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Thirdly, in the Energy Review Report last year the Government noted that:

Many of those are power stations that are going to have to close because of the EU Large Combustion Plant Directive. Will—or perhaps I should ask, could—retiring coal power station sites be nominated for new nuclear development under the Government’s siting consultation process?

All these questions are based on statements that the Government have already made. I hope that I can get some answers. When the noble Lord comes to wind up the debate, he will recognise that I do not expect him to give me detailed answers to my questions, but I would very much welcome a general response and perhaps an undertaking to write to me in greater detail.

The Government have embarked on what seems to me at last to be the right road towards what might become a viable energy policy. As I said at the beginning of my speech, it is very welcome that we can expect decisions before the end of this year. We shall want to hold Ministers firmly to account as the decisions which must be taken are taken.

2.26 pm

Lord Chorley: My Lords, as is customary, I start by congratulating the noble Lord, Lord Jones of Birmingham, on his maiden speech. He has made it on an important subject: energy policy and the recent White Paper. This is the third White Paper in four years, and I am bound to say that the previous two rated, in my book, as perhaps only beta minors. This one is much better; it is more comprehensive and begins to give us a well argued way forward. But, as many noble Lords have said in the debate, we need to see some action now, and therefore we all welcome what the noble Lord said this morning without any prompting, shall we say. I say this in the main from the rather narrow fronts of, first, electricity supply and, secondly, climate change.

In previous debates I have talked about carbon emissions in transport, particularly aviation. They are important and quite topical subjects, but today I will confine myself solely to electricity supply. I do so for several reasons. First, as the Minister said, it is our biggest single CO2 emissions source, at about one-third. Secondly, it is probably the easiest one to deal with.

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Thirdly, as the White Paper acknowledges, it so happens that the next dozen years will present a unique opportunity to do something significant and make a major contribution to CO2 reductions, and to do so in a manner which is or could be near economic. The caveat of “near economic” is of great importance. We can do things which are pretty expensive—offshore wind power is the obvious example—but there are limits in terms of security of supply and of cost. The opportunity is derived from the fact that, between now and 2020, about a third of our generating system needs to be renewed. All this is well argued and set out in chapter 5 of the White Paper.

I am not going to speak at length about renewables but will make three brief points. First, they are in my view a red herring, a sop to the “hair shirts and sandals” people. They would be lucky to achieve 20 per cent, which is just as well as they are expensive, which is my second point. A new renewable obligation of 20 per cent is just about affordable in terms of subsidy, but the figures are beginning to get pretty big and it is increasingly worrying. Thirdly, the environmental damage to our countryside is factored in only when the planning aspect is brought into play. In that connection, the thought of a Severn barrage horrifies me. The damage it will do to wildlife and the estuarine countryside—that is, the birdlife—is difficult to contemplate. Whether a tidal flow scheme, as compared with a barrage, is a possibility may be worth examining. Nor do I wish to say anything about nuclear. The Government are still treading gingerly in this area. I can understand why, and I hope that under the new leadership we can move forward. A new consultation document—here I agree very much with the noble Lord, Lord Jenkin of Roding—has much to commend it. There is no question, either on basic economic grounds or on CO2 grounds, that the new generation of nuclear power stations is pretty good. Surely by now we can put to bed the decommissioning issues. We have had countless reports on this, including some from House of Lords Select Committees. Surely we can move on now, following the consultation. I encourage the Government to grasp this nettle. In the interests of diversity of supply—not too many eggs in one basket, that is—I would like to see around 25 or 30 per cent of our supply from nuclear.

I come finally to fossil fuels—about 50 to 60 per cent of future supply. Gas and coal are highly economic, excluding the carbon footprint. There are big question marks, of course, over gas supplies from Russia, but we can thank President Putin for alerting us to that danger. The other big question is surely the economics and the technical question of carbon capture and sequestration—CCS. How well are we—not just Great Britain—progressing with this technology? What is the timescale? When do decisions have to be made? What do the electricity supply companies think? In my notes I wrote, “Where have we got to on the important and imaginative scheme of BP at Peterhead?”. I got the answer from the speech of the noble Baroness, Lady Wilcox. BP has had to abandon it because the Government were incapable of coming to a decision. I am appalled by that. Now that we have a businessman in charge, perhaps these sort of disasters will be prevented.

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I understand that decisions are required from Government, but where have we got to? I go on about this because grinding away at the technology of CCS, carbon capture and storage, seems to be the key to the future of the electricity supply industry. I suspect that CCS, combined with other technical improvements in electricity generation, is not that far off from being economic. Does the Minister agree? What price does his department put on carbon that would equate with the extra cost of CCS? In addition, if he agrees with this line of thought, do we have enough regulatory powers to push the electricity companies in this direction? The White Paper suggests, in rather general terms, that Ofgem has these powers. Can the Minister confirm that Ofgem has the power to ensure that the generating companies make timely and appropriate investments with low carbon footprints? I am referring here to box 5.1.1 of the White Paper.

I conclude with a few observations on the EU Emissions Trading Scheme, which has been referred to by a number of noble Lords. I am sure that the Government are right to seek agreement to strengthen and reinforce the ETS to provide firms with greater long-term carbon market certainty. In particular, we surely need a much higher carbon price—other noble Lords mentioned this—and a much more stable price, if CCS is to become an economic reality. Moreover, the ETS is surely the way forward to international carbon trading, with all the benefits of classical economic efficiency. It is a large and hugely complex subject, but the objectives are clear. I leave it at that.

Finally, if there is one conclusion that comes through from this debate, it is that we have had enough talk about White Papers. We now need decisions and actions.

2.34 pm

Lord Brennan: My Lords, this White Paper is to be welcomed, as is the manner in which it was presented to us by the Minister. He is well equipped, from his experience and abilities, to deal with a very complex problem. He will remember Harold Macmillan giving advice to colleagues, when dealing with something very complex that takes a long time: he said that the balance between delivering a cliché or making a terrible mistake is a state of delicate equipoise. We are confident that he will avoid both.

I want to concentrate on chapter 1 of the White Paper, which deals with energy security, and in particular security of supply. The word “security” in this context is used in its traditional rather than its intelligence sense. So where in this context we speak of “national security”, we mean it in a most compendious way—it includes government, business, industry, finance, the people and the way we live economically in this country. Security of supply of energy requirements that will sustain our national security is absolutely vital. All the other parts of this White Paper are equally important. But in the shorter term—the next 10 to 20 years—we cannot afford to neglect our critical dependence on traditional energy supplies. Their security is therefore something we must work for. We should work for it in our national interest, in the expectation that that would usually coincide with the international interest.



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What are the essential factors that affect our national interest at the moment? Most of our energy requirements will have to be met by imported supplies for the foreseeable future. We remain a trading nation, right down to energy. Secondly, the chief executive of Shell said recently that by 2050 the world’s use of energy will double from its present volume. Thirdly, the International Energy Agency this week predicted a period of five years plus of what it called a supply crunch—an extremely tight market. Higher oil and gas prices will remain. Of course the economist and the financier will tell us that most of the time that can be accommodated. But it cannot readily be accommodated at the personal level. Higher oil and gas prices, persisting over time, mean more expensive petrol, more expensive utilities and more expensive food, so that every citizen is affected economically.

My fourth point involves resource nationalism. It is here to stay in some countries, and, because they have such massive resources, the rest of us will accommodate the nationalisation of their products. But this resource nationalism means that, in a period of higher prices, there will be a restricted supply and little inclination to spend lots of money on discovery and exploration—a circular system that maintains a high price level, if that is possible.

The last point about these external factors concerns resources. Anyone who has been to an energy conference will remember the bar charts for gas and oil that show us, each time, which entities supply the most and have the greatest reserves. For gas, it is Gazprom; for oil, it is Saudi Aramco. Those bars on the chart literally go off the page compared with any other similar entity. In effect, two entities are in seriously important positions of control of world energy supplies.

What do those five factors mean? They mean that we as a country need energy at an expensive price, which is likely to continue, from limited sources, some of which may be unstable, with little prospect in the foreseeable future of big new reserves being found. That state of affairs requires of our Government and our country some really serious thinking about security of supply. I propose some suggestions under three headings.

The first is that we adopt a more aggressive search for energy supplies. One of the least publicised but most important achievements of the last Government towards their end was the agreement with Norway for long-term supplies of energy—an ally, a neighbour and geopolitically secure. What about Qatar? I imagine that our ambassador there is treated as one of the more important people to speak to on the phone occasionally. What about Libya? It is opening up into the market. Algeria presently wants to feed gas into Spain, France and probably beyond.

What of our gas infrastructure, which is designed to meet these new sources? That means going out into the market and getting it. How do we do that? First, I suggest an advisory group; not a talking shop, but one which consists of energy experts, financiers and geopolitical planners, who meet the Government from time to time to talk it through, as would any big business if it had the capacity to deal with such a problem. No civil servant reading the White Paper

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could enjoy the hubris of thinking that any Government could achieve it all through their own resources.

Next, why do not we appoint “energy ambassadors”? I refer not to diplomats but to people who cross the energy, political, business and government divides, and who spend their time, within reason, looking for our markets, preserving those we have and seeking to make our supplies secure, being on top of the issue. This is geopolitics of a serious kind. May Kaldor’s recent book, Oil Wars, makes plain to us that which we should have known historically: that the present panorama in many ways repeats that which existed towards the beginning of the 20th century—the oil wars of that time where Baku was the Riyadh of its epoch. So I suggest a more aggressive policy built on skill, experience and determination.

Next, we must look for a more reliable market. The governance of the countries upon which we are dependent in this regard is unreliable. It is amazing that we should be conducting the world economy without anyone really knowing how much oil reserves there are or what the future gas capacity will be. For 15 consecutive years, Saudi Arabia has declared that its reserves are 280 billion barrels, even though in the same number of years it has consumed 100 billion barrels. The absurdity of that state of affairs should worry us if, as I pointed out, Saudi Aramco is the key supplier. Where is it all going? So I suggest better governance and more transparency. At 1.29 of chapter 1, the Government say that the UN should work for that transparency in the interests of us all.

Next, under the heading of the more reliable market, we have an energy charter. It exists to preserve a system for energy usage around the world, based in Brussels. As my noble friend Lord Haskel indicated, why do we not have a European energy security charter to which we sign up as allies and supporters of a single market, not to divide the supply of energy into Europe but to unite it in the most productive way? If one looks at a map showing gas and oil supplies into Europe, it is all from the east—not the Middle East. One can see the lines for gas and oil criss-crossing pretty well every European country. Has anyone planned it, negotiated it, or thought it through? Of course not. It has happened coincidentally with one national interest meeting another. So the Russo-German gas pipeline under the Baltic could create the supply alliance between two very powerful countries. What about the remainder of Europe? Again the word “Russian” is not coincidental here. Its proposal for an oil pipeline—Bulgaria, Greece and Italy—completes the circle of supply and potential market control. That requires European action.

Lastly, I refer to a market with security of supply that remembers the developing world. I start with national interest, not charitable sentiment. If by next year, or the year after, we as a nation will be the first in the G8 to reach 0.7 per cent in our commitment to development aid, do we want it wasted because it will go to countries which do not have proper energy supplies or systems which will be necessary to make our development aid more beneficial to them? At 1.50 of chapter 1, the Government have some really serious proposals: an energy research programme for Africa; an infrastructure consortium; and the involvement of the development banks.



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I have spent a considerable time on security of supply because it can be forgotten. I am talking about today and the tomorrows of the near future. They are vital to us. This is an extraordinarily complex problem. It will benefit from the following: informed debate; evidence-based decisions; financial prudence; and all of us in Parliament and Government being geopolitically astute, as I am sure our new Minister will be.

2.48 pm

Lord Redesdale: My Lords, I congratulate the noble Lord on his most uncontroversial maiden speech. I say that because, when I came to the House 16 years ago, I was given one piece of advice by noble Lords. They said, “On your maiden speech you can say anything you like because everyone will be nice to you. On your second speech the knives are out; you had better watch your back”. So basically I am making my speech to his second speech while saying what a wonderful first speech he made.

I remind the noble Lord that we have met on one occasion previously, when we were both in teams on “University Challenge”. I represented the House of Lords; the noble Lord represented the CBI. It goes to show the degree of aspiration to which this House is held by those outside that we were put up against the Oxford University Press while the CBI was against the English National Opera. I believe that we had a slightly harder challenge.

I wish immediately to ask one important question, because many noble Lords have raised the issue. What is the noble Lord’s department called? As I passed down Victoria Street, I noticed that there was no D before the letters BERR. If you add the D, there is a slightly more interesting connotation, because it sounds like debris. I wondered whether that was a hangover from somebody in the DTI leaving this as a rather amusing aside for the new department. I am sure that the Minister can give us a conclusive analysis of how we should refer to the department in future.

This debate has been held on a number of occasions. As many noble Lords realise, a small but happy band in this House comes back to the issue. As we have had three White Papers, all of which were startlingly similar in the conclusion that they wanted to reach, the arguments have become somewhat calcified. These Benches are obviously of the hair-shirt and open-sandal brigade mentioned by the noble Lord, Lord Chorley, because of our view on nuclear energy. However, as was said from these Benches, that view is not held by everybody in the party and might well change if situations change.

If we moved to thorium reactors, which the noble Lord, Lord Hunt, mentioned, I would be the first to say that nuclear energy would be a very positive step forward. However, our position is based on the cost of nuclear power and the amount of energy that it produces. We should look at the reality and not put ourselves in the position of the French, who get 80 per cent of their energy from nuclear power. We are talking about 14 per cent of our energy being produced by nuclear power in the next few years, going down to under

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10 per cent unless new nuclear power comes on stream. The figure will probably go below 10 per cent; the recent results from the Hinckley Point reactors, and the state of the carbon rods in them, give the impression that they might have to come offline far sooner than we thought, given that we were hoping for an extended life.

So in the next 10 or 20 years we are looking at not relying on nuclear to provide a massive proportion of our energy. Obviously, if the planning regime is changed under the White Paper we could bring nuclear power online far quicker than at present. However, we are still looking at between five and 10 years to bring nuclear power stations online. It will depend how many nuclear stations are brought online. If we are looking to meet a significant proportion of our energy needs from nuclear, we are talking about a very large number of reactors being built. It would be interesting to know the cost of that. By going down the nuclear power route, we will lock ourselves into a power system that is 30 years old. We will lock ourselves into the national grid and therefore close the door on distributed energy, which is another policy that the Government are looking at.

Nuclear power is seen by many, especially those involved in the environmental field, as a silver bullet against climate change. I have a separate issue with that, because no carbon audit of the life cycle of a nuclear power station has ever been undertaken. Although we have talked about waste and waste management, there has never been an assessment of the carbon footprint of deep geological storage.

Lord Jenkin of Roding: My Lords, I am most grateful to the noble Lord for giving way. Could I suggest that he gets in contact with British Energy, which did exactly that with regard to the life cycle of the nuclear power station at Torness?

Lord Redesdale: My Lords, that is interesting. British Energy might have done that, but I should have thought that the Government, who are meant to be procuring energy, would have done it themselves. In response to the multiple Questions that I have tabled over a couple of years, the Government have said that they have never undertaken a life-cycle carbon footprint assessment, and they have never shown any knowledge of that carbon footprint. Of course, we are also talking about the legacy costs of nuclear power, which will have a long carbon tail in the management of waste. However, if technology moves on and nuclear power is shown to be far more reliable and to have a far lower carbon footprint and an acceptable cost, I am sure that my party will look again at this issue.

I congratulate the Government most wholeheartedly on the recent commitment to 20 per cent renewables by 2020. That is visionary and should be recommended. I believe that it is also achievable. The Severn barrage has been noted. If we are to meet that 20 per cent target, the Severn barrage must be considered, because 5 per cent of the country’s renewable energy coming from one source is not something that can be written out of the mix. However, I note that a report is soon to be published on this. The environmental impact has to be looked at. The environmental report considered the

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impact on the birdlife. We should not forget that global warming has resulted in the temperature in the Severn estuary rising by 1.5 degrees in the past 10 years. Whatever the cause of that—many people attribute it to global warming—it has displaced one of the bird species that was at risk from temperature rises, because it has made the Severn estuary uncomfortable for that species as a breeding area. This should be taken into account.

If we are looking at global impact, we cannot just say, “We shall not have wind because it would destroy the view”. I live in a national park in Northumberland and I am very aware of the view and of the impact that wind energy has. However, I am also very aware that when we had very dry summers there was a massive risk of fire, and many of the native species in the national park were under threat due to lack of water. Global warming will increase periods of drought and will fundamentally change the view in national parks and their flora and fauna.

On the underpinning of the White Paper, there is a slight problem, especially with the 20 per cent renewables target. The White Paper is based on the assumption of a high carbon price of around 30 ecus a tonne under the European trading scheme. If that is not realised, some of the underlying philosophy is at risk. There will also be a slight challenge for renewables, which, as the noble Lord, Lord Jenkin, said, were receiving ROCs. If the 30 ecus a tonne is not achieved, that would fundamentally challenge the concept of whether nuclear makes sense. I refer to the low-carbon generation offset of nuclear. Has any work been undertaken in the department? Is it looking at this problem? Does it believe that the price will remain high? If the carbon price collapsed, it would have a fundamental impact on the underlying precepts of the White Paper.


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