Here are the climate-related sections of speeches by MPs during the Commons debate Draft Electricity Capacity (Amendment) (No. 2) Regulations 2025.
14:30 Michael Shanks (Labour)
“Reform the capacity market to provide clear and viable routes to decarbonisation for unabated gas, enable low-carbon flexible capacity…and incentivise investment into existing capacity.”
Through capacity market auctions, which are held annually—one year and four years ahead of delivery—we secure the capacity needed to meet future peak demand under a range of scenarios, based on advice from the National Energy System Operator. Since its introduction in 2014, the capacity market has contributed to just under 20 GW of new flexible capacity needed to replace older, less efficient plants as we transition to net zero.
The draft instrument does that by revoking several expired provisions of secondary legislation relating to the scheme, including references to: transitional auctions, which are no longer applicable; the temporary standstill period, which occurred in 2019; and the time-limited relief given to scheme participants in relation to coronavirus. It will also introduce a new process to establish a decarbonisation pathway for unabated gas plants currently in long-term capacity market agreements. That will allow gas plants to exit their agreements without penalty in order to transfer to a dispatchable power agreement, facilitating conversion to gas-fired power with carbon capture and storage once the technology is available. That will better align the capacity market with our clean power objectives, and it will provide gas plant operators with a future route to decarbonise their assets.
The Government carried out two public consultations on this instrument. The first considered reforms to the capacity market to strengthen security of supply and enable flexible capacity to decarbonise. The second considered reforms to modernise the capacity market and improve the participation and delivery assurance of consumer-led flexibility. Both consultations were published towards the end of 2024. Respondents were broadly supportive of the instrument’s proposals. We have also made a number of technical amendments to the capacity market rules that support the regulations, which were laid before the House on 3 June.
This draft instrument introduces a number of technical provisions and changes to enable the continued efficient operation of the capacity market so that it can continue to deliver on its objectives. These reforms will be critical if we are to achieve clean power by 2030. They will improve security of supply by ensuring the modernisation of the capacity market and making legislation as clear as possible for all scheme participants. We need clear routes for the decarbonisation of unabated gas and for the rapid acceleration of low-carbon, flexible capacity. And today, with these regulations, we take another step towards that.
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Andrew Bowie (Conservative)
These regulations will allow unabated gas generators to exit their capacity market obligations without penalty for the purpose of retrofitting carbon capture, usage and storage and transferring to a dispatchable power agreement outside of the capacity market. The rationale for this is to allow generators to convert unabated gas to power with CCUS in order to decarbonise the UK’s electricity generation. So far, so good. We support that ambition in principle, as we believe in a cleaner energy system.
However, we also believe in delivering an energy system that is secure and affordable, on which we have some concerns. Namely, how will this impact energy bills? The regulations intend to allow unabated gas generators to transfer from existing capacity market agreements to a contract for difference mechanism to power CCUS, thereby entering a dispatchable power agreement.
The increase in intermittent renewables on stream in the UK must be shored up by increasing capacity market payments. Unfortunately, this Government continually prioritise climate targets over secure and affordable energy, and billpayers are paying the price. Can the Minister please tell us what impact the Government’s clean power 2030 payments will have on capacity market payments? Are the Government still committed to reducing energy bills by £300, and will the Minister reiterate that commitment?
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Michael Shanks (Labour)
I warmly welcome, as I always do, the shadow Minister’s wholehearted support for the work we are doing in the Department for Energy Security and Net Zero, and long may that continue. I commend these regulations to the Committee.
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