Summary of today's BEIS Committee meeting on the energy white paper

The Business, Energy and Industrial Strategy Select Committee today held an evidence session on net zero and UN climate summits, focussing on the energy white paper.

Meeting summary:

The energy white paper was welcomed by all members of the first panel as well as Deirdre Michie from the second panel, but they all agreed that more information was needed on how to implement the proposals. The witnesses representing the industrial sectors in the second panel were significantly less positive about the white paper and were concerned about the implications for their industries.

In addition to members of the BEIS Committee, the meeting was attended by some members of the Environmental Audit Committee, including Alex Sobel, John MacNally, Cherilyn Mackrory and Jerome Mayhew 



Panel 1 witnesses:

• Chris Stark, Chief Executive Officer, Committee on Climate Change
• Emma Pinchbeck, Chief Executive Officer, Energy UK
• Nina Skorupska CBE, Chief Executive, The Association for Renewable Energy and Clean Technology
• Sam French, Interim Chair, Decarbonised Gas Alliance

Committee Chairman Darren Jones opened the meeting by asking about the strengths and weaknesses of the energy white paper. Chris Stark said he was very impressed with it. It was framed as a strategy for climate change and net zero and fitted well with the PM’s ten-point plan. One of the weaknesses was there was an opaqueness about how the big infrastructure issues should be delivered. More understanding was needed about the commercial models that would be needed to lever in private investment and how people would be engaged in the challenge. He felt the white paper would be only the first of further white papers and the full detail promised would likely come later. He identified 16 separate commitments that needed more attention. There was still a lack of detail on behaviour change, emissions removal at scale, aviation, shipping, etc.

Emma Pinchbeck agreed that the white paper put net zero at the centre of policy. She was also pleased at its breadth in tackling energy issues from all sides. She also agreed on the weaknesses of the white paper regarding the lack of detail on how people’s lives would have to change. Behaviour change had to be done with people and not to people. Energy retailers and service providers would be critical to that change. She counted about 20 issues on which there would be further consultation.

Nina Skorupska pointed out the minister (now Secretary of State) Kwasi Kwarteng said the white paper was a framework. Its strength was its overall direction and impetus towards energy transition. There was a focus on renewables, but not all renewables. It was disappointing that there was not a recognition of the wider broad-brush of technologies that could deliver across power, heat and transport. One of the white paper’s weaknesses was there was not a clear route to market and clarity on how we were going to challenge the failures of the current system.
Sam French said the white paper was a good foundation. There was an opportunity for the UK to create a legacy in new areas of the energy sector and he felt the white paper was not entirely clear on that. There could have been more focus on off-grid power.

Responding to Alex Sobel, Chris Stark said there was a striking amount of agreement between the white paper and the CCC’s recommendations, but the next decade would be critical for policy to drive investment.

Mark Pawsey explored the costs of the measures in the white paper. Chris Stark said the allocation of costs was critical. There needed to be additional investment of about £50 billion per year (over the £400 billion which was being invested pre-pandemic). Much of it would be covered by the steps in the white paper. There would be a big pay-off for the investment, including savings on fossil fuels. The costs to the economy overall would be close to zero per cent. The crucial challenge for the Treasury would be to offset savings in the transport sector to pay for costs elsewhere. He called on ministers to be clear about how costs would be allocated. It was entirely possible to protect consumers in an equitable way, but the Chancellor had not yet provided the information needed.

Alexander Stafford asked for opinions of the government’s assessment to reduce carbon emissions by 230 million tons. Chris Stark said he did not have the figures to comment accurately, but his personal view was that the government’s assessment actually looked quite conservative. He praised the government’s ambition, but full detail was not available. The areas where the government and the CCC were well-aligned were in the power sector, offshore wind, powers ccs projects, nuclear, bio-energy ccs, networks, hydrogen production, energy system changes and emissions trading. There was a lack of full commitment on the subjects of the power sector, buildings and heat-pump installation. And more could be done on changing behaviour.

Paul Howell focussed his attention on jobs and the green job agenda. Alan Brown asked about whether there should be a focus on nuclear. Jerome Mayhew asked about the co-ordination of offshore wind policy,

Panel 2 witnesses:

• Richard Leese, Director, Mineral Products Association
• Frank Aaskov, Energy and Climate Change Policy Manager, UK Steel
• Richard Wooley, Head of Energy and Climate Change, Chemical Industries Association
• Deirdre Michie OBE, Chief Executive, Oil and Gas UK

Questions to the second panel focussed on industrial transition and if the white paper met industry’s needs in terms of decarbonisation and carbon capture.

Richard Leese said it was ‘difficult to get excited’ about the energy white paper, with announcements repeated and many consultations and information to come. Of particular interest would be the fairness of bills. Frank Aaskov said the white paper was very helpful to the steel industry, but much was missing was on energy costs. The UK steel sector faced some of the highest electricity bills in Europe, but this was not addressed in the white paper. Richard Wooley said the white paper was insignificant to his sector in terms of the support package. Carbon linkage protection was needed in the form of free allocation up to the benchmark in the carbon market; protection from high energy prices; capital grant and OPEC subsidy for investment in net zero production technology; and, in the long term, carbon border tariffs and minimum carbon standards. There was a lack of detail on any of these in the white paper.

Deirdre Michie said Oil and Gas UK welcomed the white paper for its holistic approach and the way it built on the strength of the sector. It provided a massive opportunity because of the government’s commitment to a transformational North Sea transition deal. She agreed there was a lack of detail in the white paper, but that was intentional.

Darren Jones pointed out that DBEIS was starting round-table discussions this week on how the proposals in the white paper could be implemented, which all the witnesses acknowledged.

Jerome Mayhew asked about the costs associated with transition. Frank Aaskov said specific analysis had not been done, but there was concern that a mistake of the past would be repeated of simply lumping costs onto energy bills. Richard Leese expressed concerns about additional costs to his sector. Deirdre Michie said it was a ‘work in progress.’ It would be a collaborate effort to cover the costs, but it was important not to put costs onto industries, thereby making them uncompetitive at home and abroad.

Paul Howell focussed on jobs and levelling up. Deirdre Michie said the white paper created an exciting opportunity. The oil and gas sector provided 270,000 jobs across the whole of the UK. It was important that workers were given the opportunity to retrain where necessary. The majority of skills were transferable. Richard Leese pointed out that many jobs in his sector were in rural areas and it was essential they were supported.

Alan Brown asked Deirdre Michie about the implications for future oil and gas demand in terms of the world-wide effort to decarbonise. She replied that oil and gas demand would fall, but it would form an important part of the energy mix during the transition to net zero and domestic producers should continue to be supported by the government. Regarding the EU transition deal, she was optimistic but not complacent and a lot of support was still required.