Category: Energy

  • James Cartlidge – 2023 Statement on Energy Support Package for Businesses

    James Cartlidge – 2023 Statement on Energy Support Package for Businesses

    The statement made by James Cartlidge, the Exchequer Secretary to the Treasury, in the House of Commons on 9 January 2023.

    With permission, Mr Deputy Speaker, I will make a statement on how the Government are continuing to support businesses, charities and the public sector with their energy bills. Before I outline how we are helping businesses, I remind the House why we are in this position.

    Although wholesale energy prices are now falling, some businesses are still exposed to higher energy bills after Putin’s illegal invasion of Ukraine pushed prices far above their historical averages. Putin’s military aggression has put households and businesses across Europe and beyond under serious financial pressure. For that reason, we have already provided a package of support for non-domestic users through this winter that is worth £18 billion, as per the figures certified by the Office for Budget Responsibility at the autumn statement.

    The energy bill relief scheme gave a direct discount on energy costs for all eligible businesses. It lessened the shock of the immediate increase in prices; it gave businesses the certainty they needed to plan for the winter; and it is one of the most generous packages in Europe. It comes on top of our support for households, including the energy price guarantee worth £900 this winter according to the OBR, which further helped to support consumers and the businesses that rely on them. I remind hon. Members that that followed unprecedented business support during the pandemic.

    The Government are proud to have helped businesses through a twin combination of unprecedented shocks that nobody could have expected a few years ago. We will always do what is necessary to keep the economy and the British people secure, which is why the Prime Minister has been clear that we will halve inflation this year to ease the cost of living and give people financial security before returning it to target. That is also why we unleashed the furlough scheme, which avoided 2 million forecast job losses; a groundbreaking vaccine roll-out, which saved lives and ensured the safe reopening of our economy; grants for pubs, shops and other retail businesses; and now, humanitarian and military aid to Ukraine as it fights for democracy, with the UK giving more than any other nation bar the US. All those steps have been right, but all have come at a significant combined cost, leaving our national debt standing at £2.48 trillion or 98.7% of GDP.

    To secure the future of public services, we have committed to get national debt falling, including two new fiscal rules—that the UK’s national debt must fall as a share of GDP by the fifth year of a rolling five-year period, and that public sector borrowing in the same year must be below 3% of GDP.

    As we look to the next steps in supporting businesses, it is therefore in our national economic interest that we chart a path to withdrawing such support and restoring fiscal sustainability, but in a sensible and fair way that strikes a balance between supporting businesses now and protecting taxpayers’ exposure to volatile energy markets. As my right hon. Friend the Chancellor said at the autumn statement, one of our key economic priorities is stability, and we cannot have stability without financial prudence. So all Members must recognise that there is a balance to be struck, and it is not sustainable for the Exchequer to continue to support large numbers of businesses at the current level.

    No Government—no responsible, serious Government —anywhere in world can permanently shield businesses from this energy price shock, and we must cap the taxpayer’s exposure to volatile energy prices. We have also been clear throughout that such levels of support were time-limited and intended as a bridge to allow businesses to acclimatise. Firms need to adapt and invest in energy efficiency to remain viable, and as they do so, we will be at their side to help, including with £6 billion of additional investment to cut the UK’s overall energy use.

    Yet we remain fully alive to the fact that businesses would be facing a cliff edge as support comes to an end. To avoid this, we are going to provide a further package of transitional support, so today I can confirm a new energy bills discount scheme for businesses, charities and the public sector. Up to £5.5 billion will be made available from the end of the energy bill relief scheme period on 31 March until 31 March 2024.

    The Chancellor has been working with the key industry stakeholders to get this right. We heard that they needed a 12-month rather than six-month scheme. We have listened and, as a result, I confirm that we will be providing a year’s worth of support for all non-domestic bills beyond the current six-month scheme. This will give certainty and ongoing assistance to businesses locked into contracts signed before recent substantial falls in the wholesale price, and provide others with reassurance against the risk of prices rising again. It is different from the previous energy bill relief scheme, but provides long-term certainty for businesses and reflects how the scale of the challenge has changed since September last year.

    From 1 April 2023 to 31 March 2024, non-domestic customers that have a contract with a licensed energy supplier will see a unit discount of up to £6.97 per megawatt-hour automatically applied to their gas bill and a unit discount of up to £19.61 per megawatt-hour applied to their electricity bill, except for those already benefiting from lower energy prices. This means a typical pub can expect a taxpayer-funded discount of up to £2,300 over 12 months and a typical small retail store will get up to £400 off its annual energy bill.

    We also recognise that some businesses, especially intensive users such as major manufacturers, are highly exposed to both energy prices and international competition, which means they are unable to pass through or absorb all of these costs. I can therefore confirm that the Government are targeting a substantially higher level of support beyond April 2023 to energy and trade-intensive sectors, providing a major boost for the manufacturing sector. Businesses in scope will receive a gas and electricity bill discount based on a price threshold that will be capped by a maximum unit discount of £40 per megawatt-hour for gas and £89.10 per megawatt-hour for electricity. This discount will only apply to 70% of energy volumes. These firms will continue to be supported at source, based on a price threshold of £99 per megawatt-hour for gas and £185 per megawatt-hour for electricity. This means a typical medium-sized manufacturer would expect to receive nearly £700,000 of direct support over 12 months.

    This comes on top of the £13.6 billion of support for firms with business rates over the next five years, a UK-wide £2.4 billion fuel duty cut this year and the protection from full corporation tax rises for businesses making profits of less than £250,000, with those making profits of less than £50,000—the vast majority—not facing any rate rise at all.

    I have set out how this transitional support will reduce overall as a cost to the Exchequer while remaining significant at a time of elevated energy costs and providing certainty for a further 12 months. However, I have also been clear that, just as we withdrew covid support when we moved to a position of living with the pandemic following the success of our vaccination efforts, this energy support is deliberately transitional in nature. That means that in due course we will move unambiguously to a point where there is no universal support for businesses with energy bills from the taxpayer.

    Ultimately, it is in the national economic interest that we move to a position where the Government do not routinely subsidise UK businesses. It is not for the Government to habitually pay the bills of businesses any more than it is for the Government to tell businesses how to turn a profit, and it cannot be that the taxpayer props up failing or unproductive firms. Instead, we must protect the forces of free enterprise and entrepreneurialism that have led to our economic success for generations. [Interruption.] Labour Members do not understand free enterprise and entrepreneurialism, and I do not think many of them have ever run a business.

    The approach I have outlined today does just that: it is fair in balancing the needs of non-household energy users with the need for prudence and a restoration of competitiveness, and it shows that this Government remain committed to supporting businesses, charities and the public sector through these challenging times. I commend this statement to the House.

  • Jeremy Hunt – 2023 Comments on Energy Support for Businesses

    Jeremy Hunt – 2023 Comments on Energy Support for Businesses

    The comments made by Jeremy Hunt, the Chancellor of the Exchequer, on 9 January 2023.

    My top priority is tackling the rising cost of living – something that both families and businesses are struggling with. That means taking difficult decisions to bring down inflation while giving as much support to families and business as we are able.

    Wholesale energy prices are falling and have now gone back to levels just before Putin’s invasion of Ukraine. But to provide reassurance against the risk of prices rising again we are launching the new Energy Bills Discount Scheme, giving businesses the certainty they need to plan ahead.

    Even though prices are falling, I am concerned this is not being passed on to businesses, so I’ve written to Ofgem asking for an update on whether further action is action is needed to make sure the market is working for businesses.

  • Jane Hutt – 2023 Statement on Meeting with Energy Suppliers

    Jane Hutt – 2023 Statement on Meeting with Energy Suppliers

    The statement made by Jane Hutt, the Welsh Minister for Social Justice, on 4 January 2023.

    People across Wales are facing an unprecedented cost-of-living crisis, fuelled by soaring energy, fuel and food costs The cost-of-living crisis is having a devastating impact, particularly on low-income households. Current estimates suggest up to 45% of all households in Wales could be in fuel poverty following increases to the energy price cap.

    The Welsh Government is doing all it can to support households in Wales, filling the gap left by the UK government. We have allocated £90m to provide support to vulnerable households to meet rising energy costs. This includes a second Welsh Government Fuel Support Scheme in 2022-23 and we are working in partnership with the Fuel Bank Foundation to deliver a £4m fuel voucher scheme aimed at those on prepayment meters and those off the gas grid. The Welsh Government has also made additional funding available to the Discretionary Assistance Fund (DAF) this financial year to help people who are struggling financially with support for off-grid households.

    Free impartial advice is available to all households via our Warm Homes Programme Nest scheme. An enhanced winter fuel campaign commenced on 1 November, targeting a wider audience with much needed energy efficiency advice and guidance. This service is accessible to all. Where eligible, households may be entitled to a package of energy efficiency support.  The Minister for Climate Change has made a number of improvements to the Warm Homes Programme Nest Scheme this year investing in innovation through solar PV and exploration of battery storage enabling homes to use energy at source.

    However, there is a responsibility on the energy suppliers to provide appropriate support for their customers.  I am deeply concerned, as more households fall behind with the payment of their electricity and gas bills, they may be unfairly driven onto pre-payment meters.

    Approximately 200,000 households in Wales use pre-payment meters for their mains gas and electricity. This represents approximately 15% of all households and 24% of tenants in the private rented sector. Almost half of social housing tenants (45%) also use pre-payment meters. Many of these bill payers are on the lowest incomes yet are paying the highest tariffs for their energy.

    On 22 November, Ofgem published their own findings into how energy suppliers are helping customers through this period of high energy prices. In their deep dive, Ofgem explored how suppliers treat ‘Customers in a Vulnerable Situation’.

    Findings showed that, although some good practice was identified, all suppliers need to make further improvements. Severe weaknesses were found in five suppliers, moderate weaknesses were found in another five suppliers and minor weaknesses were found in seven suppliers.

    On 21 and 29 November and 7 December, I met with representatives from a number of energy suppliers to discuss the issues surrounding pre-payment meters and the cost-of-living crisis.

    I was told by the suppliers that moving householders onto pre-payments meters was seen as a last resort, and whilst there was a perception pre-payment meters are linked to debt, some suppliers stated the majority of their pre-payment customers used the meters as a tool to control usage.

    Suppliers confirmed to me they try to actively engage with their customers before a pre-payment meter is considered and, in most cases, there is a lengthy process to follow before one is installed, in agreement with the householder. There are measures in place to determine who is considered to be appropriate for a pre-payment meter

    Energy suppliers agreed to share with the Welsh Government data on the number of households being supported with their energy bills and/or being transferred onto pre-payments meters, and the reason for doing so, in order for my officials to assess the situation. They also agreed to provide information on ‘self-disconnection’. This is vitally important to allow us to understand the nature of self-disconnection, and to design policy responses.

    Not all energy suppliers have standing charges for pre-payment meters. Some of those who currently apply a standing charge agreed to hold further discussions regarding the removal of standing charges. The removal of standing charges was also something I raised again with Ofgem in a meeting on 29 November.

    We have made it clear that energy companies should absorb the cost of standing charges for pre-payment customers who are particularly at risk of disconnection as a result of the rising cost of fuel. This should not be a cost for the Government to take on.

    It is important we identify and support customers who are starting to struggle as early as possible. Energy suppliers have advised they can provide their customers along with other support mechanisms, such as funds set aside to help those who are struggling the most to pay their bills and flexible payment plans.

    Following a meeting with Ofgem on 29 November, I remain concerned that a worryingly large number of householders on a traditional pre-payment meter have not used their vouchers as these have a 90-day expiry date. It is important these householders use their vouchers. I would also encourage customers in vulnerable situations to contact their energy supplier to register themselves as vulnerable.

    Welsh Government has consistently called on the UK Government and Ofgem to introduce a social tariff to protect the most vulnerable householders and there was broad support for this from energy suppliers.

    I will be holding a follow up meeting with energy suppliers in the new year, followed by quarterly meetings. I will seek further assurances that the weaknesses identified by Ofgem are being addressed and continue to push for the greatest levels of support for the most vulnerable in our society.

    This statement is being issued during recess in order to keep members informed. Should members wish me to make a further statement or to answer questions on this when the Senedd returns I would be happy to do so.

  • 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.