16:30 The Parliamentary Under-Secretary of State for Business, Energy and Industrial Strategy (Nadhim Zahawi)

The Minister says that the exclusion relates to renewable energy. Will he confirm that it does not relate to the cost of nuclear energy, including the strike rate mechanism for Hinkley Point C?

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16:49 Alan Brown

This SI is an ad-hoc arrangement indicative of a reactive Government and the fact that, over the years, energy policy has kept chopping and changing. We need a strong focus and a coherent policy that will deliver the lowest-cost renewable energy to bring down the overall energy cost for households and businesses. That means scrapping the nuclear white elephants and forgetting the mad plan for small modular reactors. It is one for the future—it is fantasy—and we should focus here and now on renewables.

The Minister explained that the costs for Hinkley Point C nuclear are not exempted for energy-intensive industry, so it makes no sense that there is an exemption from offshore wind costs. Offshore wind now has a £40 strike price per megawatt hour, whereas Hinkley Point C has a £92.50 strike price for a 35-year concession, compared with a 15-year concession for offshore wind. Industries are exempted from offshore wind costs, but not nuclear. That sends out the wrong message about the value of renewable energy.

How sustainable is it to continue to have householders carry the cost of energy for energy-intensive industries? Will the long-awaited energy White Paper address this looking ahead? How does this policy fit in with the net-zero targets and how does it incentivise switches to cleaner or local renewable energy for energy-intensive industries?

Going forward, we need onshore wind: it is the cheapest form of electricity generation, which should help both energy-intensive companies and householders. According to the Committee on Climate Change, we need to almost triple our onshore wind capacity by 2035, so what plans do the Government have to do that, and how do they fit in with these measures?

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16:59 Nadhim Zahawi

I will take the last point first. My hon. Friend the Member for South Thanet raises a powerful point. At the beginning of my remarks, I referred to carbon leakage. We need to get smart about how we support industry, and of course move towards net zero, for which we are the first developed nation in the world to legislate. It is the law of the land that we will get to net zero by 2050.

However, I will share an example that I hope will allay some of my hon. Friend’s fears. I think it was nine years ago or less when we delivered the first offshore wind contracts. They came in at about £140 per megawatt hour; they are now at £40 per megawatt hour, and we account for something like 36% of global offshore energy production. That is an extraordinary tale of innovation and backing from Government, to repurpose, effectively, our energy production towards renewables—towards net zero. The hon. Member for Kilmarnock and Loudoun tried to make it a trade-off between nuclear, renewables and offshore, but I do not think it is as simple as that. I am a chemical engineer by background and the hon. Gentleman will know, I hope, that, while offshore wind and solar are of course important parts of the portfolio mix that we will produce as we transition to net zero, we need a baseload, because if the sun is not shining and the wind is not blowing, we will have a problem. That is why nuclear is an important part of the mix.

Alongside the regulations, we will support our manufacturing industries to become more energy and resource efficient and reduce their greenhouse gas emissions through several programmes, including the industrial energy transformation fund, which offers £315 million of additional support; a low carbon hydrogen production fund, which offers £100 million of further support; and the transforming foundation industries industrial strategy challenge fund, which is £166 million.

The Government are serious about delivering their net zero commitment by 2050 and leading the world. That is not just good for the environment, but good business, which I know is dear to your heart, Mr Paisley, and the hearts of your constituents. Therefore, I commend the regulations to the Committee.

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