The Energy Bill that is close to finishing its Parliamentary journey has received quite a lot of belated publicity over the last few days, some of it histrionic (perhaps deservedly so), while the majority of Parliamentarians in both the the House of Lords and the House of Commons seem utterly relaxed about its contents. I thought it might be worth taking a look to see what all the fuss is about.

Having said that, Parliament doesn’t make it easy for interested bystanders to discover what is going on. The section of Parliament’s website dealing with the Energy Bill doesn’t (at the time of writing) seem to provide a continuous revision of the Bill that enables onlookers to see the current state of play. Instead, we can see the Bill as first introduced on 6^th July 2022 – all 346 pages, 243 clauses and 20 Schedules – and we can see all 127 pages of the House of Commons amendments (the Bill was first introduced in the Lords), but so far as I can see, we can’t (yet) see the latest version incorporating the amendments. From a quick canter through them, it doesn’t seem that many (if any) of the amendments affect the substantive provisions of the Bill, so my brief summary (it can’t be anything else, given the huge scale of the draft legislation) will focus on the original draft, for ease of reference.

Introductory

It’s interesting to note that before we get to the meat of the Bill, Lord Callanan (the Minister introducing it) makes a standard boiler-plate statement under section 19(1)(a) of the Human Rights Act 1998 to the effect that in his opinion the provisions of the Bill are compatible with the rights set out in the European Convention on Human Rights. In view of what follows, that might seem to be a little controversial.

Much media attention – especially in those parts of the media that are a little more sceptical about Government policy and the net zero agenda – has focussed on the potentially draconian aspects of the Bill here, here, here and here.

However, while certainly touching on those issues, my intention is to provide an overview of the entire Bill, in order that readers might grasp its scale and intended purpose.

Part One – Licensing of Carbon Dioxide Transport & Storage

The first 55 clauses are concerned with provisions for licensing carbon dioxide and storage. Climate change obsession and net zero targets are hard-wired here. Section 1 (which deals with The principal objectives of the Secretary of State and the Gas and Electricity Markets Authority (GEMA) in carrying out their respective functions under this Part of the Bill) remind the Secretary of State of his/her duties under sections 1 and 4(1)(b) of the Climate Change Act 2008 (carbon targets and budgets). GEMA is reminded of the need to assist the Secretary of State in that regard and also of the need to comply with the net-zero emissions target, as defined in section A1(1) of the Climate Change (Scotland) Act 2009, a target in, or set under, section 1 or 2 of the Climate Change Act (Northern Ireland) 2022 and a target in, or set under, section 29 or 30 of the Environment (Wales) Act 2016.

Parliament is very fond of creating new offences, and one comes along very quickly, in clause 2. Anyone will be guilty of an offence if they lack a licence to operate a site for the disposal of carbon dioxide by way of geological storage or provide a service of transporting carbon dioxide by a licensable means of transportation (basically via a pipe or pipes or any other means specified in subsequent regulations). It applies to the UK and to adjacent territorial seas. Exemptions may be granted and revoked. GEMA is to be the licensing authority. Licences may be granted with conditions attached, and the Secretary of State may subsequently define standard conditions. Conditions may later be modified. Provision is made for the termination and transfer of licences. Appeals lie to the Competition and Markets Authority.

Interestingly, the Secretary of State and GEMA must carry out their functions by promoting effective competition, promoting the resilience of transport and storage networks, and protecting the public from dangers arising from the construction, operation and decommissioning of infrastructure used for these purposes. However, they may have regard to the desirability of the efficient and effective operation of the energy system (or any part of it) in the United Kingdom or any part of the United Kingdom. Whilst it’s encouraging to note that protecting the public and promoting resilience and competition are essential, it’s disappointing (to say the least) that promoting the efficient and and effective operation of the energy system is merely desirable (“may”, rather than “must”). Clause 1(7) contains the offending words. They are unaffected by the House of Commons amendments.

Part 2 – Carbon Dioxide Capture, Storage etc and Hydrogen Production

Clauses 56 to 97 deal with this area. Clause 56 is replete with new definitions (things like “allocation body”; “allocation notification”; “carbon capture allocation body”; “carbon capture counterparty”; “carbon capture entity”; “carbon capture revenue support contract”; “eligible carbon capture entity”; “eligible low carbon hydrogen producer” ; and “hydrogen levy administrator” and many, many more). You can tell that it’s going to be complex and bureaucratic before reading past clause 56. And sure enough, it is.

Revenue support contracts are a new concept (to me, at least), and they apply with regard to transport and storage, hydrogen production, and carbon capture. Revenue support counterparties exist in respect of those three areas too. There will be revenue support regulations, and they will need to ensure that the revenue support counterparties can meet their liabilities under any revenue support contracts to which they are a party. Are your eyes glazing over yet?

Counterparties are to be designated as such by the Secretary of State and can be directed to enter into a revenue support contract, with a person licensed under Part one of the Bill.

Provision is made for a hydrogen levy. And of course, a hydrogen levy needs a hydrogen levy administrator. The Secretary of State is empowered to appoint a person to carry out those functions. What functions will such a person have? Under yet more regulations (i.e. subordinate legislation) provision may be made for “relevant market participants” to make payments to the hydrogen levy administrator to enable the counterparties mentioned above to make payments under the relevant support contracts mentioned above or to meet the liabilities incurred in connection with such contracts.

And who is a “relevant market participant”? Persons specified as such in revenue support regulations, but they cannot include anyone other than gas suppliers, electricity suppliers and gas shippers. No doubt they will pass on any such costs to end users, though needless to say that conclusion doesn’t appear in the Bill.

Much detail regarding these arrangements follows in clause after clause. I spare you this, but if you are interested, it’s all there in the Bill, and it’s all very bureaucratic indeed. While this will ensure that many people incur a great deal of costs, no doubt others will make a lot of money making sense of and advising regarding all this.

So what’s it all about? Basically, offering revenue support contracts (presumably, in plain English, contracts with subsidies) to eligible low carbon hydrogen producers and eligible carbon capture entities.

Following on from that, provision is also made with regard to the decommissioning of carbon storage installations. There must also be a CCUS strategy and policy statement, and the Secretary of State is obliged to review it at least every five years. And there are additional provisions regarding carbon dioxide storage licences – amendments are made to the Storage of Carbon Dioxide (Licensing etc.) Regulations 2010.

And just to demonstrate how keen Parliament is on carbon capture and storage, clause 97 provides that the Secretary of State may, out of money provided by Parliament, provide financial assistance to any person for the purpose of encouraging, supporting or facilitating transportation and storage of carbon dioxide; carbon dioxide capture facilities which operate (or are to operate) in association with facilities for the transportation and storage of carbon dioxide; low carbon hydrogen production; and transportation and storage of hydrogen.

Part 3 – New Technology

Clauses 98 to 107 deal are concerned with low-carbon heat schemes (defined as schemes for encouraging the supply or installation in the United Kingdom of relevant heating appliances through the imposition of low-carbon heat targets on persons to whom the scheme applies). Needless to say, yet more regulations may provide for low-carbon heat targets. And regulations may also provide for the appointment of a person (the Secretary of State or equivalent person in a devolved administration) as the administrator of a low-carbon heat scheme.

Clauses 108 and 109 deal with hydrogen grid conversion trials, namely schemes designated by the Secretary of State relating to a trial location, designed to gather evidence for the purpose of enabling assessments to be made about the feasibility, costs and benefits of using hydrogen for heating or cooking, requiring the network for supplying gas to the trial location to be modified so as to enable the supply of hydrogen, and intended to have effect for a definite period.

Provision is made for yet more regulations, designed to protect consumers with regard to such trials. However, such protections look weak to me. They include such things as requiring a gas transporter to take specified steps to secure that consumers in a trial location are properly informed about a hydrogen grid conversion trial being conducted in the trial location; requiring a gas transporter to take specified steps to secure that consumers are given adequate warning of the need for their premises to be disconnected for the purposes of a hydrogen grid conversion trial; and about the enforcement of such requirements. It doesn’t appear that consumer protections extend to allowing consumers to say they don’t wish to participate.

Part 4 – Independent System Operator and Planner

A couple of miscellaneous clauses follow, then clauses 112 to 132 introduce an Independent System Operator and Planner (“ISOP”). Their functions are basically whatever functions are imposed on them by the Bill or other legislation, but include co-ordinating and directing the flow of electricity onto and over transmission systems; making and administering arrangements for the provision of services for the purpose of facilitating the co-ordination of the flow of electricity onto and over transmission systems; carrying out strategic planning and forecasting in connection with the development of transmission systems, the provision of services referred to above, and other arrangements relating to the conveyance or supply of electricity; carrying out strategic planning and forecasting in connection with the development of pipe-line systems for the conveyance of gas, and other arrangements relating to the conveyance or supply of gas; and providing advice, analysis or information in relation to requests for information advice made by a Minister of the Crown.

The ISOP must carry out its functions in a way that it considers is best calculated to meet three objectives (the three objectives that it hasn’t yet dawned on politicians are mutually exclusive) namely the net zero objective; the security of supply objective; and the efficiency and economy objective. There are numerous ancillary provisions which, thankfully, need not concern us here.

Part 5 – Governance of Gas and Electricity Industry Codes

Clauses 133 to 152 set the scene for some of the aspects of the Bill that have caused such understandable concern among commentators. Definitions abound, e.g. “designated central system” means a central system that is designated for the purposes of this Part by notice given by the Secretary of State. So, what is a “central system”? It’s an information technology system which has one or both of the following functions, namely to support the operation of the provisions of one or more designated documents; to process, transmit or store data in connection with the operation of the provisions of one or more designated documents. A designated document in turn is a document that is maintained in accordance with the conditions of a relevant licence, and is designated for the purposes of this Part by notice given by the Secretary of State. Then there are code manager licences and code manager functions. These are to sit next to smart meter communication licences, a concept from earlier legislation. A more complex bureacuratic piece of legislation is difficult to imagine. As always more regulations are to follow.

Part 6 – Market Reform and Consumer Protection

Clauses 153 to 164 deal with issues such as amendments of the Electricity Act 1989 in connection with enabling competitive tendering for electricity projects; mergers of energy network enterprises; multi-purpose interconnector licences; the extension of the domestic gas and electricty tariff cap; electricity storage; amendments to the Gas Act 1986 so as to allow for the possibility of a transporter or supplier meeting the whole or any part of a carbon emissions reduction target by making a buy-out payment instead; and the extension of provisions in the Energy Act 2008 dealing with smart meters, from 2023 to 2028 (is that because the 2023 roll-out target hasn’t been met?).

Part 7 – Heat Networks

Clauses 165 to 173 are concerned with the regulation of heat networks (district or communal) and provides that heat networks can also include those designed to rely wholly or in part on heat pumps particular to the buildings served by the network. Clauses 174 to 185 deal with heat network zones (being areas in England that are designated as such under zones regulations by virtue of being appropriate for the construction and operation of one or more district heat networks). Yet more regulations are provided for, as is the possible creation of a Heat Network Zones Authority, zone co-ordinators and zone methodology.

Part 8 – Energy Smart Appliances and Load Control

This is where it gets interesting, so far as concerns worries about the possible activities of Big Brother. Clauses 186 to 197 deal with these issues, and we are going to look at them in a little detail, given the interest that some parts of the media have rightly shown in them. Definitions will be important here, so we will have to work through them carefully. Interestingly, they all stand as drafted, with no amendments being made to them in the House of Commons.

“Energy smart appliance” means an appliance which is capable of adjusting the immediate or future use, discharge or storage of electrical energy by it or another appliance in response to a load control signal; and includes any software or other systems which enable or facilitate the adjustment to be made in response to the signal (clause 186(2)).

The functionality described in subsection (2) above is referred to as the “energy smart function”.

“Load control signal” means a digital communication sent for the purpose of causing or otherwise facilitating such an adjustment and received (by an energy smart appliance) via a relevant electronic communications network.

The sending of a load control signal to an energy smart appliance is referred to as “load control”.

And of course provision is made for subsequent “energy smart regulations”. They are to be made in connection with appliances that are charge points (for electric vehicles) (as defined in in Part 2 of the Automated and Electric Vehicles Act 2018); or are capable of being used in connection with any of the purposes specified, namely refrigeration, cleaning, battery storage, electrical heating (of any kind) and air conditioning or ventilation (my emphasis).

Note carefully what follows:

In making such regulations, the Secretary of State must, in particular, have regard to the desirability of ensuring that (a) the energy smart function or compatibility with that function is incorporated into appliances in a manner that is compliant with the regulations, (b) the energy smart function does not undermine the delivery of a consistent and stable supply of electricity, (c) the energy smart function in any energy smart appliance is capable of operating in response to load control signals from any person carrying out load control, and (d) communications, software, systems and personal and other data used in connection with energy smart appliances are secure or otherwise protected, for purposes including the protection of end-users.

Provisions then follow with regard to non-compliant relevant appliances, defined as being (a) energy smart appliances that are not compliant with requirements or particular requirements of energy smart regulations; (b) appliances without the energy smart function, or that are not compatible with the energy smart function of another appliance, and are (i) charge points (for electric vehicles), or (ii) electrical heating appliances

Clause 189 deals with enforcement. The use of the word in this context is itself a little chilling. Energy smart regulations may include provision to ensure compliance with any prohibition or requirement imposed by or under the regulations, including provision (a) designating authorities to carry out enforcement (referred to in this Chapter as “enforcement authorities”); (b) requiring persons to (i) maintain information; (ii) monitor compliance and report non-compliance; (c) conferring powers of entry, including by reasonable force; (d) conferring powers of inspection, search and seizure; (e) conferring powers to require the production of information or things held at, or electronically accessible from, entered premises; (f) conferring functions, including functions involving the exercise of a discretion.

Energy smart regulations may allow enforcement authorities to impose requirements by written notice on persons to (a) produce information or things; (b) make appliances compliant with energy smart regulations; (c) stop or limit (i) the placing on the market of, or other activities in connection with, appliances, (ii) the providing of load control to appliances, or (iii) the modification of appliances, for the purpose of preventing or mitigating non-compliance with energy smart regulations.

I take those words to be inserted in order to ensure that products entering the home must be “smart” if regulations so require. And the purpose of making them “smart” is to facilitate, via smart meters, load control.

Note very carefully, however that clause 188(5) provides that energy smart regulations may not provide for a prohibition to be contravened by an end-user of an appliance (in their capacity as such) or for such a person to be enforced against as described in section 189 or 190. I take that as meaning that the enforcement provisions above cannot be used against domestic customers at home, though I would welcome observations on that view. Of course, at some point in the future, even assuming I am correct in my interpretation, it would be a simple matter in a short amending statute to repeal that protective sub-clause.

Electricity and gas licences may be modified by the Secretary of State for the purposes of facilitating, promoting, ensuring the security of, or otherwise regulating load control. Such modifications may, in particular, may in particular (a) regulate or prohibit the provision of load control in relation to appliances that are not compliant with energy smart regulations or any technical standards specified in or under a condition; (b) regulate the provision of load control in relation to appliances that are compliant with energy smart regulations or any technical standards specified in or under a condition; (c) require the holder of a licence to supply information to the Secretary of State or the GEMA (or both) so as to enable them to assess any matter relating to the purposes mentioned in subsection (2); (d) require the holder of the licence to enter (or refrain from entering) into an agreement of a specified kind, or with a specified person; (e) require the holder of a licence to supply information about tariffs (including to such persons, and in such a format, specified in or under a condition). Also, those powers may be exercised to make different provision in relation to different areas or different classes of customer.

Part 9 – Energy Performance of Premises

Clauses 198 to 201 apply here. As always, they provide for the detail to follow later in regulations, to be called “energy performance regulations”. The Secretary of State may make regulations for any of these purposes: (a) enabling or requiring the energy usage or energy efficiency of premises to be assessed, certified and publicised; (b) enabling or requiring possible improvements in the energy usage or energy efficiency of premises to be identified and recommended; (c) restricting or prohibiting the marketing and disposal of premises on the basis of whether their energy usage or energy efficiency has been assessed, certified or publicised.

Looking at the detail, we learn that energy performance regulations may (a) provide for (i) the regulations to apply to specified descriptions of premises, or (ii) specified descriptions of premises to be excluded from the application of the regulations; (b) confer functions on any person; (c) provide for functions to be exercisable only if specified conditions are met (including conditions as to the eligibility of persons to exercise the functions); (d) provide for the energy usage or energy efficiency of premises to be assessed or certified by reference to information that is obtained, produced or kept otherwise than under energy performance regulations; (e) impose requirements on any person; (f) make provision for the purpose of securing compliance with requirements imposed by or under energy performance regulations; (g) authorise or require, or restrict or prohibit, the supply or keeping of information (including authorising or requiring supply or keeping of information that would otherwise be prohibited); (h) provide for the charging of fees.

The regulations will also apply to new premises, defined as being which are being constructed or adapted, or which it is proposed to construct or adapt. The regulations may provide for civil penalties of up to £15,000 and for the creation of criminal offences with regard to (b), (c) and (d) above, in which case the sanction may be imprisonment up to 12 months and a fine not exceeding level five on the standard scale. While that used to limit fines to £5,000, my understanding is that this now allows for an unlimited fine.

Part 10 – Core Fuel Sector Resilience

Clauses 202 to 224 apply here, and we have to consider some more definitions. “Core fuel sector activity” means an activity of a kind mentioned below, so far as the activity (a) is carried on in the United Kingdom in the course of a business, and (b) contributes (directly or indirectly) to the supply of core fuels (meaning crude oil based fuels, and renewable transport fuels) to consumers in the United Kingdom or persons carrying on business in the United Kingdom. The activities mentioned are storing oil or renewable transport fuel; (b) handling oil or renewable transport fuel; (c) the carriage of oil or renewable transport fuel by sea or inland water; (d) transporting oil or renewable transport fuel by road or rail; (e) conveying oil or renewable transport fuel by pipes; (f) processing or producing oil or renewable transport fuel (whether by refining, blending or otherwise). “Oil”, however, does not include crude oil which has not yet entered any refinery or terminal in the United Kingdom.

This Part of the Bill introduces a general objective, which strikes me as one of the few sensible provisions I have read. The Secretary of State must exercise his/her functions under this Part of the Bill with a view to ensuring that economic activity in the United Kingdom is not adversely affected by disruptions to core fuel sector activities, and (b) reducing the risk of emergencies affecting fuel supplies. The idea is to ensure that the supply of core fuels to consumers in all areas of the United Kingdom, and persons carrying on business in all areas of the United Kingdom (a) is reliable and continuous, and (b) is maintained at normal levels, meaning levels that (a) are not substantially below average monthly levels of supply in the United Kingdom (taking account of regional variations), and (b) are consistent with a reasonable balance between supply and demand.

I won’t go into detail here, as it’s quite extensive, but I note that yet again provision is made for the details to follow in regulations, and also to note power is given to the Secretary of State to give financial assistance in any form to a core fuel sector participant for the purpose of (a) maintaining or improving core fuel sector resilience, or (b) securing or maintaining continuity of supply of core fuels.

Part 11 – Oil and Gas

Clauses 225 to 229 contain environmental protection provisions, specifically in connection with marine oil pollution and with a view to reducing the effect of offshore oil or gas activities on habitats. While this is welcome, the lack of any similar habitat protection in connection with renewable energy is glaring.

Part 12 – Civil Nuclear Sector

Clauses 230 to 237 deal with civil nuclear sites (including decommissioning), the civil nuclear constabulary, and the power to make yet more regulations. This is all important stuff, but beyond the scope of an article such as this.

Part 13 – General

Clauses 238 to 243 deal with the usual boilerplate provisions, such as the name of the legislation, its commencement date, etc.

Conclusion

When I set out to investigate the contents of the Energy Bill, I assumed that the sub-heading to this article would be “A Curate’s Egg”, for the very good reason that I expected the Bill to be good in parts. Surely it couldn’t be all bad? But I’m very much afraid that it is almost all bad. Before ending, I draw the attention of readers to an excellent article by David McGrogan, which can be read either at the Daily Sceptic website or on his Substack account. While I have concentrated on explaining briefly the main aspects of the Bill (broadly what it seeks to do and how it seeks to do it), Mr McGrogan adopts a broader approach, standing back, and explaining the sinister nature and worrying implications of Parliament legislating in the way that it does here. I commend the article to readers, and offer a flavour with one extensive quotation, which gets to the nub of the issue:

The explanatory notes to the Bill suggest this [the use of load control signals etc.] will be done to “help consumers save money on their energy bills” by “shift[ing] electricity usage to times when it is beneficial for the energy system” and thus “smart[ly] and flexib[ly]… control consumption”. Sceptics may wonder if this is the only reason why it will be done – and will also have their eyes unavoidably drawn to clause 237 (5) of the Bill, which will “allow enforcement authorities to impose requirements by written notice on persons to… make appliances compliant with energy smart regulations” (i.e., to ensure that their dishwashers, washing machines, etc. can receive load control signals). These sceptics may, if they are capable of parsing modern Parliamentary drafting, also have their eyes drawn to to clause 235 (4) (c) and clause 236 (3) of the Bill, which seem to give the Secretary of State the power to ban the sale of non-smart appliances.

Why would the Secretary of State need to ban the sale of non-smart appliances if their only purpose was to “help consumers save money on their energy bills”? Why would he or she need to require people to make sure their appliances are “energy smart”? I won’t insult your intelligence by spelling it out, but I don’t think “helping consumers save money on their energy bills” is the end of the story.

Setting aside the substance of the Bill itself, what I wish to emphasise here is its character. If Parliament wished to legislate in order to control energy consumption through clear rules (“each household may only use X number of kWH of electricity per day”) that might be authoritarian, but at least it would be clear – and at least it would then be subject to open debate. But that would be to govern through the creation of quaint old Law 1.0. We’re now in the era of Law 3.0, and we don’t even see rules of general application appearing at all. Instead we see legislation delegating authority to a Government minister to appoint licensees to issue “load control signals” to “smart appliances” on a “smart and flexible” basis in order to control energy consumption. The law, in other words, will self-execute through the technology itself, and non-compliance will become impossible – because our machines themselves will simply respond to the load control signals which they are sent. (And because we will have to use such machines, because the sale of others will be banned…).

Finally, one last aspect of the Energy Bill that is deeply worrying is that, despite its hugely flawed nature, the response of the vast majority of Parliamentarians to its terms offers up yet more evidence that the UK public are being offered no democratic choice regarding energy policy and its relationship to the disastrous net zero religion. Nothing of substance divides all the Parliamentary political parties here – for them the only issue is whether or not we are heading for the rocks (or the edge of the cliff – choose whichever metaphor you prefer) sufficiently quickly. Other than a few of the “usual suspects” raising some highly pertinent questions and concerns, most Parliamentarians, in both Houses, seemed content simply to nod it through. The Bill is of such staggering complexity that I would be surprised in one MP in ten has the faintest understanding of its provisions, yet the vast majority of them, of all political persuasions, wandered happily through the “aye” lobby when it came to passing its (amended) provisions. Is there no political party capable of standing up for common sense and getting a grip on reality?