Lord Teverson:

Moved by Lord Teverson

38: Clause 57, page 51, line 34, at end insert—“(1A) When making regulations under this section the Secretary of State must also publish an explanation of how revenue support mechanisms deliver in line with the CCUS Strategy and Policy Statement and the overall Strategy and Policy Statement, and how milestones relate to net zero pathways set out by the Climate Change Committee.”Member's explanatory statementThis amendment seeks to ensure that policy processes are aligned with the Government’s Strategy and Policy Statement.

I asked specifically that all these amendments be grouped together because they have one aim: to make sure that there is a coherence between policy measures and the net zero pathway that is the Government’s own aim. Of course, the Government have undertaken to produce a government strategy and policy statement and the Bill requires a statement focusing on CCUS to be produced as well. However, our contention is that there is no current requirement for policy and infrastructure planning processes to be based on a consistent set of assumptions about the future. That means, in practice, that two projects could get a green light despite being justified by incompatible visions of system need, ensuring that one would ultimately be left stranded. Of course, that does not lead to confidence in this area. So there could be incompatible visions.

For instance, hydrogen electrification visions of the future involve very different supporting infrastructure, and a lack of coherence could create expensive infrastructure which, at the end of the day, is unusable or redundant. The strategy provides an opportunity to set out the latest set of assumptions, projections and decision methodology and I am sure that is what the Government want to do to underpin their policy, to which other processes should align. What we are really trying to do in these amendments is to make sure, practically, that the actions that arise from the Bill are coherent and tie in with the policy statements of the Government. It seems absolutely straightforward to me: it is that missing link, if you like, that pushes together intent in these various areas and makes sure that the strategy is coherent in its delivery. It is as simple as that and I hope the Government and the Minister will look favourably on that approach. I beg to move.

I do not have an enormous amount to add to the comments of the noble Lord, Lord Teverson. I highlight again the significance of linking strategy and policy: that is crucial. We will discuss in future debates the issues around the role of the ISOP and its independence, and, particularly in the context of this afternoon’s debate, look at long-term thinking, making sure that we get all the checks and balances in place. We are in a very fast-moving environment and need to make sure that we are absolutely on top of all the changes that are taking place. The noble Lord, Lord Teverson, highlighted the risk of lack of coherence: we need to make sure that everything is nailed down, line by line, and I am sure we will have further discussion on these areas as we go through different aspects of the Bill. I look forward to the Minister’s conclusions on this group of amendments.

I thank the noble Lord, Lord Teverson, for his amendments, beginning with Amendments 38 and 112. The Bill provides that the Secretary of State may designate a CCUS strategy and policy statement to set out the strategic priorities of the Government in formulating their CCUS policy. This would also need to take account of any statement designated under Section 131 of the Energy Act 2013. The Secretary of State must carry out their functions under this part in the manner they consider is best to further deliver the policy outcomes set out in the statement. In addition, parliamentarians will have the opportunity to consider any draft CCUS strategy and policy statement before it can be designated, as is provided for by Clause 91(10). Setting out in a strategic policy statement possible scenarios for policy change would start to introduce considerable uncertainty for both investors and the regulator which would, in my view, hamper the stability of the sector.

Amendment 120 to Clause 98 would require that, when making regulations establishing or adjusting a low-carbon heat scheme, the Secretary of State must publish a statement demonstrating how the scheme would deliver in line with both the carbon capture usage and storage strategy and policy statement and any overall strategy and policy statement provided for by the Energy Act 2013. Of course, I agree with the noble Lord in his principle that policy-making should be aligned with the broader strategy and the latest science: that is why all policy on heat and building decarbonisation is and will continue to be developed in line with wider government energy and decarbonisation strategy. As we said in a recent government response to a consultation, the plan to introduce, for instance, the market-based low-carbon heat scheme is aligned with the aim to expand the deployment of heat pumps towards 600,000 installations per year by 2028. I am afraid I do not agree with the noble Lord, and therefore do not believe that requiring another series of publications each time new regulations are made is ultimately necessary. I therefore hope he will feel able to withdraw his amendment.

Turning to Amendment 128, Clauses 108 and 109 will enable the safe and effective delivery of a village-scale hydrogen heating trial to gather vital evidence to help make decisions on the potential role of hydrogen in heat decarbonisation. I reassure the noble Lord that trial development is already following the latest science. This amendment would delay the introduction of new regulations which are focused on the protection of consumers until two strategy and policy statements are published. The exact contents of these documents would also need to be properly consulted on before they are issued.

I am pleased that the noble Lord recognises the importance of ensuring that all the different strands of the Government’s net-zero agenda are joined up. I can assure him that this is the case and that the impacts of any regulations made under Clause 109 will be clearly set out. The Government do not believe that this amendment is necessary for the success of the hydrogen village trial and therefore, again, I hope he will feel able not to move it.

Amendments 143, 145 and 148 all relate to the independent system operator and planner, now referred to as ISOP. The Bill is intended to extend the strategy and policy statement to provide guidance to ISOP in a similar manner to how it can provide it to Ofgem. It ensures that the Government can effectively communicate to ISOP and Ofgem their strategic priorities and policy outcomes. These clauses therefore reflect the wording that applies in the strategy and policy statement to Ofgem as set out in the Energy Act 2013.

On Amendment 143, it would in our view be misguided to add to ISOP’s responsibilities demonstrating its alignment with every policy outcome in the statement, particularly if the same duty does not necessarily apply to Ofgem. On Amendment 145, this is a government document and in our view it is for the Government alone to draft it and ensure that it is aligned with our policy priorities. The Government will use the statement, once it has been designated, as a tool to provide strategic focus to ISOP and to ensure that it is aligned with the strategic priorities of the Government’s energy policy. There are no statutory obligations on the Government to set out assumptions or design methodology in the statement. Therefore, it would not be appropriate or necessary for ISOP to be obliged to opine on their appropriateness. However, ISOP will always have liberty to provide its views on the contents of the statement if it wishes or if we choose to ask it to.

I thank the noble Lord for his Amendment 148, which seeks to provide ISOP with the duty to make recommendations on updating the strategy and policy statement. As I have said, the strategy and policy statement is a government document which reflects the Government’s own policy priorities. If ISOP deems it particularly important, it will always have the right to provide recommendations at its own discretion, but we do not think it appropriate to place a statutory duty on it. We think that is unnecessary and, in this case, inappropriate. It is therefore neither necessary nor suitable for ISOP to have a duty to provide its opinion on the content or timing of the next iteration of the strategy and policy statement.

It is also worth pointing out that Ofgem will have no such corresponding duty, and it would not be appropriate to impose a duty only on ISOP and not Ofgem, as the strategy and policy statement is meant to operate in the same way, effectively, for both of them. I welcome the noble Lord’s contributions, which have allowed us to have a discussion on this issue, but I hope that, in this case, he feels able not to move his amendments.

Amendment 160 seeks to ensure that policy processes are aligned with the purpose set out in Amendment 6. In my view, it is unnecessary for two reasons. First, there are already provisions in the clause that do not just have regard to the outcomes the noble Lord is seeking but are in fact designed with those outcomes in mind. The buy-out mechanism has been designed to aid the removal of obligation thresholds under the energy company obligation scheme, which aims to address current market distortions in the retail energy market. This measure will lead to more energy suppliers becoming obligated, therefore spreading the cost of ECO among a greater number of domestic consumers. Secondly, the amendment would not have a practical effect. The ECO scheme was developed to meet various fuel poverty commitments and targets set out in the fuel poverty strategy for England. Again, I do not think that duplicating the existing obligations in this Bill serves any substantive purpose.

Therefore, given the reassurances I have been able to provide, I hope the noble Lord will feel able not to press his amendments.

I thank the Minister for his response and reassurances. Obviously, I am fairly disappointed with the overall reply. On the principles of coherence and delivery, I will read what he has said and think about coming back to this issue on Report. I thank him for going through the Government’s feelings on this issue in detail and may respond fully later during the passage of the Bill. In the meantime, I beg leave to withdraw my amendment.

Amendment 38 withdrawn.

House resumed.

Sitting suspended.