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Mr. Stephen O'Brien (Eddisbury) (Con): This is a Bill of modest ambitions in the context of even the White Paper, especially when measured against the burgeoning resources of the Department responsible for drafting it and, even more importantly, against the context of our country's medium to long-term security of energy supplies—an issue from which the Secretary of State and her Department continue to shy away.
The Bill, which started its passage in the other place, contains some positive provisions, not least because it was improved enormously by some constructive amendments from my colleagues in the other place and some from Liberal Democrats and Cross Benchers. I pay tribute to their success and I am sure that the House will recognise the great and, in some cases, incomparable experience that some noble Lords bring to such matters.
It is invidious to single out one contribution, given the first-class team, ranging across shadow departmental briefs, that the official Opposition put together to work on the Bill, but the House will wish to join me in thanking warmly Baroness Miller of Hendon for her steadfast, indefatigable and insightful leadership and outstanding work on the Bill in the other place. We shall not, therefore, seek to oppose the Bill, but we will want to continue the excellent work commenced by our colleagues to improve it in Committee and beyond.
A Government spokesman in the other place said that the Bill
"provides . . . solutions to a number of legislative problems related to parts of our energy strategy." —[Official Report, House of Lords, 11 December 2003; Vol. 655, c. 834.]
With a few qualifications, I do not dissent from that view, other than its pretence that the Government's policies amount to an energy strategy taken—to use a Blairism—in their totality. My main concern is that the Bill represents a missed opportunity, which we may all shortly come to regret, to set out a coherent and realistic strategy to ensure secure, safe, sustainable and affordable low-carbon energy supplies to UK domestic and business customers in the medium to long term. That is particularly regrettable since, when all is said and
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done, it is hard to conceive of a more basic responsibility for any Government than to create the framework and enable conditions whereby the market ensures that the nation's lights stay on.
It is not the presence of the Bill that I object to, but the absence of a different energy Bill that addresses the big and pressing problems at a time when a nexus of factors combine to make the matter an acute national consideration. The reasons for that are familiar, but I shall summarise them again. To put it bluntly, there is a looming black hole in the nation's energy mix. Taking breakdowns into account, normal operative standby energy capacity is more like 16 per cent. than the 21 to 23 per cent. habitually claimed. That scenario has prompted Professor Dieter Helm of Oxford university to remark:
"We are very close to the margins, when this is something we should really be very risk averse about . . . The costs to everybody of any failure are so enormous. If there's a catastrophic failure in the shoe industry, nobody suffers very much. If electricity goes wrong, everybody is in big trouble."
Meanwhile, we are committed to reducing our carbon dioxide emissions by 60 per cent. by 2050. We are becoming increasingly reliant on gas supplies, just as we are set to become net importers of gas for the first time—primarily through pipelines, as well as by shipments of liquefied natural gas—at a period when global terrorism and geopolitical instability show little sign of receding. Nuclear power's share of electricity generating capacity is in steep decline. It is expected to fall from 21 per cent. today to just 2 per cent. in 2023—just under 20 years. In addition, in the absence of so-called clean coal technology, coal-derived energy remains in decline and we shall also see an imminent decline in domestic oil supplies from the North sea. The latter has less to do with energy production and more to do with powering transportation and commercial and domestic heating.
There is an enormous weight of expectation about the planned major expansion of renewable energy and energy efficiency. That is, of course, to be relentlessly encouraged, but the expectation, created by the Government, is that that will fill the looming gap in our energy supply. However, the Government have just had to revise downwards both their energy efficiency and carbon emissions targets. They are expected to miss their combined heat and power target for 2010 by about 20 per cent. Likewise, experts do not expect the Government to come close to meeting their ambitious target of 10 per cent. of power being generated by renewables by 2010, even when the loosest definition of "renewables" shows that we have remained stubbornly between 2 and 3 per cent. since 1997.
We should keep a beady eye on the Government's definition of renewables. Changing the definitions is the surest way to avoid admitting a series of missed Government targets. It does not take a genius to see that if nuclear power were replaced by renewables, no carbon emissions reduction would be achieved by such a mere substitution. Only 11 days ago, the Department of Trade and Industry told the Financial Times:
"Plainly, our policies on energy efficiency, emissions trading, renewable sources, transport and others will need to deliver more in future."
Energy policy cannot simply rely on the hope that the Government's policy will miraculously start to deliver more at some unspecified date in the future. It is too important to be determined by the aspirational target setting in which the Government specialise.
That is why I am delighted that Conservative peers tabled an amendment that will require the Government to make specific progress reports on the development of new energy sources. I am also pleased that they succeeded in securing a separate amendment to clause 106, which strengthens the Government's insubstantial policy on energy efficiency by allowing energy produced by CHP to be exempted from the renewables obligation. As we have seen, without such incentive the Government are currently on course to fall well short of their targets. I was disappointed to hear that the Secretary of State wants to amend that. The £90 million that she claims as a fiscal cost has to be seen in the context of the fact that offshore wind turbines currently receive a subsidy of £117 million. So this is a matter of choices, rather than absolutes.
We welcome the use of biofuels. The use of biodiesel and bioethanol can result in the reduction of carbon emissions. I have a very fine example in my constituency—e-diesel, produced by Stephen Whittaker. We welcome the fact that the Treasury is currently consulting on the fiscal regime. The Government must report their plans to the EU by July 2004, and we await the report with interest. The development of biofuels is expected to produce long-term benefits for the environment and can certainly bring economic gains for agriculture.
Mr. Jack: Does my hon. Friend think, however, that there is a need for greater clarity of leadership on biofuels, given that the Treasury currently sets the fiscal regime, that the Department for Transport is dealing with the consultation paper on the introduction of biofuels in transport, that the Department of Trade and Industry deals with matters connected with biofuels and energy and that the Department for Environment, Food and Rural Affairs deals with the agriculture side of the issue?
Mr. O'Brien: I am glad that my right hon. Friend has demonstrated how one can be joined up in opposition, even when that is not apparent in the Government. I very much hope, therefore, that the Government will consider his joined-up approach and deliver a package that can give him the confidence to report positively to his constituents and the interests that he represents on an important initiative in biofuels.
Mr. O'Neill: Does the hon. Gentleman agree that there are some dangers in going overboard in this respect? Only a limited amount of timber is available, and a number of timber processing plants across the country, such as the one in my constituency, convert wood into timber for the construction industry. If there were an undue demand for such wood, it could affect the availability of timber for house building and the like, thus producing the opposite effect in terms of doing the business.
Mr. O'Brien:
I am grateful to the Chairman of the Select Committee on Trade and Industry for raising that
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point, because it must be recognised that we are talking not just about timber but about rape seed and other matters. We must consider encouraging a package of contributions to renewables, rather than banking on any particular approach, because it will be enough of a struggle to meet not just the Government's renewables targets but any substantial, worthwhile renewables targets in the overall energy mix. We must be extraordinarily careful and not simply talk about timber, as that would be a distortion.
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