Great British Energy Bill - Committee (1st Day) – in the House of Lords at 5:15 pm on 3 December 2024.
Moved by Lord Naseby
8: Clause 3, page 2, line 13, after “encouraging” insert “investing in”
My Lords, in moving Amendment 8, I will also speak to Amendments 9, 12, 13, 14, 31 and 32 in my name. They are focused on Clause 3, “Objects”, and they arise from a key part of the energy world that has problems with those objects as they exist in the Bill. I will refer particularly to the hydrogen industry; all my remarks will be on that industry’s reading of the Bill as currently drafted.
I have had discussions with the leading and largest trade association, Madano, which has 120 members across the value chain for Hydrogen UK. It is concerned that the current definition of clean energy in the Great British Energy Bill lacks clarity and could unintentionally hinder the growth of the UK hydrogen sector. That is why I am seeking to amend the definition in the Bill.
The proposed amendments aim to provide an inclusive definition of clean energy that includes CCUS-enabled hydrogen. The amendments are supported by Hydrogen UK and the Carbon Capture and Storage Association to address the concerns they have about limiting sector growth and investment. The UK’s unique twin-track approach to hydrogen production that supports the use of CCUS-enabled hydrogen and electrolytic hydrogen is, in my judgment, a major strength that can help kick-start the UK hydrogen industry. Excluding critical CCUS-enabled hydrogen production technology at this early stage would harm the UK hydrogen industry.
So, how will the amendments that I have put forward support the UK hydrogen industry? First, they give confidence. They will secure investment, because a narrow definition of clean energy will limit investment in sustainable energy resources, slowing the growth of green industries such as hydrogen. And hydrogen presents the UK with a massive opportunity for economic growth, due to its natural geological and geographical advantages, supply-chain support and existing industrial skill set. A clear definition of clean energy will allow GB Energy to build confidence and bring in investment. This will create jobs. Hydrogen UK’s most recent economic impact assessment estimates that the hydrogen sector in the UK could support approximately 30,000 direct jobs by 2030, but that will happen only if CCUS- enabled hydrogen projects reach FID.
It will help to achieve net zero. GB Energy is the flagship policy of this Government’s plans to reach net zero by 2050, and I support that. Hydrogen has a wide range of uses, from local transport to aviation to industrial decarbonisation, and is essential for decarbonising hard-to-reach sectors of business. It would show good global leadership. That is really thanks to the healthy pipeline of projects, a supportive policy environment and existing energy expertise. The UK is well positioned to become a global hydrogen leader and build robust supply chains here. But, above all, it supplies energy security. CCUS-enabled hydrogen has a critical role to play in protecting the UK’s energy security, because hydrogen can store energy to balance offshore wind and solar. When the wind is not blowing and the sun is not shining, hydrogen is there to give us the future energy security that we need as a nation. I believe that what this industry has done and is doing is vital to enhance this Bill and I look forward to hearing what the Minister has to say.
My Lords, I rise to speak to five amendments in this group, so I apologise that I will be a few minutes—but at least they are not in five different groups. I start with two amendments on heat pump technology. They both seek to explore how Great British Energy could have a greater and more useful and productive role in helping with the uptake of heat pumps.
Amendment 16 would set an objective for GB Energy to ensure the uptake and use of heat pumps. Amendment 17 would set an objective for GB Energy to ensure the uptake and use of heat pumps, including by leading efforts to develop a mortgage opt-in financing scheme, where payments for heat pumps could be included in mortgages on an opt-in basis. Helping people to decarbonise home heating has been a long-running and difficult issue. Very little progress has been made in these areas, which are responsible for a quarter of our total CO2 emissions. We all need to recognise and work together to ensure that policies and plans are put forward to bring people with us on the journey to net zero, and that means ensuring that vulnerable and low-income households are supported through the transition.
Heat pumps are up to four times more energy-efficient than gas boilers and they are a crucial element of the Government’s plans to decarbonise home heating. I welcome a lot of the measures that have recently been announced by the Government as part of the warm homes plan, including boosting the budget for the boiler upgrade scheme, supporting more households to switch to a heat pump and removing unnecessary planning restrictions which were a blockage to people taking up and installing heat pumps. While I recognise that these measures are useful and help to remove some barriers, my worry remains that they are still not enough to get us back on track to meet our heat-pump targets.
To meet the UK’s climate change target, the Government need to install 600,000 low-carbon heat pumps annually by 2028. The 2024 progress report to Parliament from the Climate Change Committee identified heat-pump installations and the training of heat-pump installers as being “significantly off track”. In 2023, less than half the number of heat pumps were installed to keep us on track for these goals. While figures have improved a little this year, it has not been dramatic enough to make progress. The marketplace faces continued resistance from many of the gas boiler companies; there is still a prevalence of disinformation and cost barriers and a lack of installers necessary to get these heat pumps installed. So I wish to explore with the Minister and with the House whether it is worthwhile giving GB Energy a role in this space, to help progress with the installation of heat pumps and to help us meet these challenging targets. To be frank, I do not see much of another plan from the Government that is going to get us anywhere near where we need to be in time. Furthermore, has any consideration been given to bringing the warm homes plan and the associated budget within the control of GB Energy?
Turning to Amendment 17, I wish to acknowledge from the outset that this is not my idea; this is an idea I read about and it originates from the noble Lord, Lord Deben. It made sense to me. This would be a way of helping people who own a house and have a mortgage to overcome the cost barrier to the installation of heat pumps. I think it is sensible and possibly worth pursuing further. So, I wanted to ask the Minister and to explore with the House whether GB Energy could act as a facilitator and a broker to help make this happen. There are significant government grants available—£7,500 for installing a heat pump—but that still leaves over half the cost with the householder. That is still a significant amount of money and it is a barrier to people taking this up. However, if the total cost of the heat pumps that was left over could be put on a mortgage, that could spread over a longer term and the process would become inherently much more affordable. So I will be interested in the Minister’s comments on whether that is something that GB Energy might have a role in helping to facilitate.
I will now move on to Amendment 23. To be clear, this is a probing amendment. Sorry, that was not written in the amendment. The amendment prevents GB Energy facilitating, encouraging and participating in carbon capture and storage, as the Government have already allocated a budget for CCS to be spent elsewhere. I tabled this amendment so that the whole House could gain a better understanding of the proposed role for GB Energy in the CCS sector and in this space. I want to hear from the Minister what the objectives are. What value will GB Energy add here, why are they investing in it and what are the proposed outcomes that will flow from that investment?
I understand from the Minister that the Government do not want to put a list in the Bill and that they are keen to maintain flexibility for GB Energy. GB Energy is about investing in emerging technologies, helping them to get off the ground and taking on some of the risk that needs to be taken to help create new markets. It is about crowding in and not crowding out private capital. Those are clear objectives. It is a tightrope that needs to be walked, but there is a clear purpose there. I am not against GB Energy having a role in CCS, but I wish to understand a little better what that role is, what is planned and what percentage of GBE’s proposed budget might be spent in this area.
Against that background, I am concerned about the availability of budget and government resources for GB Energy. I know that government discussions around budget resources are ongoing, that £100 million has so far been pledged over the first two years, and that a total of £8 billion over the five years of this Parliament is proposed, but that is not a huge budget resource and there is a growing list of priorities and possible areas for GBE to invest in. Eventually, we could end up in a position where the cake is cut so small that each slice begins to have a very diminishing value.
Of course we need to set up the organisation, but only £100 million-worth of investment will be available to GBE for the year 2025-26, other than what might come from the National Wealth Fund. Time is running out for GB Energy to make these investments, because the ambition here is obviously to decarbonise our energy by 2030. If you are 25 or 26 making these investments, once you have made them they need to create real things that make a real difference. We are running out of time.
I speak also to Amendment 24, which is similar to Amendment 23 but looks at GB Energy’s role in nuclear and at the relationship between GB Energy and GBN. I do not have time to go through it all, but basically I want to explore all the points I made on CCS in relation to GBN. I note the Minister said in the letter he wrote to us that the detail is being worked through and that considerations are being given to how GBN’s functions could be best aligned with GBE. Briefly, can he confirm that there are no plans for GBN to become part of GBE, and that the plan is that they will always be separate organisations but will have close working relationships with each other? Again, I assume that that is about initial investment and risk-taking in new nuclear technology.
My worry these amendments address is that, without proper strategic priorities, the ever-growing areas that GB Energy could invest in will leave it with inadequate resources to do the core job that I want to see, which is renewable energy. The Government have made £200 billion available for carbon capture and storage, so I do not quite see why GBE also needs to be involved in it.
Amendment 25, to which I have added my name, is in the name of my noble friend Lord Bruce. Unfortunately, he cannot be here, so I will speak to his amendment, which would require GBE to have consideration
“to measures that ensure oil and gas supply chains contribute to … the development of renewable technology during transition to net zero … the decarbonisation of remaining oil and gas production, and … the reduction of oil and gas production consistent with net zero”.
I pay tribute to my noble friend and his years of experience in Aberdeen and the North Sea oil and gas sectors, and his very real concern to ensure the transition is indeed just. These processes are extremely difficult even in the best of times and with the best will, so it is important to ensure oil and gas workers are protected and treated fairly, that adequate support is given to them, and that they are able to transition into the green energy and technologies of the future. We need these people and their skills, and we need these industries to ensure we can deliver the green technology that we need. However, these processes can be bumpy. It is in all our interests to ensure that their rights and futures are protected, and that these British industries continue to be supported and flourish, and are able to transition. All projections to and through net zero envisage oil and gas as part of the plan, so this will continue to be part of our energy mix even in net zero.
The oil and gas sector currently accounts for £25 billion of UK GDP and supports around 200,000 jobs. The plans are that even more people will be employed in the green sectors. The simple purpose of the amendment is to ensure that the decline of the oil and gas supply chain does not proceed faster than the expansion of the renewable sector. If we get the balance right, the UK can deliver net zero at home and help develop it abroad; if we get it wrong, we could depress one successful if declining sector before the new sector arrives to take it forward.
Just before I finish, I give my support to Amendment 18, which will no doubt be spoken to very well by my noble friend Lady Grender. It calls for GB Energy to support an emergency home insulation programme. This is one of the key amendments to the Bill from my party. The best energy of all is the energy we never need to burn, use and consume. More must be done on energy efficiency to support our home owners and bill payers to make sure that they can afford to keep their homes warm and safe. Finally, I lend my support to Amendment 91 on tidal barrages. With that, I think I have run out of time.
My Lords, I rise on the final note of the contribution of the noble Earl, Lord Russell, on those amendments to speak to my Amendment 91, which he just mentioned. It is in my name and that of my noble friend Lady Finlay of Llandaff and the noble Lords, Lord Storey and Lord Woodley. I know it enjoys support from all parts of your Lordships’ House. It would insert the following new clause after Clause 7:
“Within six months of a designation under section 1(1) coming into effect, Great British Energy must publish an assessment of the potential use of tidal barrage projects to support decarbonisation of the energy sector”.
That sits comfortably with the other amendments in this group. I strongly support what the noble Lord, Lord Naseby, said about the use of hydrogen, what the noble Earl, Lord Russell, said about heat pumps, and what I think my noble friend Lady Boycott will say about biomass.
I also thank the Minister, the noble Lord, Lord Hunt, with whom I have already had one meeting—he promised that at Second Reading and I am grateful to him for it. It is partly about whether we can reduce reliance on forms of energy that come with a price tag connected to slave labour in places such as Xinjiang. If one is to stop using sources that have a human rights dimension, we have to find alternatives. In a way, that is what these amendments seek to do: to look at what some of the other alternatives may be. I also know that the Minister has kindly agreed to meet with me and the metro mayor for Merseyside, Steve Rotheram, along with his noble friend, the noble Lord, Lord Woodley, in due course, so we can talk further about the Mersey barrage, which I will come back to in the course of my remarks.
The noble Lord, Lord Naseby, talked about security and diversity—very important concepts that have come out in all the previous groups we have talked about. We should make sure that we are not so dependent on any one source that anyone else can then hold us to ransom. I would add to security and diversity the need for more reliance in the United Kingdom on ourselves and a reduction in dependency on countries such as the People’s Republic of China or Russia. I think all of us were horrified to see the dependency that Germany had at the beginning of the war in Ukraine, and we must learn the lessons of that.
Why tidal energy? I am grateful to the House of Lords Library for producing some notes on this for me. However, I have been interested in this issue since the 1980s, when I served in another place on the Environment Select Committee, but also because I founded the Mersey Barrage All-Party Parliamentary Group. This idea had not come out of the blue. In fact, tidal barrages have been around for many years. The first was thought of by the French in 1921. It did not come to pass until 1966, when the La Rance barrage, quite close to Saint-Malo in Brittany, opened. So this is not a fantasy or something out of dystopian fiction; they have been done and here are decades of experience.
Tidal energy could be a crucial pillar for delivering the objectives of the energy Bill. It would strengthen the UK’s renewable energy mix, complement intermittent sources such as wind and solar, drive the green industrial strategy by fostering innovation, create jobs and support regional economic growth. The United Kingdom is uniquely positioned to be a global leader in tidal energy.
We can learn from projects such as the La Rance estuary barrage in France, but we can also learn—I think the noble Lord, Lord Howell, will be particularly interested in this—from the experience of South Korea, where the largest operating tidal power station is based: the Sihwa Lake project, which produces 254 megawatts of energy. It is a 43.8 kilometre artificial lake constructed as a land reclamation project in 1994. It used a 12.7 kilometre seawall at Gyeonggi Bay and, after some false starts, if you look at its history, nevertheless, construction led to 552.7 gigawatts of electricity generated by the tides. I asked what that really means to a layman like me, and I was told that it is the equivalent of 862,000 barrels of oil, or 315,000 tonnes of CO2, equivalent to the amount produced by 100,000 cars annually. It has 10 water turbine generators, enough to support the domestic needs of a city with a population of about half a million. After some false starts initially, as I said, it led to some very positive developments in the ecosystem there as well.
That neatly takes me to the Mersey barrage, an idea that, as I said, has been around for over 30 years now. There has recently been a new public consultation, which closed last month. I know that when the Metro mayor comes to meet the noble Lord, Lord Hunt of Kings Heath, there will be an opportunity to discuss the findings of that.
None of these things, whatever energy we produce, comes with no downside—we all accept that—but there are surprisingly few downsides to the use of tidal barrages. Merseyside would argue that the green industrial revolution could be started off there, and Britain’s renewable energy coast could be there, on the River Mersey and in the Irish Sea. It would power hundreds of thousands of homes and create many jobs. I visited Cammell Laird a few weeks ago to see the wonderful renaissance that has taken place there, alongside the extraordinary renaissance of the Port of Liverpool; these are big success stories that need to be understood and learned more widely. Listen to what the mayor himself says: “There is a strong strategic case for taking forward a Mersey tidal power project and we are developing detailed plans for how it could be made a reality. I also believe there is a strong moral case for it too—our planet’s future depends on it.”
As people such as the noble Lord, Lord West, will confirm, the Mersey has a huge tidal range—green energy to power every home in the city region for more than 100 years. Surely that is something worth giving serious consideration to. It is predictable, so it complements offshore wind and solar energy; but it is predictable in a way that they are not always. It should be a key part of the diversity that we heard about earlier. It is a well-established technology with minimal decommissioning needs. I would also point the Minister to other experience, not just overseas. The Orbital O2 project in Orkney is the world’s most powerful underwater turbine: 2,000 homes there receive their energy from it, and more than 2,200 tonnes of carbon are cancelled as a result of the work of the project.
Then, of course, there is the Severn barrage project, which has been around a long time and has had many advocates, not least on the Official Opposition Benches over the years. I know that some noble Lords, one of whom cannot be here today, are great supporters of it, as are some of my noble friends. This is an issue that has captivated the party of the noble Lord, Lord Wigley, who is in his place, and others. The idea was dropped back in 2010, but it was resurrected in 2024, with New Civil Engineer reporting that a new independent commission had been established. It estimates that 7% of the United Kingdom’s electricity could be generated, and challenges such as cost, risk and environmental impacts, which have previously halted major barrage projects, are believed to be capable of being overcome by the use of new technologies.
The UK could be in a position to be a global leader. I certainly think this is worthy of exploration, and that is all the amendment commits us to doing. This should not be seen as some sort of science fiction, as some projects undoubtedly appear to be from time to time. It is not unrealistic, and there are already very good examples, which I have cited. It is worth looking at further, and if the Minister cannot support the amendment, I hope he feels that the principle of delving further into the potential of barrages should be part of what Great British Energy seeks to achieve.
My Lords, I very much support what the noble Lord, Lord Alton, and the noble Baroness, Lady Finlay of Llandaff, said about tidal power. I have followed what has happened on the Severn, and it is terrific to see that it is now coming back into play. Tides are probably our most reliable power source in the UK. There will always be a tide, when there might not be some wind.
I support pretty much all the amendments in this group which look at diversifying the sources of energy—all of what the noble Earl, Lord Russell, and the noble Baroness, Lady Grender, said. I shall speak specifically to Amendments 30 and 33, which would exclude biomass from the definition of clean energy, and there are many reasons for this. Over the past few years, it has become completely clear to me and, I think, to many other noble Lords—including the noble Lord, Lord Forsyth, who is not in his place, and who spoke about this issue during a Question of mine a couple of weeks ago—that while biomass is okay on paper, in theory, and on a very small scale in practice, it is not at all okay on the big scale at which we practise it. We cannot go on using it to reach net zero. I do not know whether noble Lords saw the “Dispatches” and “Panorama” programmes; also, an Ofgem investigation has found that biomass energy generators in the UK have “misreported”—that is not my word—the data on where they get their wood from. In other words, it is not waste wood. The idea was that offcuts and waste wood were used and burnt. That in itself was a fallacy, because the burning of wood releases so much carbon, but the story gets worse.
As the Wildlife and Countryside Link put it:
“Bioenergy which burns woody biomass actively harms nature restoration efforts and will not contribute to GB Energy’s goals of clean energy, energy independence, nor cheaper energy bills.”
This is before you get to the negative health impacts of sourcing and burning biomass, the damage it is doing to the renewable energy brand, or, importantly, habitat destruction, which so often gets missed in the race towards net zero.
I want to raise a couple of wider bioenergy issues. I am really worried by the idea of BECCS—bioenergy with carbon capture and storage, which the Government seem intent on believing is an inherently negative emission technology. Let us look a little further. The assumption is based on the idea that all biomass inputs are waste—which not even our sustainability requirements require—or are balanced out by regrowth. If it was entirely the former, let us be clear that burning waste wood releases more emissions than natural degradation, through which carbon is absorbed by the soil—and that is before you get to all the other environmental benefits of leaving forestry residue in the forest where it belongs. If we assume the latter to be true, it is only the case after several decades and, again, only if the trees are actually replanted. In short, there is no way to verify that biomass is carbon neutral at any point.
I feel that this has gone so far that it would even be worth the department itself sending someone out to where these pellets are apparently sourced from—in North America and in the province of British Columbia. Perhaps there is something that DESNZ or its predecessor, BEIS, has already done, which I have heard rumours about. I would be very grateful if the Minister could tell me if this has happened or is planned.
Biomass is not carbon negative. I understand that the Minister’s department baked BECCS into our carbon budgets over a decade ago and that they are ongoing in future carbon budgets, but the logic is flawed and, at its worst, truly deceitful. Just because we classify something as renewable or carbon negative does not mean that it is. We do not have time to grow the trees to absorb the carbon we are pushing into the atmosphere. As the noble Lord, Lord Forsyth, said, we are cutting trees down in North America and Canada, turning them into wood pellets, shipping them by various means back across Canada and the Atlantic, often to a power plant in Yorkshire where they are belting out carbon into the atmosphere, and we are calling this clean and renewable. My Lords, it is not.
My question for the Minister—apart from whether he is on this mission to find out the extent of this—is whether he will rule GBE out of involving itself with biomass power generation, and will he come back to me on what investigations his department has done in the past few years? Can we be honest at this point and remove the absurd assumption that biomass is inherently carbon-neutral at the point of use?
My Lords, I rise to speak in favour of Amendment 18, not Amendment 28— to be clear. I regret that I was unable to be here for Second Reading.
This amendment inserts two additional objects for GBE. The first is to implement
“an emergency home insulation programme with targeted support for people on low incomes”.
The second is to have as a clear object
“the expansion and development of renewable energy and technology”.
I also support many of the amendments in this group, particularly those in the name of my noble friend Lord Russell. Most of my comments will address his Amendments 16 and 17, which, alongside the spirit of my own amendment, seek to promote an eco-friendly and affordable way to heat homes.
On these Benches we would argue that these amendments are essential if the welcome aims of the Bill are to be fulfilled; namely, to reduce dependence on fossil fuels, drive down costs for individual households and ensure long-term security of supply. Failure to give these two issues due prominence, especially when it comes to insulation, would be like running a hot bath with the plug missing. My amendment focuses on getting GBE to support and innovate on behalf of its customers, because GBE, like any other part of our society or any other organisation, should be working towards and contributing to net zero.
The UK has one of the worst records in western Europe when it comes to losing heat from homes—three times faster than neighbouring countries—resulting in exorbitant costs, poor health and a level of wastage which is breathtaking. The greatest impact of our older, damper, leakier housing stock is on those who can least afford it; and it particularly impacts on people who live in the private rented sector. While residents might be able to access help with insulation from their local authorities at present, that is not what this amendment attempts to achieve. It is about the rollout of a proper emergency home insulation programme—yes, for this winter but, above all, as a long-term measure to improve living conditions and drive down costs. I ask that the Minister particularly addresses our aim for an emergency scheme. The benefit is obvious and has been laid out by the Climate Change Committee in the past. Demand for energy can reduce if we deal urgently with the energy which is lost and seeping out of homes that are not insulated and are leaking heat.
The potential savings are significant. The New Economics Foundation estimates that £2 billion alone could be saved for the NHS from reducing cold and damp in current housing. In addition, home energy efficiency is highly necessary to get us to the net-zero target. Regrettably, according to the previous Conservative Government’s own Climate Change Committee, while the UK over recent years should have installed nearly 3 million individual measures in energy efficiency, the last Government achieved just under 16% of that target. This was such a wasted opportunity to help those who need it most, in the leakiest of homes.
The worst part of this historical record is the abandonment of targets for energy efficiency and insulation in 2015, allowing houses to be built without energy-efficiency measures at all. We urge this new Government to make this record of lost opportunities a thing of the past, and to adopt an emergency programme of insulation through the scheme proposed to support those on low incomes. While we are of course aware that the Government’s warm homes plan is due next year, if this Bill is intended to champion the consumer alongside the objective of energy efficiency, which is one of the best ways to help them, it should be included within this legislation, particularly given how far these programmes have, tragically, lagged behind and how much progress and catch-up now need to be made.
I ask that the Minister responds in the context of the warnings from Age UK and Disability Rights UK about the urgent and imminent impact of the changes to the winter fuel allowances. This is something that could be reduced as an impact, crisis and concern right now, if countless vulnerable pensioners were lifted out of fuel poverty with the emergency programme we have described.
Leading the way in previous years, my noble friend Lady Pinnock introduced an amazing scheme that I urge the Minister to look at called the Kirklees Warm Zone scheme—noble Lords may have heard her reference it once or twice in the past—that offers over 170,000 households support with an insulation programme, regardless of the tenure of the property. It was an award-winning programme over a three-year period, and the largest domestic insulation scheme in the UK. It is estimated that approximately 55,000 tonnes of CO2 were saved in that period, and it helped to dramatically reduce fuel poverty and won many awards for sustainability.
In October, Wokingham Borough Council launched a new home decarbonisation advice service aimed at supporting residents who want to make their homes more energy efficient and reduce their energy bills. Eastleigh, as part of a much wider consortium of local authorities, secured home upgrade grants to help vulnerable households. I have given the Minister those three local government examples where there is such a strong appetite for the emergency action that we are trying to bake into this legislation.
The second part of the amendment would also reinvigorate an ambition that has fallen away in recent years for the UK; namely, to be a global leader in development and expansion of renewable energy, which many noble Lords have talked about in this group. This is an ambition, sadly, that the Conservative Government dropped like a wet, cold potato when they ditched—according to the Sun, not me—the “green crap”. This new ambition today should be baked into primary legislation. We should immediately remove the last Government’s restrictions on new solar and wind power. When it comes to renewables, we should be innovating and proudly leading. From insulation and heat pumps to wind, wave and solar, the UK is uniquely able to lead in this, in part because of the geography.
We are ambitious for what this Bill can achieve and, as a result, what the UK can achieve. We believe that investing in renewable power now will ensure that 90% of the UK’s electricity is generated from renewables by 2030. Innovation that is referred to in this amendment would include things such as a rooftop solar revolution, with strong incentives and a guaranteed fair price for electricity sold back into the grid, for instance.
Finally, this part of the amendment is connected to jobs that can be created in this area. I think everyone would agree that one of the best examples of that over a few years now is Hull, where the new blade factory with a recent contract worth £1 billion is yet another example of how growth in jobs can be generated through great innovation in this area. That is why the amendment refers to expansion and development: it is with these schemes in mind.
Our ambition as a nation must be to be a leader in this, and it should have no limits. I hope noble Lords and the Minister will support this amendment, its intentions and the spirit of the other amendments as the Bill progresses through Committee.
My Lords, I do not believe that the Bill should be too specific on the investment targets of GBE. As I said in an earlier group, I believe that GBE should remain flexible and fleet of foot, adapting itself over the years to the development of science and changes in the marketplace.
Nevertheless, there is no harm in us discussing where we think some of the current opportunities lie. In that context, and in the context of the amendments in this group, I will touch on both heat pumps and tidal energy. Unfortunately, it was not clear from reading the script that the amendments from the noble Lord, Lord Naseby, referred to hydrogen. Had I known this, I would definitely have been supporting his amendments, because I am very keen on hydrogen. It has a crucial part to play in our energy infrastructure, as a storage of intermittent power—as the noble Lord himself mentioned—as well as in the making of steel and in transport. Hydrogen fuel cell cars have a range of more than 1,000 miles. Hydrogen is a really important part of our infrastructure. As I said at Second Reading, I hope that GBE will support the hydrogen industry.
I turn now to heat pumps. Heating and hot water make up around 40% of the UK’s energy consumption and nearly one-third of our greenhouse gas emissions. I see a role for GBE not so much in individual domestic heat pumps but in community heat pumps—particularly where, to coin a phrase, we can use the heat under our feet. Many major population centres in the UK are above, or adjacent to, hot, sedimentary aquifers at, say, 500 to 2,000 metres depth, with temperatures ranging from 25 to 60 degrees and higher. These, combined with an at-scale community heat pump, have huge potential to produce heat for hundreds of thousands of homes, factories, hospitals and greenhouses. In Holland, they hope to meet 23% of their heat demand by 2050 using geothermal heat.
We have geothermal resources in the UK; we have the heat beneath our feet. We also have the drilling skills left over from oil and gas explorations to use in this nascent industry. The industry is poised to deliver growth, renewable heat and employment. It just needs a small amount of government focus and pump priming.
I turn to tidal energy and the amendment tabled by the noble Lord, Lord Alton. I strongly believe that it is imperative for the UK to play to its strengths in the whole energy field. One of its real strengths is its range of tides. While in Gibraltar, for instance, the tidal range is only about one metre, in the Solway Firth it can be eight metres or, in the Bristol Channel, 15 metres- plus. We also have tidal races around our shores and between our islands which flow at great speed and with considerable power.
Of course, tidal power is classed as intermittent, but it is guaranteed and predictable. We know now how much power we can produce from a given site between the hours of 6 pm and 7 pm on today’s date in 2124 because, if we build, say, a tidal lagoon now, we know it will still be producing electricity almost for free in more than 100 years’ time.
We have tidal races in our firths and between our islands but, to me, the most compelling solution for harnessing our tidal power are large, offshore tidal lagoons. Any site with a depth of between five and 10 metres, and a tidal range in excess of five metres, can produce guaranteed power. They are better than a barrage across a bay because you can have turbines all round, not just on one side. This means they are almost half the price per output of power. They can be any shape, with curves in any direction that can follow the required underwater contours to produce maximum return on investment. There are about 20 ideal sites around the UK coastline.
I come from southern England, as compared to the noble Lord, Lord Alton, and the other side of the channel from the noble Lord, Lord Wigley. If noble Lords look up, they might be able to imagine a wall of water the height of this Chamber and several miles long. This is the sort of power that the Severn Estuary can produce four times a day. One lagoon in Bridgwater Bay alone—right next door to Hinkley Point, with its connections to the grid—could produce 1,900 megawatts. These lagoons do not have to be shut down for repairs. If a turbine—one of 20 or 30—needs servicing, it is lifted out for maintenance, while the rest just keep on turning.
As opposed to a barrage across an estuary, these lagoons do not upset shipping traffic in any serious way, because they sit at the side of shipping channels in the shallow waters. Furthermore, their environmental effect makes only peripheral difference to the course of the tide, migratory fish, wading birds and so on. They have the support of most environmental NGOs. There are numerous sites for these lagoons, from the north to the south of the UK. There is a seven-hour tidal difference between Bristol and Solway. If the tides are used on both flood and ebb, this gives an almost consistent baseload of power for England—and that is before we tap into some of the Scottish tidal ranges. Tidal lagoons as a whole could provide three times the capacity of Hinkley Point. We must play to our strengths. Tidal power is our natural advantage and I believe it would be well worth the focus of GBE.
My Lords, I apologise for coming in late. I am here at the behest of the noble Baroness, Lady Finlay, who apologises to the Committee that she cannot be here to speak in support of Amendment 91, proposed by the noble Lord, Lord Alton. I very much support the points that he made.
The noble Baroness has asked me to make a brief contribution to the debate. I wholeheartedly agree with the points she has asked me to raise. These relate mainly to the importance of tidal power in both its devices, which we heard analysed a moment ago. Tidal range is one part of the possibility of creating tidal power; tidal stream is the other. Tidal stream has not yet been well developed and that could be something for the future, but tidal range most certainly has been. There is a predictability about it which gives it a tremendous advantage.
Tidal range devices use water height. The differential between high and low levels in the Severn, for example, is an enormously important factor. Using the same principles, there are locations suitable for lagoons as well—certainly around the coastline of Wales, in Swansea Bay and up around Anglesey. I understand that the Marine Energy Council recommends reaching a gigawatt of tidal stream capacity by 2035. This would be an enormous contribution.
The noble Lord, Lord Alton, spoke about the possibility that 7% of the UK’s electricity needs could come from the Severn Barrage. That would have the advantage of providing very important construction work, which could make a massive contribution to the south-east Wales economy. Given what has happened recently to the steelworks in Port Talbot, those jobs are very much needed. I hope that the Government will look seriously at this.
The case for this type of electricity generation is overwhelming. I hope the Government will give it the attention it deserves.
My Lords, I rise very briefly, first to declare my interest and secondly to comment on some of the amendments in this group.
I have sat in the Minister’s chair, so I understand that he will not want to add a long list of exclusions or inclusions to the objects of the Bill. Even with that in mind, I hope that he will have listened carefully to the issues that have been raised. They are important and there is a theme to them.
I support the comments of the noble Baroness, Lady Boycott. Two issues have come out of the debate for me. The case for energy efficiency, insulation and heat pumps was made very powerfully by the noble Baroness, Lady Grender, and the noble Earl, Lord Russell. It is important that GB Energy looks to how it can provide a long-term, consistent environment for the policies that each Government pick up and put down. Industry, which has to be a key partner, finds this so frustrating and retrenches from investing in the skills training and expansion that are needed if we are effectively to retrofit the millions of homes in this country.
As we said in the debate on a Question earlier today, this is important not only for carbon reduction. We saw what happened from 2014: emissions from buildings fell by two-thirds after the change in policy. It is therefore really important that someone is boosting this and making sure that it is there for the long term to provide that stable environment. GBE will be in a position to do that, particularly if it is tied in with what we discussed in the Question earlier about the planning framework, again providing a clear and consistent road map for those who will need to invest in this.
The other thing that came out of the debate was that we have to be innovative, look to our strengths and be open-minded about sources of renewable energy. We have to understand that some of those sums that we had in our heads 20 years ago, about the cost of wave power, tidal power or whatever, have changed. They have changed financially but also in other dimensions, such as energy security and our priorities in energy. It is important that GBE is in there supporting those things.
I absolutely support Amendment 17. It may not be for the Bill but, as part of the innovative thinking we need from GBE, we need to look at such things as financial instruments. When we know that solar panels or heat pumps will pay off over the years but people are not going forward with them simply because they cannot afford the capital expenditure, it is important that we look not only at upping the government grant—helpful though that is in some instances. Houses can have mortgages on them for 10, 20 or 30 years. The costs of that investment can be spread in other and innovative ways, so I hope that the Minister can respond supportively to that amendment.
My Lords, I thank my noble friend Lord Naseby for introducing his thoughtful and technical amendments, which no doubt would improve the quality of the Bill should they pass. I also thank all noble Lords who have spoken on this group. Each amendment contributes meaningfully to the Bill’s ultimate aim by ensuring that governance reflects accountability, fairness and long-term sustainability.
I will limit my remarks to Amendments 8, 9, 12 and 13. Amendment 8 proposes the addition of “investing in” alongside “encouraging”. This is quite important, because it seeks a balance between fostering enterprise and ensuring strategic government investment to safeguard our national energy. We want a partnership between government and the private sector. By explicitly including “investing in”, the amendment aligns with our commitment to a dynamic and sustainable energy sector.
Amendment 9, by adding “one or more of”, would bring clarity and flexibility to the Government’s strategic objectives in advancing energy policies. It would ensure that the Government could prioritise specific energy initiatives based on strategic needs without being overburdened by one limiting obligation. It reflects the core principles of pragmatism and efficiency, ensuring that resources can be allocated where they can deliver the greatest impact.
We know that energy security and innovation in this area—referred to by my noble friend Lord Howell as bigger perhaps than the Industrial Revolution—require adaptability. Whether we are investing in offshore wind, nuclear power or emerging technologies, the amendment would allow for a tailored approach that maximised value for taxpayers’ money and strengthened our energy independence. I urge colleagues to support it to make sure that we have smart, effective and flexible governance in the Bill.
My noble friend Lord Naseby’s Amendment 12 is again quite technical. It seeks to insert the phrase “directly or indirectly” into Clause 3, which would again enhance the Bill by acknowledging the interconnected nature of emissions reductions and energy initiatives. This addition would ensure a pragmatic approach to addressing climate goals. Emissions reductions often involve complex supply chains and secondary impacts. Recognising these indirect contributions reflects our understanding of the broader economic and technological dynamics that drive innovation and decarbonisation. For example, investments in nuclear power or advanced grid infrastructure may not lower emissions immediately but they create the conditions for sustainable reductions in the long term, towards 2050 net zero. The amendment therefore provides the flexibility needed to pursue bold initiatives while holding true to the principle of cost-effectiveness for taxpayers. By adopting it, we would make the Bill more robust, practical and reflective of real-world energy systems. I urge my colleagues to support it.
Finally, my noble friend Lord Naseby’s Amendment 13 proposes the substitution of the word “produced” with “derived” in Clause 3. Again, this is a technical and seemingly small change, but it holds significant importance for our energy policy. “Derived” more accurately captures the diverse and evolving sources of energy in our transition to a low-carbon future. Energy comes increasingly from various integrated systems, including renewable sources, nuclear, tidal—as we have heard in great detail—and hydrogen. The term “produced” can be limiting, whereas “derived” acknowledges the broader, more dynamic approach needed to secure our energy future. The amendment provides the flexibility to encompass a wide range of energy sources and technologies, ensuring that our energy policies remain adaptable and forward thinking. It should reflect our commitment not only to reduce emissions but to foster innovation and maintain energy security in the face of global challenges.
My Lords, this was a very interesting group. It clearly refers to a range of technologies in which Great British Energy could invest. I should start by saying that we intend GBE to be operationally independent and it is not for us to rigidly define what it should do or in which technologies it should invest.
The noble Baroness, Lady Hayman, of course anticipated my list argument because she has used it herself a number of times, but I take her point about ensuring long-term certainty and a stable environment for some of these crucial sectors. I recognise that GBE has great potential so to do, particularly in sectors where investment from the private sector may initially be difficult. I also take her point about how this has to be aligned with planning reform, enhanced grid connections and infrastructure.
Amendments 8, 9, 12, 13, 14, 23, 31 and 32, in essence, relate to technologies specific to GBE’s objects in Clause 3. Amendment 23 from the noble Earl, Lord Russell, would prevent Great British Energy being involved in CCUS projects, whereas the amendments from the noble Lord, Lord Naseby, would ensure that both carbon capture and storage and hydrogen fell within the scope of the Bill. The Government view both hydrogen and CCUS as vital to our drive towards net zero and to ensuring a just transition for industries based in the North Sea.
As part of our transition to home-grown clean energy, we see hydrogen and CCUS as safeguarding our energy security, and we are focused on deploying CCUS technologies to ensure that CCUS-enabled blue hydrogen can serve as a critical enabler in the transition to a net-zero energy system. I say to the noble Lord, Lord Naseby, that the Climate Change Committee described CCUS as a necessity, not an option, for maintaining our climate commitments. His enthusiasm for hydrogen was very clear. I can confirm that we do not think his amendments are required, because we believe that CCUS and blue hydrogen are within the scope of the Bill. The Bill defines clean energy as energy produced from sources other than fossil fuels, as defined by the Climate Change Committee. The fact that blue hydrogen does not meet the definition does not at all prevent its production or use falling within Great British Energy’s other objectives in Clause 3. This clause allows GBE to facilitate, encourage or participate in projects, such as CCUS or CCUS-enabled hydrogen, that would contribute to the reduction of greenhouse gases from energies produced from fossil fuels. I have made clear that the Government support both technologies. The Bill is drafted to reflect this, and it is further demonstrated—as the noble Earl, Lord Russell, remarked—by the recent announcement in relation to CCUS of £21.7 billion funding over the next 25 years.
On the point raised by the noble Earl, Lord Russell, we are very wary. In a sense, this is coming from two points: on the one hand, noble Lords are concerned about too much interference from Ministers in the day-to-day operations of GBE, and, on the other, there is a temptation to try to specify here what it ought to be doing. I understand that quite fully, because noble Lords have some important issues to raise about certain clean power technologies, but I think the noble Lord, Lord Cameron, is right: we really need to resist the temptation to say how GBE will divide its resources.
The budget for 2025 is relatively modest, of course. The promise is £8.3 billion in the lifetime of the Parliament. I accept the issue of speed, but we also have the multi- year spending review to come over the next few months.
Amendments 16 to 18 from the noble Earl, Lord Russell, and the noble Baroness, Lady Grender, are on heat pumps and home insulation, which are clearly very important matters. They are major challenges to which we in Government are giving urgent consideration. We are also working across government on new requirements for new homes. We debated that only last week in relation to solar energy. I think we are making good progress on solar, and we are setting up a task force to give us added momentum.
Amendment 16 proposes the addition of an object relating to uptake and use of heat pumps. Amendment 17 would do the same but include efforts to develop financing options for heat pumps—we find that interesting, and I will certainly draw the remarks made to my department’s attention. Obviously, I am clear that the Bill enables Great British Energy to undertake these activities. I certainly agree that ensuring the uptake of heat pumps, including exploring ways to spread the cost, would reduce greenhouse gas emissions from gas boilers and would contribute to energy efficiency. There is no question but that home insulation and an expansion and development of renewable energy are also within scope of the Bill.
I say to the noble Baroness, Lady Grender, on the subject of vulnerable households, that we have kick-started delivery of our ambitious warm homes plan. This will help people find ways to cut energy bills and deliver warmer, cleaner-to-heat homes, with up to 300,000 homes to benefit from upgrades next year. We will continue to refine the warm homes plan. It was very interesting that she mentioned a number of local authorities and initiatives that they have taken. When I was a councillor in Birmingham in the 1980s, we had a scheme in the inner city called enveloping, which essentially took whole streets, put completely new roofs on and made other developments. If you go there now, you will still see the benefits. I very much take this whole-community approach that she mentioned.
On nuclear power, I say to the noble Earl, Lord Russell, that the Budget provided additional funding for Sizewell C for the next financial year, and we are engaged in the final investment decision over the next few months. We have the SMR programme—money has been allocated to Great British Nuclear—and then potentially AMRs ahead. Clearly, that is an identified spending stream for the future. It would be unnecessarily constraining to say that GBE could not go into the nuclear field at all, but I take the point he raised about CCUS and nuclear energy. I would not want to preclude GBE from going there if it thought that was a wise thing to do.
My Lords, I am sorry to interrupt again—the Minister has been very patient—but can we be very clear on what he just said? Is he saying that GBE can involve itself and will be involved one way or another in part of the nuclear sector or not? This is very important: we need about 500 SMRs or AMRs to have the slightest hope of getting anywhere near net zero. At the moment we are plodding along, not very fast at all, and it requires all hands to the helm. So far, I understand that GBE is supposed to stand quite clear of nuclear. That does not make sense, because it is all one ball of wax, frankly. We have to get nuclear right, and only then will we get any hope of net zero.
Yes, I want to be absolutely clear: nuclear clearly falls within the definition of clean power, so it would be within the competence of Great British Energy to invest and do the other things in the Bill in relation to nuclear. However, we have Great British Nuclear, which I believe will continue. We are still finalising discussions, but GBN is focusing at the moment on small modular reactors. The department is involved in major funding of the nuclear developments, but GBE could also invest in nuclear energy. I hope that is clear.
I turn to oil and gas. Amendment 25 from the noble Earl, Lord Russell—and the noble Lord, Lord Bruce, who was not able to be present—would require Great British Energy to consider oil and gas supply chains and a reduction in and decarbonisation of oil and gas production. I say to the noble Earl that I understand the need for a just transition and acknowledge the skills of people working in oil and gas in the North Sea.
The Bill is focused on making the minimum necessary provisions to enable the establishment of this operationally independent company. Clause 3 provides the framework for Great British Energy’s functions and limits the areas where it can act, but it does not say how Great British Energy should deliver its functions or objectives. One of the worries about the noble Earl’s amendment is that it would widen the intention of this clause, perhaps unnecessarily. I say to him that, as we invest in the UK’s energy potential, we want to rebuild supply chains at home, of course. In relation to oil and gas, we want to help the transition and use the skilled workers in the most effective way possible. Oil and gas production in the North Sea will be with us for decades to come, so we want to manage the North Sea in a way that ensures continued support for that sector but enables some of the workers there to transition to other sectors, particularly in energy where they have such expertise.
Amendments 30 and 33 in the name of the noble Baroness, Lady Boycott, wish the Government to confirm or state that biomass is not included in the definition of clean energy in the Bill. Although I understand that many noble Lords share her viewpoint, as was clear from the Oral Question we had a few weeks ago, the Government believe that biomass plays a role in balancing the energy grid when intermittent renewables are not available. It is well evidenced that sustainably sourced biomass can provide a low-carbon and renewable energy source. That view is supported by both the Inter- governmental Panel on Climate Change and the Climate Change Committee.
Biomass sourced in line with strict sustainability criteria can be used as a low-carbon source of energy. Woody biomass that is sustainably sourced from well-managed forests is a renewable, low-carbon source of energy, as carbon dioxide emissions released during combustion are absorbed continuously by new forest growth.
The noble Baroness mentioned the Ofgem investigation, which she will know was about incorrect data being provided. It would be fair to say that Ofgem did not find the process at fault; it was the data provided. She asked me what visits officials in my department had made to the US. Officials have been in contact with US regulators but I would be happy to provide her with more details on what we have been doing.
The noble Baroness also mentioned BECCS, as it is known, or bioenergy with carbon capture and storage. Again, the Committee on Climate Change and the International Energy Agency recognise that BECCS can play a significant role in supporting net-zero targets through the delivery of negative carbon emissions with the co-benefit of producing low-carbon energy.
The noble Lord, Lord Alton, spoke eloquently and passionately to Amendment 91 on tidal barrages. I listened to the noble Lord, Lord Cameron, too, who suggested that tidal barrage and, in particular, lagoons play to the UK’s strength. The noble Lord, Lord Wigley, also spoke. The National Energy System Operator—NESO—is leading a network innovation allowance project aimed at establishing a holistic knowledge base on the potential development and impacts of tidal barrage in Great Britain within the context of grid operability. That is a very important development that I hope picks up the point that noble Lords have raised—the situation may have changed over the past 10 or 20 years.
I look forward to discussing the Mersey barrage with the noble Lord, Lord Alton. When I did this job at the Department of Energy and Climate Change from 2008 to 2010, I chaired a forum that we established on the Severn estuary potential, so I would certainly be interested in taking discussions forward on the Mersey barrage.
I hope that I have reassured most noble Lords that the energy technologies they wish to see supported can be covered in the Bill, but Great British Energy must be allowed to make its own decisions within the context of the objectives and strategic priorities the Secretary of State will set.
I thank the Minister for his detailed response to all the amendments in this group. I want to follow up with a quick question. I and the noble Baroness, Lady Grender, asked the Minister whether any consideration will be given to rolling the warm homes plan into GB Energy. The answer might be that no consideration will be given, or that the Minister does not have an answer—though he could possibly have one in a minute. I am happy to take a written response or come back to it at a later stage.
My Lords, I am not aware of any intention. I will certainly write to him if I have got that wrong but I am not aware of any intention to do it. The whole issue of home insulation and heating is crucial to getting to net zero and we are giving it a huge amount of attention.
My Lords, I am grateful for the depth of the Minister’s answer. He may well be right that Amendments 8, 9, 12, 13 and 14 are unnecessary. I would like to reflect on that. I am far less convinced on Amendments 31 and 32 and I reserve the right to come back on Report if necessary. I beg leave to withdraw the amendment.
Amendment 8 withdrawn.
Amendment 9 not moved.