My Lords, our purpose here today is to consider updated energy national policy statements, which we propose to designate later this year, subject of course to the outcome of a public consultation and parliamentary scrutiny.
NPSs for all types of nationally significant infra- structure should comprise clear guidance on the legal, policy and technical issues that project sponsors need to consider as part of their applications for planning consent under the Planning Act 2008. They enable the Planning Inspectorate to examine the application before any recommendations are sent to the Secretary of State for determination, and underpin the delivery of legally robust and timely planning decisions by the Secretary of State. Importantly, where the need for a type of nationally significant infrastructure is established in an NPS, that need cannot then be questioned on an individual application for development consent.
The NPS framework is complemented by two supporting assessments: the appraisal of sustainability and the habitats regulations assessment. The appraisal of sustainability ensures that the likely national environmental and socioeconomic effects of the national policy statement are identified and evaluated. The habitats regulations assessment identifies and assesses the likely effects of the national policy statement on nature conservation and specially protected sites.
The suite of energy NPSs was first designated in 2011. They set out national energy policy and form the framework for decision-making on applications for development consent for nationally significant energy infrastructure projects. The overarching strategic national policy statement, EN-1, sets out the need case for certain energy infrastructure and general assessment principles. The other five NPSs set out technology-specific assessment principles. The Government published their energy White Paper, Powering Our Net Zero Future, in December 2020. The White Paper presents our vision of how we make the transition to clean energy by 2050, building on the Prime Minister’s 10-point plan.
My Lords, I thank the Minister, particularly for explaining the relationship of these documents to planning decisions at both national and local level. Last night, I took home all the documents that are piled up over there, together with the energy policy White Paper and hydrogen White Paper, and tried to make sense of them. I failed utterly, although the Minister’s explanation has made it slightly clearer. Nevertheless, I shall bore the Committee with my reflections, looking at the totality of the papers before us.
I note in the present draft that the Government frequently use nuanced forms of modal verbs—namely, could or can rather than should or will. That is perhaps too loose a form of words for the immense task that we have before us in meeting our net-zero targets in particular. As the Minister said, those net-zero targets have a direct impact on not only what are traditionally regarded as nationally significant developments but the local effects that those developments will have on their areas and populations.
Therefore, the final version needs to be a little more definitive than the one before us. The key target here is clearly that for 2035. Decisions taken in planning now will not see fruition for at least three or four years and, in many cases, much longer. The 10-year run-up to 2035—meeting the 78% reduction, I think in emissions by that date— therefore depends on crucial decisions to be made in the next two or three years. That requires clearer guidance in the overriding policy statement, less freedom of manoeuvre and less nuance in the guidance given, otherwise we will have inconsistent decisions.
I take just four examples of where we need a clearer decision on the basis for any national or local decisions before they can be taken. The Minister will be familiar with the arguments in many areas—we debated nuclear yesterday and have debated other aspects—but I shall go through them quickly.
My Lords, energy is a serious topic, as we have been forcefully reminded very recently. Indeed, my own house in Wiltshire was cut off from the electricity grid as a result of recent storms for two days. Since our village has no gas supply, that brought real discomfort to all, but especially of course to the very old and infirm. Luckily, the village has an emergency generator, started up by supportive volunteers who learnt who and how to help across our community during Covid.
My first point is a simple one. It is the responsibility of any Government to ensure that energy is supplied as required both to domestic customers and to enterprises of all kinds. Any Government who fail in that task will be judged harshly and might well not be a Government for very long. No amount of enthusiastic rhetoric on sustainability, climate change or habitat enrichment will serve as an effective excuse. I am not sure that the document before us is as unequivocal in recognising this reality as it could, and ought, to be. Keeping the lights on, literally and metaphorically, is the number one priority in energy policy. All other aspects are secondary to that.
Having said that, it is sensible to have documents of the kind before us today to help with planning and other decisions. Naturally, there will be a need for constant revision, since the world changes more quickly than we sometimes recognise. Twenty-five years ago—less than a third of the average lifetime—most countries, including this one, relied heavily on coal. Indeed, a recent UK Prime Minister was heavily criticised by some politicians for allegedly devastating the UK coalmining industry. Now the same people are critical of any attempt to retain any coal mining at all in the UK, even if the objective is to retain one or two heritage railway lines, as some may recall from our debates on the Environment Bill and my vain efforts to save the Thomas the Tank Engines. How the world changes! Coal was once the epitome of virtue to some; now it represents the devil to the same people.
My Lords, I welcome this document. I remember some 10 years ago sitting here and going through all six of the previous documents. It does not seem so long ago, which is a sad fact, but there we are. It is right that a lot has changed since the statements first came out during the coalition Government.
I do not want to talk particularly about net zero; I want to talk about the other emergency that we have and ask a number of questions on it: the biodiversity emergency, and how that relates to the national policy statement. There are some specific questions that I want to ask at the end. I welcome the fact that biodiversity is mentioned quite a bit—I have mainly gone through the overarching document—but I do not understand how the Environment Act that we passed at the end of last year relates to biodiversity net gain in terms of nationally significant infrastructure projects. Paragraph 4.5.2 of the overarching document states:
“Although achieving biodiversity net gain is not an obligation for projects under the Planning Act 2008, energy NSIP proposals should seek opportunities to contribute to and enhance the natural environment by providing net gains for biodiversity.”
Yet Schedule 14 to the Environment Bill, which is about biodiversity net gain, states:
“The biodiversity gain objective is met in relation to development for which planning permission is granted if the biodiversity value”
is attributable to the percentage, which, as we know, in the Environment Act is 10%. Given that the Environment Act, primary legislation passed only at the end of last year, relates biodiversity net gain to a planning permission —and I understand that NSIP is a planning permission— does the 10% net gain apply to such projects? Is that true also of marine projects? In any case, even if the Environment Act does not apply to them, does the Secretary of State expect that marine projects will also create biodiversity net gain?
My Lords, I declare my interests. My commitment to the environment came with me into my first ministerial job in the 1980s, and the energy world provided me with a second opportunity of ministerial office. Since then, I have regularly worked in both sectors. I was privileged to be elected the first president of the British Wind Energy Association, and I introduced the first competitive market framework for renewables in the UK, the non-fossil fuel obligation in 1990. Since then, as set out in the register, I have continued to work in the energy sector, culminating in my current chairmanship of Buckthorn Partners, which works in energy transition.
This short debate, particularly well set out in EN-4 before the Committee, and the wider strategy referred to by my noble friend the Minister, provides us with the opportunity to discuss the issues set out admirably by the noble Lord, Lord Whitty. Looked at rhetorically, the current high watermark of the relentless destructive attack on the oil and gas industry, with John Kerry citing the May 2021 International Energy Agency report as evidence that there should be no more new oil and gas investment anywhere in the world, is foolish and ultimately destructive. That is so in political terms, as it ignores the transitional pain inflicted on families and industries around the world, and it is counterintuitive, as it encourages highly polluting coal to be used in electricity generation, thus causing yet further pollution to our planet.
However, today, at least in this Committee, we have a more moderate, sensible and civilised energy debate, as the documents before us highlight. We vitally need to produce gas within a regime of strict environmental standards against the chorus of politicians clamouring to inflict windfall taxes on North Sea producers to help struggling families, who are struggling primarily because of eye-wateringly expensive energy policies. This came as we brought to a close a record year of low investment on the UK continental shelf. This has to change.
My Lords, it was good last September to finally have sight of the draft updates for the range of energy-related national policy statements, first introduced a decade ago in 2011. I will restrict my remarks today to the infrastructure that we need to deliver net zero with regard to our shorter-term horizons —for example, the rollout of electric vehicles—and will not be tempted to talk about gas and its phase-out.
These updates, according to the Government, focus on regulatory, policy and technology changes to guide those involved in determining development applications for major infrastructure projects in England and Wales. As the noble Baroness, Lady Neville-Rolfe, pointed out, National Grid is going to be crucial in delivering this. It sits at the heart of Britain’s energy system. It is fully behind the net-zero ambitions and is committed to playing a leading role in enabling the transition, as indeed it must, because without its wholehearted commitment the transition would not be realisable. In its briefing, however, it states that while it was looking forward to the reviewed national policy statements, it has been left rather disappointed. In its view—I would say a rather well-informed one—current drafting does not provide the step change needed to deliver the scale and pace of nationally significant infrastructure development that will be needed to meet the Government’s own net-zero ambition.
That should really give the Government cause for concern. There is no sense of urgency or appreciation of the scale or pace of change needed to deliver nationally significant infrastructure development, which lies at the core of what we are trying to achieve here. I wonder whether BEIS is aware of its concerns and is taking them seriously. We are otherwise in real danger of falling short of meeting the challenging targets that the Government have set on electric vehicle ownership, as an example. These cars will need electricity—a lot of it, as the Minister himself said. The current grid, however, cannot supply what we will need. As an aside, and as the noble Lord, Lord Whitty, mentioned, the Government have to take on board the imperative of reducing demand. One quite effective way of doing that, and one that there is growing public concern about, is to make homes more energy efficient. That would take a lot of demand off the national grid, so I feel that is a real missed opportunity here.
My Lords, I am delighted to follow the noble Baroness. I refer to my interests as declared in the register: I am the honorary president of the advisory board of National Energy Action and, perhaps of more relevance, I was delighted to undertake a placement with BP as part of the Industry and Parliament Trust and had the privilege of visiting a North Sea oilfield.
I welcome today’s debate on the documents and thank my noble friend the Minister for bringing them to us. I want to ask a series of questions. As there are a number of them, I will quite understand if my noble friend might find it easier to respond in writing.
Following the critical floods of 2007, the Pitt review concluded that there should be an audit of critical infrastructure, most of which seemed to be energy substations that were at serious risk of flooding. How regularly does such an audit take place and when was the last one performed?
In the principal policy statement before us today, EN-1, there is welcome reference to climate change adaptation. Is there any reason—perhaps I have missed it—why mitigation has been left out? Many of the references that are made would cover mitigation as well as adaptation. I welcome in particular paragraph 4.9.11, which states:
“If any adaptation measures give rise to consequential impacts (for example on flooding, water resources or coastal change) the Secretary of State should consider the impact of the latter in relation to the application as a whole and the impacts guidance set out in Part 5 of this NPS.”
I think that, somehow, the Minister is secretly aware of my fixation and passion for SUDS, or sustainable urban drainage; I am also an honorary vice-president of the Association of Drainage Authorities, which apply to the lower drainage areas, of which we have plenty in North Yorkshire. I am therefore delighted that, on pages 93 and 95, there is reference to the reduction of flood risk and, in particular, the “hierarchy of drainage options” in relation to sustainable drainage systems and other green infrastructure. That is very welcome, and I hope that my noble friend will be able to expand on those points.
I wish the Minister had shown me his speech before he gave it today, because I could have gone through it with a red pen. Repeating wishful thinking does not make it happen. “May” and “might” is not a policy, and I shall now describe what the Government’s energy policy should be. I am really happy to send it directly to the Minister, in case he is in any doubt about what I am saying.
If we had insulated Britain, people would not be choosing between heating and eating. If we had not “cut the green crap”, as Cameron said, over the past decade, we would be saving £2.5 billion off energy bills. If we had not had a Tory Government for the past 12 years, we would be doing a lot better than we are now.
Renewable energy was cheaper to produce than gas even before the big explosion of oil and gas prices in recent months. There is now a huge gap between what it costs to produce renewable energy and what it is sold for as part of the national grid. If renewables now dominated the energy sector in the UK, everyone would be buying electric hobs and ovens as gas prices soared and electricity prices continued to go down. Rich and poor would all be better off, and the planet would be better off; the only people not better off would be the fossil fuel companies such as Shell—but I think we can manage without their doing particularly well, personally.
We have the perverse situation where green consumers who want green energy are paying extra because we have an energy system dominated by fossil fuels. For example, if someone is selling electricity to the national grid, why are they getting only 5½p per kilowatt hour, when it is being sold back to them for 21p per kilowatt hour? I understand that operators have costs to pay, but those small-scale producers, those homeowners, ought to be getting at least twice what they are now. I have a lot of questions; that is the first.
4:54 pm
20 of 43 shown
Of course, since the energy White Paper, the Government have published the Net Zero Strategy. This sets out clear policies and proposals for keeping us on track for our coming carbon budgets and for our vision for a decarbonised economy in 2050. The strategy raises our ambitions to hit our climate targets, as well as delivering our goals to create new jobs and industries as we capitalise on green economic opportunities. The energy NPSs need to reflect this scale of ambition.
The agenda established through the energy White Paper and net-zero strategy mark the start of a decisive shift away from unabated fossil fuels to clean energy technologies. This means renewables, nuclear, CCUS and new technology options such as low-carbon hydrogen. Deploying a range of low-carbon technology options keeps us in line with our objective to ensure that our supply of energy always remains secure, reliable, affordable and consistent with our net-zero target.
The Government decided that it was appropriate to review the existing energy national policy statements to ensure that they reflect the policies set out in the energy White Paper. The review would ensure that we continue to have a planning policy framework which can deliver the investment required to build the infra- structure needed for the transition to a clean energy system.
I should be clear that updating the NPSs is not the only way that we will satisfy our infrastructure needs. Through the national infrastructure strategy, the Government have committed to a major reform programme to refresh how the nationally significant infrastructure project regime operates. This reform programme will make the planning regime more effective and bring government departments together to deliver more certainty in the process and faster outcomes. The Department for Levelling Up, Housing and Communities will be providing further information on how it is taking the NSIP reform programme forward later this year.
The draft revised energy NPSs, which we have consulted on, reflect our policy that a diverse mix of technologies will be required to deliver on our energy objectives. However, where a technology no longer meets our objectives, it is right that this is removed from the mix, and the NPSs are clear that there is no longer any role for new nationally significant coal or oil-fired electricity generation. We believe that the market is best placed to determine the best solutions for very low emissions and reliable supply, at a low cost to consumers. This means that we should use the NPSs not to deliver specific amounts or limit any form of electricity infrastructure, but rather to set out the framework under which they can be consented. This approach facilitates competition and spurs both investment and innovation in technologies which are cheaper and more efficient.
We will need a significant amount of new energy infrastructure. Electricity demand is set to double as we electrify heating and transport. Networks need to adapt for the future electricity system. We will also need oil and gas to support a smooth and orderly transition to a clean energy future and to ensure security of supply. Natural gas will still be needed for heating homes and workplaces, until we are able to deploy low-carbon alternatives, so we need infrastructure to support the importation, storage and transmission of oil and gas. Natural gas infrastructure might also be repurposed in the future for use by other gases required to deliver a net-zero economy, such as low-carbon hydrogen or for transportation of carbon dioxide to storage.
The nuclear power generation NPS, EN-6, was reviewed but not amended as there are no changes material to the limited circumstances in which it will have effect. However, it would not be appropriate to withdraw the NPS at this time given that the information that it contains may be relevant to development consent order applications under examination and the need to maintain a stable nuclear planning and consent regime. The Government went out to consultation with an updated energy NPS last September. The consultation closed in November. The draft energy NPS has been scrutinised by the BEIS Select Committee in another place; its report and recommendations are due to be published shortly, I am told. We will consider the recommendations and responses to the consultation, and publish our response in due course.
National policy statements for energy must be clear about the urgent need for new energy infrastructure, to meet our climate change commitments and continue to ensure a secure and affordable supply of energy. They must also identify the potentially negative impacts of such infrastructure at a local level to enable planning decisions to be taken which weigh up this national need against potential impacts, based on expert evidence and with full stakeholder involvement. The documents that we have consulted on strike the right balance between these factors. I appreciate that there are many views on this, and I look forward to hearing all the contributions to today’s debate. I beg to move.
The first is obviously the replacement of natural gas heating for homes and buildings. On that, we need clear decisions on whether a hydrogen-based system can meet most of our gas needs, whether we will have enough hydrogen and how it will be produced—presumably, it will be green hydrogen. The hydrogen strategy itself, although very useful, leaves a lot of questions unanswered. We need to know whether there will be differential impacts in different parts of the country. If we are to have large-scale hydrogen for industrial and domestic purposes, heating may well extend only to the area within a few miles and everybody else will have to rely on transferring on to the national grid for direct electrification of their heating or, in the more rural and suburban areas, probably heat pumps. So there will be different impacts of that decision but if what is currently natural gas heating, which heats 80% of our homes and buildings, is to be replaced, we must be clear how it will be, and in what parts of the country it may be replaced by different forms of lower-carbon heating.
My second example is related, because one of the replacements for our gas grid proposed for our domestic heating has been district heating—effectively, local networks. If we are to have local networks on a major scale, we cannot rely on a planning process which takes propositions for development, retrofitting or individual buildings on a one-by-one basis. You have to designate substantial domestic or industrial building areas to be obliged to take the form of district heating that is given planning permission on the grounds that it is nationally significant. If we are to see district heating—I am in principle in favour of it, as long as its consumers are protected, because clearly there is no competition in those circumstances—we need to ensure that we have powers to designate the whole area, otherwise, by and large, it will not work. That includes not only new developments but the retrofitting of existing buildings and factories.
Thirdly, there is the issue of offshore wind. It has been a huge success and, in the period between now and 2035, will continue to be one of the major contributors to reducing our total carbon emissions. However, the development of offshore wind has been somewhat haphazard. By and large, a single array has a single landing point onshore and each is owned by different companies or consortia. There are planning considerations, usually addressed locally to start with, of how you bring offshore wind onshore and what the connections look like, because they will also be mostly in areas of natural beauty or other rural areas which do not like the disturbance. If every array has an individual landing point, that is a huge number of planning decisions if we are to meet the objectives in the energy White Paper.
If, however, there were to be an offshore network so that several arrays could be connected, some engineers argue that we could reduce the number of landing points by something above two-thirds. That requires a government intervention to ensure that we have an onshore and offshore network that limits the number of onshore connection points. That is a key strategic decision and, if decisions on new or enhanced offshore arrays are taken on a one-off basis, we will never reach the decision to amalgamate them into an offshore grid.
My second-to-last point relates to nuclear, which we discussed at some length yesterday. It is also important that we have early government decisions on a number of nuclear aspects, particularly the designation of nuclear reactor sites—a project that successive Governments have utterly failed at over the past 20 or 30 years. Any sizeable nuclear reactor will create significant planning effects on the surrounding area and there will be strong political pressures as well. That means that, if we are to go for a new generation of nuclear power—by and large, I am in favour of that, whether on the size of Sizewell or on a smaller size facilitated by the Rolls-Royce developments on small modular reactors, et cetera—we need to know where it will go and all the planning hurdles have to be overcome. That will again require a much clearer government decision on where those sites will be.
Of course, the most acute and difficult decision for the Government, and for all of us, is the issue of the storage of waste and waste disposal. We already have a historic legacy of waste from now-closed reactor. If we are to have a new generation of nuclear, while it will be much more efficient, there will be high-radioactivity waste to be disposed of. We need a decision on that urgently.
I hope that the final version of the statement indicates that there are key decisions that the Government have already taken, or are about to take, which will define the parameters of any subsequent decisions, even on relatively large-scale projects. I hope that those will be addressed.
My final point is that as far as I could see, certainly in the overriding document, there is a major omission on carbon reduction. As I understood it, the National Infrastructure Commission indicated that the energy efficiency project, to insulate and otherwise improve the energy efficiency of our homes, should be regarded as a nationally significant project. That is operated street by street, at best, but it is still in totality a major contribution towards meeting our net-zero targets. It should really be dealt with in the same way as these other single-site projects. I hope that the Minister, and the final version, will take that into account and that it will be somewhat shorter and more to the point than the present document, so that all protagonists can understand where we stand on that and where their own projects stand.
Personally, I favour a more nuanced and balanced approach to energy policy. I would add that gas is a very important part of any transition to net zero, and that shale has played a major part in the transition in the US, and indeed in its growth. So we need to see regular textual revisions to these documents every few years, as policies change and innovations come through. The noble Lord, Lord Whitty, has rightly just talked about the potential role of hydrogen and town heating systems, as well as of nuclear, where I think we are on more common ground. On this question of revisions, I very much hope my noble friend the Minister can indicate how often he envisages that changes might be made.
My other main point is to emphasise how much investment there will need to be in infrastructure if the presently expected move towards electrification, including electric vehicles, comes to pass. That has two major implications. First, we need to be clear how and where the investment will be made. We need to be assured that those concerned with the grid and other electrical infrastructure have a viable plan to achieve this investment. I am not clear that we can yet feel confident on that point. Secondly, we need to know from whence the very large sums needed are to come. I note that a main method of financing green investments so far has been to impose green levies on consumers. That is one approach, but I note that it has quickly come into question now that electricity prices have risen steeply and inflation has taken off sharply. Some argue, rightly I think, for moderation, but all this certainly needs more thought.
Finally, I return to the storms and what they have taught me. Despite the advent of the 105 number, which I remember launching a few years ago when I was fortunate enough to be in the Minister’s position, consumers are in serious trouble when their power lines go down. We also need more thought about how people might prepare. Perhaps retailers could start selling first-aid style kits, with candles, matches, gloves, woolly hats, primus stoves and an old-fashioned phone that plugs in when the wi-fi and cordless phones do not work. This of course is not an issue for the statements before us, but we always need to think about how to make life easier and bearable for the consumer. Throughout history, too much of the energy debate has been provider and government-led, and that concerns me. I was therefore glad to hear that our Economic Affairs Committee will be looking at some of these knotty issues. I hope it will be able to help tackle the problems, including those that hit the poorest in the country, old and young.
It is great to go on about biodiversity net gain, but, as we know, there is a requirement in the Environment Act that such net gain be protected for at least 30 years. That has to be done by local authorities, as I understand it from the Environment Act, but when it comes to NSIPs, who is going to make sure that net gain that is promised as part of NSIPs’ planning permissions is actually delivered through that period of at least 30 years? If that policing and enforcement do not take place, we know that it will not happen or will disappear along with everybody’s corporate memory of the original agreement. I would be very interested to understand the Minister’s idea of that. I am sure that both he and I have exactly the same objectives in that area.
On a similar environmental theme, I could find no mention within the documents of the circular economy. This is one of the other areas that government is starting to get involved in and where it is starting to see that, rather than a linear economy, we should move to a circular economy in terms of global resources. How will the Government start to look at that in terms particularly of renewable energy as well as all the other areas that there are? On renewable energy, we have got as far as looking at wind turbine blades, but that is about as far as it goes, and I do not think that the industry has been fully responsible yet in that area.
On waste disposal, the noble Lord, Lord Whitty, was absolutely right. I know that the Government are doing a study on networks of offshore wind pipelines and energy cables; it is particularly important, as development starts in the west, in the Celtic Sea, to understand what is going to happen, so that we do not have the sort of spaghetti junction that we have in the North Sea.
I also want to comment briefly on nuclear waste. I was disappointed that EN-6 was not actually updated. I think that the Minister may reply by saying that it is in process, which, if so, is fair enough. But on page 16 of the original EN-6, the footnote, which I thought was a typing error when I first read it, says:
“Geological disposal of higher activity waste from new nuclear power stations is currently programmed to be available from around”—
wait for it—“2130”. That is still 120 years away, and I wonder whether the Government would like to reconsider that and maybe bring it a little forward. The document does say at the end, to give it its due, that they—this is the coalition Government—might see
“potential to bring forward this date”.
I shall put it in my diary to check if it happens by then, but it would be great if we could bring it forward.
Lastly, I again checked “energy security” on a phrase checker, and it came up with “text not found”. The document does mention energy security, but only in relation to two things. One is the capacity market, all around the area that the noble Baroness, Lady Neville-Rolfe, mentioned—keeping the lights on—which the capacity market is very much about. The other area is cyberattacks, which as we know are very topical and important. But there is nothing on what we would understand more broadly as energy security in this overall document, and I find that quite an interesting omission.
I look forward to the Minister’s reply, particularly in the area of who is responsible for making sure that biological and biodiversity net gain actually happens over the next 30 years for this level of project.
We all watch European customers, both residential and industrial, facing the extreme post-Covid pain of record power prices and gas prices, at some $200 per barrel of oil equivalent, which means that a European fertiliser producer, or any European industrialist using natural gas as a feedstock, is now paying eight to 10 times more for energy than a US or Middle Eastern competitor, and nearly 15 times more than a Russian competitor, due to the unprecedented differential between global spot prices, at some $200 per barrel of oil equivalent and much lower market gas prices in self-sufficient countries such as the US, Russia, et cetera. Europe, including the UK, could now lose a significant proportion of its industrial base to “home fire” very quickly indeed if this energy crisis continues.
We also anguished in 2021 at the all-benevolent coal-to-gas switch, the most effective atmospheric cleansing policy yet devised, being reversed in China and other parts of Asia as they burned more coal again due to gas prices reaching levels exceeding $300 per barrel of oil equivalent. Now we all sit on the precipice watching if the stability-threatening energy price tsunami will sweep away many industries before it, or whether the tide will turn the turn as the political elite of the West confronts its poorest citizens being crippled by the energy crisis imposed on them. Are the hopeful recent reports that—long overdue—the EU will include gas in its taxonomy of green energy a sign of energy sanity returning, or is this a false dawn, with Germany’s new Government showing ever more radical eco-credentials?
A wise voice in this debate to whom every Government should turn for advice is Philip Lambert, who, leading Lambert Energy Advisory, has continued to highlight the critical role of gas, as mentioned by my noble friends Lady Neville-Rolfe and the Minister, if the world is to pursue accelerated decarbonisation and create a responsible energy mix that balances affordability, reliability, energy security and environmental needs. With consistency in his approach to energy policy in recent debates, Lambert continues to emphasise that gas plus renewables, as so obviously on offer in the UK with its strong offshore gas plus offshore wind resource blend, are complementary partners and able to lead the phase-out of coal, as well as supporting blue/green hydrogen buildout efforts.
Recently, Lambert set out the problem in a rather innovative way, saying that it is very simple to understand if one uses a stark medical analogy. The climate doctors of the western world, who gathered at Glasgow for COP 26 in November, have decided, with very little real democratic debate or scrutiny that the global patient, threatened by the “certainty” of extreme and catastrophic climate change, now needs an accelerated transfusion of the “fossil fuel” portion of the global energy lifeblood which courses through the global economic body every day, underpinning the heartbeat of our modern life of mobility, health, domestic living, food production and industrial process. The climate doctors’ prognosis, as underpinned in the IEA paper of May 2021, is a “net zero world” by 2050, the ongoing “capital starvation” and progressive transfusion of 80% of the current energy lifeblood of the world—the 101 million barrels of oil equivalent per day of oil, 66 million barrels of oil equivalent per day of gas and 70 million barrels of oil equivalent per day of coal.
In this incredible medical transfusion experiment, we need to dispense as quickly as possible with 80% of the world’s energy lifeblood. But as any responsible medical doctor will testify, no transfusion process should happen unless the patient can receive with complete certainty instant similar amounts of “clean bloodstream” —ie, new clean energy blood of 237 million barrels of oil equivalent per day—otherwise, the patient will literally die. Yet breathtakingly, the climate doctors currently have only developed small, highly uncertain and intermittent—albeit very welcome—“new blood sources” to transfuse back into the body. After 20 years and nearly $5 trillion of investment into “new energy blood”, the world has only 15 million barrels of oil equivalent per day of wind and solar, against the 237 million barrels of oil equivalent per day required—and this bloodstream flows, as 2021 has demonstrated, only sporadically to the heart when the wind blows or the sun shines. Moreover, the all-in cost of intermittent renewables into power systems is rising not falling, due to the high cost of system balancing and legacy subsidy and government guarantee costs.
Our journey to this began 40 years ago exactly, and we have reached a global position of 15 million barrels of oil a day equivalent of renewables against the necessary 237 million, but instead of recognising that we are entering a vital stage of transition, many demonise gas—which, if revoked from the energy equation, as so many campaigners would have us do immediately, will unquestionably damage the world economy. Of course it is right to invest heavily in solutions to take us to net zero, but this should be done alongside acceptance of gas as a critical component of the energy mix in the UK as we move towards net zero and welcome ESG approaches. Setting an arbitrary date of 2050 is little wiser today than forecasting the date of storms in the UK next winter.
I should add that most of the rest of the energy lifeblood is made up of biomass, which entails burning primarily wood at higher carbon intensity than coal at a time when the world should be protecting all existing forests and planting billions of new trees, not cutting them down, especially as the tree is still the most effective carbon capture and storage process in today’s world, with the carbon abatement costs still 10 times cheaper than a human-manufactured CCS plant. So the climate leaders have been ironically highly successful at starving the global gas machine of essential investment needed to overcome natural global gas production declines of 3% per annum, let alone allow gas productive capacity to increase to beyond its current level of 66 million barrels of oil equivalent per day to facilitate the all-important environmental initiative: the global coal-to-gas switch.
We are therefore waking up to the nightmare that high gas prices may in 2022 imperil the very viability of mass renewable rollout, because the back-up needed to create a firm power product out of intermittent renewable production relies basically on gas—or coal if gas is too expensive. The real nightmare for renewables producers is new obligations on them—rather than energy customers or taxpayers—to pay the full costs of back-up supplies. This, plus a rise in interest rates to challenge their leveraged model, could push some renewable energy players in 2022 into the same difficulties as faced recently by the mass bankrupted energy suppliers in the UK, who promised “100% renewable electricity” and other seemingly attractive product brands but then faced the full storm of reality when wholesale gas/power prices soared and the questionable irresponsibility of the UK Government’s populist “price cap” policy was fully revealed, and they may well end up in the same place. I foresee many of the current wind operators facing financial difficulty. Certainly, a new generation of companies will take over but the next five years are going to produce harrowing headlines around the world along with calls for significant nationalisation.
Policymakers must cease their rhetorical attack on natural gas, realising that for a responsible energy transition to occur, a solid partnership between best-in-class renewables such as offshore wind in the UK or solar in India and best-in-class gas—zero methane leakage, environmentally responsible and cheap—is required. That means tax-effective measures to extend the life of fields in the North Sea, postpone decommissioning, bring onstream new gas fields and maximise recovery rates within a clear and certain framework of strong, environmentally responsible policies. This surely is the great window of opportunity for the UK so we can produce a clean, firm power product via our integrated and environmentally responsible gas/renewables/trading model into the market, which will begin to wake up to the fact that firm power is a premium product, not a cheap, guaranteed given.
Maybe the last word should be left to our Chancellor, Rishi Sunak, who recently commented that North Sea gas
“plays an important part of our transition to net zero.”
He added:
“I want to make sure that people acknowledge that we should also exploit our domestic resources. We have resources in the North Sea, and we want to encourage investment in that because we’re going to need natural gas as part of our transition to getting to net zero. And in the process of getting from here to there, if we can get investment in the North Sea that supports British jobs, that’s a good thing. So that has to be part of the mix as well.”
There is also concern about what we are hearing from industry leaders about the importance of BEIS’s offshore transmission network review, which is producing a blueprint known as an holistic network design for the onshore and offshore infrastructure required to connect the Government’s target of 40 gigawatts of offshore wind by 2030. Why is the crucial work of the OTNR and the HND not explicitly referenced in the draft NPSs?
Another point of concern is that delivering the scale of nationally significant infrastructure needed will inevitably impact on the local communities and environments that host this infrastructure. Industry must have clear guidance from government on the levels of mitigation and compensation that developers are expected to deliver locally. On the flip side, the communities affected must also have some idea of what they will be up against. Communication with industry and local communities is going to be key. I wonder whether BEIS has taken that on board. Unfortunately, the draft NPSs are silent on these points. Again, can the Minister address that, as it will be really important if the infrastructure behind these policy statements is to be successful?
I add that Energy UK, the trade association for the energy industry, also has real concerns about the lack of a strong focus on net zero. In particular, there is real concern about the fast pace, flexibility and adaptability that will be needed to realise net-zero ambitions. The energy NPSs will therefore need to be revised and updated regularly, certainly more frequently than once a decade, so I ask the Minister: how often will the Government review these NPSs?
My background gives me a real concern about how energy is generated, transmitted and distributed in rural areas. My noble friend Lady Neville-Rolfe had a similar experience to my own, where a family home was without electricity for six days and included a particularly elderly population who had no such luck as to have a generator. That was during Storm Arwen, and we have seen many others since then. Rural areas are often off grid and face particular challenges in receiving fuel. They tend to be dependent on LPG, solid fuel and oil to heat homes. As my noble friend the Minister will be aware, these are not covered by the price cap and those areas face an even higher increase in costs, particularly because of activities this week in Ukraine—today there has been an additional spike. To what extent will the NPS reflect this and look to rural-proof any nationally significant infrastructure that is envisaged under the proposals before us today?
I for one particularly accept and welcome the nuclear energy mix. My noble friend said yesterday in the debate on the Bill that 85% of our UK nuclear capacity is to go out of commission by 2028. If, as I understand it, the national policy statement for nuclear power generation, EN-6, is not part of the package before us today, what would be the timetable for its review, and would it be subject to a further debate here and looked at separately by the BEIS Select Committee in the other place? I think that we are going to be increasingly dependent on nuclear and, obviously, 15% is not going to hack it after 2028.
The noble Lord, Lord Whitty, in his remarks, made reference to hydrogen and heat pumps as two separate issues. I, for one, do not understand how hydrogen will work and what the use of hydrogen will be, but I was particularly relieved that fracking did not happen in north Yorkshire, for the very simple reason that it would not only be difficult to fund but there was no way that the wastewater could be safely taken away and disposed of. Fracking and hydrogen, as I understand it, will have remarkably large uses of water. I certainly welcome a greater understanding of how we would deal with that.
I leave the Minister with the thought that we need a coherent, well-thought-out and consistent policy, and I for one would argue that we should not penalise those who live in rural areas. I would be interested to learn how we are going to rural-proof any energy policy, particularly regarding significant national infrastructure as it comes out.
The noble Lord, Lord Whitty, also referred to district heating, which is closely linked to energy from waste. I do not understand why we are not using more energy from waste or, indeed, combined heat and power. I remember going to visit SELCHP, the south-east London combined heat and power scheme, before it actually became the combined heat and power scheme. It seems that we solve two problems in one go, if we go down the path of energy from waste and combined heat and power. We are disposing of hard to get rid of rubbish; we want to incinerate it, because we cannot get rid of it in landfill—it is very hard to get rid of. North Yorkshire and I think probably most local authorities are exporting this rubbish to countries such as Holland, where it is burned and goes into the local network. I hope that my noble friend and the department will learn from the Danes and other Scandinavians, as well as the Austrians and Germans, who use this, as my aunt and uncle in Denmark have enjoyed over a period of time, to reduce their heating and hot water costs by feeding the energy from waste into the local grid, so the local community benefits.
I shall say a word on renewables. Under the excellent and skilful chairmanship of the noble Lord, Lord Teverson, we looked at offshore wind farms and received very powerful evidence to show that there are significant threats to sea mammals and sea wildlife through the use of offshore wind, which should be explored before there is a further rollout of offshore wind and arrays, to which the noble Lord, Lord Whitty referred. The most significant thing for rural areas that causes me alarm is that, once the energy generated reaches shore from an offshore wind farm, it has to be transmitted almost entirely by overhead powerlines and pylons. My noble friend and I suffered a loss of electricity, as did thousands more in the two recent storms—and any reduction of transmitting power by overhead powerlines and pylons would be welcome. It is not generally understood that we lose 30% of our electricity through transmitting energy in this way, so it is wasteful, not sustainable, and that must be addressed. I welcome my noble friend’s response as to how we can better transport the energy from offshore wind farms when it reaches shore. I support the call of the noble Lord, Lord Whitty, for limiting the number of onshore connections in that regard.
Like my noble friend Lady Neville-Rolfe, I am a keen supporter of heritage railways, and that is something that my noble friend might like to address in his remarks —whether they will be able to source their coal. I speak as the honorary president of the most-visited tourist venue in north Yorkshire, the North Yorkshire Moors Railway. I hope that my noble friend will ensure that we can continue to enjoy heritage railways sourced by locally produced coal.
In conclusion, I ask my noble friend how he intends to address energy efficiency to stop wasteful transmission, as I described; how to make electricity more sustainable and resilient; how to future-proof the increasing demands and how the Government will meet the additional electricity required to power electric vehicles. In particular, I ask, as have others, how often the Government will review the national energy policy statements and, finally, what plans he has to rural-proof the national policy statements and how we expect the department to do that.
If gas producers are pushing up the price of electricity, why are households with renewables not getting more for their investment? Why are the fossil fuel giants the ones being rewarded for destroying the planet and ripping off consumers? That is another question.
I know that the Conservative Party receives millions of pounds in donations from the oil and gas industry; we have discussed that in this Chamber before. For example, the Prime Minister got something like £2 million in donations from Russians, possibly oil and gas producers, since he became Prime Minister. The case for a dirty fuel tax is overwhelming, and I wish everyone in this House and this debate would support a move that benefits this planet and consumers. Perhaps that is another question: why not have a dirty fuel tax?
Unfortunately, we have a Government in the pay of the oil and gas industry who have agreed the price cap for consumers going up by 50% in April. By contrast, households in the feed-in tariff scheme selling electricity to the national grid are tied to the retail price index, which will go up by 7.5%. That is a decision by the Government; why is that?
The potential for solar on the rooves of houses, warehouses and shops is absolutely massive, and this is the year when the Government should be giving it the biggest push by upping the amount that people are paid. Getting solar panels on more rooftops could make us far less reliant on gas in future years. Removing the planning block on wind farms supported by their local community would stop reliance on foreign gas. In fact, bringing back all the “green crap” would make us more independent and energy secure.
It is progress—I will give the Government this credit—that the Government have removed the arbitrary cap on how large solar farms can be, but why are we still building new houses and warehouses without basics such as solar panels? Why are there any new houses being built that are not net producers of energy? That is another question. We know how to do it. We know that new houses in the decades to come will have to be built that way or retrofitted, so why do we not do it now? The clever engineers at the national grid say that they can be ready for net zero by 2025, so why cannot we make this happen sooner rather than later? That is another question.
Why can we not use the technology that we have to make renewables the dominant source of our electricity within the next three years? That is another question. Why can we not scale up the use of emerging technologies of battery storage and hydrogen production to capture all that renewable energy in a form we can use to power vehicles, houses and factories when we need it? If we show that solar panels are an investment that really pays off, then more people will see the logic of heat pumps earning them money back. Making Britain independent of foreign gas supplies is a side-benefit of going renewable, the main reason obviously being the climate crisis.
Greens are often accused of wishful thinking, but in my view, and in that of an increasing number of people, we are the realists. The reality is that we have the technology to reach net-zero carbon emissions in the next few years; what we do not have is the political will. The Government’s wishful thinking is that they can keep using oil and gas, even beyond 2050. Instead of using all the potential sources of renewables, they rely on non-existent “greenhouse gas removal technologies” —more wishful thinking—to square this circle in reaching net zero. This is the wishful thinking of politicians who have taken dirty money from the dirty-fuel industries. I am sure the Minister knows that Germany has just cancelled the Nord Stream 2 undersea natural gas pipeline and is saying that it will overhaul its energy supply strategy. I would so love the Government to do this, and I would give them full credit for it.
Another bit of wishful thinking is the Government’s approach to waste incineration, which has driven me mad since I was a councillor. It is good that the Government state:
“The amount of electricity that can be generated from EfW”—
or energy from waste—
“is constrained by the availability of its feedstock, which is set to reduce further by 2035 as a result of government policy.”
However, unless they stop local authorities building an excess of new incinerators across the country and signing up to legally binding contracts for the next 25 or even 35 years, the words have no meaning. Money talks, and the contracts require councils to burn and not recycle. In some areas, the amount of recycling is going down because of the incinerator contracts that councils have signed. Burning waste instead of recycling is bad for air pollution and, obviously, bad for the climate. Can the Government commit that they will not allow the import of waste from abroad for burning in UK incinerators?
I know that we had the debate on nuclear yesterday, where my noble friend Lady Bennett of Manor Castle demolished the Government’s arguments for it, but I will say now that nuclear is not needed. We are developing tidal and wave power. Houses leak less heat when they are insulated. We have more efficient batteries as well as the conversion to hydrogen gas. The storage of energy is becoming an everyday thing, whether that is in a car or a battery on the side of the house. In the coming decades, more and more houses and communities will become net producers of energy. Are we seriously expecting them to buy nuclear energy from Hinkley at three or four times the price they are producing it for themselves?
Nuclear is dangerous. It leaks; it produces waste that we do not know how to dispose of; and, above all, we have to build new plants on the coast in an age of rising tides. Every single IPCC report since 2007 has increased the worst-case scenario for sea levels. Sizewell C has a massive sea defence system at the height of 18 metres based on the 2018 IPCC analysis, but that worst-case scenario is already out of date this year. If we build nuclear stations, they will become islands awash with sea water.
The Government’s energy strategy needs to abandon the idea of balance based on dirty fuels, whether fossil or nuclear. It needs to do its bit to mitigate the climate emergency by fast-tracking the cheaper solutions of renewables and insulation. It needs to show some bravery and create a dirty-profits tax that will encourage clean energy. In short, the Green national policy on energy would be good for the planet, good for consumers and independent of Russian gas and the flux of world prices.