Village halls, sports centres, voluntary youth organisations and churches could all benefit from being able to generate local energy for local people. I certainly see the potential for our churches, which have wonderful south-facing roofs. With the planning consent given to King’s College Chapel in Cambridge to have solar panels and other landmark projects such as York Minister and Salisbury Cathedral, there are new opportunities emerging.

I warn your Lordships that, if you are ever invited to go to a dedication of solar panels on a church roof, just beware. When I went to dedicate the solar panels on the roof of St Peter Mancroft church in the centre of Norwich back in September, a very observant member of the public rang 999, saying that a youth was stealing lead off the roof. When I came down, having dedicated the solar panels, I had to answer to two local police officers who had turned up—it was a great compliment to be called a youth, though.

This is important work for community groups and the charitable sector to be able to contribute to their local communities in new ways, particularly in areas of low economic activity, and to provide income for their sustainability. There is a challenge that I wanted the Minister to be aware of, however. The connection charge that is asked for to upgrade the electricity connection to many churches and community centres often prohibits them being able to do this sort of work. In the diocese I serve, St Margaret’s church in Lowestoft has just been quoted a sum of around £100,000 to make the connection. That means that the project is just unaffordable, so we need to be creative and think more about how community groups can be able to engage.

But I warmly support the Government bringing forward their Amendment 8.

[Lord Teverson (LD)]

My Lords, I too very much welcome the Government’s amendment. I would also like to congratulate the noble Baroness, Lady Boycott, on her work to get her amendment there, which I think added pressure. The noble Lord, Lord Whitty, has made a very good point. It may be something that will carry on in other Bills as we go through the Session.

I want to talk briefly about the amendment from the noble Lord, Lord Fuller. There is some truth in it, but I think it is an amendment in the wrong Bill. This whole area of land use will come in when the Government finally bring forward their land use legislation. I would point out that onshore wind has a very small footprint in terms of agricultural land. If we had that 20-mile radius, I am thinking of the first field south of London that has, perhaps, a very modest wind farm or a single turbine. It would probably require a consultation with some 5 million people for that one turbine. So, I think it is the wrong place and the wrong amendment for this Bill, and it discriminates against certain parts of renewable energy. There is something in it in relation to land use that does need to be pursued, but perhaps in a Bill to come later in this parliamentary Session.

[Lord Howell of Guildford (Con)]

My Lords, I have glad tidings for the noble Baroness, Lady Boycott, regarding her concerns. There are between 23 million and 27 million homes in this country still using gas for heating, cooking and warmth. Clearly, that has to be tackled. The answer is quite simple, but complicated as well. The answer is that modern electric boilers can replace all those gas boilers, without having to dig and provide new hydrogen pipes and all sorts of other such complications.

The snag is that electricity is so hopelessly expensive. That is the deterrent. Here we are, wishing to transform millions of homes away from gas, and the pipes then will all become redundant. We can put in modern electric boilers, which can do the job just as well, but the cost goes up rapidly. If only we could focus on how to reduce the cost of electricity by building rapidly—which we are not doing—the cheaper, smaller modular reactors and cheaper devices for producing electricity, and even using more hydrogen on the electricity side; that is another story that we have not really discussed. Even on that basis, we are facing the problem that electricity is very expensive. As long as we keep it that way, as long as we play that game in relation to the overall energy cost, we are shooting ourselves busily in both feet.

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Just briefly on Amendment 19, we are supportive of it, although I understand that the noble Baroness, Lady Bennett, has said she will not call a vote on it. But on the deforestation point, will the Minister kindly say whether government Amendment 38 would be relevant here?

[Lord Teverson (LD)]

My Lords, very briefly, I was pleased to add my name to this amendment and, like others, I commend the noble Lord, Lord Alton of Liverpool, for his long-time work on this crucial area. On supply chains, those companies involved in fitting solar or anything else in this area should really be concerned about their supply chain in terms of scope 3 emissions, where they have to track their supply chain backwards, so I would hope that was also a method to check means of manufacture as well. I am also very sympathetic to the amendment from the noble Baroness, Lady Bennett.

[Lord Offord of Garvel (Con)]

My Lords, Amendment 18 is a simple yet essential safeguard that ensures that public funds will not support companies tainted by modern slavery in their energy supply chains. The UK has long stood against forced labour and exploitation. If we are serious about a just and ethical transition to clean energy, we must ensure that Great British Energy, a publicly backed entity, operates to the highest moral and legal standards. There is a clear precedent for this approach. The UK’s Modern Slavery Act 2015 requires companies to take responsibility for their supply chains, yet we know that modern slavery remains a serious issue in the global energy sector, particularly in the sourcing of solar panels, batteries and raw materials such as lithium and cobalt.

This amendment does not create unnecessary bureaucracy or hinder investment; it simply ensures that taxpayers’ money does not fund exploitation. If there is credible evidence of modern slavery in the supply chain, public funding must not flow to that company. It is a basic ethical standard. It is also a matter of economic resilience, because reliance on unethical supply chains creates risk for businesses, investors and the public. Therefore, supporting this amendment strengthens the integrity of Great British Energy. aligns our economic ambition with our moral obligations and sends a clear message that Britain’s clean energy future must be built on ethical foundations. I urge all noble Lords to support this amendment.

Great British Energy Bill

Lord Teverson Excerpts

Report stage
Tuesday 11th February 2025 Lords Chamber

[Lord Teverson (LD)]

My Lords, it seems to me that this is not the sort of thing that ought to be in this Bill. I do not remember Conservative Party immigration legislation ever mentioning numbers, despite everything that was said by it. That brings complete disrepute to legislation and Governments at the time; I do not think that we should be attracted into that situation with this Bill.

[Lord Hamilton of Epsom (Con)]

My Lords, it is clearly the Government who have come up with this number: that they are going to reduce energy bills by £300 per household. I say to the noble Lord, Lord Teverson, that it is nothing to do with the Opposition. This issue is very important. This is a commitment that has been made by the Government. We should have it in legislation to make sure that it is delivered on; if we do not, it will indicate that the Government are not serious about this matter. It matters very much to people in this country that we reduce their energy bills. Many of us think that it is not going to happen. On the other hand, the Government have constantly assured us that it is going to happen and that, somehow, energy bills are going to come down. I think that many people in this country are looking forward to that, because we want to see a dividend for all this greenery. We have heard already from the noble Lord on the Liberal Democrat Benches that this is the effect of green energy: it brings down your electricity bills. Well, as far as most people in this country are concerned, so far, we have just seen our energy bills go up and not down. I think there is a lot of cynicism around that green energy does not deliver lower prices.

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[Lord Hamilton of Epsom (Con)]

The noble Lord probably knows more about the consistency of the UK Parliament than I do, but this seems to me to be infinitely sensible. I did not ask the Labour Government to commit themselves to lowering energy bills by £300, but they have done so. Therefore, they should be happy to see it in the Bill. I do not what the problem is, really.

[Lord Teverson (LD)]

On a point of personal clarification, I mentioned it because there was an undertaking, made publicly, that net immigration would come down to 10,000.

[Lord Cryer (Lab)]

Order! We are not discussing an immigration Bill. We are discussing an energy Bill, so could we stick to order and stick to the scope of the amendment?

ECO4 and Insulation Schemes

Lord Teverson Excerpts

Wednesday 29th January 2025 Lords Chamber

[Baroness Bloomfield of Hinton Waldrist (Con)]

My Lords, the energy company obligation scheme and the Great British Insultation Scheme were established to improve the energy efficiency of homes—one of the best ways to cut consumer energy bills and keep people warm. This is particularly true for those experiencing fuel challenges. We took significant steps to improve the energy performance rating of homes. By the time we left office, 70% of social housing had an energy performance rating of A to C, up from 24% in 2010. In fact, almost half of the measures installed under the GBIS have been to low-income households.

The installation of solid wall insulation makes up a small proportion of the work undertaken by the ECO schemes and the Great British Insulation Scheme. It is worrying, however, that we have seen examples of substandard solid wall insulation under the schemes as identified by TrustMark.

It is with that in mind that we welcome and support the action announced by the Government last week, in which Ofgem will oversee the repairs and remediation. We are also grateful to hear of a review into the quality of solid wall insulation in other schemes and that additional on-site audits will be conducted to inform future action. It goes without saying that installers should fund the necessary repair work to remedy impacted households, which may experience issues with damp and mould.

However, we look to the Minister to provide clarity. Will the Government publish a full list of the 39 companies suspended from the scheme for carrying out poor-quality work? Can the Minister explain how the suspended companies will be required to remedy their work, and how will the Government ensure that the remedied work meets the necessary standards? Finally, will the Minister clarify exactly what action will be taken to ensure that every household which had solid wall insulation implemented under the schemes is thoroughly and properly informed and provided with the necessary information to rectify the work?

I am sure that all noble Lords in your Lordships’ House can all agree that households should have warm homes that are both cheap and efficient to run.

[Lord Teverson (LD)]

My Lords, I gather from looking at the press release more than the original Statement that 65,000 applications will be checked through Ofgem procedures. Today I met someone who is affected by this, and I want to emphasise just the worry that the 65,000 or whatever will have over the future of their houses, their saleability, their onward renting or the damages to landlords. This is a real concern.

How many of the 39 companies that the noble Baroness, Lady Bloomfield, mentioned, were part of the TrustMark scheme? That scheme, which I believe all those contractors should have been a part of, is described as “Government Endorsed Quality”. What really worries me regarding future schemes—I know there is a big ambition on the part of this Government to carry on retrofitting—is that there will be a loss of confidence.

The one question I would really like an answer from the Minister on is about what I think is wishful thinking: namely, the Government’s view that all these issues will be replaced or rectified by the original installers. I do not wish to accuse the department of being naive, but let us be clear: the majority building business model is that when you get into trouble, you go into liquidation. I and, I think, other people really want to understand who will then bear the cost of those rectifications where that happens, as I suspect it will quite regularly.

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

My Lords, I am grateful to the noble Baroness and the noble Lord. The noble Baroness has taken time out from Nuclear Week, which we have both been spending a very enjoyable three days on. She is absolutely right to stress the importance of the scheme. Clearly, there is consensus across the House on dealing with this big problem, as both the noble Lord and the noble Baroness suggested.

I make it clear that we have the evidence of an audit of about 1,100 of those 65,000, and there will now be a massive piece of work to follow up with further audits, which will be overseen by Ofgem. Some of those will be desk based and others will be in-person site visits. There will be a proportionality test to decide how the audits will be undertaken.

The sampling that has been done was geared towards the installers that were thought to be most risky, but the fact is that a significant proportion of that sample showed that there were major issues, which is why we needed to take swift action to conduct further checks and initiate a further programme of remediation. We think it is 38 installers, not 39—a correction has been made by TrustMark. To answer the noble Lord, of course they were all under the auspices of TrustMark, and we are working very hard through certification bodies and TrustMark to require them to remediate the work.

As the noble Lord pointed out, it is a requirement for those schemes to be registered with TrustMark. In the case of those already audited, this is happening. I believe most installers want to do the right thing and do a good job. My understanding is that where issues are being flagged, they are repairing the work, but clearly we are having mechanisms put in place to make sure that the installers deliver on their obligations, and the guarantee system we have acts as a backstop. Clearly, the current system is not working. There is a combination of TrustMark, the companies involved, the certification process and the UK accreditation system—there are a lot of bodies involved and there is not sufficient co-ordination or tight oversight of this. We need to focus on remediation, but then we must move on to establish a better system in future.

On whether remediation will be carried out effectively, we are going to put additional spot checks in across the system to make sure that where insulation faults have been remediated, that work has been done to the required standard. Suppliers have committed to additional checks and monitoring future installations of solid-wall insulation so that householders can be confident that it is done to a better standard. I very much agree that any householder who has learned about this issue will be concerned. They will be concerned about the impact on their home, but also about whether the remediation work will be done effectively.

In terms of information to those households, Ofgem has begun writing to all households that have had solid-wall installation installed under energy company obligation 4 or the Great British Insulation Scheme. As I said, we will be reviewing the quality of all 65,000 solid-wall insulations, and we hope that the vast majority will not have any issues or that any issues found will be minor, but if we see major concerns, we will want action to take place immediately. It is clearly important that we carry out a quality check across all solid-wall insulation under these schemes.

I want to pick up the issue of saleability raised by the noble Lord, Lord Teverson. Clearly, this will be a concern. Householders seeking to sell or perhaps remortgage their home will be worried about lenders’ approach. Our expectation is that the firms that have done this shoddy work must pay for the remediation. Clearly, that must be the principle under which we operate. There is a moral hazard in my saying anything different from the Dispatch Box on that issue.

Looking further ahead, it is clear that the whole system of consumer protection is fragmented and in need of reform. In terms of our overall goal towards net zero and the massive challenge of heating efficiency in our homes, it is essential that in all these programmes the public have confidence in the quality of the installation. That is why what has been discovered has been very disappointing, but we have to take it, look at the whole system and improve it.

Greenhouse Gas Emissions Trading Scheme (Amendment) Order 2025

Lord Teverson Excerpts

Monday 27th January 2025 Grand Committee

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

My Lords, this order was laid before Parliament on 3 December 2024. Noble Lords will know that the UK Emissions Trading Scheme, UK ETS, was established under the Climate Change Act 2008 by the Greenhouse Gas Emissions Trading Scheme Order 2020 as a UK-wide greenhouse gas emissions trading scheme, contributing to the UK’s emissions-reduction targets and net-zero goal. The scheme is run by the UK ETS authority, a joint body comprising the UK Government and the devolved Governments. Our aim is to be predictable and responsible guardians of the scheme and its markets.

Under the UK ETS, operators are required to monitor, report on and surrender allowances in respect of their greenhouse gas emissions. Most allowances are purchased at regularly held auctions. However, operators in certain sectors at risk of carbon leakage are given a number of allowances for free in order to manage both their exposure to the carbon price and the risk that businesses’ decarbonisation efforts could be undermined by higher-carbon imports.

Under the UK ETS, an operator is the person who has control over an installation. Installations are stationary units at which regulated activities take place. Sub-installations represent operations carried out at an installation in respect of which free allocation operators are required to report activity levels for the purposes of the ETS.

I now turn to what this statutory instrument does. We have brought forward this SI to enable important changes and improvements to the scheme to be made. Under previous UK ETS policy, where a sub-installation ceased operation, free allowances were no longer distributed in respect of that sub-installation in the year after the year in which the relevant sub-installation ceased operation.

However, the operator was entitled to retain the full amount of free allowances made available in respect of the sub-installation without recalculation to account for the permanent cessation of the sub-installation within the scheme year. Noble Lords will readily see that this had the potential to result in the overallocation of free allowances beyond the volume required for carbon leakage mitigation, as well as the distribution of free allowances that were no longer associated with an activity that resulted in emissions.

This instrument ensures that the volume of free allocation to which an operator is entitled in the final year in which operations are carried out at one or more sub-installations is calculated by reference to the level of activity at the relevant sub-installation in that year. To facilitate this change, this statutory instrument will require that operators prepare an activity level report in respect of the final year in which operations are carried out at a sub-installation. That report will be used to recalculate the volume of free allocation to which the operator is entitled in the final year in which operations are carried out at a sub-installation, and any overallocation will be recoverable in accordance with existing scheme rules.

This instrument includes an exception to the final-year rule in circumstances in which the permanent cessation of operations at a sub-installation is part of a series of changes that has resulted in a material reduction in the specified emissions per unit of production of those pre-cessation products that continue to be produced at the installation. This exception to the final-year rule will incentivise decarbonisation, as operators that can demonstrate that the relevant requirements are met will continue to be entitled to the free allocation calculated in accordance with existing UK ETS rules, which is calculated in advance on the basis of historic activity levels.

This instrument also amends the circumstances in which an installation or sub-installation has ceased operation for the purposes of the UK ETS legislation. The previous definition of the circumstances in which an installation or sub-installation had ceased operations was at the point in time when it became technically impossible to resume operation. This definition was difficult to apply consistently in practice. The updated definitions provide that an installation has ceased operation when all regulated activities, in the case of an installation, or the relevant operation, in the case of a sub-installation, have permanently ceased to be carried out at the installation. This amendment increases certainty for both the scheme regulators and operators.

This instrument also introduces a requirement for operators to notify the relevant scheme regulator of circumstances in which all regulated activities cease to be carried out at an installation by the end of the scheme year in which the cessation occurs or within one month of the date of cessation—whichever is later—and to confirm whether the operator intends for one or more regulated activities to resume at the installation. Operators are similarly required to provide details of a cessation of operations in respect of a sub-installation in annual activity level reports prepared in relation to the 2025 scheme year and thereafter. Requiring these reports will facilitate the application of the new final-year rule.

The statutory instrument introduces a new power for regulators to issue a notice to an operator which determines that an installation or sub-installation has ceased operation for the purposes of UK ETS legislation. The new power is available in circumstances where the regulator is not satisfied that the operator intends regulated activities to resume at the installation or intends for regulated operations to resume at the sub-installation level. The change will increase certainty for operators and facilitate equivalent treatment for all installations undergoing a cessation.

The changes follow comprehensive engagement and consultation with stakeholders. Between 18 December 2023 and 11 March 2024, the UK and devolved Governments ran a consultation, seeking views on proposals to alter the free-allocation methodology for the UK ETS statutory sectors to better target those most at risk of carbon leakage and ensure that free allocations are fairly distributed. The UK Emissions Trading Scheme: Free Allocation Review covered the provisions included in this statutory instrument on permanent cessations. The responses to this consultation were in broad support of the proposed technical changes to the treatment of permanent cessations. The authority response to this consultation will be delivered in two parts; an early response to proposals on permanent cessations was published last November.

In conclusion, I have spoken at considerable length on what seems to me a perfectly sensible order that builds on the work of the last Government. It seems to me absolutely sensible and proportionate. I beg to move.

[Lord Teverson (LD)]

I do not think I have ever known something so simple be made to sound so complicated, if I am honest. Basically, this will stop people having a free ride after they have closed down a particular part of their business; I think that describes it. Therefore, it makes sense and is right to do.

Perhaps I may come back to a slightly broader canvas, because this is a really important area for the UK ETS. Free allocations come primarily from grandfather rights and work through. I presume that all free permits will cease as the UK introduces the carbon border adjustment mechanism, which I think is coming in 2027, as planned by the previous Government. Free allocations are all about carbon leakage and, when we have a carbon border mechanism, clearly, carbon leakage is solved by that instrument rather than by free issue. So will they be phased out in that time?

The Minister will also be aware that, under the trade and co-operation agreement negotiated by the previous Government, there was a strong inference that the UK ETS and the EU ETS should recombine in a single scheme. In fact, one of the issues at the moment is that the UK ETS carbon price is significantly less than the European one. This is due to what I would probably see as an overallocation of free permits.

So my question is: are this Government still considering bringing those two schemes together? This is particularly important at present because, in one year’s time, the EU will introduce its carbon border adjustment mechanism for heavy industry, but, in particular, energy exports will be taken into account by the first phase. If we do not have an equivalent scheme or are not part of a joint scheme, effectively we will be subject to tariffs in terms of those effective carbon charges.

A particular problem with the carbon border adjustment mechanism is the GB-Northern Ireland issue, because there will effectively be a tariff for carbon costs and energy between Great Britain and Northern Ireland. I visited Energy UK one or two weeks ago, and it was particularly concerned about these aspects of the UK ETS into the near future and when the EU moves forward with its well-planned carbon border adjustment mechanism. It is really important to make decisions here and get on with them, because there will be very difficult issues if we do not resolve this over the next 12 months.

--- Later in debate ---

[Lord Hunt of Kings Heath (Lab)]

My Lords, I am grateful to the noble Lords who spoke in this short debate. I will first respond to the noble Lord, Lord Teverson, on international co-operation on carbon pricing. I certainly accept that, as we transition to net zero, it is important that we work across international borders to drive climate ambition. Under the terms of the trade and co-operation agreement, the UK Government and the EU agreed to consider linking our respective carbon pricing schemes and to co-operate on carbon pricing. The noble Lord will know that we are working to reset our relationship with the EU and strengthen ties and improve trade and investment relationships with it, including promoting climate, energy and economic security, while recognising that there will be no return to the single market or customs union.

The Prime Minister visited Brussels on 12 December 2024, and the joint statement with President von der Leyen illustrated that the UK and the EU would take forward this agenda of strengthening co-operation at pace over the coming months. As set out in the TCA, carbon pricing remains an area where we will continue to co-operate, and it is right that we will continue to develop the UK ETS to support our climate goals and support sectors in the transition to net zero.

The carbon price within the EU emissions trading scheme is determined by the market, and it is designed this way because competitive markets are likely to deliver the most efficient transition to net zero across the economy. This will give emitters the flexibility as to how they abate their emissions, thereby allowing businesses to cut carbon where it is cheaper for them to do so.

I assure the noble Lord, Lord Offord, that, as I said earlier, we are here simply building on the work of his Government in just making a sensible adjustment to make sure that there is no free ride in removing the excess allocation of free allocations, as the noble Lord, Lord Teverson, suggested. When the production has been ended as part of a decarbonisation programme, allowing them those free allocations recognises that. We do not think that these rules will lead to disproportionate regulation or that there will be potential manipulation of the market.

On oil and gas, I will write to the noble Lord with further details on his specific question.

[Lord Teverson (LD)]

I am afraid I do have to come back to the Minister. Is it the Government’s intention to integrate, if they can, the two emissions trading systems? Is that a government goal or not? Also, do the Government still intend to do what the previous Government suggested—to introduce a carbon border mechanism for the UK at the beginning of 2027? This is pretty fundamental stuff that industry and the whole economy need to understand. If the Government do neither of those, how will they solve the problem of the EU carbon border mechanism from the beginning of next year?