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4.30 pm

The Secretary of State for Energy and Climate Change (Edward Miliband): I beg to move, That the Bill be now read a Second time.

Today is an appropriate day to discuss the Energy Bill-at the opening of the Copenhagen conference and before the ministerial meetings that will take place in its second week. Those talks are an essential part of the context of the Bill that we are debating, and in the past two weeks we have seen signs of progress from China, India and the United States. They have all put targets on the table, and we are determined to use our influence to get the best agreement that we can, consistent with the science. We are determined also to show the maximum ambition in our own plans, and that explains the Bill that we have brought before the House.

Given recent events, I should also like to say that we are here to debate a Bill that is driven in large part by the science of climate change. It is important to take this opportunity to restate briefly the case on the science, because it underlies today's debate. The science is not from politicians, but from scientists: the Intergovernmental Panel on Climate Change, whose work is based on 4,000 experts; the national academies of science of the G8 developed countries and the five leading developing countries; and, here at home, the Met Office, the Natural Environment Research Council and the Royal Society. All those organisations are clear that the science is unambiguous-that climate change is real and man-made.

Of course the science is not static, but we must not somehow suggest that robust and near universally accepted science is merely of equal validity to the views of a very small minority of people, many of whom are not scientists. Importantly, one chain of e-mails does not undo decades of climate science, and particular responsibility lies with Members of this House and, indeed, of the other place not to seek to sow doubt or to replace the view of the science with their prejudices.

Mr. Robert Goodwill (Scarborough and Whitby) (Con): Does the Minister share my concern that the media-some of the tabloid press, in particular-choose deliberately to misrepresent the science just to sell a few more papers?

Edward Miliband: I actually think that, by and large, members of the press, including the tabloid press, have during this year embraced the idea of climate change and the need to tackle it. However, the hon. Gentleman makes an important point: in this process, we rely partly on the press to make clear the burden of evidence and views and where they lie, and, indeed, the balance of views and where they lie. Anything that the press can do to help us to make that case is very important, because we are debating difficult decisions-and nobody should be under any illusion that they are not difficult. If people come away with the impression that the science is somehow not settled, or that there is an easy way out, we will face difficulties.

Nigel Griffiths (Edinburgh, South) (Lab): Does my right hon. Friend accept that the validity of the arguments and the scientific case for the existence of climate change
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is completely undermined by people such as Lord Lawson and the Conservative MEP Richard Helmer; and, that the Conservatives must do more to ensure that they align themselves with our policies and the policies that the British public want?

Edward Miliband: The truth is that we need as much of a consensus as we can get on these issues-from all parts of the House. That is very important, and that is why I emphasise the importance of us all showing responsibility, rather than setting ourselves up as scientists and somehow substituting for the views of the science. It is important that politicians act on the basis of the science, and that is what we seek to do.

Justine Greening (Putney) (Con): The right hon. Gentleman talks about acting on the evidence of the science, but he knows that in the case of Heathrow airport, involving an important decision that will affect the environment, the only costed emissions were those of outgoing flights, not of incoming ones. How can he be serious about taking good decisions if his own Department does not get its maths right?

Edward Miliband: The hon. Lady has a long history of campaigning on this issue. I agree with her about the need to make decisions such as that on the third runway at Heathrow in the proper context. That is why we are the first Government in the world to say that we will stabilise aviation emissions at 2050 levels. Indeed, there will soon be a report from the independent Committee on Climate Change on that precise point.

Bob Spink (Castle Point) (Ind): The Select Committee on Science and Technology was in absolutely no doubt about the validity and strength of the case that climate change is happening and that it is the result of man's activity since the industrial revolution. Even if some of the science can be questioned, the consequences for the planet and mankind are so dire that the precautionary principle should be observed, and I congratulate the Government on taking that line.

Edward Miliband: The hon. Gentleman is completely right. The precautionary principle was emphasised by the hon. Member for Bexhill and Battle (Gregory Barker) in a debate that we had a few weeks ago. It is right that we should follow the precautionary principle in this process; in a way, that is an important part of the argument. However, in emphasising the precautionary principle we must not give a sense-I know that the hon. Member for Castle Point (Bob Spink) is not doing this-that the science is not settled and that we would be better off being cautious. The science is clear and overwhelming, and the precautionary principle adds extra weight to that.

Dr. Brian Iddon (Bolton, South-East) (Lab): Whether one believes that emissions of carbon dioxide into the atmosphere produce climate change is a big argument, but does my right hon. Friend agree that there are two other important reasons why we should not be burning fossil fuels? First, we are acidifying the sea almost beyond the point of no return. Secondly-I speak passionately as a chemist-producing energy from carbon fuels is a very inefficient process, and we need those carbon fuels as larders of chemicals for the generations of the future, so it is a sin to burn them.

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Edward Miliband: My hon. Friend speaks with great knowledge; indeed, much greater than mine. My chemistry is probably as bad as my brother's physics in terms of his performance at school. My hon. Friend is completely right about that point and about ocean acidification, which is a serious issue that lots of oceanographers and others are very concerned about.

Simon Hughes (North Southwark and Bermondsey) (LD): The Energy Secretary is clear that he is persuaded by the science and that the scientific evidence is overwhelming, which is the view of those on the Liberal Democrat Benches and on the Conservative Front Bench. Can he confirm that the logic of that is that the UK Government, this week and next, on their own and with the European Union, will go for the toughest, strongest, clearest binding agreement so that we can not only follow the precautionary principle but remember that we are going in to bat for a world where countries such as Bangladesh and the Maldives have the chance of a future, not just countries such as ours which caused the bulk of the problem in the first place?

Edward Miliband: I think I can say yes to that intervention. I agree with the hon. Gentleman that we need the toughest and most ambitious agreement possible and the shortest track to a legally binding treaty.

Mr. Tobias Ellwood (Bournemouth, East) (Con): The right hon. Gentleman gave his maiden speech just after I gave mine; I congratulate him on his epic rise to fame on the Front Benches.

Taking up the issue of fossil fuels, we now know that nuclear capacity is running out and that we are running out of oil and gas. What have this Government done for the past 10 years? It is as though the Secretary of State is the boy scout who has turned up late for camp and finally realised that he was responsible for lighting the fire, so everybody will get very cold and angry. Have we not just had a wasted decade?

Edward Miliband: If we are talking about responsibility, I have to say that the alarmism that Opposition Front Benchers have engaged in on these issues is of no help at all. The answer to the hon. Gentleman is that we have very clear plans, as I will explain, on renewables, where we are now the leader in offshore wind, on nuclear power-opposed tooth and nail by the Opposition, whose leader said that it was a last resort-and on clean coal.

Mr. Mike Weir (Angus) (SNP): I very much agree with what the Secretary of State has said, but even if we get an agreement at Copenhagen, there is still the problem of having to explain to people what the figures actually mean. If we are talking about 80 per cent. reductions, that will mean massive changes in our economy. I am not convinced that the people of this country really understand what it means as yet.

Edward Miliband: I agree with the hon. Gentleman that, as I said at the weekend, there is a mountain to climb and a huge amount to do to explain to people the scale of the changes that we are making, such as 10,000 wind turbines between now and 2020, more nuclear power stations and the clean coal technology
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that I have talked about-and that is just in the energy sector. Those are big changes, and I will not pretend that they are not.

The central response to the challenge of the science must be for the Government to understand their role in making the low-carbon transition happen. The truth underlying the Bill is that markets left to their own devices do not put a price on carbon emissions and will not bring forward the investment and industrial policy that we need, nor will they provide the right energy mix for the future. Our low-carbon transition plan, which was published in the summer and widely welcomed, sets out sector by sector what needs to change to meet our commitment to a 34 per cent. reduction by 2020. I believe that we are the first country in the world to do that. It builds on the fact, which Opposition Members often forget, that we are one of the few countries to have met and exceeded our Kyoto targets, with greenhouse gas emissions 21 per cent. below 1990 levels.

Previous legislation, including the Climate Change Act 2008, provides us with many of the powers that we need. In the Bill, which is relatively short because of the length of the Session, we provide for legislation on three particular matters that are central to the task that we face. First, to clean up our energy supplies, it legislates for a levy to provide unprecedented investment in clean coal. Secondly, to improve the deal for consumers, it strengthens the power of the regulator and ensures that it must be proactive for the consumer. Thirdly, to deliver fairness, we are introducing compulsory cut-price energy for the most vulnerable customers.

Mr. Michael Clapham (Barnsley, West and Penistone) (Lab): Does my right hon. Friend agree that carbon capture and storage is important for the UK, because it will give flexibility to the energy mix, but even more important for the world? Exporting post-combustion technology will allow the bolt-on application that will help to reduce carbon dioxide throughout the world and help us to reach the 2050 targets?

Edward Miliband: My hon. Friend is absolutely right. We have said that there will be up to four carbon capture and storage projects, up to two of which will be post-combustion and up to two pre-combustion. That is not just for domestic reasons but for the international reasons that he mentions.

My hon. Friend's comments take me to one of the central purposes of the Bill, which is to provide for a levy for clean coal technology. In total, the new levy will provide up to £9.5 billion over the coming two decades. It is fair to say that in a world of tight resources, it must be right to provide a dedicated stream of funding for clean coal and CCS. It is the largest single investment in CCS by any country in the world, including the United States. Let me be clear about the timetable, which has been raised with us: if the measure is passed, the new levy will come into force in 2011. Next year, before its introduction, we will launch a competition for the up to three additional projects that will benefit from it, alongside the current competition. We need to move quickly on CCS, that is what we will do, in support of our central aim to demonstrate CCS and make it ready for widespread deployment by 2020.

The importance of that is that it is right not just for our environment but for our economy. As many hon. Members know, the CCS industry could provide Britain
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with up to 60,000 jobs by 2030. Furthermore, CCS can be good for our long-term energy security, as my hon. Friend has pointed out on a number of occasions, because it will give us greater diversity in our energy sources. As we develop it and make it viable, there will be future steps to ensure that it can be applied to gas-fired power stations as well.

Mr. John Grogan (Selby) (Lab): The Secretary of State mentions consumers, so is there not now a compelling case for him to use his powers to refer the big six energy companies and the relationship between consumers and wholesale prices to the Competition Commission-that is supported by Consumer Focus, the statutory consumer body-given that the commission alone has the powers to break down barriers to entry to the market and that the enhanced powers for Ofgem in the Bill will not come fully into effect until 2011?

Edward Miliband: My hon. Friend has thought deeply about this issue and we have discussed it. The Competition Commission remains a potential last resort, which I still consider it to be. Let me explain why. For a Competition Commission inquiry, we are looking at one to two years, and further remedies will take longer. The commission looked into the liquefied petroleum gas market, but it was five years between the initial investigation and the final remedies being introduced-not that I hold the commission responsible for that.

However, the intent behind my hon. Friend's question is right in the sense that we have cause for concern, including about what Ofgem has shown today, but the Government need to think about a policy response, and we have work going on around the road map for low carbon that will be published in the spring. It is better to look at policy options-Ofgem will indeed have a report out early in the new year-rather than at a lengthy Competition Commission investigation.

Sir Robert Smith (West Aberdeenshire and Kincardine) (LD): The Secretary of State mentioned in passing that CCS would be rolled out to gas-fired power stations as well. Nothing in the Bill does that, so how will that step be taken?

Edward Miliband: I think the urgency is to make coal carbon capture work-CCS for gas is farther down the road. We know that coal-fired power stations have approximately double the emissions of gas-fired power stations. The North sea industry, for which the hon. Gentleman campaigns vigorously, can play a crucial role in that area of CCS-indeed, I enjoyed a recent visit to Aberdeen.

That takes me to the second part of my remarks, which is about the consumer. I welcome the fact that in the past year, we have seen an improvement in certain areas; for example, for prepayment retail customers, which has long been campaigned for by hon. Members. A year ago, people on prepayment meters paid £41 more for their energy than standard credit customers; today, that differential has been effectively eliminated.

However, there is a lot further to go, as I said in reply to my hon. Friend the Member for Selby (Mr. Grogan), and the Bill provides for three important changes in regulation. Central to the Bill is reforming the duties of Ofgem. It is wrong to think that competition alone can
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protect the consumer, so the Bill makes it clear that Ofgem must use all the measures at its disposal, not just competition. It is wrong that generating companies can unfairly exploit market power to overcharge consumers, so we are responding to a request-such a request was turned down some years ago by the Competition Commission-to provide Ofgem with new sanctions against market power exploitation in the generation market. It is also wrong that companies can escape penalty if abuse is not discovered for more than a year. To ensure that the enforcement regime provides an effective deterrent, the Bill extends the time limit within which Ofgem can impose penalties for licence breaches from 12 months to five years. That suite of new powers significantly strengthens the powers of the regulator to ensure that the costs of energy are fairer.

Mr. David Heathcoat-Amory (Wells) (Con): As the Secretary of State is going to change Ofgem's powers and duties, has he considered doing so in relation to new grid transmission lines? He will be aware of a new proposal by National Grid for a high-voltage line across the Somerset levels. Only two options have been proposed, but a sub-marine option up the Bristol channel was excluded even before consultation began. If he is considering making changes, will he put additional obligations on National Grid to consider other options for that type of environmental project?

Edward Miliband: The right hon. Gentleman raises a local issue that is of some importance, but I confess that I do not know the details. On the question of grid access, which is a significant and wider problem, he will perhaps be aware that I exercise powers-under the last Energy Bill we had, in the summer-to set the terms of grid access, which has been a perennial problem in relation to renewables. We pledge that that process will be completed by the summer of 2010, and we are on track to do that. On the local issue, he may wish to write to me or one of my colleagues and we will look into it.

Miss Julie Kirkbride (Bromsgrove) (Con): The Secretary of State is right to say that there are some important issues connected with being fair to consumers given some of the monopolistic powers of the energy generators. Why has he rejected the suggestion of a legal requirement for gas storage, as is the case in other European countries? Some people believe that that allows those countries' markets to behave in a fairer way towards consumers, whereas our market, which has such a limited supply of gas storage, has enabled some of the suppliers to behave poorly.

Edward Miliband: We do need more gas storage, and the hon. Lady, as a member of the Select Committee, has expertise in these matters. The reason we are worried about the proposal that she recommends-we will shortly respond to the recommendations of the Wicks review, which looked at some of these issues-is the danger that it could take the pressure off the companies in terms of what they need to do to build more gas storage. If we substitute our judgment in these matters for their judgment about what is necessary, the danger is that we increase costs to consumers and inhibit future plans for gas storage.

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The third issue is the question of vulnerable consumers, which is very important to hon. Members. As well as strengthening general powers of regulation, the Energy Bill will do more for vulnerable consumers. We need to help those most in need through higher incomes, energy efficiency and prices. That is why we have introduced and increased the winter fuel payment and brought in higher cold weather payments. Since 2002, 6 million homes have received loft or cavity wall insulation, and we are on the way to loft and cavity wall insulation for all houses where it can work by 2015. But we need to go further. Today we are announcing pay-as-you-save pilots in five parts of the country to test out a comprehensive, whole-house approach to energy efficiency, supported by finance, as is necessary to make it happen. This is on the way to whole-house refurbishment, beyond loft and cavity wall improvements, for 7 million homes by 2020 and for all by 2030. This will help save money for consumers.

But we also need action on tariffs. The current voluntary agreement on social assistance with energy companies has already helped more than 1 million customer accounts. However, the powers in the Bill will mean that rather than a voluntary agreement, there is a compulsory money-off energy deal for vulnerable customers. We will increase the total amount of help, up from the level of £150 million in the final year of the current voluntary agreement. We want the new system to ensure that older, poorer pensioners in particular receive assistance with their energy bills and we will set out more detailed plans in the coming weeks.

John Robertson (Glasgow, North-West) (Lab): How will that scheme be paid for? Will it be the taxpayer who ultimately pays or will the companies be expected to use some of their profits to pay for it?

Edward Miliband: As for many of these levies, the cost will be spread across other bill payers. Alongside that, we need the tough regulation that I am talking about, which bears down on prices as much as possible. It is right that we take action to help the most vulnerable consumers in our society, and a voluntary agreement is inadequate in the current circumstances. We will have more to say about that in the coming weeks.

Several hon. Members rose -

Edward Miliband: I have been generous in giving way, but I will give way to the Chair of the Select Committee.

Paddy Tipping (Sherwood) (Lab): I welcome the announcement about mandatory social tariffs. The Secretary of State said that the poorest pensioners will benefit, but will he look at the case of people with long-term chronic illnesses and, in particular, the campaign run by Macmillan for people with cancer?

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