Securing the UK's energy future
In the latest episode of our Committee Corridor podcast, host Darren Jones MP and his guests explore how the UK can improve its resilience against future crises while meeting its goal of a completely low-carbon energy mix by 2035.
For episode four of our second series, Darren Jones is joined by Simon Evans of Carbon Brief. They discuss some of the technologies available to secure Britain’s future energy supply and the hard choices and challenges that they present.
In the second half of the episode, Darren Jones speaks with Anna McMorrin MP, who sits on the Environmental Audit Committee, who laments the awarding of more licences to drill for North Sea oil. He is also joined by the Chair of the Science and Technology Committee, Greg Clark MP, to talk about the viability of alternative power sources, like nuclear.
Transcript
Darren (00:00): Our food and energy bills are soaring, driving up inflation to a 45-year high. And with energy bills high at the list of concerns, we ask where can we find reliable, affordable sources of energy, sources of fuel that aren't vulnerable to local or global conflicts?
Welcome to Committee Corridor.
In this series, we’re looking at the cost-of-living crisis, and in this episode we're looking at the UK's energy security. I'm Darren Jones, and I chair the Commons Business Energy and Industrial Strategy Select Committee.
Select committees are cross-party groups of members of Parliament who swap opposition for collaboration. We pick the issues, ask the questions, and publish reports.
There are 20 select committees reflecting government departments. Today, we'll hear from two that are investigating alternative ways to power the UK. Greg Clark chairs the Science and Technology Committee. He's the Conservative MP for Tunbridge Wells.
Darren (01:03): Anna McMorrin is the Labour MP for Cardiff North. She's a member of the Environmental Audit Committee. But first, the conflict in Ukraine created a profound shock to our energy supplies. It has driven up prices, putting people into fuel poverty, and it's brought the UK's energy production into sharp focus. It's a long time since we were energy independent, but we can't go back to the days of coalfields, oil, and natural gas. So, where do we look and what can we do?
Darren (01:36): Dr. Simon Evans works for Carbon Brief, a leading website covering climate science, climate, and energy policy. It has won awards for its clear content, explainers, analysis, and fact checks. And that's what we're after today. Simon, welcome to Committee Corridor.
Darren: So, Simon, there's been a lot of discussion recently about the price of people's energy bills, about things like net zero, but also, we've been talking a lot more recently about energy security as well. I just wonder if you could explain, what do we mean by energy security?
Simon (02:12): Yeah, thanks, Darren. So, I mean, energy security in a nutshell, this is about making sure that when you switch the lights on, the lights do actually come on. And when you go to fill your car up with petrol, you don't have to queue, you can actually do that. That's it basically and obviously, recent events with Russia's invasion of Ukraine have really put the spotlight on how essential it is for all countries to maintain energy security.
Darren (2:41): And people understand, I think that energy prices are high at the moment, but why would we run out of energy? Why would we not have enough to keep the lights on?
Simon (2:48): Well, fundamentally what's happened is that Russia's stopped selling gas to Europe. Basically, it started cutting supplies to Europe last autumn, well ahead of its invasion of Ukraine. A lot of people don't appreciate that.
Also, Gazprom, one of the state-owned energy giants in Russia operates, or I should say formerly operated, a large amount of gas storage sites in Germany, and they systematically ran down the storage at those sites leaving Europe with less gas stored going into last winter.
And so, what happened after Russia invaded Ukraine in February of this year, and they started cutting their supplies to Europe in a really big way. And just put in perspective, we are now down about 80% in terms of the amount of gas that Russia supplies to Europe compared to normal levels. And Russia's the world's biggest fossil fuel exporter. So, this is big stuff. And so, as a result of that, prices have gone through the roof. There's genuine concern about the actual volume of energy available because this huge supplier of gas is gone away.
Darren (03:57): And we use quite a lot of gas to produce electricity, don't we, in gas-fueled power stations, which is why we worry about fossil fuels and our electricity. But the energy regulator Ofgem and the government have been working over the last couple of months to try to anticipate whether we really will run out of electricity this winter. Other than gas, what is it that the government might be worried about in terms of our supply of electricity?
Simon (04:24): So, just to come back on that, the UK is almost uniquely exposed to the current energy crisis, which is primarily about gas, although prices for coal and oil have also been very high. And the reason that we're quite exposed to high gas prices is that we get quite a high proportion of our electricity from gas fire power stations, about 40% of the total.
And in addition to that, 85% of our homes are heated with gas boilers. Both of those figures are much higher than in many other European countries. And furthermore, we have some of the leakiest homes in Europe. So, some of the least energy efficient.
Coming back to your question, where else are we getting our electricity from? So, one of the areas where there might be some concerns is electricity imports. So, we import significant quantities of electricity from the continent, primarily France, but also Belgium and the Netherlands.
Given that this is particularly a European energy crisis, if gas supplies were to run low across the continent for whatever reason; a cold snap, a complete shutoff of supplies from Russia, for example, [then] there's a question mark over whether we would continue to receive those electricity imports from those countries.
Darren (05:33): And there's been some suggestion that the energy crisis as we now refer to it, which people have really been experiencing now for maybe a year or so, could go on until the end of the decade. I mean, do you agree with that?
Simon (05:48): So, obviously, it's very hard to predict the future. Energy prices are no different in that regard. But it is true to say that the current forecasts suggest gas prices are going to remain much higher than we expected a year ago for much of the rest of the decade.
I mean, that's what the OBR has said. That's what energy consultancies are saying. That's what the Climate Change Committee that advises the government is saying. So, yes, that does seem to be the expectation.
Darren (06:17): And so, if we rely a lot on gas for electricity and importing electricity from Europe, and both of those are potentially at risk or just very expensive, let's take a look at what we actually have. What's the GB energy that we have here in Great Britain?
We're doing quite a lot for offshore wind. So, wind turbines out in the North Sea and elsewhere, everyone seems to think that's a good thing. But onshore wind has been a problem for a while. The government have been flip-flopping, I think between supporting it and not supporting it. What's the latest position from the government in terms of supporting wind turbines on land?
Simon (06:54): So just to set things out, in terms of the UK's electricity supplies, it's roughly 40% gas, 40% renewables, which is primarily wind and solar, and also, some bioenergy and sort of 15% nuclear and then imports. In terms of the government position on onshore wind, I have to say I haven't really been able to keep up with the very latest on this. At one point, it did seem like they were going to effectively level the playing field in planning terms for onshore wind in England. And now it seems that they may not do that.
Onshore wind and solar are effectively the cheapest and quickest ways to get new electricity supplies in the UK but in most countries around the world. And so, the fact that there is a de facto ban on onshore wind farms in England is perplexing, you might say.
Darren (07:46): Any idea why? Why don’t they like them?
Simon (07:48): So, I mean, it's a very strange one really, because if you look at all of the polling, onshore wind is popular, very popular, sort of 80% popularity amongst the general public. It's popular amongst people that live near wind farms. It's popular amongst Red Wall voters. It's popular amongst Tory voters. It's popular amongst Labour and Green voters and Lib Dems too.
Basically, everyone likes onshore wind farms. But there is this kind of very vocal minority of people who are very opposed. I guess, it's not totally clear, but primarily, we kind of surmise on aesthetic grounds. They don't like the way they look. And unfortunately, quite a large number of those people occupy positions of power, whether that's in media, editing newspapers or whether that's in government.
Darren (08:37): Well, it might be that the government has little choice, right? Because you've already set out that 40% gas for our electricity, 40% renewables; wind and solar, the rest from nuclear and imports.
But on nuclear, most of our nuclear power stations are pretty old and end of life now. We have a new nuclear power station, Hinkley Point C being built down in Somerset, but it's very delayed. The government's trying to get the money to add up to pay for another new nuclear power station called Sizewell C.
If the government can't get all the cash in to pay for Sizewell C, what can it do? I mean, it's going to have to do more wind or just rely on gas, isn't it?
Simon (09:20): So, I mean, let's clear up one thing to start with. It would be possible for the UK to meet its electricity needs and meet its net zero target without building Sizewell C. It's a question of choices and priorities and costs.
So, that is certainly a possibility to do that. Sizewell C isn't a must-have from that point of view. But having said that, the rates of growth that are needed for renewables to meet our net zero target and indeed, to meet the government's target of fully decarbonizing the electricity sector by 2035, that's a pretty staggering rate of growth.
We've seen massive growth in wind and solar over the last decade, but that's going to need to accelerate from now, and particularly so, if we are relying more heavily on wind and solar. Just on the other point that people often raise is what do you do when the sun sets at night, which it does do every night.
And but also obviously we do experience periods of up to two or three weeks sometimes, particularly in winter where it's not very windy. And the question is how do you keep the lights on in those periods?
And the answer is that you have to have a mixture of options. Batteries aren't the answer because they're great for within day and perhaps for balancing across a few days. But the amount of energy that you would need to store to meet supplies for several weeks is too large to be met by batteries.
There are alternative longer term energy storage options such as compressed air, which is obviously kind of cheaper than lithium-ion batteries. But we will also likely need things like hydrogen fire power stations or perhaps gas fire power stations with carbon capturing storage.
Darren (11:02): Let's just talk a little bit about hydrogen because my select committee got in a bit of bother a few months ago for saying that we weren't entirely convinced of the evidence at the moment about hydrogen being the easy answer for replacing gas for our boilers, for heating our homes.
But in other sectors, it seems to be very promising. So, for electricity purposes, just explain to listeners what that means. So, how does the wind turbine and the hydrogen and the demand all kind of fit together? What happens in real life?
Simon (11:29): Yeah, so obviously when it's windy, you generate electricity from wind farms and when it isn't windy, you don't. And so, the output goes up and down, and that doesn't necessarily match up well with when we actually need that power.
So, the idea with hydrogen is that when there's an excess of electricity generation from wind farms, you could be using that to run electrolyzers, which people might remember from their school chemistry classes. So, in this case, you're running electricity through water and splitting out the hydrogen and the oxygen that makes up that water.
And you can then store hydrogen like we store gas today. And similarly, you can use that hydrogen to generate electricity in a gas turbine again, much like we use methane gas today.
Darren (12:12): I mean that all sounds very sensible. Why are we not doing it already? What's holding us back?
Simon (12:18): At the moment, there effectively isn't any production of clean hydrogen, hydrogen with low carbon emissions. Effectively all of the hydrogen currently in use today is made by something called steam methane reformation, where you take natural gas methane, and you turn it into hydrogen.
And that comes with quite high carbon emissions. If we want to use hydrogen as part of the answer to net zero, then we need to get it from clean sources. So, either need to add carbon capturing storage to your gas production route, or you need to use electrolyzers based on clean electricity.
Darren (14:51): Okay. Now, carbon capture, so again, let's just try to paint a picture here. So, you've got a hydrogen production plant, you've got water, you've got your process to try and get hydrogen out of it and you use gas to heat it up, presumably.
But in doing so, you produce carbon dioxide emissions. And the idea is you can capture those carbon dioxide emissions before they escape into the air and make global warming worse, and then pipe them somewhere probably under the North Sea so that they don't escape. Is that right?
Simon (15:22): Yeah, that's it exactly.
Darren (15:23): Now is there any working example of a carbon capture plant in the UK at the moment?
Simon (15:29): So, there are kind of pilot scales, so very, very small carbon capture examples. I believe Drax, the former coal power station in Yorkshire is piloting carbon capture with its bioenergy power plant. But yeah, these things don't really exist in a major way anywhere in the world.
There are a number of small demonstration plants around the world, but we're talking perhaps 40 working plants. And if we're serious about carbon capturing storage being part of the solution to net zero, then that we need to scale up extremely quickly.
Darren (16:05): Yeah, we probably need to see something working, right, so that we can rely on it. Because all of this, we obviously want the electricity to work when people switch the lights on and be able to heat their homes and to afford their bills. But this whole discussion's important because we also need to get to net zero and tackle climate change.
And the government strangely thought that expanding the amount of licences for drilling oil and gas in the North Sea was good for energy security, good for energy prices, and good for climate change. What's your, if you had to mark their exam answer there — how would you grade them on the answers about it being good for energy security, good for energy prices and good for climate change?
Simon (16:43): So, I mean, it's quite difficult to make those answers stack up to be completely honest. Let's take them one by one. In terms of energy security, we're facing an acute global energy crisis today. We've been in that crisis for the last year. This winter and next winter in particular, are going to be the most acute phases of that crisis. New oil and gas licences will make absolutely zero difference to that acute phase of the crisis.
The North Sea Transition Authority, formally the Oil & Gas Authority, which regulates north oil and gas production has figures suggesting that from the granting of a licence to the production of oil or gas takes on average 28 years.
In saying they're going to issue these new licences, they've suggested perhaps it might be five or six years for new production to come on stream, but even five or six years to be clear, does absolutely nothing for us in this acute phase of the energy crisis. So, that's pretty much an F, I guess.
In terms of energy prices, the UK operates in a global market, particularly for oil, but also for gas. Increasingly, we're seeing a global trade in gas via liquefied natural gas ships. And so, the idea that the UK is a medium-sized, but ultimately quite small global producer of oil and gas could have a major impact on those global markets, is just not very likely. So, it's not really going to do anything for people's bills and certainly not as I said in the short-term.
So, in terms of climate change, the government's making this pretty strained argument that new oil and gas licences is somehow good for climate change. So, just to be clear about what they're saying, they're saying that North Sea oil and gas production has relatively low emissions in the production phase.
So, that's the emissions associated with getting this oil and gas out of the ground and to the consumer Now, that may be true, but overwhelmingly, the emissions relating to oil and gas come when you burn them. And those are the same whether they're UK oil and gas or coming from elsewhere.
And fundamentally, if you open up new oil and gas supplies, unless we are displacing oil and gas supplies somewhere else, then we're simply increasing the global supply of oil and gas and therefore, we're increasing global emissions.
You can add onto that, the International Energy Agency in its net zero report published last year basically, said that if the world gets on a pathway to 1.5 degrees, which the UK government says it wants to do, and governments around the world say they want to do, then we actually don't need new oil and gas supplies.
That actually, we don't need the energy that would come from those. We have already plentiful oil and gas supplies around the world that would be more than enough to meet our needs.
Darren (19:23): Well, that's not a very good set of grades for the government. Why do you think they're doing it then?
Simon (19:36): Well, ultimately, this is why climate change is such a hard problem to solve. For narrow kind of national interests, the government earns tax revenues from the North Sea. They’re increasing their revenues in the North Sea by imposing this energy profits levy, which is going to last number of years.
And so, for UK PLC, it might be a good thing. But if every single country around the world that produces oil and gas took the same attitude, then we're not going to be getting very far in terms of attacking climate change.
Darren (20:07): We're running out of time, unfortunately, Simon, but just very briefly on heating, the big debate, of course, is whether hydrogen is the easy answer to decarbonise heating or whether we need to use electricity pad heating such as heat pumps. What do you think the answer is?
Simon (20:21): So, if you look at all of the major energy studies, BP does an outlook at how we're going to get to net zero. They didn't include hydrogen for heat. The IEA didn't include hydrogen for heat. A review of 32 independent energy studies found not much hydrogen for heat. And yet despite that, the government is committed to exploring it and not deciding whether to use hydrogen for heat until 2026.
[Music Playing]
Darren (21:51): Securing the UK's energy supply has to be a top priority for government. I'm joined now by two MPs whose committees are looking into ways of doing just that.
Greg Clark chairs the Science and Technology Committee. They've been examining the government's approach to developing new nuclear power. They've also looked at the role of hydrogen in achieving net zero. Anna McMorrin is the Labour MP for Cardiff North. She's a member of the Environmental Audit Committee.
They've been examining the government's approach to leaving fossil fuels behind and securing the UK's energy supplies. They've also been exploring different technological innovations such as geothermal technologies. Welcome both.
Darren (22:33): So, Anna McMorrin, you've been looking on the Environmental Audit Committee at the phasing out of fossil fuels from our energy supply here in the UK. And we've heard already on this podcast, we're down about 80% in terms of the amount of gas supplies to Europe compared to normal levels because of sanctions on Russia. Do you think that that's just going to speed up the transition across the European continent to get off of gas or do you think it's going to cause us some major problems this winter or next winter?
Anna (22:59): Well, I think it's already causing us major problems, and we're already seeing a huge hike in energy bills right across Europe, but especially, in this country because what hasn't happened over the last 12 years is that we haven't had that investment, that proper investment in green renewable energy to make sure that we are weaned off fossil fuels, but also, external supply and supply from Russia.
I hope that this means that we are going to step up a little quicker with this government, but the recent approval for more than a hundred licences for new fossil fuels in the North Sea is not the way to go.
People are scared and constituents are telling me how scared they are. Not only are we facing a hike in energy bills, but we face a huge hike in mortgages and inflation. It is not the solution to increase our dependency on fossil fuels. We need to be increasing dependency on and increasing investment on renewable energy.
We need to be stepping up right now to make sure we don't have that dependency on Russia or any other external environments and political whims and conflict.
Darren (24:26): So, the government would say that if you are going to try and wean yourself off of Russian fossil fuels or indeed fossil fuels from other countries where there's political instability, that the best thing to do is to get as much oil and gas as possible out of the North Sea, homegrown oil and gas. You've already said you disagree with the extension of licences, but do you take the government argument in any way about homegrown oil and gas? Is it as easy as you suggest in just terms of rolling out renewables?
Anna (24:53): Yeah, and when I asked this to Graham Stuart on the committee, that's the exact answer he gave. But I don't see the increasing dependency on fossil fuels is the way forward. What we need is huge investment in renewable energy, and that needs to be absolutely stepped up. Not only renewable energy, but also energy efficiency, which is one of the quickest and easiest ways to prevent more dependency on energy. There's an opportunity as well. I've just got back from COP27. The overwhelming conversation there is about how climate change needs to be that opportunity.
Darren (25:52): And Greg Clark, the government's energy security strategy, it emphasised in the government's view, the important role that nuclear power will play in weaning us off of fossil fuels, recognizing that a lot of our power comes from gas fired power stations. What have you been hearing about the UK's ability to deliver additional nuclear power in your inquiry so far?
Greg (26:11): Well, we're in the early stages of our inquiry. But I think what has emerged from that very clearly already is a degree of scepticism that we can meet the government's ambition for one nuclear reactor per year being commissioned.
And in fact, the National Infrastructure Commission, in evidence to us, are fully supportive of another big nuclear power station after Hinckley, which is obviously still under construction. Sizewell would be the next one. They think that that should be approved during this Parliament.
But some of the additional options like small modular reactors, they think it will be wrong to rely on that to meet either our energy needs or indeed our climate requirements because that is too uncertain and nuclear, as everyone knows, has a, I'm afraid, a track record of being delayed and uncertain in terms of its timing.
Darren (27:20): So, the problem we have, basically, we've got big nuclear and small nuclear, don't we? Big nuclear like Hinkley Point C and the proposal for Sizewell C, big, very long-term, very expensive projects to deliver. And the idea that we might have small nuclear or small modular reactors that are cheaper and quicker to install in different parts of the country.
But in terms of the investment case, presumably if small nuclear's going to happen, the government's going to have to buy some so that we can build them and plug them in, and that would divert money from perhaps Sizewell C.
Greg (27:46): Well, you are absolutely right that everyone thinks and assumes that if we're going to develop small modular reactors, small nuclear in this country, it's inconceivable that we would do it without the government being a customer for it, that there are aspirations that this should be an export industry.
But if your own system, if your own government doesn't buy it, then that's not a terribly good look. It's not much of an endorsement. So, you are right, Darren, that it is, I think, very clearly accepted that if this is to work, then we are going to have to buy it and to deploy it.
Now, whether that comes at the expense of big nuclear, that is a moot point. We have to secure our energy supplies at an affordable price, especially given what we've discovered in the behaviour of Russia. We need to have security and resilience.
So, it's not necessarily the case that we should just regard nuclear as a single part. I mean, the truth is that the characteristics of small reactors may be very different from those of the very large-scale reactors. And that is one of the things that our inquiry will be looking in more detail at.
Darren (28:57): Presumably, you've had some written evidence at this stage from some stakeholders who say we don't actually need Sizewell C. The amount of money that it takes to build Sizewell C, if that was invested in renewables or grid upgrades or storage, we would be able to achieve the same outcome. Have you taken an early view on that or are you waiting until you've heard all of the evidence?
Greg (29:19): We're going to wait until we've heard all the evidence. And so, we have had people expressing that view, academics and certain environmental groups as well as commercial businesses invested in renewables as one might expect.
But equally we have heard not just from those with a stake in this, that's to say the EDF and some of the companies that supply services to them, the National Infrastructure Commission have been very clear in advance and have been with us that they do think that it is necessary for the purposes of resilience to have two new nuclear fire stations within the next few years.
So, we do have conflicting evidence and as you will know, as a veteran of the committee that I now chair and as a chair in your own right, we will have to weigh that up when we finish our inquiry, when finish the oral evidence sessions of our inquiry.
Darren (30:16): And Anna McMorrin, I don't know if you do share the view about whether we need Sizewell C or not, but if you don't have that additional nuclear power on the system and you're trying to reduce gas, the only place you can really go is really ramping up renewables.
And you've been looking on the Environmental Audit Committee at the role of onshore solar energy. I suppose in people's minds, they think about a big nuclear power station and then they think about some small solar panels, and they think they're probably not comparable. Could you not have additional nuclear enhanced solar, or do you need both? What do you think?
Anna (30:49): I mean, I think there needs to be combination, a mix of energy. So, I think we do need some nuclear power, but we've not seen that investment to date. And a nuclear power station takes a long time to build. It's not overnight. So, this is not a quick fix solution.
And the new nuclear power stations are a lot cleaner. The issue, of course, is what to do with the waste because the last Labour government gave the go ahead for new sites in 2009. These haven't yet got up and running.
It's been thrown into disarray by China having a vested interest in them as well. So, that's thrown in the security aspects. So, we haven't seen the leadership that we need to get that good mix of renewable and onshore, which is severely lacking as well as nuclear.
Darren (31:41): I think Greg, and for listeners, I'm sure they know Greg. But Greg, you were the Business Secretary between 2016 and 2019. So, I got the message there you were eager to respond to one of Anna's points, so go for it.
Greg (31:51): Well, actually to add to it and it's more in my current role as chair of the Science and Technology Committee, it's one of the fascinating pieces of evidence that we had relates to this point that Anna mentioned about nuclear waste. And of course, in my mind, this has always been one of the big worries, how much does it cost to dispose safely or store nuclear waste.
And the point was made that, I thought was quite striking in one of our evidence sessions, that for new nuclear, the incremental cost of storing waste is not so prohibitive. It's not linear, because basically, once you've got nuclear waste that needs to be stored, and we do have an awful lot of it, then the very fact of having it actually and historically, means that you have to have sites that need to be secure. You need to have facilities.
So, adding a bit more to it is actually not repeating the costs in the same way, which I thought was a really valuable insight into the future economics of nuclear that I felt was a good illustration of how taking evidence from experts actually can bring an insight that may have been well known in the nuclear world, but as a policymaker, that hadn't been expressed so clearly before.
Darren (33:10): And certainly, as part of our decarbonizing the power sector inquiry on the Business Committee, we'll be having a little look at nuclear, not in the same depth as you on the Science and Technology Committee, Greg, but one of the concerns that's come up for us is also the cost of delivering the infrastructure because lots of countries are now interested in building nuclear power stations in Europe and Asia and America and elsewhere, but the supply of enriched uranium fuel for those nuclear power stations is pretty limited.
And also, in some countries where there is political risk. And so, the price of powering these stations seems to be pretty risky or indeed higher than it was before. And so, these business cases often change with time. And when you're trying to make an investment for such a long period of time, that makes it very difficult, as I'm sure you experienced when you were a minister, Greg.
Greg (33:55): Well, that's exactly right. And it is why you have to look at all the different angles and the cost and the availability of fuel is one of those.
And it's one of the reasons why as a minister — I was the minister responsible for agreeing the Hinkley Point C deal, the fact that the risk there is entirely with EDF, the operator of the site. I was pretty pleased with that.
It let me sleep more comfortably in my bed because whether it's construction cost or whether it's the operating cost, the fact that it didn't fall incrementally to the UK taxpayer or the UK bill payer was a source of some relief.
Now, obviously, the debate is that the price for that is in the strike price that was agreed. One of the things that I think we'll all need to consider if we're moving to a new model, the so-called RAB model (Regulatory Asset Based) model in which the taxpayer or the bill payer would take on some of the risk, then that risk needs to be quantified because it can be quite significant.
Darren (35:14): And doesn't this Anna McMorrin, actually, help make the case for renewables? The public presumably are more comfortable with taking on financial risk around wind turbines and solar panels. Why do you think here in Westminster there's always such a debate about the public not liking wind turbines or solar panels when actually, the evidence suggests otherwise?
Anna (35:31): I mean, I think there has been some controversy around onshore wind and local communities. There's quite a lot of work that has to be done around the planning system around that in Wales.
And when I worked as a special advisor on energy in Wales, we had and we still do have specific areas set out within Planning Policy Wales where onshore wind is naturally going to be allowed. So, that was a main strategic element of ensuring that we got more onshore wind, and also, made sure that local communities benefited from it, not just through a bigger community centre or such like, but actually benefiting, whether that's jobs, whether that's cheaper energy.
And I think that's got to be the way forward for onshore. But it's got to be a mix. There's got to be a mix of renewables as well as making sure that all of our homes are energy efficient. And, that's going to be the quick fix that can … I mean, it's not quick, but none of this is quick.
But that is going to be a solution to making sure that we don't draw down on the energy, the energy demands, and that we can make sure that we have the supply that is needed for every single home and that every single home is warm.
Darren (36:51):
And just moving to a related but slightly different issue; on the Business Committee, we've been tasked by government to scrutinise its use of new national security powers which are administered through the business department.
And Greg Clark, you mentioned the signing off of Hinkley Point C when you were Secretary of State. Of course, there's a concern now about the role of Chinese money or the Chinese state in energy infrastructure. Of course, we're all trying to decouple our energy supplies from Russia now. I'm sure there'll be other examples in the future.
Do you think we're set up both as the UK, but also in partnership with our allies to really be able to finance and deliver the amount of energy infrastructure that we need that does decouple it for those national security concerns from countries that we've previously worked with?
Greg (37:36): Well, you're absolutely right, Darren, that the very biggest energy projects, specifically nuclear energy projects have proved in recent years, in the last 10 years or so, not to be commercially financeable without a government guarantee. And EDF which is a commercial company, was owned by the French government, and now, even more so, since the crisis, they've taken it over in effect.
And so, that is a dilemma. We had two Japanese firms, Hitachi and Toshiba, who were more or less pure private sector plays. But the scale of the investments, tens of billions of pounds, the shareholders felt that they couldn't take that on the balance sheet. So, we've had to go to sovereigns. Now we have our own ability to back that, and that's what the government is looking at through the regulatory asset base, but there are other sovereigns that may be willing to invest.
In the case of China, I think it's fair to say at the time of agreeing the investment in Hinkley Point C, relations were probably less strained than they were at the moment. The doctrine of the government, you might remember Xi Jinping came and enjoyed a pint of beer with David Cameron in the pub outside Chequers.
Things are not so cordial these days. But even then, the investment was limited to be in effect, a financial investment, a portfolio investment. They're not involved in the construction of the plant. And obviously the security assessment needs to be very expert and very thorough and decisive at every point.
Darren (39:27):
Sorry, Anna McMorrin, you wanted to say something?
Anna (39:30):
Yeah, well, I was just going to come in to say what you're describing there, Greg, is the need for an energy company, a national energy company. Out of I think 10 countries in the world leading the clean energy transition, it's only the UK that doesn't have a public generation company.
So that would allow that investment in onshore, offshore, solar, nuclear companies, as you say, like EDF or like Vattenfall, they are public companies.
Greg: But personally, I don't think the vehicle is the principal problem. I think it's the financing of it. You can have guarantees that are given from the public balance sheet to private companies. Other countries like France do it through, in effect, a state-owned company, but it comes down to who is going to take the risk onto the balance sheet. And are you prepared as a country and as an economy to take on those big risky investments.
Anna (40:52): But I think there's opportunity there. So, by having that state-owned or nationally-owned company, which can be made up of private enterprises, and private funding; you can then have that leadership on creating skills, creating those jobs, making sure that you’re energy independent. I think it gives far more ownership over a government to make sure that you have the credibility, but you also have that energy, secure energy supply.
Greg (41:27): Well, I would say you're right about the need to create jobs and skills. I think that what's been done in Hinkley, for example, by an independent of the UK government company in terms of creating skills and generating apprenticeships has been pretty commendable. And beyond nuclear, looking around the country at offshore wind, for example, one of the things that I had the pleasure of doing as Secretary of State was to open the Siemens turbine factory in Hull.
And there, I met some of the young people being trained, having previously had pretty low-paid jobs, getting much higher-paid ones. I think there are different ways to do it, but the key thing is that we need to have those skills as well as those investments.
Anna (42:28): And actually, in Britain, we don't have anywhere making solar panels anymore. Everything has to be imported. And there are a lot of opportunities for homegrown companies here to create those jobs and bring in those-
Greg (42:43): Well, that gets us onto industrial strategy, which is obviously, in the title of Darren's committee. One of the things that I do look back with pride on is the development of the offshore wind industry, which was very strategic. The government made a commitment that we were going to, through the contracts for difference, have and incentivise and subsidise the development of an offshore wind industry, and to try to capture the supply chain here when we'd miss the boat with the onshore wind industry.
Whereas you remember, most of the equipment was manufactured in Denmark or Germany that was coming here. And we've created a lot of good jobs. And I think it's a good example of industrial strategy in practice.
Darren (44:18): I think the good news for our listeners that worry about climate change is that it's very clear there's a lot of work taking place on this area in Parliament through the committees, but also, through the political parties. I hope that gives them reassurance that we're all working as hard as we can to make sure this agenda is pushed forward as effectively as possible.
We could keep going on, but as ever, I think we've run out of time. So, the last question that we ask at the end of all of these episodes is the elevator pitch, and you have to imagine yourself in the House of Commons, the elevator doors have opened, Rishi Sunak is in the lift, and you have one minute for your elevator pitch on energy security. What would be your number one ask of Prime Minister Sunak,
Greg Clark?
Greg (45:03): Well, I'm going to cheat Darren. I'm going to get two in quickly. One is to follow Churchill's advice that diversity and diversity alone is the key to security. We need to do that. But also, as chair of the Science Committee, scientific breakthroughs have a lot to offer, and there are things that we may not be able to do now, but may be able to do in a few years’ time with the right research and development.
Storage, for example. If we were able to store the energy that we generate from renewable, intermittent sources more reliably than we can at the moment, that would solve a lot of these problems. So, research and development for scientific breakthrough, but diversity.
Darren (45:45): And Anna McMorrin, you're in the lift, what are you going to say?
Anna (45:47): Okay, well, it's a no brainer to step up on investment into renewables across the board. So, onshore, offshore, solar, make it an energy efficiency as well. Creating jobs, skills and addressing the climate crisis, making the point to create our own GB energy company like EDF, like Vattenfall; making sure that bills, families’ bills are cut. That's what it'll do. If we invest in green renewable energy, we're going to save families, an average of a thousand pounds a year. Energy efficiency is a key to that, making sure that there is huge investment in that at the same time.
Darren (46:27):
Great. So, lots for the Prime Minister and the government to do, and a lot for us to do in Parliament as well. Anna McMorrin, Greg Clark, thank you for your time.
Anna (46:35):
Thank you.
Greg (46:36):
Thank you.
Darren (46:37):
My thanks to all of my guests today. Next time, we'll be talking about the outcomes of COP27, the United Nations Climate Change Conference. More than 200 countries gathered at Sharm el-Sheikh to discuss progress on cutting emissions and preventing disastrous levels of global warming.
We'll be asking what progress looks like and what the conference has achieved. If you want to feedback on what you've heard, please leave us a review or spread the word about our podcast, Committee Corridor.
Darren (47:08):
You can listen to every episode of Committee Corridor, wherever you get your podcasts, or by visiting us on www.Parliament.uk/committeecorridor. I'm Darren Jones, chair of the House of Commons Business Committee, and you've been listening to Committee Corridor. Thank you for listening.
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