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Alan Duncan (Rutland and Melton) (Con):
May I express our gratitude at the outset to the Clerks and the officials for their work behind the scenes on the Bill?
The passage of any legislation takes a lot of work. We are grateful for their professionalism and assiduous attention to the way the House works.
The Bill does not really live up to its title. It has come out of Committee after hours of exhaustive debate, but has been largely untouched by the wisdom of colleagues from any part of the House. There has been a clarification here and a little syntactical tweak there, but it is a pretty thin document that waits to be sent to the other place.
The Bills lack of scope and ambitionproblems that we identified at the start of its passagereflect a regrettable absence of decision making in Whitehall. There is some evidence of strategic thought, however. In the past 10 years, there have been innumerable White Papers and lots of reports and reviews, but when it comes to taking what the Prime Minister enjoys calling tough, long-term decisions, Ministers have mumbled their excuses and hidden from their responsibilities. Creating yet another review or holding yet another consultation might seem like a great listening exercise, but it does not give us the action that we need as quickly as we need it.
The one thing that we have got out of the Bill is a raft of consultationsno fewer than sixon a series of subjects that we have been talking about and consulting on for years, including microgeneration, decentralised energy and feed-in tariffs, which the hon. Member for Nottingham, South (Alan Simpson) argued for so persuasively this afternoon. Other subjects for consultation include smart meters, the role of Ofgem and priority access to the grid. Only this afternoon, yet another three consultations on smart meters were announced. There is nothing in that list that anyone in the energy industry finds particularly revolutionary any more. Most of it is quite well known and largely uncontroversial.
Those ideas have become basic, additional measures that would help the Government to meet their stiff targets on renewables and emissions for 2020 and 2050. I suspect that if we do not put some of them in place right now, today, we will curse our lack of urgency in 10 years time. It is a great shame that the Government have been unable to find room in what is supposed to be a broad Energy Bill for many of the amendments that have been debated. However, they might be pressed more rigorously in another place.
The House has, to some extent, been duped. The Bill is not really an Energy Bill, but a Bill to facilitate nuclear power and create arrangements for decommissioning, all of which is fair enough. When the Government published their White Paper in January, we made it clear that we supported their signal that nuclear power had a role to play in our future generating mix, but we sought particular assurances that there would be no subsidy. We also asked for clarity on the regime for new waste.
The funded decommissioning statements that will provide financial cover for companies, and security for the taxpayer, seem to be a satisfactory way of proceeding, but we look forward to examining the details with more scrutiny in coming weeks and months. We will continue to press the Government to move swiftly and with urgency to resolve the high-level
waste repository issue. With the current timetable, a repository probably will not be built until 2080. That remains a serious concern.
The Bill pretends to sort out all things nuclear, but leaves large questions hanging over the commercial landscape that will govern it. Despite the Secretary of States speeches about the economic benefits of the new generation of reactors, he has remained uncharacteristically tight-lipped on an issue that has equal resonance for the nuclear industry: the potential sale of British Energy. We are on the brink of one of the most strategically important commercial deals of recent years, but as yet we have heard nothing from the Government. There has been no formal statement of policy, no guidance on how they intend to proceed either with the total sale of British Energy or regarding their own share, and nothing on foreign ownership.
What is the Governments position on the conflict between foreign ownership and national competition? What is their verdict on the choice between short-term cash from the disposal of their shareholding and long-term value, which is an alternative? Perhaps, most pertinently [Interruption.] The Secretary of State mutters, It is nothing to do with something, but if he [Interruption.] If he wishes to intervene, he is very welcome to do so. Perhaps, however, the House would prefer to hear a formal statement on what is going to happen properly in this sector, rather than the silence to which we have been subjected since the rumours hit the press.
The Secretary of State for Business, Enterprise and Regulatory Reform (Mr. John Hutton): I am grateful to the hon. Gentleman for giving way. I had no intention of interrupting his peroration, but I want to say two things. First, this is a Third Reading debate, but the issues that he is raising have no relevance whatever to the Bill; we do not need to legislate through a Bill to cover the points that he mentions. Secondly, I remind him that British Energy is a publicly listed company, in which the Government are a minority stakeholder.
Alan Duncan: Indeed it is, but it is that minority stakeholding that we would like to know more about, because the implementation of the Bill may go one way or another depending on what happens to the commercial infrastructure in which it will have to work. About that, however, we hear nothing from the Secretary of State. Indeed, I wrote to him during the recess, requesting an urgent clarification of the Governments position before a sale goes through in order to avoid having to endure the embarrassment and confusion of a messy post-mortem thereafter, but I am afraid that the response was bland and unhelpful. We still await a clear public statement of the Governments principles on this vitally important commercial deal, which will determine the shape of electricity generation in the nuclear sector in the UK for the next 50 or even 100 years.
Nor have we heard a whisper from the Department on the tendering of the Nuclear Decommissioning Authoritys contracts for legacy waste and its clean-up, which might have a price tag of £18 billion. How will the Government ensure that competition is maintained in this area of the nuclear sector? It is no good the
Government sidestepping the key commercial issues that concern nuclear, while at the same time trumpeting their conceptual and economic benefits. Policy, as part of this Bill, needs to be created in a coherent and all-embracing way.
Mr. Redwood: Does my hon. Friend share my concern that the existing range of nuclear power stations that generate base load electricity are ageing very rapidly and that we need to know what the replacements, of whatever type, will be? We need to be further down the track of granting permissions so that we can be sure that the new stations building will be completed before the existing ones have to be retired.
Alan Duncan: It is exactly that side of the equation that I am asking the Secretary of State to express clearly, as it is no good having a Bill without the commercial apparatus necessary to go along with it to make it happen.
That brings me to the Governments failure to take the opportunity to introduce new legislation to address the whole range of energy issues that are of paramount importance to the United Kingdom. We face an extremely difficult period both in retaining our capacity at a time when we will require a new 35 GW of electricity and in boosting our green industries in order to meet the 15 per cent. renewable energy target that the EU has imposed. The Governments refusal to take action on the less traditional approaches, particularly on feed-in tariffs, which they have just voted down for microgeneration, will only make life more difficult for them. I imagine that the issue has not gone away and that the other place will want to discuss it in detail and perhaps send the matter back to us. I am glad, however, that the Government have partly seen sense on smart metering, but they are still being timid and I simply do not understand why they wish to play it that way.
Alan Duncan: The trouble is, Madam Deputy Speaker, that that pretty well brings things to a halt because there is almost nothing in it. There is so little in the Bill, which is why it is a great missed opportunity. Many people are asking why there are no energy efficiency measures in it, why it does not marry up with the commercial opportunities that are supposed to exist
There are some important elements in the Billnamely its few nuclear clauses and, indeed, its reform of the renewables obligationbut the Government delude themselves if they think that this is the best way to make energy policy. If the industry is to make the correct investment in the UK, securing us
clean and reliable energy, and if consumers are to be protected from the volatility of the wholesale energy markets, we need much more aggressive action. The real absence of decisions over the last 10 years has placed us in a very precarious situation. The Bill must not be used as an excuse for further hesitation.
Steve Webb: Having reflected on our consideration of the Bill over the past few months, I find it striking that only a short section of it deals with renewables, although the overwhelming majority of the amendments tabled in Committee and on Report focused on the subject. That demonstrates that the measures on renewables in the Bill do not go far enough. It would have been great if the amendment on feed-in tariffs had been passed today. I strongly suspect that when the Bill emerges from another place we shall see a similar amendment, which we would welcome.
Although we have not opposed the banding of the renewables obligation, I think the Minister grossly oversold what has been achieved by that mechanism so far. If it is so wonderful, why has it taken so long for us to reach a point at which we are still so far behind? The Minister said earlier that we were making rapid progress and that we had started from a low base; but we started from a low base 11 years ago, we are still virtually at the bottom of the league table, and the Bill will not enable us to surge up to the place that we ought to occupy.
We are witnessing the problem of departmentalitis. I simply cannot understand why an energy Department would not use an Energy Bill to promote energy efficiency. That would have been entirely proper and should have been in the first clause, but there is no mention of the subject in any of the clauses.
On Second Reading, we observed that the Bill was about big energy. It was about paying for nuclear clean-up, about offshore gas storage and about carbon capture. We are pleased that we have been able to improve it at the margins, and we welcome the nod in the direction of smart meters, but the Bill does not provide much more than that. It is a case of Something will happen at some point, we hope. We are told that the Government have powers to make something happen within five years.
If I have any overall observation about the Bill and the Governments energy policy, it relates to the breathtaking lack of urgency. The hon. Member for Beverley and Holderness (Mr. Stuart), who has now left the Chamber, commented that five years ago the Government had said that the issue of carbon capture was urgent. When chided, the Minister said We are on the brink of some demonstration projects, seeming not to consider that the elapsing of five years mattered particularly.
The point is that our climate change targets are not being deferred by five years every time the Government delay for five years. When the Climate Change Bill is enacted, dates will be set, and the delays embodied by the Bill will make it harder and harder for us to hit the targets. Every extra year of the consultation, dither and delay that we are about to see on smart metering, even following the amendment of provisions in the Bill, will make it that much harder to achieve the vital goals that we need to achieve.
We discussed the carbon capture provisions at some length. We have no problem with the Governments attempt to introduce post-combustion demonstration projects, but they have scuppered pre-combustion demonstration projects. They have picked a technology, and the history of Governments picking technologies is not a good one.
I cannot bring myself to describe the Bill as a missed opportunity, because it is much worse than that. I think that not only our nation but our planet will rue the day when it missed so many chances to do the right thing.
Mr. Binley: I want to continue the theme adopted by the hon. Member for Northavon (Steve Webb). I was rather encouraged when the Minister began by talking about carbon capture and storage. Great Britain has been given a massive opportunity by the 240 years or so of our energy requirements that lie beneath the surface of this country alone in coal seams, and the ability to extend oil production by up to 25 years. Together those factors could do much to solve our energy security problems, but sadly we have been very timid. The Governments actions in the Bill have closed down progress on carbon capture and storage. The Select Committee was given considerable evidence of thatsome of it as a result of the questions asked by the hon. Member for Northavon (Steve Webb)during its public sessions when we listened to witnesses.
Let me give an example of the way in which the Government have disappointed the pre-combustion lobby. The Centrica-Progressive Energy project at Eston Grange on Teesside is a good example. It proposed an 850 MW integrated gasification combined cycle coal-fired power station with pre-combustion carbon dioxide capture on a brownfield site. Sadly, that has been scaled back now, and the company is reviewing the whole process. A £1.2 million scheme that would have supplied clean power to 1 million homes will not now go ahead, certainly in the form originally suggested.
There is an even more vital concern in respect of carbon capture and storage. We have only a small window for enhanced oil recovery in the North sea. That will not take place now. On pre-combustion, we know the technology exists and is being used in various sites throughout the world. It is not quite put together in the way we would need in the North sea, but it is being used. Many North sea fields will reach the end of their working lives between 2015 and 2022, and that poses a massive problem. We will not be able to address it, because the competition has specified post-combustion and only a demonstration model, whereas I am told by experts that a commercial station can be up and running by 2014 if we have the courage to proceed.
We know that we need to store carbon securely, and that can be done either in oil wells coming to the end of their lives, saline aquifers or old coal mines. What is the advantage of using oil wells in this respect? It is that by shoving carbon down there, we increase pressure and get about 15 per cent. more oil out of those wells. That amounts to up to 25 years of extra oil production. I am told that a 800 MW pre-combustion station will produce 5 million tonnes of carbon per year. One tonne produces three barrels of oil. I need hardly go on
with the mathematicsI can see you looking at me in a concerned fashion, Madam Deputy Speaker.
The point I am making is that the Bill lays some foundations, but the way we proceeded with the competition that is vital to the Bill has closed down much of our ability to exploit two great resources in this country. That is a massive missed opportunity. As the hon. Member for Northavon says, it is more than that; it is a tragedy.
Mr. Binley: Thank you, Madam Deputy Speaker; I will do that. I ask the Minister to build on the Bill very swiftly, by looking at this matter much more seriously and coming forward with real proposals that will carry out the task we need to carry out by relating our coalfields to our oil fields, and thus to provide a real future for our children and grandchildren. The Bill is a start, but we need to go further, and I hope the Minister will tell us how that can happen.
Mr. Weir: The Bill has some good points. The smart meter provisions are a step forward. I hope the roll-out will happen very quickly, but it is more important that we get it right than that we do it quickly, and the Government approach is to be commended.
I have concerns about other parts of the Bill. I agree with the comments of the hon. Member for Northampton, South (Mr. Binley) on carbon capture and storage. The Bill now lays down a joint approach to this, and the Minister said that we are a world leader in CCS but, as has been pointed out, there has been a huge missed opportunity in the pre-combustion market. The Government have gone down the post-combustion route, basically, I think, because they see it as an exportable technology as it can be fitted to coal-fired power stations, but pre-combustion CCS could have given us a world lead in a technology that would have been of huge value to this country. That is a missed opportunity, and I am sad that that has happened.
Earlier this afternoon, I spoke to my amendment No. 1 to clause 36, relating to the renewables obligation certificates banding and the interaction with grants. Although I did not press my amendment to a vote, the issue still gives me great concern. I understood the Ministers comments about state aid and the need not to give double help to projects, but he seemed to be saying that he was converting what was a grant into a loan. A company going for the high-end market and the high-end developments may receive a grant, but then it would receive fewer ROCs in the future or it would repay some of the grant.
What was previously a grant for these developments is becoming a loan, and that will have an impact on cutting-edge emerging technologies and renewables; I am thinking of such things as deep water, offshore wind, and wave and tidal power. The Minister may
come to regret that, but I hope that, even at this late stage, he will at least keep the matter under review to see whether it is having an effect on those technologies and whether we need to consider making a change.
There was a great deal of discussion about transmission charges this afternoon, but as that issue is not covered in the Bill, I shall not say too much about it. I merely point out that it must be dealt with. The Minister again said that a review was ongoing, and I know that Scotlands First Minister has held discussions with Ofgem about the matter. I hope that something will come of all that, and that we will finally be given a solution to a long-running problem, which I seem to have been talking about for years.
As the hon. Member for Rutland and Melton (Alan Duncan) said, much of the Bill deals with nuclear power. Fortunately, Scotland is not to have new nuclear power stations, because the Scottish Executive are much more sensible about these matters, but I remain concerned about parts of the Bill relating to the costs of nuclear power and the disposal of nuclear waste. Given what has happened, it seems that a massive bill is building up, and I suspect that it will affect all United Kingdom taxpayers.
It is noticeable that the costs of the Nuclear Decommissioning Authority have mushroomed almost out of control from the original estimate. If I remember correctly, when it was first proposed in this House the estimate was £20 billion, but the figure has now reached a probable £90 billion. I understand that the NDA is taking up 50 per cent. of the whole budget of the Department at present. I fear that the whole issue constitutes a blank cheque, and that all taxpayers will face a huge bill for nuclear power. My concerns in that regard therefore remain.
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