As energy prices have hit unprecedented levels, driven by Putin’s invasion of Ukraine, the Government acted swiftly this winter to help families and businesses across the country, covering around half a typical household’s energy bill and around half of wholesale energy costs for some businesses. The Government has also recently published 'Powering Up Britain’ which brings together our Energy Security Plan and Net Zero Growth Plan to set out how it will transform our energy system, achieve net zero by 2050 and boost economic growth. It sets out a pathway to greater energy independence through the deployment of low carbon technologies.
The Government’s landmark Energy Bill is essential to this transformation. The aim of the Bill is to help increase the resilience and reliability of energy systems across the UK, support the delivery of the UK’s climate change commitments and reform the UK’s energy system while minimising costs to consumers and protecting them from unfair pricing. To enable this, the Bill is structured around three key pillars: liberating investment in clean technologies, reforming the UK’s energy system so it is fit for the future, and maintain the safety, security and resilience of the UK’s energy system
I would like to assure you that getting to net zero is a top priority for the UK, especially given that this will reduce dependency on Russian energy. I am confident that the UK will continue to invest in renewable technologies and methods of reducing house carbon dioxide emissions to increase energy efficiency.
The Government recognises the role that community and local renewable energy schemes can play in supporting our net-zero targets. The Government’s approach to community energy is set out in the Net Zero Strategy. This includes re-establishing the Community Energy Contact Group to provide a dedicated forum to discuss the role that community energy can play in the delivery of net zero with the sector. The approach also includes support for community energy projects from Ofgem, which welcomes applications from the sector to the Industry Voluntary Redress Scheme. The Government is supporting local authorities and community energy groups to work together to develop projects within UK Growth Funding schemes.
However, regarding clauses 272 and 273, it continues to believe that small-scale, low-carbon electricity generation should be brought forward through competitive, market-based solutions. A key feature of the smart export guarantee regime is to allow suppliers to set both the tariff level and the structure and for suppliers themselves to determine the value of the exported electricity alongside all the associated administrative costs. Any move to introduce a regulated price for exported electricity has the potential to limit the overall scope for innovation and export tariff packages. This would fundamentally undermine the principles of the supported export guarantee policy objective, which looks to encourage a market-driven approach.
The Government believes that Ofgem’s principal objective makes its role in achieving the net zero target clear. However, Ministers have carefully considered the effect of clause 271 with Ofgem to ensure that this amendment would not impact the hierarchy and intended effect of Ofgem’s duties. The Government is therefore content to clarify Ofgem’s duties by making specific reference to the net zero target in the Climate Change Act 2008.
The Government's new clause 52 is equivalent in substance to clause 271, but includes some minor drafting changes to ensure that the duty works in practice. First, it clarifies the authority’s role in supporting, rather than enabling, the Government to meet their net zero target. Secondly, it clarifies the net zero targets and carbon budgets specific to sections 1 and 4 of the 2008 Act. The new clause does not change the intention of clause 271.
Small-scale, low-carbon generation will be intermittent and unable to supply local consumers at all times. Suppliers would therefore need to buy additional wholesale energy from other sources and incur all the associated network and system costs. The local tariff would also be required to have regard to the export price paid to the local generator. This would create a somewhat perverse outcome where higher export prices would benefit the generator but also increase the tariff price. As a result, there is no guarantee that the local tariff would be lower than the current regulated standard variable tariff.
Eliminating routine flaring and venting is a priority. The upstream oil and gas sector contributes approximately 1.6 per cent of UK methane emissions, compared to 30 per cent from waste and 49 per cent from agriculture.
Through the ambitious North Sea Transition Deal, industry has committed to accelerate compliance with the World Bank’s Zero Routine Flaring 2030 Initiative. Good progress is being made - the North Sea Transition Authority (NSTA) reported a 50 per cent reduction in flaring since 2018 and a 13 per cent drop last year. Furthermore, the NSTA expects all new developments to be planned and developed with zero routine flaring and venting.
Given the measures already in place, the Government is not supporting New Clause 12.
The UK is committed to addressing the urgent need for climate action at home and abroad through our ambitious net zero targets and international commitments. The new clause would initiate procedures for the United Kingdom to withdraw from the energy charter treaty. The Government completely recognises that the treaty needs to be updated to reflect the current energy landscape, which is why we worked hard for two years at negotiating to modernise it.
Britain has long advocated modernisation of this treaty, recognising the urgent need to address climate change and align the treaty with modern energy priorities, international treaty practice and climate commitments. In its unmodernised form, the treaty is focused on trade and investment in fossil fuels. Some major renewable energy technologies are outside its scope. Ministers wanted to bring the treaty into line with modern energy priorities, international treaty practice and international commitments on climate change. Unfortunately, the European Union and its member states were unable to endorse the adoption of modernisation at the energy charter conference.
Since the adoption of modernisation was postponed at the Energy Charter Conference in November 2022, my colleagues have been closing monitoring developments on treaty modernisation, including the positions of contracting parties such as the EU.
In a context that continues to develop near weekly, Ministers are carefully assessing how to take forward their priorities in relation to the treaty, but the Government cannot accept the new clause, which would require the UK to initiate procedures to withdraw.
Decarbonising off-gas-grid properties is a key priority for this Government. However the Government acknowledges that sustainable biomass is a limited resource. Policy decisions on the role of biomass in heat will need to reflect the outcomes of the forthcoming biomass strategy, which is due to launch later in 2023.
The Government has been clear that a range of low-carbon technologies will be needed to play a role in decarbonising heating and reducing the nearly 50 per cent of UK fossil fuel gas demand that heating represents. District and communal heat networks with low-carbon heat sources have an important role to play in all future heating scenarios, as do heat pumps. Work is ongoing with industry, regulators and others to assess the feasibility, costs and benefits of converting parts of gas networks to supply 100 per cent hydrogen, for example, for heating.
Although the proportion of UK buildings technically suitable for heating with a heat pump is very high there is a small proportion of buildings for which a heat pump would not be an appropriate solution. The Government is working to develop strategic and policy options for all these technologies and for different building types. That work includes: trials and research and development to build towards strategic decisions on the role of hydrogen for heat in 2026; work on heat network zoning; and the forthcoming biomass strategy, which will assess the amount of sustainable biomass feedstocks available in the UK, including for biofuels, and the most strategic uses of those across the economy.
The Government is committed to ensuring that unabated coal has no part to play in future power generation, which is why the Government is phasing it out of our electricity production by 2024. Coal’s share of the UK's electricity generation has already declined significantly in recent years, from almost 40 per cent in 2012 to around 2 per cent in 2021.
For energy security reasons, it is vital that we maintain all options that are open to us. That does not in any way impede achieving net zero. The planned phase-out date of October 2024 is extant and something that the Government is working towards. However, it is important to ensure that, as part of the UK's electricity baseload, we have access to the relevant energy sources the UK's energy security before this date. As such, I cannot support these amendments.
I appreciate calls to support a National Energy Guarantee. However, rising block tariffs charge consumers a price that increases as their consumption increases. This type of tariff would not make bills cheaper overall, rather it would simply shift a much higher proportion of costs onto those who use more energy. As a result, this would place a huge burden on millions of households whose houses require more energy to heat, and who cannot improve their insultation. As such, I cannot support this amendment.
The Government is consulting on proposed changes to the National Planning Policy Framework for onshore wind. The consultation closed on 2 March 2023 and an official response will be set out in due course.
The Government has no plans to create new criminal offences, and any suggestion otherwise is untrue. Energy certificate legislation originated in EU laws, and our amendments ensure landlords, businesses and tenants are provided with the information they need to make their own decisions on energy efficiency in their buildings.