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To ask His Majesty's Government what steps they are taking (1) to ensure that climate policies remain effective in driving emission reductions, and (2) to promote investment into renewable energy.
To ask His Majesty's Government what steps they are taking (1) to ensure that climate policies remain effective in driving emission reductions, and (2) to promote investment into renewable energy.
The UK has halved its emissions, ahead of every other major economy. The transitions set out in the Net Zero Strategy for every sector of the UK economy keep it on track for Carbon Budgets 4, 5 and 6, the 2030 Nationally Determined Contribution, and net zero by 2050.
The Government has consistently seized the opportunity to attract investment in renewables, with around £120 billion of new investment since 2010 alongside around £80 billion of UK levy funded support. For example, it continues to support new renewable deployment through the Contracts for Difference Scheme, which now runs on an annual basis.
To ask His Majesty's Government what assessment they have made of the importance of R&D investment in net zero technologies; and what steps they are taking to measure the outcomes from that investment.
To ask His Majesty's Government what assessment they have made of the importance of R&D investment in net zero technologies; and what steps they are taking to measure the outcomes from that investment.
Research and development (R&D) is critical for reaching net zero by 2050 and the government is investing £4.2 billion in net zero R&D over 2022-2025. This will support the development of the technologies and solutions needed to deliver the UK’s net zero target and to support innovative UK businesses to benefit from the growing global green economy. The Net Zero Research and Innovation Delivery Plan published in March 2023 sets out the details of this investment and an update on progress is planned to be published in 2025.
To ask His Majesty's Government what steps they are taking to ensure that prospective investors in the proposed Sizewell C nuclear power plant undergo strict national security checks.
To ask His Majesty's Government what steps they are taking to ensure that prospective investors in the proposed Sizewell C nuclear power plant undergo strict national security checks.
The Government is clear that, whilst we welcome investment in sectors including civil nuclear, this can never be at the expense of national security.
As set out in the Written Ministerial Statement of 18th September, should any investor’s shareholding in the Sizewell C project reach the relevant statutory thresholds, the investor will be required to pass through the process set out in the National Security and Investment Act 2021, allowing scrutiny of any risks posed with respect to this legislation.
In addition, as a condition of the Secretary of State’s designation of Sizewell C Limited in accordance with section 2(1) of the Nuclear Energy (Financing) Act 2022, the Secretary of State must have the ability to take a special share in the company. The rights attached to the special share are subject to approval by the Secretary of State but will likely be limited to protecting national security interests with respect to the project and complementary to the provisions of the National Security and Investment Act 2021, alongside other, related matters.
To ask His Majesty's Government what steps they are taking to encourage investors to support (1) climate resolutions, and (2) sustainable investment practices, particularly in sectors heavily reliant on fossil fuels.
To ask His Majesty's Government what steps they are taking to encourage investors to support (1) climate resolutions, and (2) sustainable investment practices, particularly in sectors heavily reliant on fossil fuels.
The 2023 Green Finance Strategy set out several actions the Government is taking to support sustainable investment practices. These include a commitment to consult on a UK Green Taxonomy later this year; setting out next steps for transition planning disclosure requirements for the largest UK companies; and providing further detail on the Government's response to using International Sustainability Standards in the UK.
The noble Baroness is essentially right: of course we need to transition to renewable energy sources, and that is exactly what we are doing. The North Sea transition deal between the Government and North Sea companies is helping to move them, as far as the transition is going, to transfer their skills to many of the new industries. For example, many drilling companies operating in the North Sea also drill geothermal heat sources to use for renewable energy. The two things are not mutually incompatible.
The noble Baroness is essentially right: of course we need to transition to renewable energy sources, and that is exactly what we are doing. The North Sea transition deal between the Government and North Sea companies is helping to move them, as far as the transition is going, to transfer their skills to many of the new industries. For example, many drilling companies operating in the North Sea also drill geothermal heat sources to use for renewable energy. The two things are not mutually incompatible.
My Lords, the IEA’s report World Energy Outlook 2022 is clear that the solution to the energy trilemma of economic, climate and security issues is to accelerate the move to greener energy. For us in the UK, among other things, that means urgently equipping our workforce with transferable skills for the energy transition. What are the Government doing to make sure that a single offshore energy skills passport that aligns training standards in all offshore energy sectors is introduced?
As I said in response to a previous question, I cannot comment on any licensing decisions—we will know about them before too long—but I can assure the right reverend Prelate that all the appropriate considerations are being taken into account by the Government and the North Sea Transition Authority on the issuing of those licences.
As I said in response to a previous question, I cannot comment on any licensing decisions—we will know about them before too long—but I can assure the right reverend Prelate that all the appropriate considerations are being taken into account by the Government and the North Sea Transition Authority on the issuing of those licences.
My Lords, what assessment is the North Sea Transition Authority making of the alignment of company commitments, especially on net- zero targets covering scopes 1, 2 and 3, over the short, medium and long term as well as company alignment on capital expenditure towards those targets? Can the Minister assure us that, before licensing any expansion in North Sea exploration, the authority will factor this into consideration when judging projects under alignment with the UK’s net-zero legal commitment?
I totally understand the point the noble Lord is making. He is right that many renewables are very cheap but intermittent, and nuclear
will contribute towards the baseload. He is asking for long-term energy storage; the answer is hydrogen. We can store large quantities of hydrogen—some really exciting projects are coming forward—and it can then be burned, with no emissions, in a power station to provide the supplies that we will need when the wind is not blowing and the sun is not shining.
I totally understand the point the noble Lord is making. He is right that many renewables are very cheap but intermittent, and nuclear
will contribute towards the baseload. He is asking for long-term energy storage; the answer is hydrogen. We can store large quantities of hydrogen—some really exciting projects are coming forward—and it can then be burned, with no emissions, in a power station to provide the supplies that we will need when the wind is not blowing and the sun is not shining.
I agree 100% with the Government’s nuclear policy but, bearing in mind that we want the success of renewables and the end of oil and gas, what assessment has been made of the fact that by 2050—which is not that far away—when the oil and gas is gone, we will be relying on nuclear for intermittency? That will leave the nuclear situation as a stranded asset, because it really does not work that way; it has got to be a formal baseload. Once the rest has gone and we are on renewables and left with nuclear, how can it be intermittent?
My Lords, the Government introduced the energy profits levy to respond to exceptionally high prices that
mean that oil and gas companies are benefiting from extraordinary profits. The Government have been clear that we want to see producers reinvest profits to support the economy, jobs and the UK’s energy security, which is why we have introduced generous investment allowances. Our North Sea transition deal reflects the key role of the sector in that energy transition.
My Lords, the Government introduced the energy profits levy to respond to exceptionally high prices that
mean that oil and gas companies are benefiting from extraordinary profits. The Government have been clear that we want to see producers reinvest profits to support the economy, jobs and the UK’s energy security, which is why we have introduced generous investment allowances. Our North Sea transition deal reflects the key role of the sector in that energy transition.
To ask His Majesty’s Government what assessment they have made of the impact of the oil and gas windfall tax on investment and jobs, and the capacity of the energy sector and supply chain to deliver key components of the transition for achieving the United Kingdom’s net zero objectives.
I am very happy to agree with the noble Lord. I am tempted to observe that he might want to talk to some of his colleagues on his Benches about that message. He is right that it makes much more sense as we go through the transition to obtain those resources from our own fields rather than import them at a much higher carbon content.
I am very happy to agree with the noble Lord. I am tempted to observe that he might want to talk to some of his colleagues on his Benches about that message. He is right that it makes much more sense as we go through the transition to obtain those resources from our own fields rather than import them at a much higher carbon content.
I thank the Minister for that reply. As we increase our efforts to meet net zero, which we clearly must, does he agree that through all the projections to and through net zero, we will continue to use fossil fuel, albeit on a declining basis? Therefore, is it not essential, because Norway has said that it will produce every ounce of oil and gas that is commercial in its sector, that we do nothing to prevent the transition being led by the energy industry, which is increasing its investment in the necessary technology such as carbon capture and storage, hydrogen and green electricity, and that we need to ensure that it can continue to do that?
My noble friend makes an important point. Taxation levels are obviously a matter for the Chancellor and the Treasury. However, there are a number of concerning stories from investors that they have pulled out of investments in the North Sea; in fact, one remarked that parts of Africa were a more stable tax environment.
My noble friend makes an important point. Taxation levels are obviously a matter for the Chancellor and the Treasury. However, there are a number of concerning stories from investors that they have pulled out of investments in the North Sea; in fact, one remarked that parts of Africa were a more stable tax environment.
My Lords, I refer to my interests in the register and to the previous questions I have raised on this matter in Treasury Questions. The point is that the EPL has had a dramatic effect on investment in North Sea oil. The question from the noble Lord, Lord Bruce, asks what assessment the Government have made of it. Would the Minister include in that assessment an analysis of the bids that have been made—for example, for Chevron oil in the Republic of Congo and in the Gulf of Mexico—by North Sea oil companies that are no longer investing in the North Sea?
I do agree with the noble Lord. Nuclear reactors, whether it be Sizewell or Hinkley, and small modular reactors will play an important
part in the net-zero transition. Of course, we want a diverse supply mix; we want as much renewable energy as possible, but nuclear will play an important role.
I do agree with the noble Lord. Nuclear reactors, whether it be Sizewell or Hinkley, and small modular reactors will play an important
part in the net-zero transition. Of course, we want a diverse supply mix; we want as much renewable energy as possible, but nuclear will play an important role.
My Lords, I congratulate the Government on the £20 billion they put into the small modular reactor enterprise, and the work they have done for the STEP fission reactor. Does the Minister agree that the best net-zero way of ensuring that we have energy to provide the electrical baseload is to press ahead rapidly with Hinkley C and Sizewell because, if we do not get this nuclear power online, we are not going to make it?
No, I would not agree with the noble Lord, I am afraid; he is absolutely dead wrong. Even with any new licences that might be issued in the UK, UK production will continue to decline at the rate of about 7% a year. It is estimated that global production decline needs to be about 3% to 4% in order to ensure the net-zero transition, so we will be declining at a faster rate than what is required globally.
No, I would not agree with the noble Lord, I am afraid; he is absolutely dead wrong. Even with any new licences that might be issued in the UK, UK production will continue to decline at the rate of about 7% a year. It is estimated that global production decline needs to be about 3% to 4% in order to ensure the net-zero transition, so we will be declining at a faster rate than what is required globally.
My Lords, does the Minister recognise that the Paris Agreement implies the use of much less oil and gas in the 2030s than now? Therefore, issuing permits for exploration that usually requires at least seven years to generate flows makes little sense, particularly as the effect on prices and security would be negligible. Does he recognise that issuing such permits is essentially enabling and fostering bets on climate failure?
My Lords, what the noble Lord refers to as a “kickback” is actually an investment allowance. If I am right, the same noble Lord was asking me about reducing flaring and about introducing electrification of fields. It is those investment allowances that pay for the very policies that he asked me to introduce.
My Lords, what the noble Lord refers to as a “kickback” is actually an investment allowance. If I am right, the same noble Lord was asking me about reducing flaring and about introducing electrification of fields. It is those investment allowances that pay for the very policies that he asked me to introduce.
My Lords, the windfall tax that the Minister mentions taxes profits but also gives a substantial kickback on investment. On renewables, the levy is against revenue and there is no such kickback. When will the Department for Energy Security and Net Zero stop discriminating against renewables?
I thank my noble friend for the kind invitation to respond to that. He will understand that I cannot comment on licensing decisions.
I thank my noble friend for the kind invitation to respond to that. He will understand that I cannot comment on licensing decisions.
My Lords, in concurring with the noble Lord, Lord Bruce, in his statement that oil and gas are a vital part of transition to net zero, can I ask the Minister what the situation is with the Rosebank oil project, which is a world-class asset and one of the largest of its kind anywhere in the world?
I do not know where the noble Baroness gets her figures. I responded in my previous answer to the question about investment allowances—policies that the Opposition have called for. The energy
profits levy is expected to raise about £26 billion and is set at a rate of 75%, which is one of the highest in the world. I realise that the Labour Party’s policy is to tax firms into extinction, but we need to leave them with some profits. Much of the profits of oil and gas companies goes towards pension funds and other shareholders which many pensioners and others rely on for their income.
I do not know where the noble Baroness gets her figures. I responded in my previous answer to the question about investment allowances—policies that the Opposition have called for. The energy
profits levy is expected to raise about £26 billion and is set at a rate of 75%, which is one of the highest in the world. I realise that the Labour Party’s policy is to tax firms into extinction, but we need to leave them with some profits. Much of the profits of oil and gas companies goes towards pension funds and other shareholders which many pensioners and others rely on for their income.
My Lords, analysis of the Office for Budget Responsibility data in May this year showed the extent to which oil and gas firms were able to reduce their energy profits levy while still making record profits. Between this loophole, the decision against a 78% rate and the decision not to backdate to catch all the surging profits, it is estimated that over £10 billion of potential tax will be missed between 2022-23 and 2023-24. I ask the Minister: have the Government given any consideration to fixing the levy to deliver the full benefits proposed since these figures came out?
To ask His Majesty’s Government what assessment they have made of the impact of the oil and gas windfall tax on investment and jobs, and the capacity of the energy sector and supply chain to deliver key components of the transition for achieving the United Kingdom’s net zero objectives.
To ask His Majesty’s Government what assessment they have made of the impact of the oil and gas windfall tax on investment and jobs, and the capacity of the energy sector and supply chain to deliver key components of the transition for achieving the United Kingdom’s net zero objectives.
My Lords, the Government introduced the energy profits levy to respond to exceptionally high prices that
mean that oil and gas companies are benefiting from extraordinary profits. The Government have been clear that we want to see producers reinvest profits to support the economy, jobs and the UK’s energy security, which is why we have introduced generous investment allowances. Our North Sea transition deal reflects the key role of the sector in that energy transition.
To ask His Majesty's Government what plans they have to encourage the transition away from fossil fuels to more sustainable energy sources through further investment in new technologies.
To ask His Majesty's Government what plans they have to encourage the transition away from fossil fuels to more sustainable energy sources through further investment in new technologies.
The Government primarily supports green electricity through its flagship Contracts for Difference scheme, which has so far awarded contracts totalling nearly 27GW of new low-carbon electricity capacity across all technologies. This month the Government has launched CfD Allocation Round 5, which is the first in a series of annual auctions going forward.
In the Spring Budget, my Rt. Hon. Friend Mr Chancellor of the Exchequer also announced an unprecedented £20 billion investment in the early development of Carbon Capture, Utilisation and Storage (CCUS), to help meet the Government’s climate commitments.
To ask His Majesty's Government what investment they are making in nuclear energy.
To ask His Majesty's Government what investment they are making in nuclear energy.
The Government has invested £700m to develop the Sizewell C project – the first state backing for a nuclear project in over 30 years.
The Government is investing in new nuclear, launching the £120m Future Nuclear Enabling Fund as well as the £75m Nuclear Fuel Fund to develop existing and future fuel capabilities.
The Advanced Nuclear Fund of up to £385m is funding Small Modular Reactors (SMR) and Advanced Modular Reactors. Up to £210m of this is helping to develop the Rolls Royce SMR design. The Fund is also supporting an AMR Research Development & Demonstration competition.
To ask His Majesty's Government what assessment they have made of the impact of Brexit on investment in businesses.
To ask His Majesty's Government what assessment they have made of the impact of Brexit on investment in businesses.
The Department has made no such assessment.
To ask His Majesty’s Government how they are working across departmental boundaries to ensure that the effectiveness of investments in clean energy is being maximised.
To ask His Majesty’s Government how they are working across departmental boundaries to ensure that the effectiveness of investments in clean energy is being maximised.
Driving investment into UK clean energy is a priority for this Government to improve energy security, reduce emissions and boost jobs and growth across the country. We are backing our targets and ambitions with policy and targeted funding. Since March 2021, the Government have committed £30 billion of investment in domestic green policies. The policies are already expected to drive an unprecedented £100 billion of private investment and to support 480,000 jobs by 2030.