Energy White Paper

Part of the debate – in the House of Commons at 5:09 pm on 14th December 2020.

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Photo of Alok Sharma Alok Sharma The Secretary of State for Business, Energy and Industrial Strategy 5:09 pm, 14th December 2020

With permission, Madam Deputy Speaker, today we have published the energy White Paper setting out how we will power our net zero future. This document is a labour of love, and I pay particular tribute to the Minister for Business, Energy and Clean Growth, my right hon. Friend Kwasi Kwarteng, who has done an enormous amount of work in putting it together; he has been working on it since last year. I also thank previous Ministers who have worked on this; of course, we are now delivering it.

The White Paper sets out immediate steps to achieve our climate ambitions, to deliver on the Prime Minister’s 10-point plan, to create jobs and, of course, to protect the most vulnerable in society by keeping bills affordable as we transition to net zero. It also allows us not only to build back better from covid-19 but to build back greener.

We make this transition with consumers at the heart of it, because I understand, as I think we all do in this House, how difficult things are as we recover from covid; for many people, every penny does indeed count. That is why the White Paper sets out at least £6.7 billion of support over the next six years for vulnerable and fuel-poor households. That includes the green homes grant, which could see lower-income households save up to £600 a year on their energy bills, and it includes extending the warm home discount scheme to 2026 to cover 750,000 extra households, giving those eligible at least £140 off their electricity bills each winter.

We will also tackle “loyalty penalties” once and for all by offering simpler methods of switching, including automatic switching. We will consult on rolling out opt-in switching, where consumers are offered cheaper tariffs and invited to take them up. That follows successful Ofgem trials. We will also consult on opt-out switching, which would automatically move consumers to cheaper tariffs unless they told us they did not want that to happen.

We have set out a vision of the future for us all—a future where smart appliances charge at the cheapest price, where one can sell electricity from one’s car back into the grid, and where hydrogen heats homes. We will go further, to ensure that the energy system works for consumers. We will introduce competition in the building and operation of onshore networks to drive down costs and increase investment and innovation, all ultimately benefiting consumers.

We will also minimise the grid connections to our offshore wind farms, which I know is important for many colleagues here, including off the coast of East Anglia, to protect our beautiful coastal landscapes and save consumers up to £6 billion by 2050. We will use data to search for cheaper and more innovative ways to power our homes, transport and businesses by publishing the UK’s first energy data strategy in the spring. This will all help to create a fair deal for consumers and protect the fuel poor, and it will give us warmer, more comfortable homes as we transition to net zero.

This White Paper comes at a vital time for rebuilding our businesses. It reinforces commitments made in the 10-point plan to deliver a green recovery. Our plans in the White Paper could support up to 220,000 jobs by 2030 in clean industries such as carbon capture, usage and storage, offshore wind, and electric vehicles. Indeed, many of the jobs created will be in our industrial heartlands, supporting our promise to level up the whole country and leave no one behind. Now is the time to seize these opportunities.

Clean energy is at the heart of our transformation from a fossil fuel-based energy system to one that will deliver net zero. Low-carbon electricity will be a key enabler for net zero as we change the way we travel and heat our homes. That is why we have reaffirmed our manifesto commitment to 40 GW of offshore wind, including 1 GW of floating wind, by 2030, which will support up to 60,000 jobs by 2030; it is why we have committed to work with industry in aiming for 5 GW of hydrogen by 2030, which will unlock £4 billion in investment and support up to 8,000 jobs; and it is why we are supporting the deployment of power with CCUS by 2030, putting in place the framework required to mobilise investment.

Of course, nuclear power continues to be an important source of clean, reliable and safe energy that, as part of our net zero mix, will help to result in lower costs to consumers. But with the existing nuclear fleet largely retiring over the next decade, we need further new capacity, so I have confirmed today that we aim to bring at least one large-scale nuclear project to the point of final investment decision by the end of this Parliament, and the Government will enter negotiations with EDF in relation to the Sizewell C project in Suffolk. These commitments will be subject to full Government, regulatory and other approvals, including of course, very importantly, value for money. The Government will negotiate this in the best interests of the British people, ensuring low-cost, secure and clean energy over the lifetime of the project.

Today, we are also publishing responses to the consultation on the regulated asset base funding model used in many significant infrastructure projects. Such a model could help to secure private investment and drive down costs for consumers in the long run. We will continue to explore a range of options, including the potential role of Government finance during construction, provided that there is clear value for money for consumers and taxpayers.

I have also been impressed by the response of businesses to our calls to decarbonise. To support them in this endeavour, I am today confirming a new and ambitious UK emissions trading scheme, which will be in place from 1 January 2021. This new UK carbon market will be the foundation on which UK businesses achieve net zero emissions. It is also more ambitious than the EU system it replaces. From day one, the cap on emissions allowed will be reduced by 5%, and we will consult in due course on how to align it with net zero. We have also committed to explore expanding the scheme to further sectors, and will continue to progress our aspirations to lead the world on carbon pricing in the run-up to COP26 next year.

In conclusion, this White Paper sets out a historic suite of measures to deliver our net zero ambitions. Fuelling the drive to 2050, as we move out of the shadow of coronavirus, these measures open the door to exciting new opportunities for our country. Taking action now ensures the UK is set on the path to ending its contribution to climate change, while giving UK industry new opportunities and creating jobs as we build the economy of tomorrow. I commend this statement to the House.