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Category: Energy

  • James Cartlidge – 2022 Statement on UK Electricity Generators and Tax on Extraordinary Returns

    James Cartlidge – 2022 Statement on UK Electricity Generators and Tax on Extraordinary Returns

    The statement made by James Cartlidge, the Exchequer Secretary to the Treasury, in the House of Commons on 20 December 2022.

    Along with resurgent demand for energy following the pandemic, Russia’s invasion of Ukraine and weaponisation of gas supplies has driven UK wholesale gas prices to record highs. Due to the composition and structure of the UK electricity market, higher wholesale gas prices are in turn driving higher wholesale electricity prices and leading to exceptional returns arising to some electricity generators in the UK.

    Consistent with action taken in other countries, from 1 January 2023 the Government are introducing a temporary 45% tax on extraordinary returns made by some UK electricity generators. HM Treasury will today publish on www.gov.uk draft legislation, along with an updated technical note explaining the policy in detail. The levy will be applied to a measure of extraordinary revenues, defined as revenues from selling periodic output at an average price above £75/MWh. That is approximately 1.5 times the average price of electricity over the last decade. It will apply to revenues from electricity generation in the UK from renewable—including biomass—nuclear, and energy from waste sources and will be focused on the largest generators through a generation threshold of 50GWH of annual output and a £10 million allowance.

    This temporary measure is not designed to penalise electricity generators. It is instead a response to the fact that, as a result of exceptional and unforeseen geopolitical events, some electricity generators are realising extraordinary returns from higher electricity prices—higher prices that have imposed substantial costs on households and business energy users and necessitated the Government to take unprecedented action with £55 billion to directly help households and businesses with their energy bills. The Government have previously considered a price cap in response to the current crisis. We have instead adopted this levy as a more proportionate approach. It leaves generators—whose continued investment in the industry is vital to our long-term energy security—with a share of the upside they receive at times of high wholesale prices.

    The levy will end on 31 March 2028. This reflects the possibility that wholesale electricity prices remain elevated for a number of years and the need for businesses to have certainty around the measures the UK is taking in response. However, should the crisis abate and prices fall below the benchmark price, the revenue forecast from the levy will not materialise and consideration would be given to the tax’s ongoing application.

    Furthermore, responding to concerns that have been raised around the tax’s duration and its impact on investment, the £75/MWh the benchmark price will be indexed to CPI inflation from April 2024, and relief will be provided for certain exceptional costs that are reducing the degree to which generators are benefiting from higher electricity prices.

    Support for investment in renewables

    The Government are committed to decarbonising power systems by 2035 and reaching net zero emissions by 2050. Britain is a global leader in renewable energy. Last year, nearly 40% of our electricity came from offshore wind, solar and other renewables. Since 2010, our renewable energy production has grown faster than any other large country in Europe. We are committed to ensuring that the UK remains one of the best places in the world to invest in clean energy and have set stretching deployment ambitions, including up to 50GW of offshore wind by 2030 and a fivefold increase in solar by 2035. As we move towards these ambitious goals, the Government will seize the opportunities for growth through the transition, creating the right framework to crowd-in billions of pounds of new investment into the UK’s economy. That includes:

    Our highly successful Contracts for Difference scheme continues to bring more and more generation online, with our most recent auction delivering a record capacity of almost 11 GW. A consultation for the sixth Contracts for Difference round was published last week.

    The Offshore Co-ordination Support Scheme, which will provide up to £100 million of grants to energy projects to develop co-ordinated options for offshore transmission infrastructure, was launched earlier this month.

    Government also continue to work with the Offshore Wind Acceleration Taskforce and other developers to identify and address barriers to deployment. This includes reforming the planning system, where Government are acting to ensure that consents are secured faster, and the risk of delays are reduced.

    We have heard calls for the tax system to provide strengthened incentives for—long-term—investment in the low-carbon electricity generation sector, including investment in new capacity as well as investment needed to maintain and upgrade existing capacity. The Government continue to recognise the value of capital allowances for supporting investment within a sustainable fiscal strategy, and any further changes will be set out at a future fiscal event in the usual way.

    Government are undertaking the Review of Electricity Market Arrangements (REMA) which will assess how our power markets can best deliver a low-cost, low-carbon and secure electricity system, whilst reducing our exposure to international oil and gas prices.

  • Neale Hanvey – 2022 Parliamentary Question on Energy Costs

    Neale Hanvey – 2022 Parliamentary Question on Energy Costs

    The parliamentary question asked by Neale Hanvey, the Alba MP for Kirkcaldy and Cowdenbeath, in the House of Commons on 20 December 2022.

    Neale Hanvey (Kirkcaldy and Cowdenbeath) (Alba)

    Whether his Department plans to take further fiscal steps to support (a) households, (b) local authorities, (c) charities and (d) businesses with energy costs.

    The Chancellor of the Exchequer (Jeremy Hunt)

    Merry Christmas to you and your staff, Mr Speaker; as your fourth Chancellor of the year, I sincerely hope that I am here this time next year to wish you merry Christmas as well.

    The Government are very conscious that these are tough times for businesses as well as families. That is why in the autumn statement I announced, among many other measures, a package of business rates support worth £13.6 billion over the next five years, including a 75% relief for retail, hospitality and leisure properties. That will help thousands of businesses in Scotland.

    Neale Hanvey

    A very merry Christmas to you and yours, Mr Speaker, and a happy new year to boot.

    My constituency of Kirkcaldy and Cowdenbeath plays host to energy giants Shell and ExxonMobil; Seagreen and Berwick Bank wind farms, which supply 2.8 million homes in England with energy, are just off our coastline. In such a land of energy plenty, it is perverse that so many people live in poverty and that businesses struggle to survive. Kirkcaldy ice arena is the oldest rink in the United Kingdom and home to the Fife Flyers ice hockey team. It survived world war two, fire, the financial crash and covid, but in energy-rich Scotland it is struggling to pay its unavoidable energy costs. What targeted support is the Chancellor going to make available for energy-dependent companies such as the rink? Will he meet me to discuss how best to tackle the problem?

    Jeremy Hunt

    We have announced a package of support for businesses this winter worth nearly £20 billion; it will help businesses throughout the United Kingdom, including in Scotland. It includes special measures for energy-intensive industries. We will shortly announce plans that will take effect from next April.

  • Wendy Chamberlain – 2022 Parliamentary Question on Energy Producer Profit Trends

    Wendy Chamberlain – 2022 Parliamentary Question on Energy Producer Profit Trends

    The parliamentary question asked by Wendy Chamberlain, the Liberal Democrat MP for North East Fife, in the House of Commons on 20 December 2022.

    Wendy Chamberlain (North East Fife) (LD)

    What assessment he has made of the implications for his policies of trends in the level of energy producer profits in the last 12 months.

    The Exchequer Secretary to the Treasury (James Cartlidge)

    The structure of the electricity market means that the price of electricity is tied to the wholesale gas price. Russia’s invasion of Ukraine triggered an unprecedented increase in gas prices, driving energy prices to eight times their historic levels. As a result, many energy generators’ profits are well above pre-crisis levels. As announced at the autumn statement, the Government are introducing a temporary 45% tax on extraordinary returns made by some UK electricity generators from 1 January.

    Mr Speaker

    I call Wendy Chamberlain, whose birthday it is today. Happy birthday.

    Wendy Chamberlain

    Thank you, Mr Speaker.

    Shell announced worldwide profits of £8.2 billion and £9 billion for the three-month period between July and September and the three months to June. BP announced more than double its profits for the same period. They have increased their dividend payments and spent billions buying back their own shares from the market. Shell says that it does not expect to pay any windfall tax at all this year and BP said that it would pay £678 million. Does the Minister agree that, if the Government had implemented a proper windfall tax that captured these things, we could be supporting offshore customers such as my own in North East Fife?

    James Cartlidge

    Obviously, the hon. Lady knows that we do not comment on the commercial decisions of individual companies. What I can confirm is that the specific levy to which she refers—the energy profits levy—will contribute £40 billion to the Exchequer. We must remember that that £40 billion will play a key part in enabling us to afford the support that we are giving to constituents throughout the United Kingdom this winter and next year, which will total, for businesses and households, more than £100 billion, and the Office for Budget Responsibility has already found that that will help to reduce inflation overall.

    Mr Speaker

    I call the shadow Minister.

    Abena Oppong-Asare (Erith and Thamesmead) (Lab)

    May I begin, Mr Speaker, by wishing you, the Minister and the whole House a jolly Christmas?

    If the Government had implemented Labour’s windfall tax, they would have raised an additional £16.8 billion. Why have the Government chosen to leave this windfall of war on the table and not put it to use to support families and businesses in the tough winter ahead?

    James Cartlidge

    I do not entirely accept that. I would be interested to know the detail behind that figure. What we can confirm is that we have two specific levies: one on oil and gas, and one on certain electricity generators. We think that these are being applied in a very fair way. The levy to which the hon. Member refers does include an allowance for investment but this is the point. That level of support cannot continue for ever. The long-term answer is energy security—investment in new energy sources and, indeed, investment in the North sea, supporting UK jobs and the transition to net zero.

  • Graham Stuart – 2022 Statement on Household Energy Bills Support

    Graham Stuart – 2022 Statement on Household Energy Bills Support

    The statement made by Graham Stuart, the Minister for Energy and Climate, in the House of Commons on 19 December 2022.

    Following is a statement on energy bill support schemes.

    Help with household energy bills—widening the support

    On 29 July, details were announced of the energy bills support scheme, which is now providing a £400 discount on electricity bills to households across Great Britain, delivered over six months. On the same date we announced that energy bill support scheme alternative funding would be developed to deliver the same level of support to households without a domestic electricity account.

    The Government announced further support in September with the energy price guarantee, which is reducing energy bills for households across the United Kingdom. It currently brings a typical household energy bill in Great Britain for dual-fuel gas and electricity down to around £2,500 per year and, at an equivalent level of support, in Northern Ireland to around £1,950 per year.

    Energy policy is devolved in Northern Ireland and it would normally be the responsibility of Northern Ireland Ministers to put in place support for households with energy costs. In the absence of a functioning Executive but in consultation with Northern Ireland Ministers, the UK Government committed in August to develop and deliver a scheme comparable to that being delivered in Great Britain.

    I am now able to update the House on both the energy bill support scheme alternative funding process in Great Britain and a scheme for Northern Ireland to ensure payments reach all eligible households this winter.

    Energy bill support scheme—alternative funding

    The energy bill support scheme alternative funding is for households in Great Britain who are not eligible for the energy bills support scheme which started delivering in October, as they do not have a direct relationship with a domestic electricity supplier. This includes many of the most vulnerable in our society. Those set to benefit include residents of park homes, some care home residents, tenants in certain types of private and social rented homes, homes supplied by private wires, residents of caravans and houseboats on registered sites, farmers living in domestic farmhouses without a domestic electricity connection, and households off-grid.

    It is important to note that most households who do not have a direct relationship with a domestic energy supplier benefit from a discount on their energy bills through the energy bill relief scheme, which is already providing support to intermediaries such as landlords and park home operators. The Energy Prices Act 2022, passed earlier in the year, ensures those benefits are passed on to consumers who do not pay their energy bills directly to an energy supplier.

    In January we will publish details on eligibility and open a portal on gov.uk offering a short online application process for those eligible households to apply for energy bill support scheme alternative funding. A helpline will be available for those unable to apply online. Applications will be validated, and payments processed by the relevant local authority. The £400 Government credit will be paid this winter to all eligible households who apply.

    Northern Ireland energy bill support scheme

    For Northern Ireland we have developed and will deliver a separate and bespoke energy bills support scheme, working with the separate Northern Ireland electricity suppliers, and respecting the very different nature of the energy market in that part of the United Kingdom. This scheme will also deliver for households this winter, with payments starting in January.

    The payment will be for £600, comprising £400 for the energy bills support scheme and £200 for the alternative fuel payment, which all Northern Ireland households will receive, given the high level of alternative fuel use. The single payment will reach customers through their supplier, either direct to the relevant electricity bill payer’s bank account, or as a voucher which will need to be redeemed into a bank account or as cash.

    We are making funds available to suppliers for this purpose by the end of this year, so suppliers will be able to start paying customers in January.

    A further announcement will be made in respect of alternative funding support for those in Northern Ireland without a domestic electricity supply.

    I have also written to Northern Ireland energy suppliers setting out expectations for them to suspend all debt recovery and enforcement activity until the end of January, as well as to provide payment holidays until the end of January when customers are struggling to pay their bills.

    Alternative fuel payment scheme

    I can also set out today our intended timings for the £200 alternative fuel payment scheme for households in Great Britain who use fuels such as heating oil, LPG or biomass to heat their homes. Payments will commence in February, with most payments being made that month through electricity suppliers. More details about how we will target the scheme will follow soon in the new year. Households that will not receive automatic payments will be able to apply to the same gov.uk portal used for the energy bill support scheme alternative fund from February.

    The Treasury has approved these extensions to the energy bills support scheme.

    I will continue to update Parliament.

  • Ursula von der Leyen – 2022 Speech at REPowerEU: Outlook on EU Gas Supply in 2023

    Ursula von der Leyen – 2022 Speech at REPowerEU: Outlook on EU Gas Supply in 2023

    The speech made by Ursula von der Leyen, the President of the European Commission, on 12 December 2022.

    Good afternoon,

    I am very happy to welcome here Fatih Birol. We had a very good discussion on an energy outlook for Europe and how to deal with the unprecedented disruptions that have been caused by Russia’s atrocious war. Russia has indeed cut its pipeline supplies by 80% – if you compare September of this year to September of last year. We all know that these pipeline gas cuts have added unprecedented pressure on the global energy markets, with severe knock-on effects on Europe’s energy system. But I want to emphasise that despite these enormous cuts, we have been able to manage, we have been able to withstand the blackmail. We have acted, and we have acted successfully. Seven months ago, in May, we have presented our response to this Russian blackmail by putting on the table REPowerEU, our plan to reduce the demand for Russian gas by two-thirds before the end of this year. And we have underpinned this proposal with an investment plan of up to EUR 300 billion. In just a few months, we have turned the REPowerEU plan into many different legislative proposals and actions on the ground. And I think it is worth looking at that. Basically, we have taken ten different actions in the last ten months.

    The first one is: we have enormously diversified away from Russian fossil fuels, away from Russian gas supplies towards other reliable, trustworthy suppliers. Second, we are saving energy. We have introduced, as you all know, the target to reduce gas demand by 15%. If we look at the data from early autumn, we are very well on track. It is good that we are saving energy and we have to keep on saving energy. The third point is: we are boosting the roll-out of renewables. If you look at the year 2022, we will have added almost 50 gigawatts of new capacity that is almost doubling the additional capacity of renewable energy, mostly from wind and solar. For us, this is very important because this is not only good for the planet, but we know that renewables are home-grown, they create good jobs here and they create independence and security of supply.

    The fourth point is that, in this context of renewables, we have proposed to speed up drastically the permitting process for renewables. We know that many projects are basically ready to go if the permitting was there, so this has to be faster. Therefore, we have put a proposal on speeding up the permitting process on the table. The fifth point is that we have put in place a minimum gas storage obligation. Our storages are now filled by more than 90%, so we have overshot the target, that is very good, and we are well above the previous five-year average.

    The sixth point is on solidarity. We have proposed default arrangements for the supply of gas between Member States where solidarity agreements are not yet in place to make sure that in an energy emergency, we can ensure that the gas is going and flowing where it is most needed. The seventh point is: we have set up a platform for the joint purchasing of gas, to increase our negotiation leverage and get better prices. I think it is unacceptable that different Member States are outbidding each other on the global market and thus driving up the prices. Therefore, it is important that we join forces for the negotiation on a global level.

    The eighth point is: we have improved our infrastructure. We have four new interconnectors that became operational this year. It is the Baltic Pipe, it is the interconnector Poland-Lithuania, the interconnector between Bulgaria and Greece, and the gas interconnector between Poland and Slovakia. The ninth point I want to highlight is the fact that we have put out a legal framework that enables Member States to skim off the windfall profits, the super profits of energy-producing companies, to take this money and to support by that the vulnerable households and the vulnerable businesses in a targeted manner. And finally, the tenth point is: we proposed a market correction mechanism, also known as the price cap, to limit spikes in gas prices at TTF level.

    Many of these measures have been adopted, some at record speed. And there are many examples that show that change is beginning – for example the massive and rapid uptake of heat pumps in Poland. The result of all these actions is that we are safe for this winter. Russia’s blackmail has failed. However, some of our proposals are still under discussion and they are essential for our energy preparedness. Therefore, I call on the Council to adopt them swiftly, because preparing for the next winter of 2023-2024, starts now. Now that we are turning our focus to the winter 2023-2024, I am very pleased, dear Fatih Birol, that we have worked on that so intensively together. One month ago, your message was very clear and you underpinned your message with figures. You said very clearly the coming winter will be even more challenging. And Europe needs to step up its efforts in several fields. You outlined the risks: It might be possible that Russia cuts the rest of the pipeline gas supply; China could lift the COVID-19 restrictions and thus go back to energy demand on the global market on pre-COVID-19 level; and of course, this year we benefitted from an extraordinary warm winter – this could also be different next year.

    I know from your data that despite the actions that we have taken, we might still face a gap of up to 30 billion cubic metres of gas next year. The actions that we have set in motion will help cover part of this, but more is needed. Here, I want to look at a few priorities we need to focus on. The first one is of course the LNG supply. I am confident that we will secure similar volumes of LNG next year as we had this year. This year, we had up to 130 billion cubic metres of LNG. For this, we of course have to further intensify our outreach to our international partners.

    My second point is: It is now time that we make joint purchasing a reality. We have the Energy Platform in place, now we have to operationalise the joint purchasing mechanism. Every day of delay comes with a price tag. We have discussions with Member States, partner countries and their companies that are ongoing. This evening, I will discuss this with the Norwegian Prime Minister, for example. We can launch the first tender for demand aggregation by the end of March. But for that, we need to have an agreement on the Emergency Regulation we proposed on 18 October, and we need it now.

    And my final point is that the greatest potential for energy in the European Union is in our own hands. We must scale up and accelerate the deployment of renewables. We must go big and we must be fast. With the right policies in place, we can even double the capacity of renewable energy that we will add to the market next year. And the case has never been stronger. In 2022, we had record additions of wind and solar capacity in the European Union. And we expect renewable capacity to rise even further in the coming year, replacing around 12 billion cubic metres of gas. And you are showing us with your additional measures that we can add an additional 7.5 billion cubic metres. So, if you look at the overall scope: efficiency, savings, joint purchasing, renewables – this might be the mixture we need to make up for the missing gas next year. We have taken the action that is necessary. Our proposals are now on the table.

    My last comment is on the bigger picture. Because if we look at the bigger picture, we also see that we need an increase in public investments in the energy transition. Mostly to ensure the competitiveness of our European industry in the energy transition, we need additional public investments at national level and at European level. You know that in the short term, we will propose to boost REPowerEU. REPowerEU is our vehicle, the framework for investment in clean tech. And this is one part of our response to the US Inflation Reduction Act. But we also know that in the mid-term, we have to step up. There, we will work on setting up a sovereignty fund to make sure that Europe continues to be the global leader in clean tech. Where we have to help our industry is now, in this high energy price environment, to bridge the transition to green, clean energy that is affordable and secure. Therefore, this funding is necessary.

    Our work has been good this year, we see the progress, we have come quite a long way. But we know that we are not done with our work until families and businesses in the European Union have access to energy that is affordable, that is secure and that is clean.

    Thank you so much.

  • Luke Pollard – 2022 Comments on the Woodhouse Colliery in Cumbria Planning Decision

    Luke Pollard – 2022 Comments on the Woodhouse Colliery in Cumbria Planning Decision

    The comments made by Luke Pollard, the Labour MP for Plymouth Sutton and Devonport, in the House of Commons on 8 December 2022.

    Luke Pollard (Plymouth, Sutton and Devonport) (Lab/Co-op)

    The world is currently meeting in Montreal for COP15 to deal with the pressing climate and nature crisis that we are facing. A common message from there is that coal should be kept in the ground. It will be incredibly difficult for the Government to convince the public at home and abroad that opening a new coalmine is dealing with that urgent climate crisis in a progressive way. His colleague, the former COP26 President, described this decision as an “own goal”, so may I ask the Secretary of State whether he thinks approving a new coalmine in the middle of a climate crisis will enhance or damage Britain’s reputation as a global green leader?

    Michael Gove

    Again, I stress the importance of looking at what the inspector says. The hon. Gentleman quite rightly points out that international partners are meeting in Montreal, alongside the UK, in order to uphold the importance of biodiversity and to help protect species. I should point out that in paragraph 21.163 of the inspector’s report the inspector specifically addresses the question of biodiversity and says that he

    “is satisfied that the Supplemental Undertaking”—

    given by the applicant—

    “would ensure that the proposed development would provide for a minimum net gain”—

    in biodiversity—

    “of 10% prior to the commencement of production and further net gain to be achieved on restoration.”

    The inspector took account of biodiversity in coming to his judgment, and so have I.

  • Katherine Fletcher – 2022 Comments on the Woodhouse Colliery in Cumbria Planning Decision

    Katherine Fletcher – 2022 Comments on the Woodhouse Colliery in Cumbria Planning Decision

    The comments made by Katherine Fletcher, the Conservative MP for South Ribble, in the House of Commons on 8 December 2022.

    Madam Deputy Speaker, you know me to be a biologist and an environmentalist—I should confess to the House that I also get called a tree hugger by certain hon. Members of this House—but does my right hon. Friend agree that it is the “net” in net zero that is the crucial thing here? We have heard today from the Opposition that this development is not green, but they are wrong. It is better to do this mining on our shores and in a responsible way. Does he agree that the north-west of England has the pride, the heritage, the skills and the future to deliver not only this coking coalmine, but the future industries of 4.0?

    Michael Gove

    I am tempted to say that any tree that is hugged by my hon. Friend is a very lucky tree.

    On the substance of the very important point that my hon. Friend makes, yes, in order to ensure that we have a transition to net zero we do need to reduce our reliance on a variety of different materials. However, as the inspector makes clear, and as my hon. Friend quite rightly points out, the economic benefits that this development brings to the north-west are also entirely consistent with our broader environmental ambitions.

  • Alan Brown – 2022 Speech on the Woodhouse Colliery in Cumbria Planning Decision

    Alan Brown – 2022 Speech on the Woodhouse Colliery in Cumbria Planning Decision

    The speech made by Alan Brown, the SNP MP for Kilmarnock and Loudoun, in the House of Commons on 8 December 2022.

    The decision has been condemned by the Chair of the Climate Change Committee. Chris Stark, chief executive of the committee, retweeted that this is

    “climate vandalism and economic incompetence on a scale difficult to believe”.

    The International Energy Agency previously stated that no further fossil fuel projects can be built if net zero is to be achievable by 2050 and OECD countries need to end use of coal by 2030, so why license this mine to 2049? Ron Deelan, a former chief executive of British Steel, called it

    “a completely unnecessary step for the British Steel Industry”.

    Chris McDonald, chief executive of the Materials Processing Institute research centre, previously advised that British Steel could not use this coal because it is

    “not of the right quality”.

    The reality is that 85% of this coal is going to be exported, so talking about cancelling imports is a complete red herring. What we are doing is increasing our carbon footprint to support industry in the EU. It is illogical and we know demand for coking coal will fall, as the EU is further ahead on the development of green steel. Where is the UK progress on green steel? Coking coal is not even identified on the UK’s critical mineral strategy or in the National Security and Investment Act 2021, although it is a critical mineral for the EU. But, clearly, this mine is not needed for the UK. Given this decision, what steps are being taken to rapidly accelerate the net zero pathway, for example, by changing the Scottish carbon capture and storage cluster to track 1 status?

    The Secretary of State hides behind the recommendations of the Planning Inspectorate. Why did his Government override the Planning Inspectorate on Sizewell C? This coking coal is not critical for the UK. It is going to be exported, so why has he made this decision just to appease Tory Back-Bench climate change cynics?

    Michael Gove

    I am grateful to the hon. Gentleman for his questions. He quotes a number of individuals and draws explicitly—he was good enough to acknowledge this—party political conclusions. I relied on the inspector’s report and on the evidence in front of me. As I explained in my decision letter, no evidence was provided to suggest that any other metallurgical coal mine in the world aspires to be net zero, so the proposed mine is likely to be much better placed to mitigate greenhouse gas emissions than comparative mining operations around the world. On that basis, it is entirely in keeping with our net zero commitments, and indeed with the commitment to not only jobs, but the environment, to approve the inspector’s case.

  • Lisa Nandy – 2022 Speech on the Woodhouse Colliery in Cumbria Planning Decision

    Lisa Nandy – 2022 Speech on the Woodhouse Colliery in Cumbria Planning Decision

    The speech made by Lisa Nandy, the Labour MP for Wigan, in the House of Commons on 8 December 2022.

    I have one question for the Secretary of State: what on earth is he thinking? The decision to greenlight the reopening of the Woodhouse colliery is bad policy and bad politics. It is the latest in a string of absurd decisions from a Government in chaos, causing chaos in this Chamber and out there in the country. They are in office but not in power.

    This mine will produce coking coal used for steel, not for electricity generation. So, as the Secretary of State has had to admit today, the claim it helps to safeguard our energy security is nonsense, but it gets worse. The two big steel producers, Tata and British Steel, are phasing out this coal in favour of lower-carbon production methods. By the mid-2030s, at best, the UK will use less than 10% of the mine’s output. Across the world, demand for coking coal is projected to fall off a cliff, by 88%, by 2050.

    People in Cumbria deserve a long-term future, with lasting, well-paid jobs that power us through the next century. Instead, they are saddled with a weak, short-sighted and unambitious Government who, only two months ago, rejected a plan to bring new nuclear to Cumbria, which would have created not 500 short-term jobs but 10,000 jobs for the long term.

    The right hon. Member for Surrey Heath (Michael Gove) is supposed to be the Secretary of State for Levelling Up. The Tories were once the party of conservation, and now they are the party of environmental vandalism. He can fiddle the figures all he likes, but the reality is that this mine is projected to increase emissions by 0.4 million tonnes a year, according to his own advisers. That is equivalent to putting 200,000 more cars on the road every single year.

    This decision flies in the face of Britain’s net zero objectives, contradicts the aims of the UK’s COP26 presidency and undermines the 2019 Conservative manifesto. This is chaos. Successive Secretaries of State are contradicting each other and the Government’s independent adviser on climate change condemned the decision as “indefensible” even as the Secretary of State stands here trying to defend it.

    The Secretary of State told us that coal has no part to play in future power generation. He cannot even agree with himself. No leadership abroad. No leadership at home. Unable to lead even in his own party. I hope he will at least reassure the House today that this bizarre decision, which he cannot even defend, was not part of a deal to buy off Back Benchers after his U-turn earlier this week on onshore wind.

    People in Britain deserve better. Right across the country, communities such as mine in Wigan and across Yorkshire, Lancashire and Cumbria are proud of our mining heritage and of the contribution we made to this country, but we want a Government who look forward and match our ambition so that, through clean energy, our young people can power us through the next century like their parents and grandparents powered us through the last. Where is the ambition? Where is the leadership? Where is the government?

    The Secretary of State for Levelling Up, Housing and Communities (Michael Gove)

    Mr Speaker, thank you for your ruling earlier. I apologise to you and to the House. No discourtesy was intended. I appreciate the importance of maintaining the courtesies of the House, particularly with regard to statements.

    As I mentioned earlier, the context of this statement is a quasi-judicial process on a planning application. I always admire the rhetoric of the hon. Member for Wigan (Lisa Nandy), and she asks, “Where is the ambition? Where is the leadership?” I think we all know where the ambition and the leadership is: it is sitting right across from me.

    The hon. Lady will have her own views on future demand for coking coal, but I fear she elides the difference between coking coal used for metallurgical purposes and coal used for energy generation purposes. The inspector’s report makes it clear that coking coal is used not for energy purposes but purely for metallurgical purposes, for the manufacture of steel. Of course, we will need steel for decades to come, including in the renewables sector. How else will we ensure that we supply all the materials necessary for onshore wind and other renewable energy without using steel? If she or anybody else in the House has an answer, I and millions of scientists would love to hear it.

    It is important to look at the inspector’s report, as I have in detail. The inspector makes it clear on page 239, in paragraph 21.37, that in all the scenarios and forecasts presented to him there was

    “continued demand for coking coal for a number of decades.”

    He also made it clear that, at the moment, imports of coking coal come from Australia, the USA and Russia. As I pointed out in the statement, and as the inspector makes clear, no evidence has been provided to suggest that any other metallurgical coal mine in the world aspires to be net zero in the way the Whitehaven development does. Again, the inspector makes it clear that the

    “development would to some extent support the transition to a low carbon future as a consequence of the provision of a currently needed resource from a mine that aspires to be net zero.”

    The European Commission is clear that coking coal is a critical part of steel and that steel is necessary to the future of Europe. We recognise that the demand for this coking coal, both in the UK and in Europe, is better supplied from a net zero mine than from other alternatives. As the inspector makes clear, this decision will also be responsible for high-skilled, high-value jobs in Cumbria, alongside other jobs in the supply chain elsewhere, and that is without prejudice to the other investment that the Government are making in clean green energy sources alongside it.

    The inspector’s report is clear and, in responding to the questions from the hon. Member for Wigan, I urge every Member of the House to read the inspector’s report in full, alongside my decision letter. Those 350 pages lay out the evidence. They present the arguments for and against the decision. The inspector, an independent planning expert, has concluded that this development should go ahead and I agree with him.

  • Michael Gove – 2022 Statement on New Coalmine at Whitehaven in Cumbria

    Michael Gove – 2022 Statement on New Coalmine at Whitehaven in Cumbria

    The statement made by Michael Gove, the Secretary of State for Levelling Up, Housing and Communities, in the House of Commons on 8 December 2022.

    With permission, Mr Speaker, I would like to make a statement following the decision I made yesterday to grant planning permission for a new metallurgical coalmine at Whitehaven in Cumbria.

    I think it is important to stress at the beginning of my statement that I am speaking with regard to a planning decision that I have taken in my capacity as Secretary of State in what is a quasi-judicial process. Members of the House will be aware that the decision may, of course, be subject to a legal challenge, so I urge all Members of the House who are interested in the decision to read the decision letter, which was published yesterday, alongside the detailed report of the independent planning inspector who oversaw the public inquiry into the proposals. Any mature and considered response needs to take account of both my decision letter and the planning inspector’s full report.

    I would like to refer in my statement to some of the arguments that the planning inspector has entertained and some of the arguments that he has made in the course of his report, but nothing that I say at the Dispatch Box should be taken in any way as a substitute for full engagement with the inspector’s report.

    It is important to note that it is rare that any planning decision is an open-and-shut matter. There are almost always competing elements for and against any planning scheme—particularly a substantial one of this kind, which can raise serious and passionate debate—but the open and transparent public inquiry system allows all those issues to be fully explored. It also allows all parties to put their case before an independent inspector.

    The decision that I issued yesterday was in line directly with the recommendation of the inspector, who heard all the evidence for and against the scheme and was able to test that evidence through the participation of interested parties. This was a comprehensive and thorough process, lasting over a month and hearing from over 40 different witnesses. It is summarised in a report of over 350 pages, which, again, I urge all hon. Members to read.

    I think it important to restate—as I think is well understood—that the proposal granted permission yesterday for the production of coking coal for use in steel production is not an energy proposal. Our net zero strategy makes it clear that coal has no part to play in future power generation, which is why we will be phasing it out of our electricity supply by 2024. Coal’s share of our electricity supply has already declined significantly in recent years. It was almost 40% of our energy supply in 2012, and less than 2% in 2020.

    I took account of the facts in reviewing the planning application, as did the inspector, taking into particular account the Department for Business, Energy and Industrial Strategy industrial decarbonisation strategy of March 2021, which explicitly does not rule out the use of coking coal in an integrated steel-making process, and makes it clear that, together with carbon capture and storage, that can be part of a net zero-compliant option.

    It is important to note, as the inspector makes plain on page 239 of the report, that it is clear all the scenarios and forecasts for the future use of coking coal which were put before the inquiry demonstrated a continued demand for coking coal for a number of decades to come. It is also important to state that the European Commission, as the inspector noted, recognised the indispensable role of coking coal during the steel industry’s transition to climate neutrality.

    It is also important to note, as the inspector did on page 238, that the UK is currently almost wholly dependent on imports of coking coal to meet its steel manufacturing demand. In 2017, 98.8% of the more than 3 million tonnes of coking coal used in UK steel plants was imported. The main exporters of coking coal at the moment are Australia, the USA and, of course, Russia. European metallurgical coal demand is forecast to remain between 50 and 55 million tonnes per annum for the next 28 years, and in the UK demand is forecast to remain at the current level of 1.5 million tonnes per annum.

    The coking coal that will be extracted from the mine in Whitehaven is of a particular quality. Coking coal is usually a blended product of soft and hard high volatile coals and low volatile coals. The coal from the proposed mine would have a low ash content of below 5%, compared with between 7% and 8% for US coal and 10 % for Australian coal. It would also have a low phosphorus content, lower than that of Australian coal, and a high fluidity. It is also important to note that, while the sulphur content of this coal has been referred to, and it is relatively high, the evidence before the inspector suggests that the coal handling and processing plant will produce coal with an average sulphur content of 1.4 %, and the applicant has stated its acceptance of the planning condition to ensure the product leaving the mine meets this level.

    It is also important to note that the applicant is making it clear that this will be the only net zero metallurgical coking coalmine in the world. It is vitally important that all of us recognise—as the inspector does on page 255—that the proposed development would to some extent support the transition to a low-carbon future specifically as a consequence of the provision of a currently needed resource from a mine that aspires to be net zero. I think it is also important that we recognise that, in any change of land use, there will always be a potential impact on biodiversity and on the local environment as well. Again, it is important to note that, on page 278 of his report, the inspector makes it clear that this mine would not cause any unacceptable impacts on ecology or result in a net loss of biodiversity. The inspector also makes it clear in paragraph 22.9 that the proposed development itself would have an overall neutral effect on climate change, and as such there would be no material conflict with Government policies for meeting the challenge of climate change.

    Taking account of all these environmental considerations, we should also bear in mind the impact on employment and on the economy, locally and nationally. As the inspectorate notes on page 279, the mine will directly create 532 jobs, which will make a substantial contribution to local employment opportunities because they will be skilled and well-paid jobs. The employment, and indirect employment, that would follow will result in a significant contribution to the local and regional economy, with increased spending in local shops, facilities and services. In addition, the exportation of some of the coal to European markets will make a significant contribution to the UK balance of payments. It is therefore the case that granting the application is compliant with planning policy, and the social and economic benefits should be afforded substantial weight.

    The inspector’s report makes a strong case, in a balanced way, for the granting of permission. After reading the inspector’s report in full, I am satisfied, in my role as Secretary of State, that it is the right thing to do to grant this planning application.