I beg to move, That the Bill be now read a Second time.
For much of the past 50 years since the oil shock and energy crisis in the 1970s, Britain has enjoyed abundant and reliable electricity. Over these years, some may have traded in their teasmades for barista coffee machines, swapped their electric fondue sets for air fryers or replaced cassette players with Spotify—I do not know why I am looking at the right hon. Member for Doncaster North (Edward Miliband)—but energy has remained largely plentiful for the best part of half a century. In the past 15 months, that secure foundation has been fundamentally shaken, with Vladimir Putin’s brutal invasion of Ukraine and his subsequent attempts to weaponise energy forcing up bills for millions of families.
This Government have stepped in and paid half the typical energy bill this winter, but frankly, those are just stopgap measures. Putin’s war marks a fundamental turning point for Britain and the world’s energy security. After years of growing reliance on fossil fuel imports around the world, this is a moment when the globe has woken up and needs to apply changes to its energy supplies for the future.
If my right hon. Friend will give me a moment, I will make a little progress first, and he can be sure that I will give way shortly.
We will replace those oil and gas imports with home-grown renewables and, critically, nuclear power to deliver resilient and reliable energy, powering Britain from Britain. We will reduce wholesale electricity prices to among the cheapest in Europe by 2035, protecting the British consumer from volatile international energy markets.
I agree with the Secretary of State that we need more energy independence and more domestic energy, so why does the Bill propose a 140% increase in imported energy through interconnectors, which will make us more dependent and very vulnerable?
My right hon. Friend makes an excellent comment, as ever, on interconnectors, but I would point out that with the growing number of interconnectors, particularly electricity interconnectors, last winter, for example, we were able to export 10 TW to France through interconnectors, providing us with income. The answer is that they work in both directions, and in some cases, they provide the reliability of, for example, France’s vast nuclear fleet of 56 reactors. When whose reactors were down last winter—because even nuclear power sometimes has to come offline—we have been able to export our power to France, and it has been a net export. Our mission is to secure the clean and inexpensive energy that Britain needs to prosper.
On clean energy, I am very enthusiastic to see the hydroelectric generator that we used to have on the Avon at Ringwood generating electricity once again. Will my right hon. Friend use the powers afforded to him in clause 273 to take on the huge barriers to entry that prevent community energy generators from selling to customers?
My right hon. Friend is absolutely right about the importance of hydroelectricity in the overall energy mix. It is something that we are working on, he will be pleased to know, and I am happy to offer him a meeting with the Bill Minister, the Under-Secretary of State for Energy Security and Net Zero, my hon. Friend the Member for West Aberdeenshire and Kincardine (Andrew Bowie), to discuss his constituency case in more detail.
I will give way in a few moments; let me just make a few lines of progress.
All of this is why, earlier this year, I was appointed to lead the new Department for Energy Security and Net Zero. It is why, just 50 days later, we published our ambitious “Powering Up Britain” blueprint for the future of energy security in this country. We are bringing all that work together in the Bill before the House.
We all celebrated the Government’s decision to move the Teesside carbon capture, usage and storage and power project to the next stage. Today in a written ministerial statement, a Government Minister, the hon. Member for Derby North (Amanda Solloway), said that she was delaying by another four months a decision on whether those plans will get planning permission. Can the Secretary of State understand why this delay will set alarm bells ringing on Teesside and how it will impact the project, and can he explain why the delay is necessary?
As the hon. Gentleman will know, Ministers must be quite careful when commenting on the quasi-judicial planning decisions that his question goes into, but he should not mistake—nor should anyone in this House—this Government’s determination to get on with things like CCUS and hydrogen. That is why we have announced a £20 billion programme for CCUS, the largest of any country in Europe. As I say, though, and as he well knows, specific planning decisions are matters that the planning inspector advises Ministers on.
The Secretary of State talks about powering up Britain, but perhaps he could take some lessons from how the Welsh Labour Government and Welsh Labour councils are powering up Wales. The other week, I visited a very important development in Rumney in my constituency, where there is a new mixed housing development. Every single one of those properties has a ground source heat pump, photovoltaics on the roof and an electric vehicle charger on the drive. They are well insulated, they are using sustainable materials, and they are bringing down costs for consumers now, but also contributing to net zero. Is that not the example we should follow across the UK?
I am pleased to report that on what is, I think, a largely uncontroversial Bill, we are working very closely with the devolved Administrations and trying to learn lessons from each other, in order to support the whole country in this energy security move. This Bill is the longest and most significant piece of energy legislation to ever come before the House; it is a critical part of making Britain an energy-secure nation. On that point, I thank colleagues across the House for their positive engagement with me and with the Bill Minister, my hon. Friend the Member for West Aberdeenshire and Kincardine, in the lead-up to this debate. I know there is much in the Bill that already has cross-party support.
I commend the Secretary of State for the Bill, and I welcome its key objectives, as I think everyone in this House does. However, a number of amendments were made in the other place, particularly one relating to a net zero duty for Ofgem. Those amendments are now in the Bill. Could the Secretary of State clarify whether the Government will support all of them, particularly the one on Ofgem?
I thank my right hon. Friend for his intervention. We will be looking very closely at the proposed amendments—the Bill Minister himself will be addressing those in detail, which is the right way to do it—and of course, the regulator is already very largely focused in that direction. As I often point out, of everybody in this place I have a particular interest in making sure we achieve what we have set out to do, because this House has kindly legislated to send the Secretary of State for Energy to prison if they do not meet the net zero commitments, potentially through contempt of court. We take these things seriously, but my right hon. Friend will wish to hear more on that issue from my hon. Friend the Energy Minister.
It is fair to say that the amendment about putting a statutory net zero duty on Ofgem does not need much studying. On the issue of clean, inexpensive energy, Hinkley Point C is now going to cost £33 billion. We know that Sizewell C will cost in the order of £35 billion if that follows, and the existing clean-up for nuclear radioactive waste is in the order of £230 billion, so where on earth does nuclear fit into the definition of clean and inexpensive?
We are talking about energy security, and about a tyrant costing all our constituents a fortune, and SNP Members do not want to fix it. They do not want to have reliable nuclear power—they stand against it. They stand against oil and gas. I do not know where they expect all this energy to come from in a reliable way in the future. However, where there are differences, I want to be constructive with the hon. Gentleman and, of course, the devolved Administration. By and large, that is the way in which this Bill has progressed, so on the other issues—the amendments—we will of course try to find ways to work with the House in considering all of them.
I will make a little progress, and then I will give way again. I just want to say a big thank you to a lot of Members for their work on energy and on considering this Bill, such as the net zero review led by my right hon. Friend the Member for Kingswood (Chris Skidmore); the pre-legislative scrutiny that the Business, Energy and Industrial Strategy Committee carried out on parts of the Bill; the 1922 BEIS Back-Bench committee’s ongoing consideration of the issues we face; and many others in this House.
Will the Secretary of State say a little about hydrogen? As he will know, there is real concern about putting a hydrogen levy on household bills at a time when so many people are already struggling to pay those bills. Will he look again at where to put the funding for hydrogen? Secondly, will he accept that using hydrogen for households—for home heating—is very inefficient? It is expensive, and it brings safety risks. We do need hydrogen for hard-to-decarbonise sectors, but will the Secretary of State rule out using it in homes?
It is certainly the case that hydrogen comes with complications when it comes to home heating, which is why we have a couple of different trials ongoing to understand some of the impacts. We will know more once those trials have been carried out. However, the hon. Lady asked specifically about a levy, so I should point out that the Bill will not itself introduce a levy. She is right that we need to see the results of trials before we understand how that should operate, so we will wait a little while.
I will make a little progress before I give way again.
Turning to the contents of the Bill, I think it is helpful to consider them in three themes. The first is about liberating private investment in clean technologies, helping reduce our exposure to the very volatile gas prices in the long term. For example, the Bill will help us to exploit our absolutely extraordinary potential for carbon capture, usage and storage, as well as low-carbon hydrogen, potentially for industrial use. This country has a vast storage reservoir beneath the North sea, much of it once filled with oil and gas. There could be enough capacity to store up to 78 billion tonnes of carbon. I appreciate that people have difficulty imagining what that would look like—I know I did. The answer is that it is the equivalent weight of 15 billion elephants, if people are better able to imagine that, or to put it another way, an atmospheric pressure roughly the space of 200 million St Paul’s cathedrals. In short, our geology provides us with a lot of space under the North sea, and if we are able to fill the UK’s theoretical potential carbon dioxide storage capacity with CO2, the avoided costs at today’s emission trading prices could be in the region of £5 trillion. We have the potential for a geological gold mine under the sea, and the Bill helps us to access it.
CCUS is very important to me and to my constituency. EnQuest, the operator at the Sullom Voe terminal, sees the next generation of the use of that terminal involving CCUS, but does that not reinforce the point made by the right hon. Member for Reading West (Sir Alok Sharma), in relation to Ofgem’s remit? Does it not sit very nicely with the recommendations that the Secretary of State has received from Tim Pick, his offshore wind champion, who has also made the point that Ofgem’s mandate must be reshaped to bring it into the appropriate framework for net zero challenges? That remit has not been touched since 2010.
The reality is that the Government have committed to those targets, as has the whole House, because the law has already been passed. We have the carbon budgets, one to six; I think we exceeded one, two, three and four, but we are on track for five, and a few weeks ago, I set out in “Powering Up Britain” how we plan to meet carbon budget six as well. The conversation about whether the regulator has an individual duty is an interesting one, but the reality is that in truth, we are all headed towards that cleaner energy system.
My right hon. Friend will recognise that, to keep costs down, to get electricity to the places where it is needed and to avoid us having to pay offshore wind producers to switch off when there is no capacity, we need something like 600 km of electricity wires between now and 2031. Over the past eight years, we have built only about 32 km. Can I press him on the proposal in the 1922 Business, Energy and Industrial Strategy committee report that there should be a new planning allowance to have those cables going down the side of transport corridors such as motorways and train lines?
I met my right hon. Friend to discuss some of the ideas in the report and I am grateful for all of them, including the idea of cables running along existing transport routes. I am pleased to let her know that we are taking forward many of the suggestions from that particular committee, as well as those from elsewhere in the House. There is much in the Bill to assist with organising and planning, but there is much more to do as well. I am grateful for her assistance in all this.
By introducing business models, we want to get the advantage of that long-term potential geological storage, with revenues and a potential CCUS industry that could support something like 50,000 jobs, with another 12,000 in hydrogen by 2030. We will also build the market for low-carbon heat pumps to 600,000 installations a year by 2028, and accelerate the transition to ultra-efficient electric heat pumps to reduce our reliance on the volatile global gas market and improve our own energy security in return.
We will also bring forward reforms to test new methods of decarbonising heating, which is where we come back to the hydrogen trials. We will have a first-of-its-kind hydrogen village trial that will convert up to 2,000 properties to hydrogen for heating, instead of natural gas, and repurpose the existing gas network infrastructure for 100% hydrogen. Through that, we can find out about the efficiency, or otherwise, of building a hydrogen heating network. I put on record that I understand there are challenges, which is why we want to test this first.
There is a lot in the Bill that is commendable for improving energy security and decarbonising energy production, but where it is perhaps lacking some ambition is in reducing energy emissions, particularly for homes. We know that poorly insulated homes in particular are expensive, at a time of a rising cost of living, to heat, but we also know that we can do a lot more in this area. Will my right hon. Friend accept amendments as the Bill progresses to improve on the loss of energy and heat and on home energy efficiency?
My hon. Friend is absolutely right that it is always easier not to expend the energy in the first place, but to save it. That is why we have been pleased to get from something like only 14% of homes having a decent energy rating in 2010 to 47% now, and we will get to more than 50% this year. We have invested more than £12 billion in this work in the last spending period and going forward to 2025-28. We are serious about securing the energy efficiency of homes and he is right to highlight that as a key concern.
I hope the Secretary of State will be able to stay on to have the benefit of my constituents’ experience of the hydrogen village trial so far. Can he confirm, as per previous correspondence with Ministers, that the Government will still expect to see strong public support before agreeing to proceed with any trials?
I have been following the discussions in Whitby in the hon. Gentleman’s constituency and I want to be clear: we have no desire to trial hydrogen with communities that do not want to see disruption. On the other hand, I know that other communities are keen on it. For the reasons already discussed in this debate, there are clearly pros and cons in switching to hydrogen for household heating and it will not be appropriate everywhere. That is why we want to learn from those trials, but it is also important to recognise that hydrogen for industrial use is a different matter. We are feeling our way into all this. Together with what we learn from the H100 neighbourhood trial in Fife, the village trial will provide critical evidence to inform decisions on hydrogen in heat decarbonisation, which will not be taken until 2026.
I appreciate the Secretary of State giving way on this matter. Just on the point of hydrogen trials and effectively doing it with consent, one of the clauses in the Bill allows companies to go in and disconnect people from the gas grid to facilitate trials. Surely that is the polar opposite of doing it by consent.
That is a misreading of what the Bill does. I absolutely agree with the hon. Gentleman: I refer to the answer I just gave. Given my record of campaigning against what happened with prepayment meters, he will know that that would never be the intention. The element in the Bill is to enable those trials to take place where they would not be able to otherwise, but as I just indicated to the hon. Member for Ellesmere Port and Neston (Justin Madders), that certainly would not be forced.
The second pillar in the Bill will help to strengthen our energy security and minimise cost to consumers. It will pave the way for an independent system operator and planner, or ISOP, whose focus will be on building a better, more reliable energy system. The ISOP will maintain our energy security, operate at the cutting edge of net zero with long-term ambitious plans and bring electricity and gas systems together into a single institution, enhancing our ability to plan for our energy system in the future and to reduce costs.
May I bring up the question of clean energy for aviation? In terms of sustainable aviation fuels, can the Secretary of State give us some assurance that we will have a home-grown UK sustainable aviation fuel industry, so that it is something we do here and do not import from overseas?
My hon. Friend may know that I helped to establish the Jet Zero Council, which has been working for nearly four years to answer exactly this problem, bringing together academia, industry and government. The upshot of that is that this morning I was honoured to be with His Majesty the King, in his first public engagement since the coronation, at the Whittle Laboratory, where he was turning the first sod to build a new £50 million building that will work primarily on sustainable aviation, including fuels. As Transport Secretary, I also set a 10% requirement for sustainable aviation fuel by 2030, ensuring that we lead the world in the production of this new industry, too.
I will come back to colleagues, but I will make a bit of progress first. We will also enable a competition in onshore electricity networks, which could see consumers save £1 billion by 2050, and we will protect almost half a million heat network customers, ensuring that smart energy systems are both safe and secure.
The third pillar of the Bill is to deliver a safe, secure and resilient UK energy system. We will not allow malicious actors to affect that. Sometimes that could be dangerous protesters or those using energy as a weapon, as we have seen with the recent disruption, and the Bill helps to address that point.
The Secretary of State is being incredibly generous with his time. On this point about vital fuel resilience, is he aware there is significant concern among refiners and other companies in this space about the breadth of the provisions in the Bill and the powers of direction that the Secretary of State could have over these companies? They have concerns around the commercial and competitive position that puts them in. Will he give a commitment that the Government will continue to look at the phrasing of those provisions in the Bill in Committee?
Again, I will make a little progress before I take the next set of interventions.
Offshore wind provides a secure and resilient source of energy, and we are already global leaders in offshore wind, with the world’s largest wind farm in the North sea. We also have the world’s second largest wind farm and the third largest. The fourth largest is being constructed now at Dogger Bank, and that will become the largest in the world. In other words, we have become global experts in delivering offshore wind, and that is why this country is now selling that technology and expertise elsewhere in the world. It is also why we have a leadership role in offshore floating platforms; we have both the first and the largest such platform in the world. We are also introducing reforms to assist with security at civil nuclear sites, and we are ensuring that offshore oil and gas regulatory regimes protect habitats as new technologies are developed.
I want to bring my right hon. Friend back to his comments about energy security. The Bill outlines lots of ways in which that will be achieved, but he will be aware that the vast majority of materials needed for renewable energy are processed in China. Are we not therefore in danger of creating the same situation with renewables as we had with fossil fuels and Russia, and what assessment has he made of energy security in those particular areas?
I very much share my right hon. Friend’s concerns. I was recently at the G7 in Japan, where we signed an agreement with other nuclear powers from the G7 on exactly this issue of energy security. Of course, we have Urenco—a third owned by the British Government—which is in many ways very advanced on the production, fabrication and other elements of uranium. It is part of the mix and we must ensure we are able to do that, so I thank him for his question.
I am grateful to the Secretary of State for giving way. This goes back—I was standing up a few minutes ago—to the question from the hon. Member for Central Suffolk and North Ipswich (Dr Poulter) and it is on energy efficiency. I have 14,000 households in Oldham that are fuel poor. They have seen their gas bills double, their electricity is up nearly two thirds, and some of them have said to me, “Why are we going through this, and when can we have our houses made more efficient so we’re not having to spend so much on this?” Why could that not be funded by a windfall tax on energy producers, given that, for example, BP said last week that it is making £60 million a day in profits? [Interruption.]
Thank you, Madam Deputy Speaker. This does go back a little way, so it is worth reminding the House that we have gone from 14% of homes being A to C—energy secure, essentially—to 47%. Energy company obligation plans were put in place and plans 1, 2, 3 and 4—[Interruption.] The shadow Secretary of State is chuntering along, saying they are not going very well, but I have just explained that nearly half of homes have now been greened up. Primarily, it is social homes that have been taken to that level, so I am very interested and concerned to understand why her own local authority has yet to follow some of those plans, and I look forward to its getting on with the job with all the money being made available to do that. She is absolutely right—I actually agree with her—about the energy producers. That is why we have taxed them at a punitive 75%, and we have handed those billions of pounds to her constituents and businesses, paying roughly half of the typical energy bill in this country.
In addition to the measures already contained in the Bill, we will go even further. Following on from the “Powering up Britain” plan, we will table four sets of amendments to achieve these goals. First, we will amend the Bill to provide Great British Nuclear, a new flagship body, with the power to enable nuclear projects and support the UK’s nuclear industry with a specific role to support Government in rebuilding our civil nuclear industry. I am delighted that my hon. Friend the Member for West Aberdeenshire and Kincardine is our country’s first Minister for nuclear in relation to that plan.
I compliment the Secretary of State on bringing forward this huge, much-needed and excellent Bill. I want to take him back to his point about the Secretary of State’s and other Ministers’ powers of intervention. The scale of investment that these plans will rightly require in whole swathes of the new technologies to be introduced will be vast; a vast amount of cash will be required to be invested not only in the UK, but internationally. Reducing the cost of that investment is essential, and reducing the uncertainty and risk of political intervention will make a dramatic difference to both the efficiency of that investment and the productivity of our economy. Will he please commit to making sure that we improve the regulatory certainty—the legal certainty—in which all those investments will be made by reducing the opportunity for politicians to meddle, be they on our side of the House or those, I hope at some very distant future date, on the other side of the House?
Again, I will just make a bit of progress. I am concerned that others want to speak in the debate.
Unlike wind power, nuclear energy is not dependent on the weather, so by ramping up capacity, we will help a lot. It is worth the House knowing that every single one of the operational reactors in this country was actually commissioned by a Conservative Government. I am delighted that Labour Members are now joining us on this, and I know that they also agree—although not all Opposition Members—that small modular reactors are an important part of our nuclear future. They will boost energy security, unlock thousands of jobs and play a crucial role in stabilising electricity prices in the long term.
The Secretary of State mentioned jobs, and research by Robert Gordon University in Aberdeen has shown that 90% of the highly skilled professionals in oil and gas have skills that could be transferred to adjacent energies. However, there is currently a shortage of people going through higher education. What are the Government going to do to address the skills gap, but also to ensure that we do not lose employment in existing energy sectors in the way that we have in other industries, such as shipbuilding and steel, over the decades?
The hon. Lady is absolutely right about skills, and the skills gap is very important. I recently had a summit with our French counterparts that was specific to skills in the nuclear sector, where there are very similar issues. We are working with our colleagues in the Department for Work and Pensions, the Ministry of Defence and the Department for Education on exactly the subject of skills that she raises. My hon. Friend the Member for West Aberdeenshire and Kincardine is working actively with them on this Bill, and I know he would be delighted to discuss that with the hon. Lady.
I will just make a small bit of progress, and then I will give way again.
Secondly, we will amend the Bill to deliver on the support package for energy-intensive industries, protecting them from high electricity prices. This will bring prices for UK businesses in line with global competitors, preserving jobs and investment in the strategic foundation industries—steel and chemicals, for example. Bringing down prices will also remove a barrier to those traditional carbon-intensive industries decarbonising, in some cases by switching to electrification.
I will give way in just a moment. Let me make a little bit more progress.
Thirdly, we will table amendments on hydrogen transport and storage, alongside the hydrogen production measures already in the Bill. Finally, we will propose further amendments related to carbon dioxide storage licensing to help us maximise the extraordinary potential—I talked about it before—under the UK continental shelf, which is so important.
My right hon. Friend knows my views on sustainable aviation fuel, and I will come back to that should I catch your eye, Madam Deputy Speaker. On the issue of small modular reactors, there is no way that a country such as France would allow a non-French firm to be the backbone of its nuclear industry. We do not want to take such an isolationist view, but it would be a travesty if the work in this field did not bring jobs, expertise and industrial success to this country. Can my right hon. Friend give me an assurance that he will make sure we do not make the mistakes of the last Labour Government, who sold off our nuclear industry, and will he encourage the development of a domestic nuclear industry?
My right hon. Friend will know that the world’s very first civil nuclear reactor was Calder Hall in Cumbria, and we led the world, but, as he said, we switched off or stopped investing in nuclear power. That was a great shame, because we are now having to work to get back to 25%, which is our objective. He is right in another way as well, because for several decades one company has been responsible for running what are essentially small modular reactors in the nuclear Trident fleet under the water, and successfully refuelling once every 25 years. We have a certain lead in this area, and it is very important that we get on with small modular reactors. That is why we are having a very brief competition, with the results coming by October.
The Secretary of State rightly addresses the need to decarbonise and support industries that have been high users of carbon. The Bill as currently amended includes a ban on opening new coalmines, thanks to the Liberal Democrats in the other place. What possible reason could there be for the Government not to support that?
Conservative Members believe in getting on and doing things, which is how we have ended up going from nearly 40% of our electricity coming from coal just 10 or 11 years ago to the position this year, when I expect that to drop to about zero. The Liberal Democrats are still fighting the battles of yesterday. They are still concerned about building more power stations for coal, but no one is doing that. The issue is already in the distant past.
I want to finish my speech so that other Members can speak, which is only fair. As you will know, Madam Deputy Speaker, the entire UK will benefit from measures in the Bill, bringing jobs, economic growth and clean energy to the whole country. From the outset the Government worked closely with the devolved Administrations and with Members across the House, and I hope they will continue to do so.
I thank the Secretary of State. The Bill is sending mixed messages across the world, issuing 100 oil and gas licences while not ensuring that renewable energy projects are connected to the grid. On the devolved Administrations, when will the Secretary of State speak to and learn from Wales and the Welsh Government about the project I am proud to have introduced, Arbed, and about upgrading our insulation in homes, creating new skills and tackling the urgent climate crisis?
As I mentioned before, we are working constructively across the whole UK on energy security. I am not sure I follow the hon. Lady’s first point. She seemed to be saying that we should import oil and gas from elsewhere, using about twice as much carbon, rather than exploiting our own. I want to work as closely as possible on those issues with Members across the House.
Let me bring the Secretary of State back to the independent system operator and planner. We in this House should always be wary of creating new regulators, and we must be clear about their exact purpose. Will he explain in a bit more detail how the ISOP will operate with Ofgem, and the relationship between the two? Clause 123 states that the ISOP will
“have regard to the strategic priorities set out”
by the Department. We must be clearer about whether Members of the House and the Government will be able to direct the ISOP to do what we want it to do and deliver on the ambitious plans in the Bill, which we hope will be successful.
My hon. Friend is right to raise that concern, but he will be pleased to hear that that is exactly the purpose of this structure. The ISOP should be able to take instruction and guidance about its policy, to ensure that we do something that is not really possible at the moment, which is to combine oil and gas input into our network in a much more strategic way. That is required more now than ever, given the extraordinary mix of energy that goes into our network.
I will make a little more progress, as I am coming to a conclusion.
I started by describing some of the changes of the past 50 years. Who knows what futuristic gadgets will be in the home of the right hon. Member for Doncaster North in the decades to come? Perhaps AI coffee machines that produce the perfect cuppa before he even realises he needs a brew, or intelligent music hubs that decide what he will listen to before he decides himself. There may even be personalised music, invented on the fly. I do not know what those developments will be, but I know that the energy we use to run those services will be far cleaner and much more secure, and that will be thanks in part to measures in the Bill. Just as we once bounced back from the crisis of the ’70s, the Bill will ensure that we never again allow British consumers to be held hostage to the likes of a tyrant such as Putin.
I will conclude, if the hon. Lady does not mind.
I hope Members across the House will recognise the opportunity that the Bill represents, with the massively increased investment in jobs and economic growth, to support our long-term ambition to lower energy bills and ensure that in future, we power Britain from Britain. I commend the Bill to the House.
Order. The Secretary of State was generous with his time in taking interventions, not least from Members who wish to catch my eye in the debate. I warn that there will be a time limit, which is likely to be five minutes or less, depending on the other opening speeches. If any Member feels that they may not have notified the Speaker’s Office that they wish to speak, they should let me know, as that will also affect the timings.
I call the shadow Secretary of State.
Thank you Madam Deputy Speaker. I will begin by welcoming the arrival of the Bill to the House. I thank the Secretary of State and his Ministers for their willingness to engage in discussions on the Bill, which, as I will explain, we support. Given his speech, after the next election I look forward to him providing some AI consultancy for my house, once he has some more time on his hands.
For us, the central truth that frames this Bill is, as the Secretary of State said in his speech, the energy bills crisis, with bills still double what they were 18 months ago. This crisis demonstrates the urgency of getting off expensive fossil fuels and moving to clean power. Clean power is the route to cheaper bills, energy security, long-term sustainable jobs and tackling the climate emergency. The peril for Britain is the deep uncertainty about whether the Government are doing what is required to make the transition happen with the urgency needed. Let us look at the last couple of months alone. In March the Climate Change Committee stated that the Government are “asleep at the wheel” on their 2035 decarbonisation target. In the same month the National Infrastructure Commission said that
“movement has stuttered further just as the need for acceleration has heightened.”
The cross-party Business, Energy and Industrial Strategy Committee said in April:
“At the current pace of change, the UK is set to fail to hit its target of decarbonising the power sector”.
The common theme is one we have heard many times about this Government: they act as if this was not the emergency it is. The Bill needs to put that right, so we apply three tests to it: does it represent an all-out sprint for zero-carbon power, the linchpin of a net-zero country; does it provide a proper plan to spread the benefits of cheap, clean power to working families across Britain; and does it provide an industrial policy that means we can win the global race for the jobs of the future? In that context, we will give our support to the Bill, because we welcome many of the measures in it and believe they are long overdue. We have long called for the independent system operator and planner—I will come on to that—as well as the CO2 licensing regime, because, as the Secretary of State said, carbon capture and storage is important for the future. We welcome measures to support hydrogen, nuclear and action on the grid, and a number of other aspects of what we might call “green plumbing”, which is largely what the Bill is about. We also welcome the improvements made in the other place, for which I thank their lordships. I will come on to those in the course of my speech.
But despite the things we welcome, set against the tests I listed we believe that the Bill still lacks the urgency and long-term strategy required. If the pace and scale at which we need to transform our energy system is akin to climbing a mountain, the Bill is a route map to basecamp, but it will not take us to the summit. It is too half-hearted on the zero carbon sprint that we need, it does not take sufficient measures to make working people the priority in the energy transition, and with the pace being set by President Biden’s Inflation Reduction Act—I am sure Members hear this in their constituencies—it does not put Britain enough at the forefront of the race for low-carbon jobs. That is why we will be seeking further improvements to the Bill during its passage.
Let me start with the sprint for zero-carbon power. Last summer, renewables were nine times cheaper than oil and gas. Today, even after the recent fall in gas prices, they remain multiple times lower. However, onshore wind—among the cheapest, cleanest, and most quickly deployed sources of energy available to us—remains effectively banned in England. That is thanks to the decision in 2015 to put it in a unique category of difficulty compared with other local infrastructure, so that one objection can defeat a project. Indeed, it is now far easier to build an incinerator or a landfill site than an onshore wind farm.
This ban has meant that in the eight years since 2015—the Minister for Energy Security and Net Zero was candid about this earlier this year—just three wind farms have been built in the whole of England. Since 2015, we have had five Prime Ministers and just three onshore wind farms. I make that to be three fifths of the wind farm per Prime Minister—that is my great maths. That is quite the record.
Members across the House will have different views on wind farms, but the cost of the ban—[Interruption.] The Minister for Energy Security and Net Zero is chuntering from a sedentary position, but these are his figures, which he said at Energy questions. According to Carbon Brief, the cost of the ban is more than £5 billion. That is £180 per household because of the expensive gas that we are importing when we could be using onshore wind. In future, failing to achieve the doubling of onshore wind deprives us of another 20 GW of power. Any self-respecting energy Bill would lift that ban. Even the right hon. Member for North East Somerset (Mr Rees-Mogg), who is sadly no longer in his place, called for the ban to be lifted when he was briefly Energy Secretary—that was not a glorious time, but he got it right when he argued for bringing that position into line with other infrastructure. In December, in a promise made by the Government, the Communities Secretary said that, by the end of April, the ban would be lifted. We have gone beyond the end of April.
I hate to say this, but the dinosaur tendency in the Conservative party seems to have prevailed once again, and I am afraid that, on this, the Energy Secretary is actually the dinosaur-in-chief. Despite all of the evidence, and despite 78% of the public supporting onshore wind, according to his own Department’s polling, he said in the midst of the energy crisis that he was not in favour of onshore wind because it is “an eyesore”. He is the self-styled TikTok moderniser, but he is more of a pterodactyl nimby stuck in the past on this. [Interruption.] I will take Wallace and Gromit over a pterodactyl nimby.
As well as that drive for all forms of zero-carbon power, we need this. I therefore appeal to right hon. and hon. Members across the House, because this should not be a party political issue. Labour will seek to amend the Bill to bring about the simple position of the right hon. Member for North East Somerset that onshore wind, which is supported 20:1 by the public, should have the same planning rules as other local infrastructure.
The right hon. Gentleman was engaging in palaeontological analysis. If I can bring him to the slightly more recent past, he named the number of wind farms given planning permission since 2015, but could he name the number of Labour Energy Ministers between 1997 and 2010 and how many nuclear projects they commissioned?
Actually, I was talking about onshore wind farms that had not just planning permission and consent—[Interruption.] I will tell the hon. Lady simply. In 2006, Tony Blair changed the policy to be in favour of nuclear. When I left office in 2010, we identified 10 new nuclear sites, and there have been 13 years since then. How many nuclear plants had been built and made operational? Precisely zero. The Secretary of State had to talk about the previous Conservative Government, who left office 25 years ago—that is indeed stuck in the past.
No, I will not.
Let us talk about how we can get an energy system that is fit for purpose. Nowhere is that more true than when it comes to the grid, where the delays that have been allowed to build up are a disgrace. For all of the Conservative party’s boasts, this is what Keith Anderson of Scottish Power says about the delays to the grid:
“The wind farms that are coming online today were approved when Gordon Brown was in power—that’s a long time ago and we need to be much faster to move beyond this crisis”.
The new independent system operator is a step forward, but there are questions remaining about whether it goes far enough in its powers, remit and independence.
What the energy system sorely lacks at the moment—this goes to the question that the hon. Member for Hitchin and Harpenden (Bim Afolami) asked the Secretary of State—is a guiding mind. It is about not simply balancing the system day to day and hoping that the market provides—this is the purpose of the regulator—but planning for the future of the system as we transition. This is the point: at the moment, that planning role is a job for everyone—the Energy Department, Ofgem and the network companies—but the ultimate responsibility of nobody. That needs to change with the ISOP so that we auction offshore wind in the right places, we plan and build the grid in the right places and on the right timescale, and we have the right amount of power in the system in the years ahead. For us, that is the purpose of ISOP, and during the Bill’s passage we will test out whether its proposals for ISOP adequately meet that vision.
If the regime is to work—I concur with the interventions on the Secretary of State—we need a price regulator in Ofgem that supports and never stands in the way of change. I hope that the Secretary of State’s failure to say that he would oppose such an amendment is a good sign, but obviously Ofgem should have a formal net zero duty. I think that was recommended by the net zero tsar, the right hon. Member for Kingswood (Chris Skidmore), and it was rightly inserted by the House of Lords. However—this is boring but very important—we also need to sort out the issues of planning.
The National Infrastructure Commission recently produced an important report about the delays to planning. It said that, in part, that was the fault of Government, who have not updated their energy national policy statements for a decade. It also said that there should be a statutory duty on the Government to review them every five years, and we agree. Here is the other thing that is important: all relevant regulators, including the Planning Inspectorate, should have a net zero duty, because otherwise we will find the system being slowed down and gummed up. Of course, the views of local people are important and must be taken into account, but we must also make progress.
The Bill could achieve those things to speed up the planning process. However, even if we get all the forms of low-carbon power that we need—I think that we should have all of them—and we sort out the grid and planning, there is an obvious question that the Secretary of State did not address. Even if we get all of those renewables and indeed nuclear, the price of electricity is currently tied to the prevailing price of gas. We do need reform of that system. Labour first called for that in January last year, and I say to the Secretary of State that we will be talking about that in the Bill Committee. We believe that there should be a commitment in the Bill to a timetable for that delinking; otherwise, we will get more drift and delay and we will not reap the benefits of the move to zero-carbon power.
On the one hand, we need the drive to zero-carbon power, but we also need a decisive shift away from the high-carbon expensive path—again, that was raised earlier—and unfortunately the Bill does not attempt to make that shift; it is business as usual on fossil fuels.
On coal, the Secretary of State rather dismissed the intervention of the hon. Member for Bath (Wera Hobhouse). Yes, there has been a good record on coal in the last decade. [Interruption.] He says “Thank you”, and he wants to chunter away, but opening a new coalmine drives a coach and horses through that record. [Interruption.] He says that it does not. We cannot go around the world, as did the former President of COP, the right hon. Member for Reading West (Sir Alok Sharma), telling everybody that they have to power past coal, and then say, “But not us,” because that totally undermines our moral authority. Here is the thing: the steel industry in Britain says it will not use the coking coal, it will not provide the long-term jobs that Cumbria needs and it sends utterly the wrong message on climate. That is why their lordships inserted a provision to ban new coalmines. Labour supports that amendment.
Labour will also table an amendment to ban dangerous, expensive, unpopular fracking. I know that Conservative Members want to say the Truss period was a bad dream—Bobby Ewing in the shower and all that. [Interruption.] I am showing my age, that is true. I am a big “Dallas” fan, actually. Labour will table an amendment on fracking.
We also believe—this is an important point—that the Bill should remove the 2015 duty to extract every last drop, the so-called maximum economic recovery, from the North sea. I can do no better than to quote the net zero tsar, the right hon. Member for Kingswood, praised by the Secretary of State, who did a very serious piece of work—Government Front Benchers are nodding. What he said could not be clearer:
“developing new oil and gas fields is incompatible with limiting warming to 1.5°… There is no such thing as a new net zero oilfield.”
Those are not my words, or those of the Liberal Democrats or any other party in this place. [Interruption.] The Secretary of State starts chuntering, but he should talk to his own net zero tsar, who did a brilliant report that he himself praised.
Let me just explain, for the benefit of right hon. and hon. Members, why that is the right position. That approach will have no impact on bringing down bills. How do we know that? Because every previous Energy Minister has said that. Gas and oil are traded on an inter—[Interruption.] Just pipe down for a minute. The price is set on the international market and 80% of our oil is exported. It drives a coach and horses through any possibility of keeping global warming to 1.5°, according to hundreds of leading scientists and the right hon. Member for Kingswood.
Here is the other thing, which is a new part of this. We now know how much the Government are having to shell out to the oil and gas industry to persuade it to make this investment, because it is in the detail of the Budget Red Book: over £11 billion. The current Prime Minister, the previous Chancellor, introduced a windfall tax, but then he introduced an absolutely massive super-deduction—not available now to any other industry, including renewables—of over £11 billion. Massive, massive cost to the taxpayer, no impact on bills, the oil from Rosebank exported, and driving a coach and horses through our climate commitments—no wonder the net zero tsar concluded that it is the wrong policy for Britain. It is. Government Members can carry on pretending that business as usual is consistent with the science and consistent with what we go around the world saying, but it is not and the net zero tsar has rightly said so. Labour will seek to improve the Bill so that it delivers on the zero-carbon sprint we need.
Next, I want to turn to the second part of my remarks —I will try to speed up, Mr Deputy Speaker—on what the Bill can do to ensure the fairness of the transition. We know that the fairness of the transition is essential if we are to take the public with us, and we know there are huge opportunities. I want to come back to the issue of energy efficiency, because Government Members go on and on about their great record on energy efficiency. Here are the facts. In 2010, there were 1.6 million energy efficiency upgrades. In 2022, there were 160,000 equivalent measures. In other words, there were 10 times more when the last Labour Government left office than there are now.
We know why that has happened. The Chair of the Environmental Audit Committee, the right hon. Member for Ludlow (Philip Dunne), has done many important and learned reports on this question. Massive cuts were imposed on energy efficiency schemes when David Cameron said, “cut the green crap” and the investment has not recovered. That is why the UK Business Council for Sustainable Development says it will take almost 200 years at the current rate to get all homes up to EPC C—200 years. That is not just bad for the constituents of my hon. Friend the Member for Oldham East and Saddleworth (Debbie Abrahams), who intervened earlier, and the constituents of many others in this House; it also means we import more gas and use more gas supplies. The estimates are that we could cut gas demand by 20% if we got all homes up to EPC C.
I thank the right hon. Gentleman for giving way in an unexpectedly amusing speech from the Opposition Front Bench. On gas and fossil fuels, he made a serious point which should be responded to. The International Energy Authority said that even by 2045 fossil fuels will still make up between 28% and 30% of our total energy mix. Fossil fuels will be with us for decades to come, although of course everybody in this House is working to bring their use down as fast as possible. In the transition period, particularly in relation to gas, does he accept that we will have to, as best we can in existing areas that are within our control, improve our energy security and resilience by exploiting our own gas rather than importing more, as he has just referred to?
I have great respect for the hon. Gentleman. Let me try to explain the position. Nobody is talking about turning off the taps in the North sea. The question is this: do we defy the International Energy Agency? He cites the IEA. The IEA says, in absolutely clear terms, that if we invest in new fields in the North sea and have new exploration, we will bust way through 1.5°. The point is that every country can say, “Well, we’re going to do it, but you shouldn’t.” But if we do that, we will end up at a 3° world. That is what all the scientists tell us.
One great thing in this House, compared with other countries, is that we have established a cross-party consensus on following the science. But the science could not be clearer. That is why 700 scientists wrote to the newspapers a few weeks ago to say, “This is our view.” That is why the IEA says it. That is why the UN Secretary-General says it. That is why the net zero tsar, when he looked at the evidence, said it. It is not me making it up; it is what the clear evidence is. The hon. Gentleman is right that we will continue to use our existing fields, but to grant new licences and new exploration, defying what all the science tells us, would be a betrayal of future generations. I do not pretend it is easy—I do not—but it is absolutely crystal clear. [Interruption.] They say, “More imports.” No, the answer is to get off fossil fuels and drive towards low carbon.
On fairness, energy efficiency—the Lords have done us a favour and I hope that we keep their amendments in the Bill—is incredibly important. Part of making the transition fair is striking the right balance between levies on bills and public expenditure. When I was Energy Secretary we introduced things through levies, so I am not saying that the Labour Government did not do it, but there is a balance. The Treasury is never keen on investing public money—not just under this Government, although it may be particularly true under this Government—but we have a problem and I have to be honest with the House about it.
If any cost in green investment must be borne through levies, we will pile more and more on to bill payers. Take hydrogen. There is a strong economic case for investing in hydrogen through public investment. That is what the US is doing. Much of the benefit of new investment in hydrogen will go to industry—not consumers directly—which will be at the front of the queue for its use. Putting the cost of hydrogen on consumer bills, as the legislation originally proposed, is not the right way forward. I know that discussions in Government are tricky, to put it mildly, but I say to the Secretary of State that the right thing to do is surely to make public investment, through public expenditure, in hydrogen, not just bung the money on to bill payers. In the course of discussing the Bill, I hope we know how much will be put on to bill payers. We cannot just add levy after levy because the Treasury says, “We don’t want to invest.”
I shall conclude on Britain’s place in the race for the low-carbon jobs of the future. The Inflation Reduction Act has had a massive impact in the US, where nearly 10 times more jobs have been created in low carbon and renewables in seven months than we have seen in the UK over the last seven years. The Bill should be our answer to IRA but, in truth, the Government face a number of different ways: first, they say, as the Secretary of State did, that it is “dangerous”; then they say that we are already doing it; then they say that we will have a response in the autumn. With every day that goes by, we hear another business say, “We are losing the global race.” It may interest the House to know that there are 23 clean steel demonstration projects across Europe. There are none in the UK. Forty gigafactories are due to open across Europe by 2030, but just one is certain in the UK. Where is the national wealth fund in the Bill to invest in our ports, clean steel and gigafactories? It is in the interests of all parties in the House to put pressure on the Government to make the investments to put us in the lead in the race for green jobs. Today, the chief executive of Johnson Matthey said that we have lost the race for gigafactories and are in danger of losing the race for green hydrogen.
Every country that leads the world in renewables has a publicly owned energy generation company. Why doesn’t Britain? This is not a matter of ideology. EDF, Ørsted, Vattenfall and Statkraft all invest in our infrastructure. These are state-owned companies. It is an extraordinary fact that 46% of our offshore wind assets are owned not by foreign companies but by state-owned foreign companies. That means that the proceeds go back to those countries and they build the supply chains. I welcome GB Nuclear, but GB Energy is a much wider version of that. GB Energy is about understanding that reality and saying, “Why not Britain?” This is a moment of peril for Britain in the race for low-carbon jobs. This Bill is not the answer.
It is Labour’s view that the Bill is necessary but not sufficient given the scale of challenge and opportunity that we face. We welcome many of its measures, which are long overdue reforms that will make the delivery of net zero easier. On the basis of the common ground that does exist, we will work constructively with the Government. The Bill will be useful to whoever is in government after the next election, but for all its length, the truth is that it is further proof that Britain will require a new Government to do what is truly needed to lower bills, give us energy security, create jobs and show the climate leadership that we need.
About 28 people want to speak in the debate, which is quite a lot. I will start with a time limit of six minutes, but after the Scottish National party spokesman has spoken I will be able to work out whether we can stay at that or it will have to go down.
It is a pleasure to follow the right hon. Member for Southfork—excuse me, the right hon. Member for Doncaster North (Edward Miliband). I was delighted to learn that he will support the Bill, and he is quite right to do so. I was pleased to learn that he reads the report of the Environmental Audit Committee. I commend them to other Members who have not had that opportunity.
I also support the Bill. As the Secretary of State said, it is a monumental piece of legislation—the largest piece of energy legislation in my political lifetime and that of most people in this House, I suspect. Energy is at the heart of our economy. It drives the competitiveness of this country versus our peers. As we have seen from the impact of Putin’s invasion of Ukraine, when things go wrong, those countries that cannot account for their own energy security and resilience are left at the mercy of the autocrats. That is not a position that this country should be in, given our geographic position and access to resources.
The Bill is a vital first step in the journey to the vision that the Secretary of State set out in “Powering Up Britain”, but I may disappoint him slightly by saying that it lacks what is really needed: a vision to get us to 2050. We need a 27-year plan to establish how we will drive electricity generation and get it to the places that it needs to go, in order to achieve net zero Britain. I hope that during the passage of the Bill, if additional comments and suggestions are made to the Front Bench, they will take them in a positive spirit in that direction.
The scale of the challenge is enormous. We need five times the current electricity generating capacity to decarbonise our economy, ignoring any increase in GDP during this period. The UK is trying to do that in a globally competitive environment, as we just heard from the right hon. Member for Doncaster North. This is a time in which international investors, whether state-owned electricity companies or financial investors, are looking for the markets to invest in energy generation that will provide them with the quickest route to completion of the deal, whatever kind of a deal that is. One big challenge that the Bill seeks to resolve is removing some of the barriers to implementation and reducing some of the risk. That is where it has a great deal to offer. The key is to provide confidence to the international community and the domestic supply chain that this country knows where it is going, will facilitate the way to get there and will do it quickly.
I have three quick points to make in my six minutes. The UK has allowed our existing nuclear fleet to age without previous Administrations taking the necessary decisions. The Labour party was completely incapable of taking decisions about nuclear and, frankly, in coalition the Lib Dems were no better, and applied the brakes. I welcome the Government’s having made the difficult decisions to start the process of renewing our nuclear fleet.
I welcome what the Secretary of State has said today on the competition launched to identify two projects by November from a design perspective. I urge him and his nuclear Minister, my hon. Friend the Member for West Aberdeenshire and Kincardine (Andrew Bowie)—who is very welcome in his place—to ensure that the UK takes advantage of this opportunity to recover our leading position in nuclear technologies, by giving some clarity on what happens after the design competition has made its determinations. We need to maintain the development of novel technological solutions so that the UK once again becomes a nuclear energy hub of expertise.
I wrote to the Secretary of State last week on the subject of solar power. In connection with that, the EAC has launched an inquiry into the grid, which, as others have said, is not in a fit state to cope with the massive electrification of the economy. I encourage external observers and commentators to provide evidence to our inquiry into enabling the sustainable electrification of the UK economy, which will focus on the role of the national grid and reducing barriers to access. The right hon. Member for Doncaster North identified some statistics. Today, attaching an onshore solar farm to the grid in the UK takes 13 years. The queue is that long. As one can imagine, that is something of a deterrent to anybody thinking about doing that. We have to cut that significantly, and planning is a big part of that.
Cutting the time to provide consents while enabling communities to have their say is the Rubik’s cube challenge that the Bill seeks to address. Similarly, we must ensure that we have confidence in supply chains to supply the capabilities that we wish to introduce in this country. As has been said, finance is internationally mobile. The money is there to fund the projects but only if those projects can be delivered.
Finally, I have a quick note on community energy. I declare that I am a member of the Ludlow Hydro Co-operative, which is a very good, small-scale scheme providing electricity to local communities. Their lordships have made some suggestions to encourage other such schemes, and I hope the Minister will look upon them favourably.
For once, I find myself in the unusual position of debating legislation that I do not intend to reject out of hand. I have to admit that I broadly welcome most of the measures in the Bill, particularly those relating to carbon capture and storage and hydrogen models. That said, I must put on record my objection to all the comments that have been made about nuclear. Nuclear is the only energy technology that has become more expensive rather than cheaper over the years, so talk of its making our bills less expensive is collective madness. We need to move away from that. As for the talk about small modular reactors, no design has even been approved for their implementation yet. I do not know how the competition can be judged when there is no approved design for SMRs, and I understand that the process that is going on will take at least another 18 months.
Another aspect of the Bill that I cannot get my head round is the fact that the so- called revising Chamber was deemed to be the right place in which to introduce it. That seems counterintuitive to me, but I will say to the Secretary of State that, if the other place was indeed deemed most appropriate for the purpose, the House should trust the five amendments that were made there and recommend that they should remain in the Bill. Let me say for the record that I support them.
The amendment that would prevent any new coalmines from being opened by the Coal Authority or its successors makes sense if we are serious about net zero. We cannot have the hypocrisy of lecturing developing countries about the use of coal while considering extracting coal ourselves. We cannot have the hypocrisy of Tory MPs’ decrying Germany for using coal while at the same time supporting the new Cumbrian coalmine. We need to end the pretence of a zero emission coalmine that ignores the emissions from the carbon embedded in the coal that is about to be burnt, and we need to end the hypocrisy of arguing for indigenous coal for steel coking in the UK when the coal is generally not suitable for the purpose and 84% of it will be exported to be burnt elsewhere.
As for the amendment to ensure that meeting the UK’s net zero targets becomes a specific part of Ofgem’s general responsibilities, that is just plain common sense. We have heard a number of interventions in support of it, and indeed it is one of the recommendations in the Skidmore review, as well as being called for by representatives of the wider industry including Energy UK, RenewableUK, the Climate Change Committee and the National Infrastructure Commission, and groups such as the Green Alliance. It is logical to assume that, if the Government object to Ofgem’s having a net zero mandate, they are signalling that they are not serious about doing everything possible to meet the net zero target—and when are they ever going to publish the long-delayed strategy and policy statement for Ofgem? For too long they have seemed to suggest that Ofgem should have responsibility for policy considerations when awkward questions arise, when it is clearly their responsibility to set policy decisions for Ofgem in that strategy and policy statement.
For years I have been going on about the unfair transmission grid charging system which penalises Scottish sites where the best load factor and wind resource can be found. As has been re-confirmed by the Green Alliance, the current system, overseen by Ofgem, favours electricity coming from Europe rather than wind farms built in the UK’s windiest areas. On average, according to the alliance, EU electricity generators paid 16 times less in transmission charges to send their energy to England last year than the cost of bringing energy down from Scotland, and Scottish generators are now at a significant disadvantage in comparison with sites in France, the Netherlands, Belgium, Germany, Denmark and Norway. What kind of perverse logic is that?
Worse still, National Grid ESO has confirmed that £4.6 billion was paid in constraint payments last year, mainly owing to the lack of grid capacity between Scotland and England. If ever there was an example of lack of strategy and forward thinking between the Government and the regulator, this is it. Paying wind farm developers to stop generating because of a lack of grid capacity, while either paying fossil fuel generators to ramp up gas generation to meet the demand or importing from the continent at the same time, is madness. Those constraint payments could easily have covered the cost of grid upgrades.
As well as the need for grid build-out to facilitate the renewable energy targets, there is a need for the Government—if they want to deploy renewable energy—to listen to what the industry is saying about the pressures of inflation and how it will struggle to meet the strike rates that have been suggested for allocation round 5. Indeed, some of the biggest developers mentioned by the Secretary of State are struggling to deliver on their AR4 commitments. We need to learn from the Spanish auction, which was a complete failure, to listen to industry and to ensure that that failure is not repeated as we try to deploy renewable energy as quickly as possible.
The Government’s own offshore wind champion has pointed out that they will be well short of the 2030 target of 50 GW of offshore wind. The Government should consider revising the “first come, first served” approach and the ability to hold on to grid consents, which is a prize that companies seek to retain. We need to move away from that system and allow access to the grid for companies that can deploy quickly. The Government rightly talk of speeding up consent processes in England and Wales through the planning system, but we must ensure that Scotland is not left behind. The Scottish Government have made contact with his Department. I am sure he understands that, while Scottish Ministers have responsibility for signing off planning consent for major infrastructure projects, the regulations themselves are reserved to Westminster under section 36 of the Electricity Act 1989. The two Governments need to work together to revise those regulations so that Scotland is not left behind.
Several bodies, including Energy UK and the Climate Change Committee, have called on the Government to apply a net zero test to all policy, regulatory, spending and taxation decisions. I support that, because I know that we need to move away from silo working and ensure that there is a joined-up net zero policy across all Government Departments. I also think that the UK Government should learn from the Scottish Government’s establishment of a Just Transition Commission to place fairness and long-term job creation and transfer at the forefront of net zero, and I call on them once more to match the Scottish Government’s £500 million just transition funding.
I also support the amendment on community energy. As a co-sponsor of the Local Electricity Bill, I support the suggested change to provide a framework to support the growth of a community and smaller-scale electricity export guarantee scheme. It has already been supported by Community Energy Scotland, and 318 MPs now support the Bill, including 125 Back-Bench Conservatives —more than enough to win a vote in the House. The concept is also backed by more than 110 local authorities—including my own, East Ayrshire Council—and more than 80 national organisations.
The organisation Power for People deserves the most credit for getting the campaign to this stage. It is estimated that community energy generation could grow between 12 and 20-fold in size over a decade, which could mean up to 10% of electricity being generated by community-owned projects. That would facilitate additional investment providing returns for communities, building better network resilience with small schemes scattered across the grid—and, of course, that is far better value for money than the £70 billion or so for two large-scale nuclear power stations. In 2021, according to Power for People, community energy groups spent more than half a million pounds on energy efficiency upgrades, helping 21,000 people to reduce their energy bills, while nearly 60,000 individuals were engaged in energy efficiency initiatives. This means reducing energy demand in the entire system. It is clear that the reinvestment of returns by community schemes is a virtuous circle.
A policy that was successful in the past was the feed-in tariff, which secured the deployment of small-scale generation projects, particularly small-scale hydro projects in Scotland. Those projects work: they are proven technology, and last for decades. That is why we need pricing certainty for such generation. Some form of export price guarantee could reinvigorate hydro schemes around the 5 MW capacity, as delivered by companies across the Scottish highlands, such as Green Highland Renewables. It makes no sense for them to have reached maximum efficiency and expertise in terms of designers and contracts, but then to have the rug pulled from under their feet and that expertise lost.
On that subject, I want to put on record again the plea to find a way forward for pumped storage hydropower. I was disappointed that the Minister for Nuclear and Networks, the hon. Member for West Aberdeenshire and Kincardine (Andrew Bowie), said at the Scottish Affairs Committee that that would not happen any time soon. That technology can be deployed right now. It is proven technology that can be deployed fast, and we should be moving forward on it.
On energy efficiency, the Secretary of State was again boasting that the stock of properties rated EPC or above has increased from 14% to 47% since 2010. Yes, that is progress, but it is progress based on addressing the easiest homes first. Clearly, if only 33% of stock has been addressed in 13 years, the target for completing the rest by the target date of 2035 will not be met.
My hon. Friend mentioned energy efficiency. Is he as concerned as I am that there was no mention of strengthening minimum energy efficiency standards in the Bill, but measures to create powers for the Secretary of State to remove European performance of buildings regulations in the UK are included?
I certainly share my hon. Friend’s concerns. It looks as if that is another Brexit dividend in reverse, where we could end up falling behind our European counterparts as those regulations have helped to drive forward standards in the UK.
To return to the Government’s efforts to upgrade stock and meet the 2035 target, we have to bear in mind that, even as house building continues, new housing is not being built to the correct energy efficiency standards, meaning that as time goes on the number of retrofits that will be required will increase. That is completely illogical and needs to be addressed as soon as possible.
On the slippage on targets, simultaneously, energy companies are finding it difficult to find homes that meet the criteria required for ECO4 upgrades. They are struggling to hit targets. It is clear that the Government will have to revise costing proposals for the scheme, or ECO4 will collapse completely. Of course that will mean the supply chain will move elsewhere and it will be hard to recover the situation. I ask the Secretary of the State to have a wee think on that.
Without action on housing and buildings, there is no plausible path to achieving the fifth carbon budget or meeting the 2030 statutory fuel poverty target. The reality is that about 7 million homes are now classed as being in fuel poverty. Energy efficiency requires much greater urgency, especially in the private rented sector. Now is the time for a proper fair social tariff; I would be happy to support amendments in that area in Committee.
There is no doubt that hydrogen production is needed as part of the net zero pathway. It can provide fuel for shipping, aviation and HGVs, for example. It will be vital for decarbonising some energy-intensive industries. However, there is a growing understanding of the reality of the cost of hydrogen production, which means it is extremely unlikely to be part of a large-scale domestic heating switch-over.
I have previously supported the H100 Fife project, which I want to see come to a conclusion as we need to have an evidence base. However, in reality, hydrogen looks to be too costly and is unlikely to be a solution. Low-carbon expert Jan Rosenow, who was a special adviser to the Business, Energy and Industrial Strategy Committee when we looked at heat decarbonisation, has identified and looked at 36 independent studies that do not predict any large-scale use of hydrogen for heating.
I can see the arguments in favour of hydrogen blending and its benefits as an interim measure to reduce the use of methane gas in heating systems, but more than 20 organisations have written to the Secretary of State outlining their belief that it will be too expensive and just another burden on bill payers. We need clarity on what the hydrogen levy will look like. We know the Government want to pass it on to bill payers, but what is the anticipated cost to consumers? How can an additional levy on bills be justified at this juncture? When France and Germany are investing heavily directly in hydrogen development and with the Inflation Reduction Act in the United States, the Government’s levy proposal means the UK will just fall further behind.
Another concern that I have raised with the Secretary of State is about a clause in the Bill that could allow forcible disconnection from the gas network to facilitate hydrogen trials. It is really important that we do not go down the route of forcing people to disconnect, because that is no way to get the public on side.
There is a lack of joined-up thinking. The Government have said they have aspirations for hydrogen blending, but the current health and safety regulations allow a maximum limit of 2% of hydrogen to be blended into the system. At the moment, there are no proposals to change that legislation, so again the Government’s own targets cannot be met because they have other legislation that needs to be changed to make that happen.
Turning to carbon capture and storage, I welcome the legislation for the licensing and funding models, which is long overdue. This is enabling legislation, and it is clear that there are no definitive models proposed yet. There are also no clear funding pathways. We have the £20 billion a year pledge from 2028, but that has no corresponding budget line and it is at the behest of a future Government. This Government always say that they cannot bind the hands of a successor Government, so saying they can guarantee the £20 billion a year pledge is clearly at odds with that.
In the here and now, we still do not have certainty over the track 2 timeline. I ask the Secretary of State once again, when will Acorn get the backing it deserves? The Scottish Government’s 2030 targets cannot be met without it. Without further CCS clusters, the UK will miss its own targets as well. It is no surprise that the Carbon Capture and Storage Association has written to the Secretary of State outlining its concerns.
In conclusion, I turn to devolution. The Bill is littered with comments that the Secretary of State must consult
“the Scottish Ministers, if the regulations contain provision that would be within the legislative competence of the Scottish Parliament if it were contained in an Act of that Parliament”.
The requirement only to consult is not good enough. As an absolute minimum, the UK Government should seek to work with and obtain the permission of the Scottish Government where regulations relate to devolved competency. This is another example of a power grab, as the matter is set out in the Bill instead of there being collegiate working. I ask the Secretary of State to think again on this, because it is outrageous that 29 clauses have that wording. That relates directly to what I said earlier about the need to revise section 36 of the Electricity Act 1989 to ensure that the Scottish Parliament has full competency over planning, which should be a devolved matter.
Going forward, these matters need to be addressed, and there are many issues that need a strategic overview. I would be happy to work with the Government on that, and I will certainly bring forward amendments in Committee.
I draw the House’s attention to my entry in the Register of Members’ Financial Interests.
I welcome the Bill. I hope all parties will recognise that the Bill is an important and much needed piece of legislation, which I hope we can find consensus to support tonight. Many across the energy sector have waited too long for the provisions in the Bill; we cannot afford any further delay.
It is to the issue of delay that I wish to speak today. As the former Energy Minister who signed net zero into law and most recently, as has been noted, chaired the independent review on net zero, I believe the greatest threat to our future ambition to deliver on net zero is the endemic and systemic delay in creating the capacity and capability needed to decarbonise our energy systems. We simply cannot will the means, expecting that because we say we will deliver, net zero will happen. It will not. Unless we address the fundamental challenges of grid infrastructure, storage and capacity, we will not get there.
The net zero review set out how the Government can tackle those delays and implement their climate commitments, both by taking action now—the Bill is a huge opportunity to achieve that—and by providing the certainty, clarity, consistency and continuity of long-term policy direction that is needed to unlock future private inward investment. We can provide certainty in this place by working across parties to build on the long-term political consensus for net zero. Indeed, the Climate Change Act 2008, led by the right hon. Member for Doncaster North (Edward Miliband), has been held up globally as a model for what stable political action on climate change can deliver.
Back then, it was the Conservative party in opposition that pushed the Labour Government to go further, to be more ambitious, in their climate leadership on emissions reduction. Thanks to the actions taken by both parties, and across all divides, the UK is a global leader in the G7, having reduced our emissions further than any other industrialised nation, and we can do the same now.
Although many provisions in the Bill are welcome, we can once again, with cross-party support, go further faster and raise our ambitions. The amendments made in the Lords are all welcome additions. Indeed, many were recommended in the net zero review. I therefore support their continued inclusion and, if needed, will seek to re-table many of them. I will also seek to work across the House, as chair of the all-party parliamentary group on the environment, to table additional amendments that I believe are realistic and achievable to help the Government meet both the needs of the energy sector and their own legal and net zero commitments.
It is in that spirit of cross-party consensus that I believe it is our duty as legislators not only to make this Bill the best it can be, but to ensure that we do not delay any further the reforms that are needed to make our regulatory and planning systems, which are holding back net zero, fit for a net zero purpose.
This opportunity to reform our energy system will not come again in this Parliament. For me, as someone whose constituency is being abolished at the next general election and who is standing down, the opportunity will perhaps never come again. I hope the Minister and the Government will recognise that I stand here tonight, and throughout the passage of this Bill, to be helpful, although they might not feel that I am being helpful, and to raise our ambition by amending the Bill. Although they might not thank me today, in time I hope the Minister and the Government will understand that I and others who seek to improve the Bill have no choice, for there is no time left in which to act.
It is a great pleasure to follow the right hon. Member for Kingswood (Chris Skidmore). I agree with every single word he said. If we do not work together on this, we really will be failing our constituents.
I support this big, important and complex Bill, but the test we should apply is very simple: will it give us the tools we need to achieve energy security in a net zero future? As the right hon. Gentleman said, we know exactly what needs to be done. We now need to get on and make it happen.
Some of the policy changes have turned out to be quite simple. The decision to say that petrol and diesel cars cannot be sold after 2030 has been brilliantly effective, because it has led to a huge increase in innovation and to new electric models coming on to the market, but other areas are much more complex.
I will address my remarks to the transition in home heating, which is intensely personal to all our constituents and, indeed, to all of us. There are currently 23 million homes in this country that are dependent on gas for their heating, which we know will have to change because the point will eventually come when no more natural gas comes through the pipes. The policy question is, what will replace that gas? Will it be electric heating, in the form of heat pumps or electric boilers? Will it be district heating? Will it be, for some consumers, hydrogen?
I support what the right hon. Gentleman is saying. The Government should also consider hydrotreated vegetable oil. We have a depot at Carryduff in my constituency, and the National Trust property at Portaferry and properties in Millisle are using it. It is a proven option. Does he feel the Government need to widen the net and consider HVO as a possibility?
I am grateful to the hon. Gentleman, because I think we will need all the current technologies and all the technologies that have yet to be invented to meet this challenge.
Of course, the advantage of heat pumps is that they are extremely efficient. Provided that the electricity comes from renewable sources, and all our electricity will come from renewable sources in the not-too-distant future, they are genuinely zero carbon. They work very well in some houses, but they do not work in others. I think of a row of 40 back-to-back houses in my constituency. The doors open on to the street, so where exactly would they put a heat pump? Well, they would not.
Hydrogen is also zero carbon when it is burned, but for hydrogen to work it has to be made through electrolysis using renewable electricity—so-called green hydrogen. There are other ways of producing hydrogen. There is the blue hydrogen question. Can we truly capture the CO2 and hold it through carbon capture and storage?
The other advantage of hydrogen is that it is “boiler out, boiler in”. Nothing else has to be changed, but there are practical issues, which the Secretary of State mentioned, when it comes to safety and operation. The gas companies are working on that, although it is worth remembering that 50% of coal gas is hydrogen. Many of us lived through the burning of a fuel that is 50% hydrogen, but hydrogen will succeed as a long-term replacement in some cases only if we can produce enough green hydrogen quickly enough, which requires a huge increase in renewable electricity, because the disadvantage of green hydrogen is that it is not very energy-efficient to produce. Three units have to be put in to get one unit of heat, although we currently pay turbine operators to turn off their turbines when the grid cannot take the electricity they would otherwise produce. It is obvious—why do we not use it to produce green hydrogen for storage?
As I said to the hon. Member for Strangford (Jim Shannon), I think we will need all the technologies, in all sizes and colours, to succeed. I do not think it is the Government’s job to pick one or another. The Government’s job is to encourage them all. Where I think the Government have a responsibility is in quickly clarifying how plans to decarbonise home heating in particular places will be pulled together, because with great respect to the new Department, it will not come up with a plan for the city of Leeds and its 800,000 people. The sooner it is clear how the local authority, working with Ofgem, the energy companies and others, will decide what are the appropriate technologies to make the transition, and in which places, the better.
My final point is on the important question of who will pay for this change. My right hon. Friend the Member for Doncaster North (Edward Miliband) made this point in his excellent speech. We cannot have a transition to net zero in which some people end up having to pay, or being asked to pay, huge costs. We all have constituents who can barely pay their gas bill at the moment, and we cannot ask them to pay for the cost of a heat pump, even with one of the Government’s 90,000 grants. Those grants will not convert 23 million homes. Frankly, we are way off the pace when it comes to home heating. That means that when a gas boiler dies, the homeowner, social landlord or landlord will put in another gas boiler because it is currently cheaper than a heat pump.
We have to get to net zero in a way that is fair to people, wherever they live and whatever they do. We cannot lumber them with costs that they simply cannot afford. If we seek to do that, those 23 million homes simply will not be converted. That is why, in this Bill and in many other ways, we need more clarity and more speed. When the Bill completes its passage through this House, I hope it will emerge even better equipped, with all the tools we need to do the whole job.
It is a pleasure to follow the right hon. Member for Leeds Central (Hilary Benn). I agree with a lot of what he said, particularly his focus on affordability for the people we represent in this House. I will make sure that my remarks address that point.
The first thing we must remember is that we are all on the same side on this Bill; there is huge cross-party support for what we are trying to do. More precisely, we know that for a cleaner, more renewable, cheaper energy system—cheaper for the people we represent—we need to electrify as much as we can and produce that electricity with as much green energy as possible. That includes nuclear power, in order to make sure we have that baseload in place.
I want to talk a little about cost, because until the right hon. Gentleman’s speech, too much of this debate did not address the fact that unless our constituents can pay their bills and businesses can be run affordably, not only do we not have a thriving economy, but we do not have a thriving society. We know what we need to do over the long term to reduce those costs, but we are in a transition, and I will repeat some of the points I made in intervention on the shadow Secretary of State, particularly in relation to gas.
We all support moving to a net zero future, but in the transition to that point we are going to need to expand our gas storage and oil refining capacity in this country. The Bill needs to do even more than it already does in that regard. I say that not because I want to burn fossil fuels, but because in the transition to get to the place that we know we need to get to—we can argue about how best we achieve that—if our constituents see their bills going through the roof, the support for the net zero agenda will plummet. So I am concerned about making sure that, as we go through this transition, we keep bills down for our constituents while making the necessary investments for the longer term.
Other Members have mentioned the need to invest in our grid. I believe it was my right hon. Friend the Member for Kingswood (Chris Skidmore) who said that it is ridiculous if we are taking over a decade to plug in new renewable energy into our grid system. I would like more clarity from the Minister and the Government on how, practically, the measures in the Bill will increase the investment in the grid and the speed with which that will happen, because we do not have forever to wait. All of us will hear examples from our constituencies or elsewhere of that huge delay, and all of our strategies and policies do not mean anything unless we can get them plugged into the grid. That requires real urgency and I look forward to the Government explaining more in that regard.
I wish to make two further points, the first of which is on energy performance certificate standards. This is a small thing on some level but it really matters, because for anyone who owns a home, wants to do the right thing, and can afford to make the investments to make their home more energy-efficient, while reducing the cost of their bills—and why should they not invest to do that?—the EPC we currently have is not fit for purpose, as we all know. I would like more clarity on how we are going to improve it; whether an updated EPC will be focused on the environmental aspect or the bills aspect, or both; and how it will come about. Unless we can do that, businesses, individuals and communities across the country will not know what they need to do, or the investments they need to make and when, to reduce the cost of their energy and the cost for our climate.
The final point I wish to make is about ISOP. I do not want to bore the House, but the detail on that is important and I intervened on the Secretary of State about it. Clause 123(1) explains that ISOP must “have regard” to the strategic policy statement issued by the Government, but subsection (2) then says, “If it can’t achieve a policy aim, it should explain why and how.” We need to beef that up. We need to explain more precisely that when the strategic policy statement is made by the Government, ISOP will be a delivery mechanism, nothing more. This is not the intention of the Government or of anybody in this House, but I fear that unless we can make that clearer, Ofgem will perhaps be doing one thing, ISOP will be thinking it is doing something slightly different, and the Government’s strategic intention will be something different again. We should examine that in Committee.
I should have drawn the House’s attention to my entry in the Register of Members’ Financial Interests, as chair of the Regulatory Reform Group, in that regard. Overall, I support this good Bill and I am glad it has cross-party support.
I welcome the Bill, but I must say that I am extremely disappointed by the Government’s paltry efforts on energy to date. It is now a year since the horrific invasion of Ukraine by President Putin, which should have been a brutal wake-up call. Not only do we need accelerated investment in renewables because of the extreme urgency of tackling the climate emergency and ensuring that we reduce our carbon emissions, but Putin’s invasion reminded us of the strategic importance of energy security. We have plentiful natural resources and we can provide ourselves with energy security with wide-ranging investment in renewables. Then we come to the issue of cost, as renewables, particularly onshore wind, are now proving their cost-effectiveness.
So whether it is about tackling the climate crisis, energy security or price, the Government should be making investment in renewables an absolute top priority. Despite the Department’s document citing onshore wind as one of the cheapest and easiest forms of electricity generation, they are still being mealy-mouthed about lifting the ban on onshore wind in England. This bill should include a clear lifting of that ban. We know that business needs certainty in order to invest, and the Bill misses the opportunity to give the onshore wind business that certainty.
Now is a crucial time for industry more widely to be investing in the green technologies of the future. Many industries such as steel and manufacturing face huge transition costs to reach net zero, and they will be making unprecedented investments in new methods of production and new production lines. They will be looking very carefully at which countries offer them the best deal on siting their production lines of the future. Not only is it essential that the Government respond to the game-changing US Inflation Reduction Act, and similar moves by the EU—I do not know why they are dragging their feet, as industry is crying out for information and will simply go elsewhere if it does not get it—but they need to address energy costs.
Time and again, not just our energy-intensive industries but swathes of manufacturing cite high energy costs as a massive disincentive to continuing their operations in the UK. This situation is absurd, and it would be laughable if it were not so tragic that we have so much potential for cheap energy and yet we offer industry sky high prices. The Government need to give industry long-term certainty on cheap, competitive energy prices if we are to have any hope of new production lines being sited here and providing the valuable green jobs of the future.
Make no mistake: if we do not get certainty on consistent, cheap energy prices, we will lose vital investment in the new production lines, with massive jobs losses. Our competitor countries have major state-owned companies pushing forward with renewables, but the UK Government shy away from any such idea. Such a company can really accelerate investment in renewables. The Welsh Government are now establishing one such company and a future Labour UK Government would establish a Great British energy company to do likewise.
Of course it is not just industry that is desperate for cheap energy; householders have been staggered by the price rises in energy this winter. Even when they make determined efforts to cut down on the number of units they use, they are still stung by rocketing standing charges, for which they can see no good reason. It seems completely perverse that the price of electricity produced by cheap renewable generation is linked to the price of gas. That urgently needs reform and, yet again, this Bill is a missed opportunity to tackle the problem. Nor are the Government doing anything to close the windfall tax loophole that allows oil and gas companies to continue to rack up enormous profits while householders struggle in cold and often damp houses.
Of course, that brings me to that other great failure: the Government’s failure to invest effectively in home insulation. If that had been actively pursued by the Government in the past, energy bills for millions of householders could have been reduced by now.
It is also high time that the Government resolve the problems of the national grid’s lack of capacity with the difficulties and delays in connection. It is vital that we have an effective grid to get energy from where it is generated to the areas of population and industry where it is needed. Not long ago we witnessed the fiasco of electricity generated in Scotland failing to reach consumers in England because of the current lack of grid capacity. But it is not enough to catch up with the present. I know that the Minister for Climate Change in the Welsh Government, Julie James MS, has flagged up the huge quantities of electricity that will be generated by offshore wind in the Celtic sea. She has raised with the UK Government the vital work needed to increase the grid capacity to transmit this energy to where it is needed across the UK. I would be grateful for a categoric assurance from the Minister that increasing grid capacity will be an absolute priority.
Community energy schemes can bring great benefit to local communities, so will the Minister, when he winds up, commit to retaining the amendments to help encourage such community energy schemes. I urge the Government: to retain the amendments made in the other place; to support our amendments to deal with grid delays; to expand home energy efficiency measures; to ban fracking, as indeed we have already done in Wales; and to lift the ban on onshore wind in England, all of which would make for a better Bill.
This is a large and technical Bill that sets in place important frameworks, particularly when it comes to carbon capture and storage and the wider deployment of hydrogen and heat networks. I will address my comments, in the time that I have today, to part 3 of the Bill, particularly the support for low-carbon heating schemes and the opportunity that this provides for doing something creative for the off-gas grid homes in this country. It links to the earlier intervention of the hon. Member for Strangford (Jim Shannon) and to a private Member’s Bill that I introduced at the beginning of this year.
At the moment, we have 1.7 million homes in this country that are currently off the gas grid, most of which use kerosene at the moment. Under the current Government plan, which is born out of a strategy that dates all the way back to 2017—several Governments ago—the intention is that all those 1.7 million homes would be banned from having a replacement boiler after 2026 and told that, instead, they must have, effectively, either an air source heat pump or a ground source heat pump. As the right hon. Member for Leeds Central (Hilary Benn) said, there is a role for those heat pumps, but they are not for every home. In particular, in rural and especially coastal areas, air source heat pumps can be prone to rusting and decay. It is also the case that they need a lot of insulation to make them work, and, in some older homes, high levels of insulation mean less ventilation, which can lead to problems with damp, mould and all of the health problems that go with that.
Perhaps, more important than anything, the capital cost of these air source or ground source heat pumps for a single property is around four times that of a conventional boiler.
My right hon. Friend touches on a point that I was going to raise later. My concern about the banning of gas boilers from 2024 is the impact that that will have on industry and on farming in particular, especially in relation to those costs. Farming is under a lot of pressure at the moment. Does he agree that this is similar to the argument that he is making about households in 2026?
My right hon. Friend makes an important point. As the right hon. Member for Leeds Central said, we need a diversity of different technologies because it is essential that we have all the tools in the box to achieve our objectives.
There is also a wider problem with the current Government strategy. Just before we get to 2026, we can envisage plumbers and boiler engineers across the land going out to people and saying, “If I were you, I would get a new boiler now because the drawbridge is about to come up.” That will probably mean that we will have a surge of investment in boilers at just the wrong time. On top of that, there is likely to be a “mend and make do” approach that will stretch for many years. All of this means that the objective of making carbon reductions, and getting not just to net zero but to our objectives under carbon budget 5, gets potentially further away, rather than closer.
The good news is that there is a better way. In recent years, the technology and supply of renewable liquid fuels have developed. If we were to use renewable liquid fuels such as hydrotreated vegetable oil, there is a great opportunity for us to get an 88% reduction in our carbon emissions, but far faster than the current Government strategy. It could get us an 88% reduction by carbon budget 5 simply by having an adaptation of those existing boilers.
A pilot in my own constituency has been testing hydrotreated vegetable oil. Residents who have used it report that it burns more efficiently. Some say that the use of the fuel is around 30% lower than with kerosene. The people at the church hall like it because they need intermittent heat, and they can switch it on without having a heat pump running continuously, wasting all that energy. The staff at the school like it because it works for their Victorian building. There is a huge amount to be said for opening the door to the deployment of these renewable liquid fuels. The Government already recognise this, because the renewable transport fuel obligation, introduced in 2007, creates an incentive scheme to require both importers and refiners of fuel to source some of that from renewable sources, such as hydrotreated vegetable oil. The Bill is an opportunity to extend the architecture of the RTFO, a long-standing scheme, to domestic boilers as well so that we can have that incentive.
I know that some officials in the Department argue that we cannot be certain that hydrotreated vegetable oil comes from renewable sources. I do not accept that. There is a British standard—an accreditation scheme for HVO that comes from renewable sources. It would be very easy for the Government, through regulation, to insist that only British standard-certified HVO would be allowed for this purpose. The officials have also raised questions about the supply of renewable HVO, but we are seeing an exponential rise in supply both from the United States and from the European Union and the potential to develop it in this country as well.
I very much hope that the Government will look favourably on amending the Bill—clause 104 of part 3 of the Bill would be key—preferably with their own amendment to give respite to 1.7 million homes in rural locations. If not, I shall seek, if I have the support of the House, to amend the Bill. My private Member’s Bill attracted huge support not just from Conservative Members, but from Members across the House, and the Government should consider it.
It is a pleasure to speak on Second Reading and to follow the right hon. Member for Camborne and Redruth (George Eustice). Energy policy has been at the forefront of political debate in the UK for many years as policymakers grapple with the challenges that humankind faces with climate change. However, the war in Ukraine and the subsequent huge increases in energy prices over the past year have brought an immediacy to the debate not only from an environmental point of view, but from a social policy point of view. There is general political consensus around the need to decarbonise the UK’s energy system and to vastly increase domestic clean energy generation. There are, of course, differences around the speed of the transition and what technologies to prioritise.
Many consider the Bill to be too timid in its approach, believing that the UK Government should be prioritising renewables over nuclear and using the Bill to make a meaningful push on home energy efficiency. I shall be supporting new clauses 272 and 273 inserted in the other place promoting local electricity production as the Bill proceeds through its stages in this House.
From a Welsh perspective, I would normally use a debate such as this to ask why a country such as mine, which is a net exporter of electricity, a superpower in terms of the percentage of electricity production generated for export—it produces twice our domestic requirements—should suffer from appallingly high levels of household fuel poverty. The latest Welsh Government estimates that I have been able to find puts the figure at 45% of all Welsh households. However, instead of making broader political points in this debate, I want to concentrate on two local issues which I have been dealing with on a constituency basis. One unmistakeable fact facing us on our decarbonising journey is that there will be a requirement to increase electricity transmission and distribution infrastructure capacity significantly. Whether that is infrastructure to transmit electricity from generation sites to the National Grid or infrastructure to distribute electricity to homes to meet the demands of domestic heating and charging the electric vehicles of the future, the impact will be felt acutely in rural areas.
In my own constituency earlier this year, Green GEN Cymru, part of the Bute Energy group, published proposals for a new 132,000-volt double circuit overhead line, supported on steel pylons between the substation on the yet-to-be-approved Nant Mithil Energy Park in the Radnor Forest area in Powys and a new substation to be generated by National Grid on the existing 400,000-volt transmission line near Llandyfaelog at the southern end of my constituency.
We are talking about 60 miles of 27-metre-high pylons from near the English border in mid-Wales through some of the most beautiful scenic landscapes in Wales. Considering that the length of Wales, as you well know, Mr Deputy Speaker, is 130 miles, the scale of the project from a Welsh perspective is clear to all. The line will run right through the heart of the Carmarthen East and Dinefwr constituency, following the route of the majestic Tywi valley.
Carmarthenshire is branded as the garden of Wales and the Tywi valley is its centrepiece. We are blessed in Wales with some of the most incredibly beautiful places in the British Isles and beyond. The Tywi valley is one such area and is designated a special area of conservation. Such is its scenic beauty that the UK Government have supported a levelling-up bid by Carmarthenshire County Council to develop a cycling path between Carmarthen and Llandeilo along a disused railway, which I hope one day will be extended to the top of the valley in Llandovery.
The Tywi valley is home to some of Wales’s most important historical sites: Llandovery, Dinefwr, Dryslwyn, and Carreg Cennen castles, the iron age fort at Gam Goch, Paxton’s Tower, the National Botanic Garden of Wales, Aberglasney Gardens and Gelli Aur and Dinefwr mansions. Beth Davies from Llanwrda writes of the Tywi area:
“It captures the soul the heart and the mind, the beautiful valley that’s one of a kind.”
If the current route continues to be favoured, then it appears to me that undergrounding is the only option that will be supported by the communities of the Tywi valley. Other countries are adopting that approach. In Denmark, all existing 150,000 and 132,000-volt overhead cables are to be undergrounded by 2040. In the United States, I am given to understand that they are encouraging the undergrounding of new electricity infrastructure along existing transport routes such as railways. Germany approved plans in 2015 to underground 1,000 km of high-voltage cables in response to public opposition to new overhead cables.
To achieve its ambitions, Green GEN Cymru has applied to Ofgem for a licence as an independent distribution network operator. It would be very helpful if, when Ofgem considers that application, it takes into account the views of the local community before we move to the planning stage. In relation to this particular project, planning powers are devolved to the Welsh Government. However, Ministers will be aware that the current battle in the Tywi valley will be replicated across the whole UK.
Before I close, I want to touch on changes to the boiler upgrade scheme that have had an impact on a company in my constituency. In February, Ofgem summarily removed certain biomass heating systems from their boiler upgrade scheme product eligibility list, leaving businesses that specialise in the supply and installation of renewable heating systems in rural areas in a very exposed position, unable to fulfil orders. Following concerns expressed by the industry and, I would like to think, my early-day motion, some of the products were reinstated—but not the Klover Smart 120 and Smart 80, which my constituent believes are the best replacement options for the range-style boilers often found in Welsh rural dwellings. Although that point does not apply directly to the Bill, I would be grateful if the Minister bore it in mind.
In the short time I have, I will focus my comments on vehicle propulsion, but first I draw on the comments from my right hon. Friend the Member for Camborne and Redruth (George Eustice) and the right hon. Member for Leeds Central (Hilary Benn) that the cost we pass on to the public must be minimised. I hope the Minister will take note of the points about the hydrogen levy before Committee stage. It is misguided and it is in the wrong place. We have to take the public with us on this—we cannot keep adding to people’s bills to try to make things work. I hope the Minister will take that point away.
Much has been said about energy security and trying to get away from the situations we face with Russian gas, fossil fuels and so on, but I am concerned that we are moving into another area of energy dependence on another autocracy or dictatorship, China. I raised this point with the Secretary of State earlier, and he focused on uranium, but that was not what I was getting at. China has sucked up the processing of many of the materials in the world that are needed to make renewable energy. According to statistics put forward by Morgan Stanley, China refines 59% of the world’s lithium, 80% of the cobalt, 69% of nickel sulphate, 95% of magnesium, 100% of spherical graphite, 69% of synthetic graphite, as well as producing 70% of battery cells, 78% of cathodes and 91% of anodes.
To build on that, the Mercator Institute for China Studies, a German think-tank, says about nickel processing in Indonesia:
“In 2014, Indonesia banned the export of unprocessed nickel, prompting a wave of Chinese investments seeking to secure battery materials. With China’s help, Indonesia plans to boost its share of global nickel production from 28 to 60 percent… Already several multi-billion USD nickel-focused industrial parks are sponsored by Chinese companies.”
On cobalt in the Democratic Republic of Congo, MERICS states:
“The DRC is home to over half of the world’s cobalt reserves and was responsible for two-thirds of mined output production in 2020. Chinese companies control up to 70 percent of the Congolese mining portfolio, but mining contracts…are under review by the DRC.”
MERICS also comments on the Lithium Triangle,
“a region around the borders of Argentina, Bolivia and Chile. It is thought to hold around half of the world’s lithium reserves. Between September and November 2021 alone, four separate Chinese companies announced acquisitions cumulatively worth USD 1.2 billion.”
That is the reality we live in today. A parallel can easily be drawn to what a hostage to fortune it could be if an autocracy or dictatorship took a direction we were not happy with. We have seen that happen in terms of fossil fuels with Russia.
So what do we do about it? The Bill makes some progress here, but I think we must come up with another technology that can work alongside electric vehicles. I want to draw attention to the fact that we do not put enough energy into hydrogen combustion. There is a lot of research going on. I am a big motorsport fan and I have been taking the magazine “Autosport” for over 30 years, so I will quote from its engineering supplement on 16 March 2023:
“‘People think hydrogen infrastructure is complicated and it doesn’t have to be if you look at it in stages,’ reckons Cosworth CEO Hal Reisinger, his company one of many including ORECA to have invested in hydrogen test cells. ‘Internal combustion engines can be very easily converted to hydrogen; put different injectors in, remap the ECU and there’s this entire infrastructure of engines that are available. It’s much easier to establish a hydrogen infrastructure than an electric infrastructure.’”
There are indeed great demands coming if we want to achieve the target number of electric vehicles. By the Government’s own estimate, the global demand for electric vehicle battery materials is projected to increase by between six and 13 times by 2040 under stated policy. World copper production has to double to be able to meet production policy, yet there was a report only last week that not enough new mines are being exploited to reach the current copper production level.
Hydrogen combustion does have issues. The compression of the hydrogen has to be 700 bar. There are questions about how we manufacture and store it. If we get the technology wrong. it produces dangerous levels of nitrogen oxide. That will have to be addressed, and so will the weight.
However, my argument is that there is an alternative that technically can work. I know that other companies, including JCB, have done a lot of research into it. I urge the Minister, when we are looking at development budgets, to start to put some hydrogen combustion development in there. We could refocus the automotive transformation fund, which perhaps has been too focused on electric vehicles and needs to look at other areas. There is a geopolitical and geostrategic effect that is occurring after some of these policies have been written, and we must be able to adapt and move along.
Every hon. Member in this Chamber wants to move towards a net zero society, but if we do not do so sustainably, taking the public with us, we will find that harder and harder to do, as my right hon. Friend the Member for Camborne and Redruth outlined with regard to the buying of gas boilers making the situation worse. Recognising that the supply of the rare earth elements that are needed may provide hostages to fortune with countries such as China, I urge my hon. Friend the Minister to look into how the Government can help companies to research and develop hydrogen combustion.
It is a pleasure to follow the right hon. Member for Elmet and Rothwell (Alec Shelbrooke). Like many across the Chamber, particularly those on the Labour side, I rise to call for a more robust response to the climate emergency. My definition of “emergency”—and, I am pretty confident, that of most people in the Chamber—is to do with getting a move on and doing things at pace. Of course, it has been some considerable time since Parliament declared a climate emergency, yet the Government’s track record has been woeful at times.
Having said that, like others, I welcome the Bill’s Second Reading. Like the shadow Secretary of State, my right hon. Friend the Member for Doncaster North (Edward Miliband), and other Labour Members, I would like to see more of a focus on clean energy. Our ambition is to power up the UK with clean energy by 2030. That will mean an end to the ban on onshore wind, an effective ban on fracking, turbocharging solar, and connecting to the grid some of the great projects up and down the country, including, in my patch, tidal energy from the River Mersey and its estuary.
The focus of my speech will be the proposals for a hydrogen levy, adding to already astronomically expensive bills for consumers not just in my constituency but up and down Britain. That is the wrong solution at the wrong time. Such a levy would be yet another subsidy for the fossil fuel industry for a technology that will not work for domestic use. My hon. Friend the Member for Ellesmere Port and Neston (Justin Madders) will expand on that by raising the trial in Whitby. I can assure the Minister that that trial is not going very well at all. My hon. Friend will expand on the reality of that.
My constituency and the surrounding areas have energy-intensive industries such as Ineos-Inovyn; Stanlow, which is just up the road; and Tata Chemicals. Hydrogen can provide a solution in terms of decarbonising at speed—I understand that, and it is recognised in the Bill—but I am fundamentally opposed to hydrogen for use in domestic premises. The evidence is crystal clear. My opposition is based not on emotion but on scientific evidence. A major peer review of 32 independent scientific studies found that none of the pilots and research supported widespread use of hydrogen for domestic heating. Indeed, MCS, a company based in Daresbury, has expressed evidence-based concern as well. The Select Committee concluded the same. The use of hydrogen for domestic use would mean 70% to 80% more on consumer bills, if we look at current gas-based consumer bills, and could result in 45% more gas importation. We should surely be moving away from that. The focus must undoubtedly be on investment in heat pumps—air and ground—for domestic use. That would provide energy at less than half the cost of the current market.
I call on all parliamentarians to make an informed choice, based on evidence, on the domestic use of hydrogen, and to support the amendments to remove it from the Bill.
It is a pleasure to follow the hon. Member for Weaver Vale (Mike Amesbury), but I have a different view from his. It is worth remembering that this country has reduced its carbon emissions very substantially over the last decade—twice as fast, in fact, as the European Union. It is worth remembering that when we say that we are not making progress. There is an awful lot to do, as we have heard, and we cannot rule out any options, so legislating against a particular technology is not where the Government should be. We have to be technology-neutral. Frankly, we will need all options if we are to get to net zero; we cannot simply rule out one or the other. We will have houses heated in one way and others in another way; we in this House cannot simply take the decision to blanket refuse a particular approach.
There are things that we should encourage. Frankly, I cannot see why we do not put in place robust rules on building solar into every new building—particularly every new commercial building. We can do things that do not close options but take us a step down the road. The Government should be taking such measures, but they probably fall into the pot of the Department for Levelling Up, Housing and Communities rather than that of the Department for Energy Security and Net Zero.
I will focus in particular on an area of energy that has been touched upon only briefly in an intervention: the whole issue of aviation fuel. If we are to achieve net zero, we need an aviation industry that also moves rapidly towards net zero, and that is not an easy task. It is a particularly difficult task for the aviation sector because the technology is not yet there to make significant progress in that direction. But it is getting there, and we have to do what we can to encourage it, because the aviation sector is hugely important to this country. Both sides of the House have agreed in the past that its importance needs to be supported and protected. That was noted in particular when we voted on the expansion of Heathrow airport: the vast majority of Members supported the industry on that night. We have to continue doing so while accepting that the industry has to transform itself. It cannot simply stand outside the plans to deliver net zero; it has to change.
The industry will change—insofar as we can currently see the technological routes—in two different ways. First, hydrogen will play an important part in the future of the aviation industry. The first very short-haul 19-seater passenger planes with hydrogen technology powering them are already being tested, and that is a positive step forward. There will be some electrification of aircraft, but only at the smallest end of the scale. Given the way in which technology is developing, it is realistic to assume that, by the middle of the 2030s, we will start seeing short-haul passenger aircraft—the A320s and A319s, or their equivalents and successors—powered by hydrogen. However, there is very little prospect any time soon of long-haul aircraft being powered by hydrogen or electricity. We will not abandon travel around the world. That would be disastrous, not just economically but for a whole raft of reasons. If we took away long-haul aviation, serious damage would be done to conservation efforts around the world, for example.
We will need what is called sustainable aviation fuel. The benefit of that fuel is that it can, to a significant degree, be produced from waste. By waste, I do not just mean more biowaste; I actually mean municipal waste. Some of the early projects to create sustainable aviation fuel have used municipal waste—black binbag waste from people’s homes. That is a huge opportunity, but we have to support the development of that industry. We live in a world that is increasingly shaped by what is happening in North America, including the United States’ Inflation Reduction Act—a slightly strangely named piece of legislation if ever there was one—and what will now happen in the European Union as a result. I am a strong free marketeer, but we cannot ignore other countries taking a different path and simply allow important industries, such as the one that will emerge to produce sustainable aviation fuel, to go elsewhere. We will have that fuel anyway. The airlines will buy it and use it, and they will fly to other countries, which will have sustainable aviation fuel to put in the jets. We will have to do the same.
My right hon. Friend is making a powerful speech focusing on exactly the right issue. As a former aviation Minister and chair of the all-party parliamentary group on aviation, I know that the aviation industry sees this as vital for its future. He touched on the point that, if we do not make SAF, we will still use it and it will be made elsewhere. Will he touch on the economic opportunities for this country, and will we simply lose them if we do not put into that technology now?
I am grateful to my hon. Friend for his comments. He is an experienced former aviation Minister and has huge knowledge of this area—he is absolutely right.
This industry is going to happen. Indeed, it is already developing in fledgling form around the world. It will certainly happen in the United States, where huge effort has been put into making it a reality. We have to have that industry here. There is no point seeing yet another industry developing around the world in this new technology and standing to one side and saying, “Well, other people can do it—we will bring it in by tanker.” That would be a betrayal of our aviation industry and a betrayal of the industrial base of this country, and we must not let that happen.
What do we need to do? We need to get this technology —this industry—up and running in the UK with something we have done in a variety of areas. We need a contracts for difference scheme. It is an attainable option, and has been done by Government before. I very much hope that the Government—this Department in partnership with the Department for Transport and the Treasury—will take that road. However, we cannot wait very long. It has to happen soon, and we have to put down a marker that says that we are going in that direction. We need to start doing the work on what a detailed scheme would look like.
The aviation industry is desperate for that to happen. The Minister knows, as do other Departments that have been looking at this—the Department for Transport has been doing so, as has the Treasury—that it does not have to be done at the expense of hydrogen. There are people who say that SAF does not really matter because we are going to do hydrogen, but we need both. We need short-haul planes powered by hydrogen and we need long-haul planes powered by SAF. That is the future of aviation.
I hope that the Minister will be able to give us comfort today, and as the Bill proceeds through the House, that the Government as a whole will deliver that. However, I would put down a marker. If by Report stage we do not have some clear signposts that the Government are going in that direction, I will table an amendment that will mandate them to introduce a contracts for difference scheme in the next 12 months, and I will seek the consent of the House for that. I know that Conservative Members who support my concerns will support such an amendment.
I am lobbing this at the Minister, saying that we need to get on with it, but may I ask him, over the next few weeks, as the Bill goes into Committee, and as he discusses with ministerial colleagues the way forward for the Bill, to seek to make a firm commitment to a contracts for difference scheme for SAF so that we can deliver for this country an industry that will be vital for the future?
I appreciate that hon. Members want to demonstrate cross-party support for net zero. Yes, by and large, we agree about decarbonisation, but sadly we do not agree about the speed of that process. The UK has a responsibility to go much further and faster than most other countries because we are disproportionately responsible for the cumulative emissions that are already in the atmosphere.
We were the first country into the industrial revolution—the fossil-fuel industrial revolution—and we need to be the first country out of it. I have not heard enough urgency from Members on either side of the House about that this evening. Winning slowly on this issue is the same as losing. The bottom line is that there can be no new exploration for fossil fuels if we are serious about doing our fair share to avoid the worst of the climate crisis. The report by the United Nations environment programme on the production gap states clearly that
“governments still plan to produce more than double the amount of fossil fuels in 2030 than will be consistent with limiting global warming to 1.5°”.
Ministers often seek to justify new oil and gas developments in the North sea in the name of energy security, but that is profoundly misleading. The majority of fossil-fuel projects in the pipeline are for oil, not gas, which will do nothing to boost energy security, given that we currently export at least 80% of the oil we extract because it is not even the type that is used in UK refineries.
That defence also exposes a paucity of imagination and a failure to grasp what true energy security looks like. True energy security is about abundant and cheap renewables. It is about a flexible energy grid. It is about properly insulated homes and it is about better storage. I urge Ministers to grasp this opportunity genuinely to transform the future of our energy system so that it works for people and planet.
What is most striking about the Bill is its failure to wean us off fossil fuels—the very thing that is choking our planet and driving high energy prices. I endorse the Lords amendment on the prohibition of new coalmines. It was simple in its drafting but vital in its importance. The Minister will no doubt note that it does not only cover coal for energy; it covers coal in its entirety, extending its reach to the newly approved Whitehaven coalmine—and so it should, because that stranded-asset coalmine would produce vast amounts of climate emissions. It is neither wanted nor needed by the UK steel industry, and it is not wanted in Europe, which is rapidly moving towards green steel. I urge the Government to retain the amendment to the Bill.
We need to go much further than that, and reduce our wider reliance on all fossil fuels, not just coal. As a first step, that must involve a review of the outdated and dangerous duty to maximise the economic recovery of petroleum from the North sea. It is beyond imagination that at a time of climate crisis we still have on the statute book an obligation to maximise the economic recovery of oil and gas. We need to move away from that. We also need to move away from the extraordinary position on the so-called windfall tax.
I am listening to the hon. Lady’s speech with great interest, and want to pick up on one part of it. On moving away from maximising economic recovery, does she agree that we are already less than 50% dependent on our own domestic sources of oil and gas? Does she agree with the Climate Change Committee’s assessment that our dependence on oil and gas will decline more slowly than our ability to replace it, so we will become more dependent on imports? What she has recommended will not stop our use of oil and gas—it will just make us more dependent on imports.
I thank the hon. Gentleman for his intervention, but I totally disagree. The option before us is not to use home-grown fossil fuels versus imported fossil fuels. The choice—[Interruption.] No, it is not. The choice before us is whether we continue to depend on fossil fuels or whether we shift to a green transition much faster. I appreciate why that is difficult for him to understand. Having listened to the right hon. Member for Epsom and Ewell (Chris Grayling), who spoke about the future of aviation, I was struck by the fact that nowhere in his speech was there anything about demand management. People are looking for technical fixes the whole time without recognising that the bottom line is that there are climate limits to what we can do.
No, I will not, I am sorry. Some climate limits mean that we need to change behaviour as well as depending on new technologies.
I was about to talk about the windfall tax and the gaping hole that allows corporations to claim £91.40 for every £100 invested if—perversity of perversities—they reinvest that money in yet more oil. This comes at a total cost to the taxpayer of nearly £11 billion—enough to give an inflation-matching pay rise to every NHS worker and teacher for a year. Instead, the North Sea Transition Authority should have a duty to help meet the UK’s climate commitments and deliver a managed and orderly phase-down of UK petroleum. This, of course, must come with a requirement to support a just transition for oil and gas workers and communities—a clear pathway coupled with financial support to enable them to move into green jobs. Crucially, we need to see no new licences, which means that Ministers must give up any idea of giving a green light to projects such as Rosebank, the UK’s largest undeveloped oil field, which would produce more emissions than 28 low-income countries combined. That would be the definition of recklessness.
The Energy Bill aims to deliver a
“cleaner, more affordable and more secure energy system”,
which is a worthy aim. I very much hope the Government listen to hon. Members on both sides of the House who have talked about introducing a new duty on Ofgem to abide by net zero requirements. The amendment on that tabled in the other place received cross-party support, and I cannot see why the Government would not want to make sure that we retain that.
The Government have repeatedly said that they wish to see more community energy generation, but they objected to amendments on that in the Lords on the grounds that they constituted a subsidy. That is not the case. Rather, those amendments would give community energy schemes fair access to the market. If the Government are serious about community energy, they have to find a way to bring community energy to market, precisely by the kind of mechanism—a fixing of price—that we already use with contracts for difference. I urge the Government to accept retain the amendments on community energy, or offer a workable alternative.
In the very short time I have left, I would love to say more about energy efficiency and the need to insulate our homes properly. The cheapest energy is the energy that we do not need to use in the first place, and I despair of the fact that the Government have still failed to come up with the community-led, local authority-led, street-by-street home insulation programme that would achieve proper progress on this.
In the very few moments that are left I want to say a few words about nuclear. Government support for this nuclear white elephant, formalised by the Bill, is beyond ludicrous. We have already discussed the cost of nuclear—it is massively expensive and going up in price—but it is also massively slow. The Government have accepted the goal of decarbonising the UK’s power system by 2035. Given that it will take eight to 10 years to produce new nuclear, it will make absolutely no difference to that decarbonisation target. It is too expensive, too slow and it needs to come out of the Bill.
It is a pleasure to see you in the Chair, Madam Deputy Speaker. I rise to support the Bill. I was hoping to hear from the hon. Member for Brighton, Pavilion (Caroline Lucas) a few more of the positive things that this Government have achieved, which are important to acknowledge, so that people can see that progress has been made, not least the fact that half of all our electricity is now generated from renewable energy sources—something we could be forgiven for missing in her speech.
I do not want to repeat what has been said in the debate, much of which I agree with, but I want to bring up two particular issues that I hope the Minister will take note of: fusion power and lithium-ion storage facilities. He will not be surprised by that. They both illustrate the ingenuity of our scientists and the fact that, as our understanding of new energy sources develops, the Government’s response to those energy sources needs to develop and those technologies need different regulation.
Let us take fusion technology first. Last year I visited General Fusion in Vancouver, British Columbia, an incredible Canadian firm working with the Culham Science Centre in Oxfordshire, which will be the home to the firm’s fusion testbed. We should be very proud of that. The Bill fundamentally changes the way in which fusion technology is regulated in the UK, because we understand it much more now. The current regulatory regime characterises fusion in the same way as nuclear, which is just plain wrong. To better recognise the fusion process, the Government are rightly introducing measures in clause 110 to remove fusion from nuclear site licensing requirements. That is very welcome. It is more accurate. It provides confidence to investors, the industry and the public alike, and it is an example of how the Government are recognising the need for regulatory changes.
That is in contrast with the issues around lithium-ion battery storage facilities, which are covered in clause 168—the Minister knows where I am going next. For the first time, the Bill recognises that electricity storage is separate from electricity generation. It is a new sector. In the past, power stations were designed to match consumer demand. With around half of our electricity now generated by wind, it is essential to store electricity to help out when the wind is not blowing, to put it plainly. Over 90% of our UK electricity storage capacity is in lithium-ion batteries, and while recognising energy storage, the Bill is silent on issues that are fundamental to the future of this sector, including fire safety.
Does my right hon. Friend agree that a lot more research needs to be done on where these storage facilities are based? Thermal runaway can cause fires that take several days to put out, and some of the chemicals used to extinguish those fires are toxic. There are planning applications coming forward for facilities that are far too close to people’s homes.
My right hon. Friend is right that there are hundreds of applications coming forward in around 350 constituencies, and I urge Members to check whether any such applications have been made in their patch.
I would like to draw on a slightly different issue, which is that if we do not have the right regulation for lithium-ion battery storage, we will not attract investment into this area in the future, because we will not be encouraging those lithium-ion battery storage facilities to be designed in a way that mitigates the risks we know exist. At the moment, the planning application process takes no account of the proven fire risks that my right hon. Friend just referred to with lithium-ion battery storage plants. Thermal runaway is a chemical reaction caused by overcharging or a design fault, and these fires cannot just be put out; they can only be stopped by cooling with large amounts of water over several days, which creates toxic fumes and polluted water runoff. Even though the use of batteries for this purpose is relatively new and there are currently only 35 such facilities in action, we have already had one major fire in Merseyside in 2019 that took 59 hours to put out.
This new technology is being rolled out at lightning speed, with 473 new sites under way, yet there is still no planning guidance for local authorities, no requirement to obtain an environmental permit from the Environment Agency and no requirement for the fire service to be consulted over designs or locations. The Bill must directly address that gap in regulation. Since I raised the problem with Ministers in July last year, and following a roundtable with five Departments in March, there now appears to be agreement that regulatory change needs to be considered. This Bill is exactly where it needs to be addressed, and I am happy to table amendments to that effect if the Government are not able to do so themselves.
In an open letter to all Hampshire council leaders, Neil Odin, who is the fire chief of the Hampshire and Isle of Wight Fire and Rescue Service, stated that these batteries
“can malfunction and lead to an intense fire, and when they do, pose a significant harm to the environment”.
That is coming from the head of one of the largest fire authorities in the country. I believe they also pose a significant risk to people, including firefighters, and I hope that in advance of Report the Minister will work with me to amend the Bill, so that lithium-ion battery storage can continue to play a hugely important role in realising the Government’s ambitions but with the right regulatory governance in place, not only to ensure the safety of our residents but to encourage insurance companies and those who want to run these facilities to do so in the future.
I would like to talk a little bit about the hydrogen village trials and the experience of the process in Whitby, because it has told me—and, indeed, this debate has highlighted—that it is not at all clear that we have the answers yet to how to reach net zero in home heating. Without that certainty, we do not have a hope of persuading people that the disruption, inconvenience and expense they will face is a sacrifice worth making to possibly at some point in the future reach net zero. I say that knowing that the vast majority of my constituents are persuaded of the urgent need to tackle climate change, as am I.
Most importantly, these changes can only be done with people, not to them. That message does not appear to have been understood by those promoting the hydrogen village. Once consultation started, local residents came to me time and again, having been left with the clear impression that they would be forced to switch to a hydrogen supply whether they wanted to or not. People were told that the trial was happening and they had better get used to it—so much for taking people with us.
We have thankfully moved to a point where people now have a choice between staying on natural gas and moving to hydrogen for the duration of the trial. That was what I thought the original proposal was going to be—it is certainly what it should have been—but this last-minute revision to the proposals is too late in the day, as many have already made up their minds. Given that only a few months ago I was being told that allowing people to stay on natural gas was not possible because
“we are aiming to emulate a rollout scenario in which natural gas heating solutions are no longer an option”,
I am more than a little cynical about the reasons for this late change of heart.
Although it is a positive that we have finally reached the point that we should have been at from the outset—that those taking part in the trial will have a genuinely free choice about whether they do so—because of everything we have been through, the take-up of hydrogen is likely to be small, and certainly not be the mass roll-out that was originally planned. As such, the question for the Government is whether all the effort and expense that will go into the trial will be worth it, given the likely low take-up.
We may have already learned the most important lesson, which is that if we do want to decarbonise the domestic energy market, technological change cannot simply be done to people. The Government need to decide which technologies they want to prioritise and then take a lead in persuading people that the choice being made is the right one, both for the individual and for the planet. However, when that choice is made, I ask them to please make sure that they have as many answers to the questions as possible, because my constituents know that, at the moment, the Health and Safety Executive has not signed off the use of hydrogen in the trials. They know that the energy needed to create green hydrogen is currently far greater than that which would be needed for other renewable sources. They know that it will cost them more, and that up until now 37 independent studies have shown that hydrogen is unlikely to play a significant role in home heating.
Even if we do get to a point where the safety and cost concerns are addressed, every week that passes sees another report or study pouring further doubt on the claims that hydrogen is part of the future for domestic heating. When my constituents see those reports, they are bound to ask why they are being put through this, and to ask the question I put to the Minister: if he is persuaded by the increasing number of studies—if he thinks that hydrogen in the home is unlikely to play a part in the future mix—why does he not just call a halt to these trials now? However, if he thinks that the time and money being expended is worth it, I ask him to please say so and be explicit about why the trials are proceeding and what the benefits are, as the majority of my residents have made up their minds that the risks far outweigh any potential benefits.
On the subject of residents’ views, I am pleased that the local council has agreed to my suggestion that a ballot of residents take place, so that there is a genuinely independent measure of public support for the trial. I am pleased that the Government have previously indicated that they will expect to see strong public support as a condition of the trial; I would be even more pleased if that were said explicitly in the Bill.
Returning to the importance of taking people with us, I find the clause in the Bill that gives gas transporters the right to forcibly enter properties in order to conduct the trial deeply concerning and completely against the spirit of what those trials should be about. As it stands, the clause offers sweeping powers for gas network operators to go into properties. It would be welcomed, both by myself and by my constituents, if the Minister could commit that those powers would only be used in an emergency and as a last resort, and say whether anything can be done to amend the Bill to make it clear that that is the case. I do not believe for a minute that the Minister thinks it would be a good idea to send engineers into someone’s home to forcibly change their supply to hydrogen just for the purposes of the trial, so it would be good if the legislation reflected that.
In conclusion, hydrogen certainly has a role in industry. It probably has a role in transport too, but in the home that role seems far less certain. The uncomfortable reality is that we have yet to find the panacea for decarbonising home heating. Moving to unproven, uncertain technologies is not going to wash with the public, especially when they are being asked to make a significant sacrifice, and always when they are not going to be given any choice. Given the money that has been spent so far on persuading people of the merits of hydrogen in the home, the fact that I and the majority of my constituents are now more sceptical about it, not less, should give everyone food for thought about whether this whole exercise is really just a case of selling ice to Eskimos, and whether it needs to continue at all. I believe that Cadent has been given more than enough opportunity to demonstrate that these trials could be a good thing, but it has failed to take that opportunity. That is probably because, at the end of the day, this experiment just does not stack up, and the idea that my constituents would end up paying for it through a hydrogen levy just adds insult to injury.
In the short time available, I want to focus on an aspect of the Bill that has not yet been discussed in this debate: the new regulations on district heat networks. I am very grateful that the Government have listened to concerns—not just from me, but from colleagues across the House who have district heat networks in their constituencies—about just how damaging those networks’ unregulated nature can be. That can be seen on the New Mill Quarter estate in my constituency, which I have raised a number of times in this place. I will outline briefly why this new regulation is so needed and why it is welcome, but also where I would like the Government to look into potentially going further.
To give a quick bit of context, the New Mill Quarter estate in Hackbridge is heated by a series of insulated pipes that stretch from the incinerator in the north of the constituency across redeveloped farmland to heat those homes, but it has been bedevilled by problems. It is not even online yet: it is currently being powered by a back-up gas boiler system, and it has suffered a number of blackouts and two call-outs from the London Fire Brigade and, practically, seems to have had a huge failure. I do not have time to go into that subject now, but I draw Members’ attention to some of my other contributions in the House on it.
Blackouts are probably the No. 1 reason why regulation is needed. The reliability of district heat networks is a massive problem, and not just in New Mill Quarter in Hackbridge; it has happened across other estates in London, such as Oval Quarter in Lambeth, New Festival Quarter in Tower Hamlets and multiple estates in Southwark—no guessing which party runs those local authorities.
Customer satisfaction is lower for customers on district heat networks, rather than gas boilers. A 2017 survey conducted by the Department for Business, Energy and Industrial Strategy found that district heat network customers were much less satisfied with their service than those with other forms of energy.
Bills are another big issue. The cost of living is a massive concern for all our constituents right now, and the No. 1 concern that comes up time and again when I talk to Carshalton and Wallington residents is meeting the cost of their energy bills. We need to empower Ofgem to force the pricing model of district heat networks to be comparable to the market average. That is incredibly important, and I am grateful to the Government for looking at that in detail and taking steps in that direction. The residents of New Mill Quarter are facing energy bills higher than the market average. They are not protected by, for example, the energy price cap, because it is an unregulated piece of heating. I very much welcome the Government’s measures, which will provide a lot of reassurance not just to residents of New Mill Quarter, but to others living under a district heat network.
The final thing that I welcome the Government taking action on is simply the monopolistic nature of heat networks. Customers cannot change and go to a new supplier, because a district heat network forces those living within it to use that heat network. They cannot shop around for a better deal and they cannot rely on the market—this is important to me as a free-market Conservative—to drive down prices while driving up reliability. Regulation therefore is so important, and I am grateful that the Government are taking steps in that regard.
One area I would like the Government to look at further is future-proofing district heat networks. Many of them are future-proofed by their very nature, but for those that are heated by incinerators, such as the one in Hackbridge, I can see a glaring problem coming down the line. The Government outlined in their waste minimisation strategy that they want to phase out incineration as a form of dealing with waste. All of us across the House support the reduction and stopping of incineration as a form of dealing with our waste. Incineration is only slightly better than landfill—only very slightly. It is not a net zero-conducive form of waste management, as we rely on creating waste to feed it.
The problem we can see in estates such as New Mill Quarter is that we will have an incinerator that becomes less and less needed as the years go on. We then have two options: either we have to import waste to feed the thing and keep the heating going, which obviously is not conducive to any net zero ambitions; or the thing has to be turned off, and what happens then? That entire estate was new build, built specifically with the infrastructure to deal with the incinerator. I might be long dead by the time it happens, but the problem is coming, and we should not leave it to a future generation to solve. We should look at future-proofing that now.
I am interested in what my hon. Friend is saying about heat networks and wonder whether he might agree with something I have learned just recently. It is a proposal from a stakeholder who deals in renewable energy, including hydrolysis to create hydrogen. That generates a lot of heat, and their suggestion is that we declare heat as a utility in a wider form. Would that help his purposes?
My hon. Friend is absolutely right, and it relates to a point that a number of colleagues have made today: we cannot mandate the use of one technology or a very small number of technologies; we need to have that collective option. I urge the Government to err on the side of caution because, under their own ambitions, district heat networks could account for something like two fifths of the UK’s heat provision. Given the problems that have existed in Hackbridge and across multiple estates, and not just in London, I urge the Government not to put all their eggs in one basket by relying on district heat networks as a singular answer. I agree with my hon. Friend. There are plentiful supplies of renewable energy out there. We need to make sure that we are neither mandating nor preventing the use of any one. We should be using all those potentials to reach our net zero ambitions and provide more domestic energy security.
I very much welcome the measures set out in the Bill and urge colleagues to support it. It will certainly have my support tonight.
Our biggest task worldwide is to get to net zero. We must transform our entire energy system. The Liberal Democrats welcome many of the Bill’s proposals. However, it is simply not ambitious enough. We need bold action now to protect consumers from spiralling costs and to put us on the path to net zero.
The Government continue to protect the oil and gas giants. Typical direct debit customers have seen their annual gas and electricity bills almost double, while oil and gas giants have announced record profits. Last year, Shell forcibly installed prepayment meters in over 4,000 homes while making £32 billion in profit. UK consumers have been among the least protected in Europe. When will this Government put struggling UK citizens first?
The energy price cap is not fit for purpose. The current price cap is set at a high level to incentivise people to switch energy suppliers, but research shows that vulnerable customers who struggle to pay their energy bills are much less likely to switch suppliers. We Liberal Democrats would reform the price cap to protect these customers by bringing in a capped tariff set lower than the existing price cap. I urge the Government to consider this.
The best way to reduce energy bills is to move harder and faster towards renewables. However, a lack of grid capacity is seriously holding back renewable energy projects. Many face delays of up to 15 years. In Wokingham, for example, the Liberal Democrat council has been told that its first ground-mounted solar farm project will only be connected in October 2037, a decade later than originally promised. How can we decarbonise our power system by 2035 when ready-to-go renewable projects cannot get the grid connection they need?
Britain will have to build seven times more transmission lines in the next seven years than it has built in the last 20. This huge task will require a major change in approach by the regulator. Ofgem is not empowered to consider the benefit of long-term investment, as its remit focuses on short-term costs to consumers. This is a major reason behind the lack of grid investment. In the other place, an amendment was agreed to give Ofgem a specific statutory net zero objective. I urge the Government to keep this provision in place.
The Bill, as amended, also now contains a ban on opening new coalmines. Less than two years ago, the Government announced that they were leading an international effort to end the use of coal, yet soon afterwards they gave the greenlight to the Cumbria coalmine, a gateway to allowing more fossil fuels in the UK and flying in the face of our net zero commitments. The Government must ensure that this ban on new coalmines remains part of the Bill if they are to retain a shred of credibility on climate action. Huge changes to people’s lives will be required to get to net zero. We must bring people on board, or there is a risk that people will not accept the necessary changes, making our progress to net zero more lengthy, costly and contested.
Community energy provides cheaper, greener power and distributes benefits locally. The community energy sector has the potential to be 20 times bigger by 2030, powering 2.2 million homes and saving 2.5 million tonnes of CO2 every year. However, community energy projects currently generate just 0.5% of the UK’s electricity. This is because the financial, technical and operational requirements involved in becoming a licensed supplier put initial costs at more than £1 million. The amendments agreed in the other place would rectify this, and they must remain part of the Bill. Ministers have said repeatedly that they want more community energy. Now is the time to show that they mean it.
Some 77% of people say that they would support a new onshore wind farm being built in their area. Our UK communities know that renewables are the solution to our energy crisis. However, this Government continue with their dogmatic opposition to onshore wind and solar. The Bill does not contain provisions to roll out solar power, and the effective ban on onshore wind remains.
Another disappointment is that the Bill does not contain provisions to cut flaring, venting and leakage of methane from gas and oil platforms. Methane is a potent greenhouse gas, with 80 times the warming effect of CO2. It accounts for 30% of global greenhouse gas emissions. The UK has signed the global pledge to cut methane levels by 30%, and a ban on oil and gas flaring and venting in the North sea would dramatically reduce methane emissions. It is supported by the Environmental Audit Committee and the Government-commissioned independent review of net zero. We must mandate monthly leak detection and repair activities. The North Sea Transition Authority must identify and publish a league table of the best and worst performing companies, so that methane emissions can be publicly monitored. We can reduce methane waste by 72%, but the Bill is currently silent about that and needs amending. We still have much to do to protect consumers and reach net zero. The Bill, although substantially improved in the other place, still does not go far enough. As it passes through this House, we must ensure it does not become a missed opportunity.
It is excellent to see you in the Chair tonight, Madam Deputy Speaker. Let me say from the outset that the main message I receive from all parts of the energy sector—the Minister will know how many parts of that sector exist in my constituency—is this: let’s get the Bill passed; let’s get on with our job that needs to be done. That said, this is a complex Bill. We have heard about some of that complexity tonight, not least the various conflicting priorities that it is the Minister’s unenviable task to sort through.
I will not go through every part of the Bill as time will not allow—in fact, time probably will not allow me to go through the topics I wish to try to talk about, so I will get on with them. Oil and gas has been spoken about already, but the “inconvenient truth”, to steal a phrase from former Vice-President Al Gore, is that we are not going to get to 2050, keeping the lights on, homes warm and the economy moving, without oil and gas, albeit at greatly reduced demand. It therefore stands to reason that we will not get to net zero by 2050 without carbon capture, usage and storage, and I want to talk about the Scottish cluster in particular.
Before the energy profits levy was introduced, the oil and gas industry was already paying 40% tax, compared with most businesses paying 19%, which rose to 25% last month. With the EPL, the oil and gas industry is now paying 75% tax on oil and gas profits—not on global profits, but profits made in this country. According to the Office for Budget Responsibility, it will pay around £15 billion in financial year 2022-23. That represents a fifth of the UK’s corporation tax receipts, from exploration and production alone.
The Climate Change Committee’s ambitious net-zero pathway profile predicts that demand for oil and gas will decline at a slower rate than domestic supply. It is hugely important that we are able to access our own domestic supplies to meet that continuing, albeit declining, demand. It is also hugely important, as the Minister knows, that the industry is adequately engaged through the passage of the Bill. Oil and gas companies, and their employees, skills, technology and expertise, stand ready to help the Government and this country not only to deliver our energy security needs, but to invest and drive the energy transition that, as should have been said, is at the centre of the North sea transition deal that was signed between the Government and the oil and gas sector in 2021.
The industry and Governments must continue to work together to make the most of our homegrown industry and supply chain in which, crucially, most of the 200,000 oil and gas jobs in the UK exist. With that in mind, I reinforce calls that I know the Minister has already heard from the industry through the trade body Offshore Energies UK. In the immediate term, we need to introduce a clear mechanism, or announce what such a mechanism will be, by which a trigger or a floor price ensures that the 75% tax rate is applied only to company profits that are earned from the excessively high market price environment. In the medium to long term, we must legislate for an effective decarbonisation investment allowance that allows for decarbonisation expenditure, which is essential to delivering the UK’s net-zero ambitions and North sea transition deal emission targets. There are longer-term requests, of which I am sure the Minister is aware.
A huge part of our decarbonisation effort is this Government’s strategy to deliver up to 30 megatonnes of carbon capture and storage by 2030. I welcome the Chancellor’s announcement in the spring statement of £20 billion to help deliver at least that commitment of four CCUS clusters in the UK by 2030, and more beyond that. The £20 billion is for 20 years, from this year. Last month the launch of track 2 of the cluster sequencing process was widely welcomed by industry stakeholders and project developers alike. That includes the Acorn project in my constituency, and the Scottish cluster more generally. Despite continued efforts to downplay the status of that project by SNP Members and Members of the Scottish Government in particular, work on that project has never stopped. In fact, more than £40 million of UK Government money has been directly invested into the Scottish cluster, compared with £80 million promised by the Scottish Government and then withdrawn, with clarity not provided on exactly where that £80 million has gone.
As I said, the sector is impatient to get on with the work to be done on energy security and decarbonisation. Speaking for not only the Scottish cluster but CCUS more broadly, the announced streamlined approach to track 2 is very much welcome, but, as I am sure the Minister realises, even more welcome would be a clear and rapid process for rolling out track 2 clusters, building on the lessons learned from track 1. For example, it would be extremely helpful to award initial capture projects swiftly—and concurrently, if possible—with transport and storage licences. May I also ask for the inclusion of shipping and other non-pipeline transport of emissions, bearing in mind that most centres of industrial activity around the UK do not currently have clarity on what their pathway for decarbonisation will be?
Finally, on CCUS, given direct air capture’s current absence from the Bill as a carbon capture entity, will the Minister clarify what role that will play? Will it need to be included in the context of the appropriate clause—I think it is clause 63—of the Bill? If the Government cannot table that amendment, would it be helpful for me to table such an amendment, as others have offered? I am sure we can discuss that in more detail as Committee approaches.
It is a pleasure to follow the hon. Member for Banff and Buchan (David Duguid), who was effective in outlining the many complexities inherent in the transition of our energy system from dependence on fossil fuels. It is a complexity that we must bear in mind as we discuss the Bill. I welcome many of the measures in the Bill that are designed to provide a cleaner, more affordable and more secure energy system. However, I am concerned that more is required to address some of the short-term issues that we face.
Of course, I need not remind the House of the widespread concern that households across the UK are particularly vulnerable to any further increases in the cost of energy. We are told that energy bills might increase by some 17% this year. Hon. Members will know as well as I do that many households struggled last winter. They have had to exhaust their savings, and some have had to take out loans to meet the costs of last winter, so they are vulnerable to any further increases that might come next.
Citizens Advice Cymru has seen a sharp increase in the number of people seeking debt advice. It reports that more people are now falling into arrears on essential household bills. The charity saw a 150% increase in the number of people seeking advice on debt relating to energy bills between February 2020 and February this year. That further underlines the vulnerability of so many of our households and how exposed they are to any further increases in the cost of energy. Before I go into some of the Bill’s longer-term measures, I would like to impress on the Government that, before next winter, there is still time to bring forward measures to support some of those vulnerable households and ways of financing them.
Does the hon. Member share my concerns, which I think are widespread, about the plight of people on prepayment meters who are struggling to pay for energy? Does he share my disappointment that nothing has yet made it into the Bill that would protect people on prepayment meters in particular from so-called self-disconnection, where, when they run out of money, they are automatically cut off from all gas and electricity?
I thank my hon. Friend for making that important point. I think we all agree that customers on prepayment meters are among the most vulnerable consumers of energy and electricity in the country, and they should be prioritised as we look to help households with the cost of energy.
It was mentioned earlier that one way of financing greater support for households could be a new tax on share buybacks. We have read in the news about Shell and its £3.2 billion plans announced in that regard, and we must question whether such funding could be used to increase support provided under the energy price guarantee in advance of next winter. Another round of the alternative fuel payment could be guaranteed, set at a level which better reflects the increase in the cost of alternative fuels experienced by off-grid households. In that regard, I am very grateful that the Government and the Minister are considering additional support for energy-intensive businesses not connected to the mains gas grid. That should be a priority.
Looking beyond next winter, I think Members will agree that the Bill offers a golden opportunity to step up investment in the energy efficiency of our housing stock. In the long term, reducing our energy demand represents one of the most important contributions to forging a more resilient and sustainable energy system, helping to permanently slash energy bills for both households and businesses alike. I have previously called for the £6 billion for energy efficiency measures, committed in the autumn statement, to be brought forward. The spending profile should be brought forward as much as possible. The more we can prioritise the investment of energy efficiency, the better. As chair of the all-party parliamentary group on fuel poverty, I emphasise that point and, in doing so, ask that the Government consider setting clearer pathways for improved energy efficiency standards for our housing stock.
The case for prioritising energy efficiency measures is well made, but for the avoidance of any doubt the New Economics Foundation estimates that had all homes in England and Wales been upgraded to EPC C by October last year, the energy price guarantee would have cost £3.5 billion less during its first six months. A Welsh home installation programme, set out by the Future Generations Commissioner for Wales, could save the Welsh NHS £4.4 billion by 2040 in improved health outcomes.
It is important that current energy company obligation schemes are delivered properly. Between April last year, when ECO4 commenced, and December, approximately 25,000 households received support. Given that that amounts to less than 6% of the 450,000 households ECO4 is supposed to support over its four-year lifetime, we should be concerned about the pace of the roll-out so far. Constituents and installers alike have contacted me to complain about the scheme’s deficiencies, which I believe demand the Government’s urgent attention. In particular, consideration needs to be given to reviewing the eligibility criteria, so that more people can benefit from the scheme. Also important is revision of the scheme’s cost assumptions, so they are brought in line with current supply costs.
Before I bring my remarks to a close, I would like to add my support for clauses 272 and 273, which were added to the Bill in the other place. The current energy and wider cost of living crisis brings into sharp focus the consequences of failing to transition away from fossil fuels. Action must be taken to accelerate the transition. In that regard, community energy projects have a crucial role to play. By establishing an export guarantee scheme for smaller-scale sites that generate low-carbon electricity, and by requiring larger suppliers to work with community schemes, the clauses could unlock the potential of community energy schemes across the United Kingdom, which the campaign group Power for People estimates could grow by between 12 and 20 times by 2030, powering up to 2.2 million homes. This is an important set of clauses that I very much hope the Government will see fit to retain in the Bill.
As chair of the all-party parliamentary group on hydrogen, most of my comments will focus on the hydrogen part of the Bill.
The past winter has epitomised the uncertainty felt across the country about our energy future. However, the Bill will restore certainty and help to deliver energy security and net zero targets, because it will help to unleash our hydrogen potential. Part of the uncertainty for our constituents is a concern about everyday essentials, such as, “How do I clean my home?”, “Do I need a heat pump?” and, even, “What is a heat pump?” Green hydrogen blending uses the same pipe and boiler system already in our homes and is by far the simplest way of cutting our carbon emissions from heat, which currently run at nearly a quarter of our carbon dioxide output. I am convinced that green hydrogen can play a part in decarbonising heating, but I know, as we have heard today, that many across the House and the country are not so certain. That is why the trials that the Bill supports are so important. The point is to allow Government, businesses and, most of all, our constituents, to decide if it is a viable path to decarbonising heating. It is essential that the Bill pushes forward those aspects.
Businesses, too, need certainty that hydrogen will not fall by the wayside. The UK has been a world leader in hydrogen. The hydrogen strategy and last year’s update clearly envision us regaining that title. But policies such as the Inflation Reduction Act and the Net-Zero Industrial Act mean that the US and the EU have become more fertile ground for hydrogen innovation than the UK. Businesses need certainty to invest in hydrogen, knowing that there will be a thriving hydrogen economy for production, storage, transport and use. That is why I am delighted that the Bill will unlock billions in private investment through contracts and business models, not only securing our energy future but bringing jobs and wealth across the country. Although there are concerns about the cost of the schemes, I know that every pound spent on hydrogen today means two pounds or more off energy bills tomorrow. That is surely an easy calculation to support. The provisions in the Bill will boost the UK’s hydrogen economy, and I am glad the Government are, at last, being proactive in this space.
Although the Bill goes a long way, we must go further on hydrogen. It will be the glue that binds our green energy future together. It is a Polyfilla energy, helping to fill the cracks between other sources and plug the holes left by carbon-based energy. It will prove an invaluable tool for tomorrow’s energy mixture. The more we encourage it today, the better. For that reason, I urge the Government to push further and legislate to become the torchbearer for global hydrogen. For a start, although I am glad that community electricity producers will now have the certainty and support that they need to flourish, the provisions in the Bill exclude small-scale hydrogen production, which can be used as storage or directly as an energy source. Will the Minister look at widening those clauses to include all low-carbon energy suppliers?
We can do more to ready ourselves for hydrogen heating. We can require new boilers to be hydrogen-ready by 2026, which will bring down prices to normal levels, provide certainty to manufacturers and smooth the transition towards blended heating systems. What better way of preparing ourselves for clean heat. I call on the Minister to re-examine the case for hydrogen-ready boilers. That will be a shot in the arm for UK manufacturers. Furthermore, although the Government’s dedication to hydrogen is welcomed by all, or by most anyway, there must be enough green hydrogen. Current estimates forecast that we will need about 10 times the hydrogen that we currently produce to reach net zero by 2050. The Government have already kickstarted UK hydrogen by doubling our production target. Will they do that again? Will there be certainty for all the hydrogen that we need? We need to increase and support hydrogen production.
Finally, and most importantly, we must be certain that the hydrogen we use is not damaging our planet, despite its clean reputation. Many of the objections to hydrogen in heating come from uncertainty about the true emissions of producing it. Blue hydrogen in heating is often claimed to emit more carbon than natural gas. We need certainty that the hydrogen we use is not going to be worse than the carbon we are leaving behind. The Government’s current definition of low-carbon hydrogen, at 20 grams of CO2 equivalent per megajoule of hydrogen, is a good start but we must look at lowering it in line with the overall emissions of the grid. Specifically, it must come down to closer to 5 grams to ensure truly environmentally friendly hydrogen. That is the only way to give investors and our constituents the certainty that low-carbon hydrogen is indeed low carbon. I appreciate that blue hydrogen and others are clearly transitional to get to green hydrogen.
It will be obvious to the House that I am certain that there is no green future without hydrogen, but thanks to the Bill and the certainty that it provides to our constituents, businesses and investors, I believe that the Government agree. I know work will be planned to incorporate some of the suggestions I put forward today, but the Bill goes a long way to creating the certainty in hydrogen that we need. However, we must go faster. We used to be the world leader in hydrogen production and manufacturing, whether from buses such as Wrightbus or diggers such as JCB. All across the sector, we need to go further and faster with hydrogen. It is not the silver bullet to all our net zero needs but it is the Polyfilla that will make sure that, when other areas fail, hydrogen will step in.
Let me begin by drawing attention to my roles as chair of both the chemical industry all-party parliamentary group and the all-party parliamentary group on carbon capture, utilisation and storage.
I welcome the Bill’s progress. It is long overdue and essential, although I feel that it lacks the necessary ambition to deliver all the Government’s stated aims of making the energy system fit for the future, ensuring the safety, security and resilience of the UK’s energy system, and leveraging private investment in clean technologies.
Ministers have said that there is no way for us to achieve net zero without carbon capture and storage. The target set by the Government is to capture and store 20 to 30 million metric tonnes of carbon dioxide a year—including removals—by 2030, but while that is welcome, I personally believe that there could be an even higher target to benefit our country. The Carbon Capture and Storage Association says that the UK’s CCUS project pipeline would be able to store some 70 million tonnes of CO. The industry is ready to deliver, and we need to let the industry get on with it.
I have been banging the drum for CCUS deployment for quite some time now. Support from the Government has been shaky in the past, with several false dawns—funding whisked away, or not provided at all—so I am pleased to see what looks like real progress, although today’s delay in planning permission for our Teesside project is a worry. Teesside is a vital area for the net zero agenda. Its proximity to offshore wind sources and its cluster of energy-intensive industries that require decarbonisation make it a good location for hydrogen production and carbon capture. I was certainly pleased when the Department selected a handful of carbon capture projects on Teesside to progress to the next stage of development, but I was very disappointed that of the 40 longlisted projects only eight are going forward. and that many in the east coast cluster, including one in the Humber, are missing out. What, I ask the Minister, will happen to them next? That said, I welcome the Government’s statement that the Bill
“will introduce state of the art business models for carbon capture usage and storage…and hydrogen”.
Now they must prove it, and prove it quick.
I know from speaking to industry representatives, especially those in the Teesside cluster, that investors see the timely passage of this legislation as critical to maintaining confidence and momentum in the sector after a decade of those false dawns and U-turns. Representatives of the Chemical Industries Association tell me that their sector also wants the Bill to be passed, pointing out that, while it is imperfect, it contains some fundamental provisions. They say that it will give the sector certainty, including the provisions relating to hydrogen and CCS business models, network charges and Ofgem's remit to include net zero, and they like it. Essentially, however, they are asking for a net zero energy transition at the lowest possible cost, creating competition in the energy market to minimise the risk of domestic and non-domestic consumers’ picking up the cost. How, I ask the Minister, will that be delivered?
Of course, the quickest, cheapest and best answer for our national energy security is a clean energy sprint. New renewables are nine times cheaper than gas. They would not only fight the climate crisis but increase our energy security and sovereignty, bring down bills, and create jobs. However, at this crucial moment for our country and our planet, the Bill does not provide the clean energy sprint that we need, so perhaps the Minister could tell us why the ban on onshore wind—the cheapest, cleanest, quickest energy available—remains. Furthermore, the Bill does not deliver the “green plumbing” measures that are necessary to accelerate the deployment of low-carbon power and grid management, failing to solve the grid connection problems, leaving our planning system unreformed, and failing to add a net zero duty to relevant regulators such as Ofgem. It is certainly not the complete answer to all our needs.
We do not just need renewables; we need renewables done well, and, as the Campaign to Protect Rural England suggests, that can be achieved by empowering communities to decide what is appropriate for their local area, and guaranteeing that they benefit from these schemes. The Countryside Charity has long highlighted community energy projects as the gold standard for renewables done well.
The Bill provides a real opportunity to put financial structures and a programme in place to secure for the 19 million homes in our country that are below EPC band C the upgrades that they need. That is what Labour would do, but there is no plan in the Bill to insulate the homes that need it, which is costing each of those households up to £1,000 a year. Disappointingly, there is no plan to remove the windfall tax loophole or de-link electricity and gas prices so that the cheap power promised by renewables can be passed on to families and businesses rather than being paid out in windfall profits. We should be providing public support to develop our hydrogen industry, but the Government’s preference is to load the cost of subsidy on to household bills.
A number of amendments to the Bill were introduced by the Lords: moving the hydrogen levy away from customer bills; establishing a net zero duty for Ofgem; banning new coalmines; introducing a local electricity Bill; and mandating reporting on EPC standards for homes. I trust the Government will welcome those amendments. I will also support further changes, such as ending the onshore wind ban, banning fracking, expanding targets on the energy efficiency of homes and dealing with grid connection delays.
It is exam season and the Government are facing big tests—I would give them about six out of 10 for now. The Bill has come some way, but we know that in its current state it does not go far enough. Our industry and people depend on us getting this right.
I welcome many of measures contained in the Bill, not least the clear step forward in embracing nuclear. Indeed, I consider it an act of national vandalism and a huge part of our difficulties on energy cost and supply since Putin’s invasion of Ukraine that previous Governments failed so badly on nuclear.
First, I wish to focus my remarks on community energy. It is an absurdity that the community energy sector has seen minimal growth in recent years, accounting for less than 0.5% of total UK electricity generation capacity, not because of the cost of technological development or even deployment, but because of energy market and licensing rules. That should be easily fixable, so I add my voice of support for clauses 272 and 273 to enable community schemes to sell the electricity they generate locally.
These seem to be straightforward, pro-competition, pro-consumer reforms, and my central ask is that they should be adopted as part of the Bill. If my hon. Friend the Minister is minded not to support them, what will he propose to open up the huge community energy sector opportunity that the Environmental Audit Committee’s 2021 report identified could grow by 12 to 20 times by 2030, powering 2.2 million homes?
I turn to the challenges facing rural off-grid households. According to the latest census, 15% of my constituents—and, for transparency, this applies to my house too—use oil-fired boilers for central heating, compared with 3% nationally, and a further 4% use tanked or bottled gas, compared with 1% nationally. As it stands, such households are looking down the barrels of massive expenditure when their boilers need replacing. A troubling direction of travel means that, as soon as 2026, these oil-burning boilers will be banned and groupthink will be directing us to worship at the altar of the heat pump.
Not only are these things horrendously expensive, but for many rural homes they just will not, and never will, work. The Government’s own data shows that some 20% of off-grid households simply cannot use them. Many rural or older homes, built out of stone, cob or “Whychert”, which is unique to the Vale of Aylesbury, are less energy efficient, more expensive, more difficult and, in some cases, impossible to insulate. It is essential that the Government drop ambitions to ban people from using systems that actually work for their homes. Instead, they should ensure there is the best variety of choices available to households to choose how to decarbonise in a way that will not leave them broke, indebted and cold.
The best way of moving forward would be to adopt the provisions in the Renewable Liquid Heating Fuel Bill, introduced by my right hon. Friend the Member for Camborne and Redruth (George Eustice), into this Bill. That would enable people to transfer to the use of hydrotreated vegetable oil at a fraction of the cost of a heat pump and associated works—we are talking hundreds of pounds to convert, rather than tens of thousands of pounds for the alternative.
That leads me to a wider ask on the future of fuel. It is hugely welcome that, with this Bill, the Government are seeking to recognise recycled carbon fuels in legislation by extending the eligible fuel types under the renewable transport fuel obligation orders to include two new low-carbon fuels. As it is inconceivable that the future of aviation and maritime will ever be without the need for a liquid hydrocarbon, the challenge is what that liquid hydrocarbon looks like. My central argument is that, by using drop-in biofuels, which are more easily and financially scalable, in the short term and fully synthetic fuels in the medium to long term, the choice extended to aviation and maritime can equally be enjoyed, with much wider access, across other heavy-duty applications, such as agriculture and construction machinery, road haulage, rail, motorsport and, linking back to my second theme, the very fuel we use to heat rural and off-grid homes in a manner that does not leave people poorer and colder.
This is about developing new fuels for what we already have, not spending billions of pounds on reinventing the wheel, or at least that which makes the wheels and propellers turn. Perhaps such fuels will even be the saviour of the road car as we know it, as even the European Commission is proposing to allow e-fuels in combustion engines after its zero emission cut-off date in 2035.
Petrosynthesis, as Paddy Lowe, the pioneer of one synthetic manufacturer, Zero, calls it, creates a balanced, circular and sustainable future of indefinite timescale—the industrial version of the natural carbon cycle. This Energy Bill should be the vehicle to embrace this evolution right here in the United Kingdom. Across transport and domestic energy, synthetics offer so much. We just need to get fully behind them.
I welcome you to your place, Madam Deputy Speaker.
This Bill is welcome, and it can play a key role in delivering a cheaper, cleaner energy system, promoting investment in clean technologies and enhancing our energy security by deploying more home-grown power. The UK has been a global leader in promoting renewables such as offshore wind, but we cannot rest on our laurels. If we do nothing, we will be left behind in the race to attract global investment, which is very much footloose.
The US Inflation Reduction Act and the EU green deal industrial plan throw down the gauntlet, to which we must respond, not necessarily with like for like but by ensuring that we have a regulatory and policy framework that gives investors confidence and certainty. At the same time, we must not forget the demand side. We should be doing better, and we are still searching for the catalyst that will unleash a retrofitting revolution.
I will briefly go through some of the initiatives that are needed to provide the clarity and certainty everyone seeks. First, a duty is needed for Ofgem to consider net zero. It is vital that we keep costs as low as possible for consumers, but expanding Ofgem’s remit to include net zero would unlock more anticipatory investment, which would enable grid reinforcement. This is currently particularly important in East Anglia.
Secondly, introducing a competitive market for major onshore electricity transmission networks is welcome and can deliver real consumer benefits by driving both innovation and downward pressure on costs. Thirdly, the establishment of an independent system operator and planner with responsibility for whole energy system strategic planning is a positive and welcome step towards an improved governance framework.
Fourthly, we need to remove the obstacles that currently block community energy schemes from realising their full potential, and I thus urge the Government to give full consideration to retaining clauses 272 and 273, which were introduced by amendments in the Lords. One of the great challenges of transforming our energy system is that so many people and communities feel as if something is being done to them—as if a burden is being imposed. Community energy schemes enable local people to be part of the solution by participating in the benefits, thereby showing that we are all in it together. As we have heard, hydrogen will be crucial to achieving net zero, and locally, in East Anglia, it has a key role to play. It is very much the new kid on the block. We do not yet know the precise role it will play and, as we have heard, there is a dispute as to who will pay the hydrogen levy. Different views are being expressed on that and it is necessary to consider carefully how best to proceed.
It is also important to send a strong signal to investors by introducing a sunset clause on the powers assigned by the Secretary of State in the Energy Prices Act 2022, which have had an impact on investor confidence, with companies falling out and leaving the sector. The Bill provides an opportunity to amend that Act so as to enable the Government to respond quickly in the short term without unnecessarily impacting on investor confidence in the long term.
My final point comes back to demand-side measures and the need to address the challenge presented by our leaky buildings. Clause 204 is the result of an amendment in the Lords and gives the Secretary of State six months to publish a comprehensive plan to improve UK buildings’ energy efficiency. I urge the Government to commit to doing that and providing firm policies to incentivise improvements across all domestic and commercial buildings.
In conclusion, there are many issues the Government need to clarify, but it is vital, as Energy UK points out, that this Bill is passed with the utmost haste. The pressing need for reasonably priced electricity, for enhanced energy security and to meeting the challenge of climate change head on, together with the opportunity to create exciting and sustainable new jobs in coastal communities such as the one I represent, means that there is no time for delay.
The Bill is a crucial piece of legislation for delivering a cheaper, cleaner energy system and increasing investment in clean energies. As the new Department is named the Department for Energy Security and Net Zero, one hopes it will deliver on both. I do not need to rehearse the challenges we face in respect of how being overly reliant on imported gas has created higher energy prices. Much more needs to be rapidly done to improve our energy security. If we create the right legislative framework, and invest in renewable and sustainable energy supplies, we should ensure that we also achieve the goal of moving towards net zero.
There is much to welcome in the amendments from the other place. In particular, I wish to speak to clauses 272 and 273, formerly in the Local Electricity Bill, which are backed by 318 MPs, including 125 Conservatives. These measures seek to enable community groups to sell electricity to local customers. It is still bewildering to me, as someone who lives somewhere sunny, windy and with a huge tide, why this has not progressed sooner. Clause 272 sets up a community and smaller-scale electricity export guarantee scheme to provide a guaranteed income for the electricity from small-scale renewable energy generators with a capacity below 5 MW. Surely, with dramatically rising energy prices and a system still reliant on fossil fuel imports, new local, secure, low-carbon generation must be desirable.
Clause 273 sets up a community and smaller-scale electricity suppliers services scheme, which would enable them to sell the electricity generated to the local community if they wish to do so. That would facilitate a community energy tariff that can be offered to consumers local to the site. Locally generated electricity would reduce our dependence on imported energy and increase the resilience of our domestic energy supply. It could help cut bills and save emissions. There is huge support for these clauses across this House, and I hope that Ministers will ensure they remain in this Bill. Ministers have previously opposed them on the basis that they amount to a subsidy. However, that would be the case only if the guaranteed price were many times the prices of other sources, but that is not what these clauses mean, with a suggested rate of about 5p to 10p per unit.
Bizarrely, these same Ministers are still happy to subsidise the burning of trees for woody biomass, creating one of the biggest emitters of carbon dioxide in the country. We are subsidising that to the tune of £1.7 million per day. Even advisors to the provider of this plant have detailed that it should
“reassess its criteria for determining carbon neutrality”.
We are seemingly keen to subsidise this polluting form of energy at a time when I am sure we are working towards net zero, yet there seems to be far less subsidy for some of the genuine renewables that we could make use of, for instance right here in the Celtic sea—I declare an interest as chair of the Celtic sea all-party group. But this year’s contracts for difference auction is expected to deliver less than half the renewable capacity we need to hit our 2030 offshore wind target, all due to an administrative strike price not keeping pace with rising supply chain and financing costs and a Department that said that it did not believe the industry’s figures.
As the Crown Estate gets ready to launch its next leasing round in the Celtic sea, aiming to catch 4 GW of floating offshore wind, I hope that we will be able to help get these floating offshore wind turbines out to sea rather than subsidise the burning of trees to secure our future energy supply. It is inconsistencies such as this that make me support new clause 271, which would place a duty on Ofgem to consider net zero. Investment and subsidy decisions would hopefully then ensure that the true environmental impacts of the energy produced were considered.
Clause 204, on improving energy efficiency standards in our homes, is hard to argue with. However, the practicalities of the issue have already seen long-term landlords change to short-term holiday lets in locations such as my beautiful North Devon constituency. We need to ensure that any move to improve energy efficiency applies to short-term holiday lets as well long-term rentals —we still use energy and emit CO2 when we are on holiday.
However, I have concerns about a blanket imposition. In rural and coastal Britain, our housing stock is older and draughtier, and it is harder to bring up to the standards of newer homes given planning restrictions. We need to better understand rurality. I will support any amendments that my right hon. Friend the Member for Camborne and Redruth (George Eustice) tables, as it seems bewildering to me that we are requiring all off-grid properties to adopt air source or ground source heat pumps when we could enable those with oil boilers to convert to hydrogenated vegetable oil at a fraction of the cost. The cost of such fuels is currently prohibitively expensive, but given that the Government have long recognised the value of renewable fuels, such as hydrotreated vegetable oil in the transport sector through the renewable transport fuel obligation, surely it is possible to devise a similar incentive mechanism, extended to the use of renewable fuels in domestic boilers for off gas grid properties. This could be achieved by some tweaks to clause 10, in part 3 of the Bill.
We should be able to support community energy generation given the abundance of renewable energy sources, particularly in the rural south-west. We must focus scarce subsidies on fuels that are truly renewable and work to harness the wind in the Celtic sea, which, in turn, will support the UK’s longer-term energy security strategy.
There is much to commend in the Bill, but I hope that Ministers will look favourably at these amendments and recognise that, while energy security is vital, we also need to work towards net zero. Frankly, though, some of the current subsidies risk delivering the opposite outcome.
I wanted to speak in this debate for three reasons. First, like every Member of this House, I am sure, I would like to see an energy system such as the Government are seeking to create—one that is more resilient, keeps cost down and keeps us on track for our net zero aim. The Government have spent a huge amount of money paying the equivalent of half the average household’s energy bill, which has been very welcome given what Putin has done to weaponise energy supply, but it is clearly an unsustainable position for the country to be in. Although we have made great strides in cutting emissions—cutting them by more than 40% and cutting them faster than any other country in the G20—we have more to do on our energy system.
The second reason is that my constituency is home to Harwell science and innovation campus, which was hidden from ordnance maps in the late ‘30s and early ‘40s, but was where atomic energy was developed. Harwell campus is now the home to £3 billion of science infrastructure, including an energy tech cluster, which, alone, has 80 companies in it. My constituency is also home to Milton Park, which has 270 companies predominantly working in science and tech. They include Tokamak Energy, which will be key to our fusion future. What the Bill seeks to do in supporting the Government’s aims on carbon capture and storage, on hydrogen and on fusion is important not just for the country as a whole, but for businesses in my constituency.
The third reason I wanted to speak in this debate is that I am the lead sponsor of the Local Electricity Bill, which various hon. Member have commented on. It has the support of 318 MPs—125 of them Conservatives—113 councils, nearly 90 national organisations and four of the six distribution network operators, not to mention countless members of the public who have written to many of us to endorse it.
We have not made enough of community energy and its potential. The Environmental Audit Committee found in 2021 that it could power 2.2 million homes by 2030. Instead, we have gone from 249 MW to 331 MW over a five-year period, from 2017 to 2022. We could be doing much more than that. We have not seen a single community energy supplier get to market through the Licence Lite scheme, which it was hoped might enable them.
The truth is that the set-up costs are too high: they are estimated to be £1 million or more, which for a small-scale generator of community energy is far too much. I pay tribute to the driving force behind the Bill, Power for People, and in particular Steve Shaw, whom many of us have worked with on this. Power for People is very flexible and adaptable and, as the Minister knows, the Bill has moved a considerable way, from seeking to make the costs of joining the network for community energy suppliers proportional to their size to proposing that we let them team up with larger suppliers so that they can sell their energy at a fair price and access the metering and maintenance capabilities of those larger suppliers.
I understand that is still not a position that the Government support, but I say to the Minister, “Work with me and the other supporters of this Bill as it progresses, to get to a position that the Government are comfortable with.” Community energy is hugely popular. People often disagree on nuclear, on which renewable source we should put more money into and on how long we will need to use fossil fuels, but almost everybody supports community energy. Indeed, the Government have consistently said that they support the development of community energy. I urge the Minister to work with us to try to find the right mechanism to get some money behind it, because it is high time we found the right mechanism to enable it to flourish.
When Russia invaded Ukraine and the energy crisis started, nobody would have thought that a small village called Bacton on the rural North Norfolk coast would play a central role. North Norfolk is home to Bacton gas terminal, a hydrocarbon gas processing plant supplying up to one third of the UK’s gas supply. As well as importing and exporting gas from Europe, Bacton acts as an important interconnector between Belgium and the UK.
Since the start of the war, Bacton has shot to prominence and has been working overtime. I mention it this evening to place on record its importance to the UK energy revolution, and to the hydrogen sector in particular. Bacton’s potential is absolutely enormous. It plays and it will continue to play a very significant role in the future of our energy security, specifically in the future of blue and green hydrogen production.
Already there are plans to launch a £1.3 billion project by Hydrogen East to transform Bacton into a hydrogen hub of the future. That hub in that little village in my constituency has the potential to power London and all of the south-east into the future. That is how significant it is. As the Secretary of State and the Minister know, they are warmly invited to see for themselves why leaders in the sector are looking seriously at this project and the potential it offers.
We know that the Energy Bill will make provision to secure our energy production and regulation, instead of subjecting the UK to volatile international markets, but a transition to hydrogen is also estimated to deliver 12.9 million tonnes of CO2 reduction. Not only will that provide us with 25% of what is needed to reach net zero, but the economic situation must not be overlooked. Importantly, it will generate up to £11 billion in private investment and more than 12,000 new jobs by 2030.
As many have said, hydrogen production will be the backbone of our transition away from fossil fuels, and it is vital that we accelerate our move towards those greener alternatives. Bacton and its £1.3 billion project could, as a terminal into the hydrogen energy of the future, heat up to 20 million homes for decades to come, with long-lasting impacts. So what is the problem? Well, all we need now is for the Government to sit up, take notice and give us the momentum, the investment and the support. By repurposing the existing infrastructure, we could, according to many of the projections, see hydrogen production in Bacton fully up and running by 2030, putting the UK on a world-leading path.
My coast already provides some of the highest concentration of wind farms in the world. It is not too far out of the question to say that North Norfolk has the ability to do that again, and—with Bacton set for the hydrogen energy revolution—it could be one of our country’s capitals of the secure energy future. We just need the Minister to help us with that. Bacton gives us our own secure energy production facility, long-lasting security and a greener future, and it certainly enables the UK to be a main player in this market.
We have had a good, calm and well-informed Second Reading debate. Indeed, we have heard contributions from across the House emphasising the point that the Bill is necessary but not necessarily sufficient.
My right hon. Friend the Member for Leeds Central (Hilary Benn) asked who will pay the changed levies as far as heating is concerned, and spoke about the need to undertake that properly for customers.
My hon. Friend the Member for Llanelli (Dame Nia Griffith) pointed us towards the rise of state-controlled companies’ investment in new energy arrangements, and was adamant about the Bill lifting of the ban on onshore wind.
My hon. Friend the Member for Ellesmere Port and Neston (Justin Madders) made a strong contribution on the role of hydrogen in heating and, in particular, on the hydrogen trials that he has experienced. Perhaps we can assure him that we will certainly pursue an amendment to the Bill along the lines that he suggested.
My hon. Friend the Member for Stockton North (Alex Cunningham) spoke strongly about carbon capture and storage, about the importance of CCS in the Teesside industrial cluster, and about the importance of ensuring that the industrial clusters can play their role in CCS as they develop further,
In the spirit of general cross-party support for the Bill, I think it also worth mentioning selected contributions from hon. Members who are not on the Labour side. Unfortunately, if everyone stuck to the contributions from their own side, those of the hon. Member for Brighton, Pavilion (Caroline Lucas) would not be mentioned by anybody, but she made a strong contribution about the future of coal, about the need to support the amendment on coal tabled in the other place, and about the ludicrousness of continuing to maximise the economic production of oil, echoing many of the sentiments of my right hon. Friend the Member for Doncaster North (Edward Miliband).
The right hon. Member for Ludlow (Philip Dunne), who chairs the Environmental Audit Committee, spoke strongly about the need for security of investment in this market, and the length of arrangement that would secure those investments and confidence in markets for the future.
Finally, the right hon. Member for Kingswood (Chris Skidmore), author of the net zero report, spoke enormous sense about delays being the biggest threat to net zero in future. He supported the retention of Lords amendments to the Bill, as did many other hon. Members, on community energy changes and other things that are part of the Bill that we are debating in the Commons.
Yes, I am happy to acknowledge that that is an important issue in the transition to net zero for the oil and gas industry, and that it is ripe for further legislation to outlaw it in the not-too-distant future.
It is fair to say that hon. Members across the House went along with the theme that we have tried to establish on the Bill: it contains a great deal to support, and it is a Bill that is necessary to introduce things that are essential to the development of a low-carbon economy, to the achievement of the many targets on low-carbon energy and renewable deployment, and to the new forms of energy management that the Government have already put in place and on which they are seeking to succeed.
The Bill establishes mechanisms and business arrangements for carbon capture and storage, and for the manufacture and deployment of hydrogen as a low-carbon fuel for the future. It starts to delineate how energy systems are going to be governed and managed for the future, with the establishment of the independent system operator. For the first time, it introduces a proper system of heat network regulation, and it takes the planning and development of heat networks further. It heralds some of the essential elements of energy market reform. In short, it undertakes a great deal of what I would call necessary “green plumbing”, which has to be done now if our low-carbon energy system of the future is to work effectively.
The Opposition have some serious differences with the Government about how to go about those changes, but we acknowledge and support the generality of those “green plumbing” measures, not least because their establishment will undoubtedly help the new Labour Government greatly as we embark on our far more ambitious programme of energy decarbonisation and energy efficiency from 2024 onwards. Indeed, one of our substantial criticisms of the Bill is how long it has taken for us to get to the point of establishing the legislation that will guide the next stages of our energy decarbonisation.
As we have heard, the Bill has been with us for 10 months in its almost finalised form. Yes, the Government have sought to add amendments to the Bill in another place, and there will be further amendments in the Commons, but the measure could have been on the statute book many months ago—and time is of the essence in getting going with the next stages of decarbonisation. Instead, last autumn we were treated to the spectacle of the then Secretary of State for Business, Energy and Industrial Strategy pulling the Energy Bill from its established progress after just two sessions of debate, and sitting on it for over three months for no apparent reason while the legislative process stalled completely. That led to the remarkable situation of the Opposition writing to the new Minister during that period of stasis demanding that the Bill be recommenced as soon as possible. I know about that because I was the person who wrote the letter. [Interruption.] Indeed, I did a very good job there.
Yes, this Bill is necessary, but many Members have asked whether it is sufficient, and we think it is certainly not. There are many missed opportunities to legislate for many aspects of the green transition that are or will become necessary shortly. There are many instances where the green plumbing in the Bill looks, frankly, fairly faulty and could do with beefing up. For example, the Bill fails completely to lift onshore wind back into place as a key element of our low-carbon energy armoury. The Bill fails to redefine Ofgem’s remit to start from a low-carbon imperative. The Bill fails to address another key part of that armoury—community energy—in any sort of meaningful and enabling way.
The Bill fails to address the very real changes in regulatory machinery that will need to accompany the transition from oil and gas to a predominantly low-carbon energy environment. The Bill continues to propose soaking customers for the support of future infrastructure when we require entirely new forms of support that recognise both the breadth of the work that has to be done and the institutions that we will need to support investment and development.
There are many areas where we can say, “Yes, but” to this Bill and put forward the measures that will enable it to rise to the challenge of decarbonisation in a comprehensive way. That is why we will embark on that task as the Bill goes into Committee by tabling the amendments that will make the Bill so much more robust for the challenge of the future, and we hope the Government will be receptive to those proposals. That process has been started, with a number of very well-thought-out additions made to the Bill in the other place on Ofgem, hydrogen, coal, community energy and home retrofitting. We will seek to defend those changes in this place, and we hope the Government will see the wisdom of them and not seek to overthrow them.
This is a necessary but not sufficient Bill that we want to get on the statute book, preferably with the added heft of our proposed changes to it in Committee, so that it becomes more on the sufficient end and less just necessary. We will not seek to divide the House on Second Reading but instead will give conditional support and assistance as far as we can with an early emplacement on the statute book.
Labour has an ambitious low-carbon energy programme for government, with a fully decarbonised power system by 2030, including a doubling of present onshore wind deployment; a grid that is fit for enabling and delivering a low-carbon economy; Great British Energy, an investment company that can do so much to speed the energy transition along; a massive programme to retrofit 19 million homes over 10 years to reach our energy efficiency targets; and serious planning of the energy transition, so that it is a just transition both in the North Sea and elsewhere. All these plans will benefit from many of the measures that are in the Bill, but they could be so much more supportive, and that is why we want to see an extended and more robust version of the Bill on the statute book as soon as possible.
I begin by thanking Members for their considered contributions to the debate. It has been encouraging to hear broad support for the Bill—I hope it sets a precedent—and that reflects the meetings I have had with Members of this House and the other place and with the devolved Administrations over the past few months. I will try to address as many of the questions and issues raised as possible.
Let me remind the House why the Bill matters: it is a critical part of securing the clean, inexpensive energy that Britain needs to prosper. It will do that by leveraging investment in new technologies and by securing clean home-grown industries that can reduce our exposure to volatile gas prices in the long term. We are already world leaders. We have reduced emissions more than any other country in the G7, but this Bill will allow us to go further. It will enable reform of our energy system. It will protect consumers from unfair pricing, and it will make Britain an energy-secure net zero nation.
I turn to the points raised in the debate. Several Members asked how the Government are increasing investment in the grid and supporting grid capacity. I will make no bones about it—this is one of the biggest challenges our country faces. I get it; we get it. That is why, following the British energy security strategy, the Government worked with Ofgem on its work to accelerate strategic transmission investment. Following Ofgem’s decision on that in December, approximately £20 billion of investment across Britain has been accelerated by regulatory efficiencies. On grid capacity, increasing competition in networks is expected to encourage greater inward investment into those networks, ensuring sufficient network capacity for demand needs in Great Britain. Further work on that issue is ongoing as we speak.
My hon. Friend the Member for Hitchin and Harpenden (Bim Afolami) and others raised issues about the independent system operator, or the future system operator. To be clear, the independent system operator and planner will be an expert, impartial body with responsibilities across both the electricity and gas systems to drive progress towards net zero while maintaining energy security and minimising costs for consumers. We are confident that we have struck the right balance on that issue.
The hon. Member for Ellesmere Port and Neston (Justin Madders) raised the issue of the hydrogen village trials—I was pleased to meet with him recently to discuss those trials. The Government have always been clear that the gas network delivering the trial must engage with residents to develop an attractive consumer offer for everyone in the trial area. This must include alternative options for consumers who do not wish to connect to hydrogen or cannot do so, such as for electric cookers and heating systems. We will not go ahead with a trial without demonstrable, strong, local support.
The hon. Member for Kilmarnock and Loudoun (Alan Brown), who I am sorry to see is not in his place just now, raised the issue of forced disconnections. All consumers will have the right to refuse trialling hydrogen. The powers of entry cannot be used to forcibly change the meter type for a consumer. Gas distribution networks will only ever use their extended powers of entry as a last resort—to ensure consumer safety, for example.
The right hon. Member for Doncaster North (Edward Miliband) and the hon. Member for Llanelli (Dame Nia Griffith) raised issues surrounding onshore wind. The UK already has almost 15 GW of onshore wind, the most of any renewable technology, with a strong pipeline of future projects incoming. The Government have consulted on making changes to the national policy planning framework in England so that local authorities can better respond to their communities when they wish to host onshore wind infrastructure. The Government will, of course, respond in due course.
My right hon. Friend the Member for Camborne and Redruth (George Eustice) raised the issue of renewable liquid heating fuel. Decarbonising off-gas-grid properties is a key priority for this Government. I was pleased to meet with my right hon. Friend recently to discuss this issue, and I look forward to working with him and others on ways to ensure that the transition to clean heat will be fair and affordable for all. As we must acknowledge, however, sustainable biomass is a limited resource. Policy decisions on the role of biomass in heat will need to reflect the outcomes of the forthcoming biomass strategy, which is due to launch later in 2023.
My right hon. Friend the Member for Basingstoke (Dame Maria Miller), as well as touching on the role of fusion—which will be critical in the decades ahead, and we are leading the world in that technology—raised concerns surrounding the planning, health and safety, and environmental issues involved in the development of lithium-ion battery storage. I was pleased to meet with her recently, along with colleagues from the Department for Levelling Up, Housing and Communities, and would like to reassure her that the Government are committed to working with her, the fire services and ministerial colleagues towards a suitable way forward on this important issue, which I know many people are concerned about.
My right hon. Friend the Member for Epsom and Ewell (Chris Grayling) raised the issue of sustainable aviation fuel. In October 2022, the Department for Transport commissioned Philip New to lead an independent evaluation to identify the conditions necessary to create a successful UK SAF industry. Last month, we published that report, alongside a Government response setting out what actions are already being taken to address many of the report’s recommendations. We are keen to continue making progress, and I would be delighted to meet with my right hon. Friend on that point as we move forward.
May I have an assurance that the five sustainable aviation fuel plants that our right hon. Friend the Member for Welwyn Hatfield (Grant Shapps) previously announced will be going ahead in time for 2025? It is critical that the UK is in the forefront and leading in the SAF industry, because otherwise, we face being left behind by Europe and the United States.
I will write to my hon. Friend on that specific issue immediately following the debate, once I have the answer from both the Department for Transport and the Department for Energy Security and Net Zero. However, we are committed to implementing the recommendations in the report. It is a policy of the Department for Transport, but I will discuss the matter with officials in that Department.
A number of Members raised the issue of the hydrogen levy. The purpose of the hydrogen levy is to provide long-term funding for the hydrogen production business model. I reiterate that the provisions in this Bill will not immediately introduce a levy. We will consult on the detailed levy design, and the decision to introduce a levy will take into account the affordability of energy bills.
Many Members raised community energy schemes, which I strongly agree have a role to play in tackling climate change. While it would not be appropriate to mandate suppliers to offer local tariffs, and this should not be a commercial decision for suppliers, I reassure the House that my officials are actively looking into what further support we can offer the sector. I have already met, and I am sure will meet again, my hon. Friend the Member for Wantage (David Johnston) to discuss how we can work together to move that forward.
I will not give way, due to time. Members expressed concerns about coal. I reassure Members that we are committed to ensuring that coal has no part to play in our future power generation, which is why we are planning on phasing it out of our electricity production by 2024. We are leading the world on this, and can be proud of the action we have taken on coal. On fracking, the Government have confirmed that we are adopting a presumption against issuing any further hydraulic fracturing consents.
On offshore wind, again where we are leading the world, the offshore wind environmental improvement package in the Bill will support accelerated offshore wind deployment and reduce consenting time while protecting the marine environment. A number of Members made broadly supportive comments on the UK’s nuclear sector, although, as is to be expected, not those on the SNP Benches. New nuclear has an important role to play in reducing greenhouse gas emissions to net zero in 2050, but we have always been clear that any technology must provide value for money for consumers and taxpayers. Great British Nuclear will address constraints in the nuclear market and support our new nuclear builds as the Government work to deliver our net zero commitments.
I could not finish without referring to my constituency neighbour but one, my hon. Friend the Member for Banff and Buchan (David Duguid). I agree with him on many issues, and he is absolutely right in his comments on oil and gas. The transition to non-fossil forms of energy cannot happen overnight, as recognised by the independent Climate Change Committee. While we are working to drive down demand for fossil fuels, there will continue to be UK demand for oil and gas, and we will be net importers of both.
I thank Members from all parts of the House who have contributed to today’s debate. I have tried to address all the points, and I apologise that I have not addressed every point. I will write and offer meetings to those to whom I have not responded. I am encouraged by the broad support for this Bill and look forward to continuing my engagement with Members in our many Committee sittings and beyond. The measures that this Bill contains will not only determine our future energy security, but will shape our environmental security, consumer security and economic security. As my right hon. Friend the Member for Ludlow (Philip Dunne) said at the beginning, we cannot ever be at the mercy of autocrats. That is why we now have a dedicated Department for Energy Security and Net Zero. It is why we will deliver the reliable, affordable and clean energy that are needed to power energy’s future under the next Conservative Government and beyond. I therefore commend the Bill to the House.
Question put and agreed to.
Bill accordingly read a Second time.
Energy Bill [Lords] (Programme)
Motion made, and Question put forthwith (Standing Order No. 83A(7)),
That the following provisions shall apply to the Energy Bill [Lords]:
(1) The Bill shall be committed to a Public Bill Committee.
Proceedings in Public Bill Committee
(2) Proceedings in the Public Bill Committee shall (so far as not previously concluded) be brought to a conclusion on Thursday 29 June 2023.
(3) The Public Bill Committee shall have leave to sit twice on the first day on which it meets.
Consideration and Third Reading
(4) Proceedings on Consideration shall (so far as not previously concluded) be brought to a conclusion one hour before the moment of interruption on the day on which those proceedings are commenced.
(5) Proceedings on Third Reading shall (so far as not previously concluded) be brought to a conclusion at the moment of interruption on that day.
(6) Standing Order No. 83B (Programming committees) shall not apply to proceedings on Consideration and Third Reading.
(7) Any other proceedings on the Bill may be programmed.—(Julie Marson.)
Question agreed to.
Energy Bill [Lords] (Money)
King’s recommendation signified.
Motion made, and Question put forthwith (Standing Order No. 52(1)(a)),
That, for the purposes of any Act resulting from the Energy Bill [Lords], it is expedient to authorise the payment out of money provided by Parliament of:
(a) any expenditure incurred by the Secretary of State by virtue of the Act,
(b) any expenditure incurred by the Gas and Electricity Markets Authority by virtue of the Act,
(c) any expenditure incurred by the Competition and Markets Authority by virtue of the Act, and
(d) any increase attributable to the Act in the sums payable under any other Act out of money so provided. —(Julie Marson.)
Question agreed to.
Energy Bill [Lords] (Ways and Means)
Motion made, and Question put forthwith (Standing Order No. 52(1)(a)),
That, for the purposes of any Act resulting from the Energy Bill [Lords], it is expedient to authorise:
(1) provisions by virtue of which persons may be required—
(a) to make payments, or to provide financial collateral, to an administrator;
(b) as holders of licences issued under the Gas Act 1986 or the Electricity Act 1989, to make payments of sums relating to costs associated with heat networks;
(2) the imposition, by virtue of the Act, of charges under licences issued to T&S companies (as defined in Chapter 4 of Part 1 of the Bill);
(3) the imposition, by virtue of the Act, of charges for or in connection with the carrying out by the Secretary of State of functions under Part 4 of the Petroleum Act 1998; and
(4) the payment of sums into the Consolidated Fund.—(Julie Marson.)
Question agreed to.