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Simon Hughes:
I share the hon. Gentleman's regret about the fact that the Danish company Vesta is ending its activities on the Isle of Wight, but I hope that he will
be open enough to accept that one of the causes of its frustration was the consistent opposition to those activities by the Tory-run council there, and by his Tory colleague the hon. Member for Isle of Wight (Mr. Turner). When those at Vesta's headquarters asked what support it was receiving locally, it had to answer, "Very little, if any."
Mr. Ellwood: The hon. Gentleman has made a fair point. As I think I said at the beginning of my speech, we need to find ways of incentivising all councils, whatever their colour or persuasion. If it is true that councils are turning their backs, we must think about how the situation can be reversed. However, I see nothing in the Bill that would take us down that route. I see nothing in it that would persuade councils on the Isle of Wight, in Felixstowe or anywhere else to invest more in technology of this kind.
The position in Europe is just as bleak as it is here in the United Kingdom. Europe is already largely dependent on imports-90 per cent. of oil, 80 per cent. of gas and 50 per cent. of coal come from outside Europe-but we cannot lean on our neighbours and depend on them to provide long-term support for our energy needs. That raises the question of security of supply-another issue that is absent from the Bill. I had an opportunity to visit Georgia and observe the development of pipelines there. A political game was being played, involving the geography of the placing of pipelines in Europe. What is worrying is that Russia is now in a strong position to turn the taps on and off, and we may see prices fluctuate across Europe. We must not find ourselves in that position again, particularly as we approach another tough winter.
We are seeing an abdication of responsibility by the Government. I do not understand the reason for the delay in the introduction of smart meters, and of charging points for electric cars-those were mentioned by my hon. Friend the Member for Tunbridge Wells, and the nation is calling out for them-and the upgrade of the 50-year-old grid. Moreover, surely an energy Bill should focus on reducing heat requirements, given that they constitute 42 per cent. of our energy requirements. It should also focus on greener transport systems. The introduction of TGV-style trains would reduce the need for aeroplanes, and an increase in the number of light railways might encourage people to use their cars less. A particular interest of mine is the introduction of grants or other incentives for councils to provide safer bike lanes, to reduce the need for cars for the school run-a major contributor to road pollution.
There is little in the Bill with which we can disagree-but then there is little in the Bill anyway. As the Copenhagen summit gets under way, I hope that none of the delegates are turning their eyes in the direction of this Chamber to see whether they can learn anything from what is being said here. I fear that they would be sadly disappointed.
From an energy perspective, Labour's period in office will be seen as a wasted decade, and the Bill represents a wasted opportunity. The nation can rightly ask why we have not planned for the future. Our oil and gas are running out, our nuclear power stations are grinding to a halt, and our coal is becoming too expensive and dirty to use. Why has more not been done not only to ensure that we can generate the power that we need, but to ensure that our homes are more energy-efficient? More fundamentally, what has been done to keep the lights on
in the future? I believe that we have just 15 days of supply-although that may have been reduced to four days. The test will be the coming winter. I shall be interested to hear about the Minister's plans for the winter, and the emergency procedures that may be required should it be as harsh as winters have been in the past. We are gambling with people's lives, as was proved by the increase in death tolls during last year's harsh winter.
Earlier generations created the problem of greenhouse gases through ignorance. The Government are compounding that problem with arrogance, by doing so little. We have had 15 Energy Ministers in 10 years. That is recycling at its worst. It seems that we must wait for a Conservative Minister to take the neglect of our energy requirements seriously.
7.4 pm
Dr. Desmond Turner (Brighton, Kemptown) (Lab): I shall not be as churlish as Opposition Members about the Bill. It is indeed a modest Bill, but I think it unreasonable to expect a compendium Bill dealing with every outstanding energy issue to go through Parliament in the limited time that we have before the general election. For obvious reasons, this Bill focuses on what is needed immediately.
I welcome the Bill, and I gather that, in a way, the Opposition do as well, so I assume that they will not vote against it. [Interruption.]
Madam Deputy Speaker (Sylvia Heal): Order. There are too many sedentary exchanges.
Dr. Turner: My apologies, Madam Deputy Speaker.
As I was saying, this is a modest Bill. Only three issues, in my view, have not been addressed at all, or have not been addressed as much as they might have been. The reason why we need the Bill is clear, however. We have a liberalised electricity market, for which we must thank the Opposition in their former role as the Government. I sometimes think that our problems with energy policy would be much easier to deal with if we still had the late, lamented dear old Central Electricity Generating Board. If that were the case, we could simply say, "We are going to do this," rather than having to act through a purely commercial market. All change is not progress, and the liberalised electricity markets have created more problems than solutions.
Low-carbon or zero-carbon technologies cost more than fossil-fuel technologies. It is as simple as that. Deploying those technologies requires market support mechanisms, or, to put it more crudely, subsidies. There is no way of getting around that in the present circumstances, and it is the reason for part 1 of the Bill. No one will invest in the building of plants with carbon capture and storage without a subsidy to cover the extra cost. That basic fact applies to renewable energy and, indeed, to the nuclear industry. If the nuclear industry had to compete with gas or coal-fired power generation on costs, it would not have a chance. It has made that clear through a number of darkly muttered remarks, for example, about the need for a sufficiently high carbon price to underpin its investment. The industry would also like long-term supply contracts, thank you very much, to guarantee it flat-out running of its reactors and make it as economic as possible.
Mr. Goodwill: The playing field would, of course, be more level if the fossil-fuel generators had to take care of their own waste. At present, they simply expel it into the atmosphere for us or future generations to deal with. At least the nuclear industry contains and processes its own waste. Surely that is the point of what we are discussing today.
Dr. Turner: I think that one of the best ways to level the playing field is to have a realistic carbon price. We currently have a ludicrous price in the EU emissions trading scheme. I know that one of the things that my right hon. Friend the Secretary of State hopes will emerge from Copenhagen is an internationally agreed means of increasing the carbon price.
Mr. Weir: I was somewhat astonished by what the hon. Member for Scarborough and Whitby (Mr. Goodwill) said about cost. Would the hon. Gentleman care to remind us of the current cost of the Nuclear Decommissioning Authority to deal with historical nuclear waste, never mind new nuclear waste?
Dr. Turner: It is about £70 billion, but I have slightly lost track; there is, however, a mounting pile of both waste and cost. I should add that the nuclear industry does not want to know about making a level playing field.
Returning to my theme, the whole process would be made a great deal easier if we had a sensible carbon price. If we had such a carbon price, we would not need to exact as much money through a levy from electricity consumers. It is the electricity consumers who will have to pick up the tab for the levy, and £9.5 billion is quite a lot of money. It could be raised through a carbon tax-that was a Freudian slip. I have long advocated our having a carbon tax, but I should have referred to it being raised through a carbon price-although that does not really matter because a sensible carbon price would, in effect, be a carbon tax, so that is just semantics.
It has now become really quite respectable to suggest that we should have a mechanism for underpinning the price of carbon. That has now been suggested by Lord Turner, chair of the Committee on Climate Change, and by many others. If we had a realistic carbon price, that would help to level the playing field for competition in generation. We need to do that, because it is unrealistic to think we can continue to subsidise everything, as we have to do now to get decarbonised electricity supply.
We cannot do that through regulation because of the liberalised market. We could regulate, however, to say not only that no coal-fired power station will be built without CCS in place, but that there will be no coal-fired generation at all. Under that restriction, only zero or low-carbon generation technologies would be licensed, but we would not get those power stations built, because the capital markets are in such a bad state that no one would invest in them. We are therefore, in effect, having to cough up subsidies to satisfy bankers. It all comes back to bankers-I am sorry to have to say that, but it is true. They want to see returns on their investments, and the only way they can get them is through subsidies: in this case, it would be the CCS levy, and in the case of wind and other renewables, it would be renewables obligation certificates. Either way, there has to be the subsidy.
That brings me on to the first matter that I would have liked the Bill to address. As has been mentioned, we have some of the best raw energy-producing resources of any country in the world in terms of wind, wave and tidal stream, but although some of our wave power and tidal stream technologies are at the point of being ready for commercial exploitation and deployment, that will not happen under our current market support regimes. Even if the double-ROCs for offshore wind could be accessed, it would not be enough because such new technologies have higher capital costs, which can only come down with increased scale, the development of supply chains and so forth.
Other countries, notably Germany and Denmark, have deployed market support systems that will develop technologies so they reach the point of cost reduction. In the process, although such countries may have to invest a bit, they will gain enormously in terms of the green industries they develop. We could have had the wind industry in Britain if we had done that. Like Germany, we might now have had 250,000 extra jobs and several billions of pounds-worth of turnover from the manufacture of wind turbines. We have an opportunity with wave and tidal stream technology, but it will not happen unless we put in place a market support mechanism-to be brutally honest, a subsidy-that will bring that through.
I would have liked to have seen a provision in the Bill to extend the levy principle to support and foster new technologies, because none of the current market support systems are doing the job. We could have a magnificent tidal stream industry in this country, as exemplified by the first commercial machine, SeaGen, in Strangford lough. There is a danger, however, that those involved in the industry will be forced to go to other countries, where there is a market support mechanism.
Mr. Elliot Morley (Scunthorpe) (Lab): My hon. Friend is making a very good argument. On market mechanisms, does he not agree that we might look back at a previous Bill on feed-in tariffs? I know it depends on the scale of generation, but there is a possibility of helping emerging technologies through the feed-in tariff applied. Although the Department of Energy and Climate Change has put in place a very good tariff structure, is there not an argument for having a higher rate-perhaps only temporarily, for a few years-to encourage those new technologies?
Dr. Turner: I absolutely agree, and I thank my right hon. Friend for that intervention. I do not mind whether the measure in question is called a feed-in tariff, a multiple ROC or a special levy, as long as it does the job. Obviously, it would be temporary and tied to the state of development of a given technology. If we do not do that, however, we run the risk of losing an industry that this country could have-it is on the point of development-and that could produce gigawatts of power that could, in turn, produce great industrial benefit. If that does not happen, we will still want to deploy tidal stream power in this country, because we have so much of it, but instead of being the manufacturer and getting 100 per cent. of the added value of deploying the technology, we would get very little-perhaps about 10 per cent. We would be a client. We would be importing machines made abroad that could have been made in Britain, and we would lose a potentially huge export industry as well.
I therefore make the following serious plea: we should examine the possibility of incorporating in the Bill a new support mechanism for emerging technologies, so that we no longer have to try desperately to get the Treasury to agree to tweaking the existing mechanisms. That just is not happening, and that is extremely frustrating for those in the industry, those who want to see it develop, and all of us who want this country to have the low-carbon electricity it can produce for us and the contribution it can make towards our climate change efforts. I think we have now had enough of that whinge, although it is intended to be a very constructive whinge.
It is inevitable that energy prices will increase. I cannot think of a single factor that would bring them down. Oil and gas prices are going up and the recession will not counter that. The general trend is inexorably upwards, just as the general trend in climate change is of global warming and temperatures moving inexorably upwards. It is vital that the increased burden of decarbonising energy is shared reasonably and that it does not fall on the poorest sections of the community, so I very much welcome the social tariff provisions of the Bill. I think that they are long overdue. We need to ensure that they bite the energy companies. It means that the rest of us have to pay, but I have no objection to that. Some of us accept that principle with taxation, although I cannot say that everybody does.
That is vital, but the tariff is not the only thing. Quite a lot has been said already about energy efficiency, and a social tariff regime needs to go hand in hand with increased energy efficiency. Whatever financial difficulties there are, we need to explore alternative mechanisms of ensuring that those people at the lower end of the income spectrum who will benefit from the social tariffs can also benefit from support for increasing the energy efficiency of their homes. That is the other gap in the Bill as I see it. Such an approach will not necessarily involve great expenditure on the part of the Treasury and it can be done by manipulation of the market. I would like to see that explored.
Finally, we come to my concerns about Ofgem. Those who are easily bored might remember that I have been having a pop at Ofgem for many years now, trying to get some responsibility for sustainability into its mandate. Ofgem has resisted that quite strongly. However, my efforts achieved something in 2004, when sustainability was added to the secondary responsibilities of Ofgem-I cannot remember the list of them now, but it was quite long. There it stayed, but it made very little difference to Ofgem's behaviour in practice because Ofgem has focused almost entirely on competition and security of supply up until now. I am very pleased that the Bill puts sustainability and climate change at the top of Ofgem's primary responsibilities.
It will be extremely interesting to watch the behaviour of Ofgem when it has to consider such matters as its primary remit, with everything else following them. That should produce a culture change that is long overdue. Ofgem's role is central to all energy policy, so if it is singing from the climate change hymn sheet, we might see some real progress towards large-scale deployment of renewable energy.
Martin Horwood: I am broadly in sympathy with the hon. Gentleman's argument. It is long overdue that sustainability should take a major place in Ofgem's remit. Is he satisfied with the rather circuitous and convoluted way in which the Bill attempts to do that, by redefining sustainability as one of the consumer benefits?
Dr. Turner: That is an interesting question, but I do not think it matters. The provision states quite clearly that sustainability is a primary part of Ofgem's responsibility and, of course, it is a consumer benefit. Fighting climate change is as much a consumer benefit as anything else. In fact, I think that it is probably one of the greatest benefits that we can give to successive generations of consumers. I do not have a problem with that. As long as Ofgem finally starts to go green, I shall be quite happy.
The other thing that worries me about Ofgem is that, although for years it has been rather tentative in its regulation and how it has tackled abuses of the energy market by energy companies, it needs more powers. Even if it has the will to go in a particular direction of enforcement, it definitely needs more powers. The Bill contains some. Although I have not worked through the issue enough to define the extra powers that I think Ofgem might need, this is one part of the Bill that will need very careful scrutiny in Committee. It could well be expedient to increase further Ofgem's powers beyond those that are already in the Bill.
I endorse the Bill, although I think it can be improved. I realise why it is a modest Bill. It fits within a time setting. It is what it is and can only be what it is. However, even within the limited time that we have left of this Parliament, I think that it can be usefully improved. I sincerely hope that the whole House will at least give it a Second Reading.
7.27 pm
Mr. Robert Goodwill (Scarborough and Whitby) (Con): It is a pleasure to follow the hon. Member for Brighton, Kemptown (Dr. Turner).
We have become accustomed to relying on an uninterrupted supply of electricity in this country although, as the hon. Member for Sherwood (Paddy Tipping) mentioned and as I also read in a report from the Environmental Audit Committee-in fact, only the Minister has not recognised it-we are heading for a situation in which the lights could well go out in 2017.
Every aspect of our modern life is plugged into the grid. There are usually no back-up arrangements, except perhaps for hospitals or dairy farmers who need to keep their milking machines going. For many vulnerable people and families, the prospect of losing power supplies is a real concern. Even our gas central heating systems and cookers rely on electricity to function, so there will be no Christmas dinner without electricity. In fact, a couple of years ago in my part of north Yorkshire there were power cuts on Christmas day, which created particular problems.
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