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28 Mar 2003 : Column 588—continued
Dr. Desmond Turner: Is the hon. Gentleman aware that the differential between electricity pricing here and in Denmark is not simply to be accounted for by the higher percentage of wind power in Denmark? It accounts for only about 15 per cent. there. Account must also be taken of the fact that Denmark does not have access to the cheap gas and coal supplies that we do; it has to import them. That is the principal reason for the higher electricity prices in Denmark.
Mr. Chope: I note what the hon. Gentleman says about that. All that I can say is that I have a letter here from quite a distinguished constituent of mine who used
to work in the energy industry and who is still very much involved with energy issues. He thinks that one of the main reasons for the very high price of electricity in Denmark is its dependence on wind power. Perhaps we shall have time to ascertain the real truth about this issue in due course. The fact that it has such a degree of wind power generation certainly adds to the costs.The hon. Member for Brighton, Kemptown was very disparaging about the Government's target setting. He thought that it would be useful if we were able to bring the Government to book once a year by forcing them to produce a report. Although I am extremely sceptical about the virtue of producing reports just for the sake of it, if it were an additional way of holding the Government to account, I should go along with it. The trouble is that the Government wriggle when faced with targets and aspirations. Even in the Bill, clause 1(a) contains a reference to
- "those measure that it intends to take to move towards"
During this time of Lent, some people will have set themselves targets for reducing their weight, their alcohol intake or other such things. Those are firm targets, and it would not be sufficient simply to say, "I have moved towards my target by losing a pound in weight" if I had set out to lose a stone and a half. By using clever language, the Government have been able to get themselves off the hook in terms of the firm targets that were set—as my hon. Friend the Member for Southend, West (Mr. Amess) said—in the manifestos that they produced at the last general election and the one before that.
My biggest concern about what the hon. Member for Brighton, Kemptown said is that he asserted that the Bill was not an attack on the nuclear energy option. If that is so, I hope that when the Bill goes into Committee, he will include—specifically in clause 1(2)—a reference to the contribution that nuclear power can make to the reduction in CO2 emissions. To exclude the nuclear contribution would be to make our task extremely difficult, if not impossible, to achieve. Apart from anything else, the cost of nuclear energy is now becoming much more competitive. Before the privatisation of British Energy, the cost of nuclear electricity was 2.37p per kWh.
Dr. Turner: If the generation costs of nuclear power have become so competitive, why did British Energy have to be bailed out?
Mr. Chope: British Energy had to be bailed out because of its totally one-sided long-term contract with BNFL, which it was tied into by the Government. It had no option on that, and in my view BNFL was bleeding British Energy dry. Indeed, it is significant now that, because of the virtual bankruptcy of British Energy, there has had to be a renegotiation of the contract with BNFL.
As a result of that, when the new contract comes into place from 1 April, it will extend throughout the lifetime of the nuclear plants and ensure that the cash operating costs of UK nuclear stations, assuming the normal output of 67 terawatt hours—tWh—per annum, will fall to 1.45p per kWh, which, the hon. Member for Brighton, Kemptown may be interested to know, will
give an operating profit of £100 per MW against the losses of £4 per MW that reduced British Energy to virtual bankruptcy in the recent past. That is why the cost of nuclear electricity was not even lower and, coupled with the neater trading arrangements, it put British Energy in those dire straits.The Government have recognised that, in the short term, they could not possibly accept the bankruptcy and closure of British Energy, as that would reduce generating capacity by about 25 per cent., which is about what is produced by nuclear. In answering questions from the hon. Member for Leicester, East (Keith Vaz) on 24 March, the Minister for Energy and Construction—I share the concern of others in the House that he is not with us to respond to the debate—said that nuclear produced 22 per cent. of electricity in 2002 from 14 plants, that 32 per cent. came from coal and 1 per cent. from oil. The targets for reducing CO2 emissions makes one immediately think that it would be more sensible to replace coal-generated electricity with nuclear rather than replacing nuclear with renewables. The Bill needs to be a lot more explicit about the important role that nuclear can play in enabling us to meet the self-imposed obligation of cutting CO2 emissions by 20 per cent. by 2010 based on 1990 levels.
I do not want to speak for much longer, but the points raised on fuel poverty warrant further comment from me. My hon. Friend the Member for Chipping Barnet (Sir Sydney Chapman) said that cold homes are the most important issue that we are addressing, and I agree with that wholeheartedly, so the Government's change to the definition of fuel poverty does them no credit whatever, although it is typical of how they set themselves targets that cannot be met and then change the definition of that target. Recently, a number of documents have been produced—by the Home Office in particular this week—in which the Government have effectively changed the definition of targets that they have set themselves. This is a blatant example of changing the set target, and it effectively strands an additional 1 million people, who cannot be embraced by the agenda on eliminating fuel poverty, which the Government have previously espoused.
This is a serious issue and I hope that the Minister ensures that the Government think again. Indeed, the Bill presents the opportunity to table an amendment redefining fuel poverty in the way that it was originally defined and putting that on the statute book. That, too, must be addressed in Committee.
The Bill has shortcomings, and the most fundamental is that targets would be set but there would be no sanctions. If the Government are prepared to impose sanctions against local authorities or other organisations that do not comply with targets that they have set, why can the Government be absolved from responsibility and liability if they fail to meet targets set by Parliament? That is my first concern.
My second concern is that the Bill is far too equivocal on the role of nuclear. I hope that amendments in Committee will enable it to re-emphasise that we believe fuel poverty is so important that it should be defined as it always was defined. We should recognise the importance of allowing our elderly people and the infirm to be able to have warm homes at affordable prices. That will be promoted if we ensure that we have good value nuclear power rather than closing down that nuclear
generating capability and replacing it with much more expensive and, in my view, more environmentally intrusive windmills.11.26 am
Mr. Andrew Stunell (Hazel Grove): First, I congratulate the hon. Member for Milton Keynes, North-East (Brian White) on his success in the ballot and, even more, on taking up such an important topic for legislation. There is no doubt that a good sustainable energy policy is the key to leaving a sustainable planet for future generations as well as to us enjoying sustainable prosperity in the meantime. The production of the Bill is a credit to the hon. Gentleman and to those who are working with him and sponsoring it.
I also congratulate the hon. Gentleman on upstaging his own Government—a point that a number of other Members have already made. So far, they have needed four Energy Ministers in five years to try to implement three different energy policies—quite often two at the same time, I may say. Apparently, we are about to embark on a fourth. Three years after the publication of the findings of the royal commission on environmental pollution, one year after the publication of the performance and innovation unit report and some months after the publication of the energy White Paper, we are still waiting for the Government to produce the money, the legislation and the vision that would lead to us having a sustainable energy policy. From that point of view, the hon. Gentleman has done the public and Parliament a service in introducing his Bill.
If, as it seems, the hon. Gentleman has secured the Government's support, his achievement is all the more remarkable, although in view of what has happened to previous Bills dealing with this topic, finding such friends for it sows the first seeds of doubt about just how good and how radical the Bill is. The Bill is timely, however, as we need a sustainable energy policy if we are to come anywhere near achieving our Kyoto commitments and the reduction in CO2 outputs recommended as a minimum by the royal commission and if we are to do anything like enough to avoid damaging our environment and, indeed, that of the planet.
The Bill is also aimed at the right problems. It is clear in setting out what needs to be done in terms of producing energy and power, particularly electricity, and also the efficient use of power. Its intentions are of the best but the question is: will it be effective? Hon. Members have explained the Bill's provisions extensively. The hon. Member for Milton Keynes, North-East and others have outlined its advantages. Perhaps the most important thing it does is to create a new duty to have a sustainable energy policy. While the need for that may seem self-evident, plenty of commentators still doubt the need either for an energy policy or for a sustainable one. If the Bill makes progress, it will, I hope, nail that fallacy.
The Bill sets long-term targets for sustainable energy production, which is a good thing. It rightly identifies many technologies and allocates to them their respective roles. It is important to recognise that some technologies are at or very near the market and others, while very
promising, are a long way short of being commercial. I hope that the sponsors of the Bill will recognise that one cannot have a once-and-for-all fix of a mixture of technologies. One has to look at the science, the technology and the market and ensure that as appropriate each technology plays its role.The Bill sets out action to conserve energy, in particular the huge waste of energy in the domestic sector. There are plenty of good estimates to suggest that, even by the implementation of quite routine measures, most households could save about 30 per cent. of the energy that they use, and in doing so improve their quality of life. People would not have to sit there shivering and freezing in the cold.
There is a huge amount that can be done. We should go beyond the routine and look at some of the trial and pilot projects that there are—for example, the Beddington zero energy, or BEDZED, project in the constituency of my hon. Friend the Member for Carshalton and Wallington (Tom Brake), which I visited. If we work at it hard, it is possible to achieve zero carbon dioxide emissions and very low energy consumption.
All those things are in the Bill and are certainly good. My hon. Friends and I will support the Bill but we want it to be strengthened. I hope that in Committee it can be provided with additional teeth, rather than going into Committee and coming out with just a pair of gums, as happened with the Bill introduced by the hon. Member for Brighton, Kemptown (Dr. Turner). I hope that clause 2, about which the hon. Member for Southend, West (Mr. Amess) spoke strongly and powerfully, will be strengthened.
It is important to recognise that how to achieve an improvement in domestic energy efficiency is well understood. There is no magic about what needs to be done. For 30 years, Governments have had schemes to save it, to switch off the lights, to do this, that and the other but smooth words and slogans are not enough. It is a pity that clause 2 is stuck with words like "may" rather than "shall" and that it talks about encouraging, offering guidance and promoting schemes when what we need is decisive action within a clear policy framework and tough regulatory action supported by financial and fiscal measures.
We must change the culture. We are in the bizarre situation in which all of us know that we could save energy in our homes, thereby saving money and probably improving the quality of our lives, but there are no incentives, we do not have the culture right, we are not doing it properly. Clause 2, particularly clause 2(1), is somewhat tepid and falls into the same trap as the failed "save it" campaign.
There are two or three measures that would in the longer term significantly improve domestic energy conservation and efficiency and benefit us all. One is to have a requirement relating to the replacement of central heating boilers. About 1 million central heating boilers a year are replaced but there are no effective energy efficiency standards relating to them. A new generation of micro combined heat and power central heating boilers is being developed and coming on to the market. They will not only heat the home but generate electricity. The PIU report identified that micro-CHP would be the most efficient way of reducing carbon
dioxide emissions from homes. A simple regulatory requirement ensuring that central heating boilers were replaced by high-efficiency micro CHP boilers would be my clear preference. In 20 years it would transform the energy outputs of our homes. One could make the same point about white goods, where the efficiency standards are far too low, not achieving the best available options.There is another matter of concern. There should be a simple regulatory requirement whereby meters are replaced by two-way meters. About 1 million meters are replaced each year. Two-way metering would make the implementation of micro-CHP easier and lay the foundations for photovoltaics in a subsequent era.
Building standards, although alluded to in the Bill, need highlighting further. All the proposals relating to domestic efficiency not only reduce carbon dioxide emissions but are vital in tackling fuel poverty. I will not go over the matters raised by other hon. Members but clearly the elimination of fuel poverty is already a Government target and the way to do it is clearly understood: the efficiency of our homes should be improved. I hope that the Bill's sponsors will be ready to accept some beefing up in those areas when the Bill gets to Committee, because pound for pound there is no doubt that improving efficiency is the way best way of cutting carbon dioxide emissions. There should be specific proposals on that in the Bill, as there are in clause 1 on energy sources.
I welcome clause 4, which amends the Utilities Act 2000 relating to the duties of the Office of Gas and Electricity Markets—not least because it is similar to the amendments that I tabled during the Committee stage of the Utilities Bill three years ago. The subsequent rigid adherence of Ofgem to the most blinkered and narrow interpretation of market philosophy has reduced wholesale electricity prices, although it has not done that much for retail prices, but also undercut investment in the electricity industry. It has undermined combined heat and power and placed small generators and renewable producers at a serious disadvantage. Getting clause 4 through and giving Ofgem a broader remit will be of great importance.
The Liberal Democrats welcome the Bill. It is in many ways an excellent attempt at delivering a long overdue policy for this country. I hope that we can strengthen a few of its weaknesses in Committee. In particular I hope that it can escape the pruning and the predations to which private Members' Bills are often subjected in Committee, often masterminded by the civil servants. I hope that the House will support the Bill today and maintain its determination to see a strong Bill emerge from Committee and pass into law.
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