An update on the Government's hydrogen policies
Parliament returns this week, with new faces at the Department for Energy Security and Net Zero but old battles yet to be resolved. New Secretary of State Claire Coutinho is a relative political newcomer but a longstanding ally of Prime Minister Rishi Sunak, who has quietly impressed No.10 with her grasp of policy in previous ministerial roles.
While she has not previously expressed any strong views on energy or net zero, her longstanding close relationship with the Prime Minister means she can be expected to conduct energy security and net zero policy in line with direction from No.10. She is also therefore likely to be supportive of the Government's recent pivot away from strong action on net zero in the wake of the Uxbridge and South Ruislip by-election.
This senior appointment may also set her up for appointment to a more senior role on the Conservative frontbench following the next election, or even potentially a run for leader herself should the Conservatives lose the next election as currently forecast.
Her first responsibility as Secretary of State will be managing the Energy Bill through its final stages in the House of Commons, taking place later today.
The Bill has faced a tricky route through Parliament so far, with a number of contentious clauses creating splits on the Government benches. Few have created more headaches for the Government than the hydrogen levy, initially proposed to be added to household bills (at an estimated rate of just under £120 per household per year) in order to raise funding for sectoral development.
Given the ongoing cost-of-living crisis, dozens of backbench Conservatives have baulked at adding yet more pressure to household bills, not least given the lack of public enthusiasm a number of them believe the Uxbridge by-election result demonstrated for net zero.
Yielding to backbench pressure, the Government has therefore tabled an amendment ensuring that the hydrogen levy will be instead apply to gas shippers (those companies responsible for pre-distribution transportation), not households, with regulations confirming the levy’s precise details (such as the rate at which this will be applied) to follow the Bill’s eventual passage into law.
Doubtless sensing a political opportunity to test the Government’s own support for net zero, Labour have tabled their own amendment, which if passed would put the onus on the Government itself to fund hydrogen development, rather than households or gas shippers. This is unlikely to pass given the absence of Conservative support and the Government’s hefty majority.
Despite moves from some of the more prominent net zero sceptics within the party such as Jacob Rees-Mogg to remove the levy altogether, the Government’s amendment to shift the levy’s responsibility can be expected to pass with a comfortable majority nonetheless.
But where one battle ends, another begins. Next will come ping-pong in the House of Lords, where the Government’s lack of a majority could see its renewed plans for the levy thrown into disarray once again.
Regarding the Energy Bill’s final passage, Parliament will be prorogued likely in early November ahead of the King's Speech on November 7, meaning all Bills that haven't passed will automatically fail and have to begin from scratch in the next session. This can technically be avoided for specific Bills using a carry-over motion, but these are difficult to use in practice and are generally rarely used.
The Government will therefore in all likelihood need to pass the Bill before early November. After today’s report stage in the Commons, the Bill will enter ping-pong where the two houses go back and forth on changes to the Bill. Given the hydrogen levy is just one of a number of contentious clauses in the Bill that the Lords and Commons will look to try to strip out or modify, the differences between which will take some time to resolve, final passage of the Bill can be expected to take place in mid-late October, when Parliament returns from conference recess.