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The White Paper mentions a number of other issues. When I first read it, I thought that it had only one aim in mind—not whether but when we should have nuclear. I am not asking the Minister to say exactly when the first foundation stone is to be laid and whose name will be on it, because Greenpeace will write a letter—I shall happily send it a copy of Hansard to help it to write that letter. The problem with the White Paper is that it focuses on nuclear, whereas there are other extremely important aspects, energy efficiency being one of the main ones. I very much hope that the Minister will consider social tariffs and get Ofgem to look at them. There is an issue of fuel poverty in this country. You cannot just raise fuel prices and expect people not to suffer. However, if you use the Scandinavian model of social tariffs, whereby a set amount of energy is charged at a lower tariff, any higher energy user has to pay far higher charges for the excess energy that they use. That would be a good social indicator of how people could reduce energy use.

This is not an insignificant issue. I recently had a meeting with the Nappy Alliance, which is for reusable nappies. A report came out on whether reusable nappies were better than disposable nappies. In energy terms, if you wash and dry the nappies, reusable nappies are not as good, according to the report. But if you hang out the reusable nappies on a clothes horse, suddenly the figures change around. We must look at social

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changes, because it is not difficult to use reusable nappies. I speak from the experience of having changed at least two this morning. I have an eight month-old baby, and I had just changed the nappy when I had to change it again, although perhaps that is more information than is worth while on a Thursday afternoon. Such changes can have a massive effect. People do not realise how much energy tumble driers use. Each bill is bolstered by an estimated £100 in those households that use tumble driers as opposed to those that do not. It is not a difficult situation to remedy; I think that you can buy a clothes horse for £12.99 in John Lewis.

Another indicator is smart meters. The Government really must firmly grasp this issue. There is a conflict between those in the industry and those producing the meters over which type of meters should be put in. If you put in a basic meter, which are estimated to cost between £40 and £60, it will show very little information of value to the consumer. It will show quite a lot of information that is valuable to the generator, but not to the consumer. If you put in the meters that cost between £90 and £140, you could have information that is valuable to the consumer. For example, it could direct your washing machine or dishwasher to turn on in the middle of the night when energy is at its cheapest. That has a massive impact on the use of energy. It would also tell you how to switch energy suppliers. However, the nub of the problem is who pays for that. At the moment, the supplier pays for the meter. It is not a great indicator if you are supplying a meter that gives information on how to change to another supplier the minute that its energy is cheaper. The Government need to look at that issue, because an opportunity is being lost to introduce energy information that could save an estimated 10 per cent of domestic users’ energy supply.

Another small issue is EPCs, or energy performance certificates. The two things that you can change to raise the energy rating of your house are your insulation and your boiler. If energy efficiency credits were used by companies to offset the cost of a new boiler, using the information from EPCs, that would have a massive impact on the use of gas by domestic suppliers, and it would help gas suppliers, who have an obligation to reduce the amount of gas that they use.

I am fast running out of time, but I end on the cautionary note of carbon storage and capture. I commend the Government for having their competition for the first plant for carbon storage and capture. The unfortunate aspect is that two carbon storage and capture plants that were being built and were ready to operate have now gone offline, and their operation has been suspended because money is no longer available. Earlier, the Minister said that the Government did not want to put all their eggs in one basket, but we are going for one project and we have lost two, which is very unfortunate.

3.04 pm

Lord De Mauley: My Lords, I add my voice to those welcoming the noble Lord, Lord Jones of Birmingham, and paying tribute to his maiden speech today in your Lordships’ House. Energy is a good example of an

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area in which long-term consistency of policy is critical and therefore a large measure of cross-party consensus is important. We therefore welcome the Minister, who we believe is someone with whose views we have much in common. He so rightly referred to the need for efforts in the international world, because we are a relatively small part of the overall problem. The noble Lord, Lord O’Neill, referred to China and India. The Minister also mentioned the need to work on our European colleagues towards achieving a common approach and, importantly, liberalised markets. The noble Lord, Lord Haskel, also spoke of his concerns in this area. However, my noble friend Lord Liverpool, speaking on China and India, referred to the need for us none the less to set an example.

I am grateful to all noble Lords for their contributions. The noble Lord, Lord Teverson, spoke about the challenge of incentivising electricity suppliers to reduce power usage and about “hot rocks”, a subject on which he has spoken before. The noble Lord, Lord Tanlaw, raised his special subject of daylight saving, and I reassure him that the Official Opposition’s position has not changed since we last debated the matter, when we gave very good reasons why we opposed precipitate change. The noble Lord, Lord Tanlaw, also made a good point about the dangers of pursuing biodiesel at all costs and the huge danger of the unintended consequences of that, which already include massive deforestation not only in south-east Asia, especially Malaysia—which he mentioned and is a country I know well—but in south America and elsewhere.

My noble friend Lord Dixon-Smith spoke about the conflict between certain growth in the use of energy, especially in the developing world, about the vital need to reduce the emission of carbon dioxide and other by-products that are so damaging to the environment, and about the huge difficulties which we acknowledge in squaring the circle. He spoke about his three Hs—heat, hydrogen and horticulture—and about the dangers of overemphasis on biofuels. The noble Lord, Lord Hunt of Chesterton, spoke chillingly about his concerns for the very survival of the United Kingdom and of the need to think for the longer term and about lessons that can be learnt from overseas.

My noble friend Lord Jenkin spoke of a continued need for clarity, and he asked the Minister to confirm the Government’s commitment to the market. He congratulated the Minister on his acknowledgement of the need for a decision this year on the nuclear question. The noble Lord, Lord Chorley, was of a similar mind to my noble friend on this issue. My noble friend Lord Jenkin mentioned the proliferation of strategies, incentives, levies, agreements, policies and proposed legislation and the pressing need for rationalisation and clarification. He also referred to the potential of the “carbon hedge” mechanism and his frustration that it and other measures are not being progressed to help to achieve a proper and consistent price for carbon. The noble Lord, Lord Redesdale, also referred to his concerns in this area. My noble friend Lord Jenkin went on to raise a number of very important questions for the Government.



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The noble Lord, Lord Brennan, reminded us of the vital importance of security of energy supply. He referred to five areas of threat to our country and he made three interesting recommendations. We look forward to the Minister’s response to those recommendations. My noble friend Lady Wilcox spoke about the importance of improving the environmental credentials of our energy industry. Like her, I am glad that the White Paper refers to the need for this to be taken into consideration. The White Paper has also mirrored the Opposition’s interim findings last year by emphasising the crucial importance of energy security.

The statistics are enough to show how much of a priority this must be. As the Minister said, 30 per cent of Britain’s current generating capacity will be retired in the next 20 years, and electricity demand continues to rise. The laws of demand and supply are inexorably leading us, as the noble Lord, Lord Brennan, said, to becoming more dependent on imported energy from a very limited number of reliable sources. In November 2005, the Minister, in a previous role, warned us about an energy crisis that,

We were all fortunate that his worst fears were not realised, but the underlying problems, especially the longer-term ones, have not gone away.

Significant increases in the price of oil on the international market have also combined with a squeeze on imports from less liberalised European markets to push up prices, so new gas interconnector and LNG facilities have come too late to prevent domestic bills rising by 35 per cent in real terms over the past seven years. Bills for medium-sized businesses have risen by 50 per cent in the past two years. The Department for Business, Enterprise and Regulatory Reform has set a target to eliminate fuel poverty—the Minister referred to that—in vulnerable households. The Government have been forced to admit that, largely due to oil price rises, the total number of vulnerable households in fuel poverty rose by around 1 million between 2003 and 2006. Perhaps the Minister can expand on the Government’s plans to tackle that.

While there is scope for conflict in the short term between reducing carbon emissions on the one hand and energy security on the other, in the longer term this could, with skill and a certain amount of luck, be turned to synergy. We cannot leave it to luck. Policies that diversify supply across renewable sources and improve efficiency in the use of energy could reduce our reliance on imported energy from less reliable sources. As the White Paper recognises, improving the energy efficiency of businesses and households is the cheapest and easiest way of reducing carbon emissions, and that would also help to restrain our dependence on imported energy. The subject has been well aired today.

Government guidance is, arguably, rather light, but the noble Lord’s arrival in his new post provides an encouraging message that there will be improvement. In their proposals on smart metering to which the Minister referred, the Government appear to fudge the distinction—as the noble Lords, Lord Teverson and Lord Redesdale, rightly said—between proper

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smart meters which send information between appliances and suppliers and much simpler real-time electricity displays which provide information in real time but do not result in any of the efficiencies associated with smart meters, such as accurate billing, early warnings for vulnerable customers and an end to expensive pre-pay meters. This differentiation may seem trivial, but there is enough doubt among the general public about the dangers of climate change and scepticism about suggested solutions that care must be taken to ensure that government statements are as accurate, clear and consistent as possible. Energywatch research suggests that smart meters, as opposed to real-time displays, can make substantial savings to customers’ energy bills. Such positive results must not be undermined by an attempt to gain green credentials on the cheap.

There is much more to energy efficiency than is mentioned in the White Paper. I join several other noble Lords who would be grateful if the Minister could give us more information about what the Government are doing, for example, to achieve an improvement in international manufacturing standards and to ensure that household appliances are made with energy efficiency increasingly in mind. The Government’s energy efficiency policy gives the Minister scope to bring his considerable experience to bear. Greenpeace has referred to the inadequacy of the White Paper’s focus on combined heat and power technology, which is already being employed effectively elsewhere in Europe. CHP can help reduce carbon emissions by using fuels more efficiently. Why are the Government not fully exploring this process, which could drastically improve our energy efficiency?

Of course it would be hard for effective CHP infrastructure to be established without considerable decentralisation of the power grid. In their energy policy statement last July, the Government proposed a range of consultations, reviews, strategies and feasibility studies to help the development of decentralised energy. Yet, as the noble Lord, Lord Hunt of Chesterton, said, the White Paper adds little except for another consultation and some vague promises that barriers will be removed. I am sure that that was not the intention, but can the Minister tell us when the Government will be able to produce a policy that will create the conditions in which decentralisation will happen?

We are unlikely ever to be completely self-sufficient in energy as a country. International trade in energy will always be necessary. Unfortunately, the lack of clarity in the Government’s energy policy has delayed the much-needed investment in new plant. These delays are undeniably leading to narrower plant margins and an ever-increasing risk of supply interruptions. Clarity is needed on the future of the carbon pricing mechanism, the support that will be available for renewables and a framework under which nuclear new build will have to operate. Without that, the investment—the importance of which the Minister referred to in some detail—will naturally be focused towards the default option of gas turbine power stations, instead of towards alternative power generation. Our dependence on imported gas will be increased, and high carbon emissions will be locked in for the life of the new plant.



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Diversity of supply is important and, again, government delays are not helping to ensure that energy production is grounded in a variety of technologies—which the noble Lord, Lord Chorley, explained in some detail. My noble friend Lady Wilcox has mentioned the danger of the banded renewables obligation focusing excessively on one or two technologies rather than sharing subsidies appropriately among all feasible renewable technologies. It is equally important not needlessly to rule out any non-renewable energy sources, and many different types have been mentioned today from all sides of the House.

Carbon capture technology, desulphurisation plants and other mechanisms for reducing the environmental impact of fossil fuel generators were referred to by my noble friend Lord Jenkin and the noble Lords, Lord Chorley and Lord O’Neill. These are all a necessary part of the future to ensure effective diversification and a continuing ability to exploit resources, such as coal, without undue adverse environmental consequences. The Minister’s words on government action here are encouraging.

The importance of energy security is clear and it will only increase as time goes on. I look forward to hearing the Minister’s response to the important points raised by noble Lords in this debate. I echo the hope of my noble friend Lady Wilcox that he will reassure us that the Government intend to introduce firmer and clearer guidance very soon.

3.17 pm

Lord Jones of Birmingham: My Lords, I have thoroughly enjoyed my first House of Lords debate. I am learning all the time. I have never before listened to a full debate, and I found it eloquent and informed; and I have learnt so much. Please forgive me if in the next few moments, I forget to do the complete tour d’horizon. If I miss anything out, please contact me, and I shall do my best to give a satisfactory answer.

I shall now attempt what my noble friend Lord Brennan said was a cautionary tale from Macmillan about steering the difficult path between the cliché and the massive mistake. Before dealing with the excellent points raised by your Lordships, I start by saying something that is very dear to my heart. It deals with a couple of the issues raised by the noble Lords, Lord Redesdale and Lord Dixon-Smith. Without wealth creation or making a profit, you get no tax in this country. With that profit, you reward the people who took the risk—the shareholders—and they pay tax on it; or you keep it in the business and you pay tax; or you employ people and they pay tax on it. Some of it goes to good, decent, hard-working people in the public sector, and they pay tax on it. Without the tax, there would be no schools, hospitals, armies, airports, railways, prisons or the rest of it. If it were not for the wealth creation of this nation, there would be no tax.

If it were not for the energy supply produced in as low-carbon a way as possible with as safe and secure a supply as possible, there would be no wealth creation because the lights would go out. Energy drives factories, workshops and offices up and down the country. It is the tool with which jobs are created,

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hospitals are kept open and schools work. Energy is literally the power behind all economic development. As my noble friend Lord Brennan said in the speech that he devoted to this subject, security of supply is vital. The one sure way of achieving that is by having diverse sources of supply, but we need to bear in mind that the people of this great nation worry every day when they see other nations using energy as a way of flexing diplomatic and political power. We will not keep the lights on in our hospitals or our offices, or help with the insecurities of our people, if we do not keep security of supply at the top of our agenda.

The noble Baroness, Lady Wilcox, and one or two other noble Lords mentioned the consultation on nuclear power. I can do no more than reassure the House that the Government have not made up their mind. The Government’s position is clear: we have formed a preliminary view, which can be seen in the White Paper, that energy companies should be given the option of investing in new nuclear power stations, but we are consulting on that view. No decision has been taken, and we will actively consider all the consultation responses. I can do no more than refer noble Lords to the Prime Minister’s statement in another place yesterday:

That was the Prime Minister yesterday, and nothing has changed.

When talking about renewables, the noble Baroness, Lady Wilcox, asked whether we are making adequate progress, whether we are going far enough and whether there is adequate investment. Of course we could always do more. It is very important that we get a mix, stimulate investment in renewables and that renewables do not suffer because of investment in other technologies. Our proposals for improving the renewables obligation will help the greater deployment of a wider range of renewables, and that includes marine technology. The changes will incentivise 40 per cent more renewables between 2009 and 2015 than if we had not changed the schemes. However, for it to work, we also need additional research and development. We need further, adequate funding of universities to make sure that they can play their part in that research and development and, probably above all, we need a planning regime fit for purpose in the 21st century to enable these schemes to happen and happen quickly.

The noble Baroness also talked about choosing between technologies and criticised the renewables obligation banding. Renewables is a market-based approach that intervened to enable renewables to compete against established technologies. I assure noble Lords that that will increase support for renewables and will improve efficiency in the system. It will support technologies more in need and increase deployment by about 15 per cent by 2015. That is something of which business should rightly be proud because it will happen due to the investment from it. The noble Baroness

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then expressed concern about the BP plant at Peterhead and the Government’s handling of it. Prior to the publication of the White Paper, there were seven interested companies. Of those seven, only BP indicated that it no longer wishes to participate. Others may come forward; we do not know. The noble Lord, Lord Chorley, also raised this point. We would have preferred BP to have taken part in the competition because it is a fabulous global business, but we cannot design a competition to suite the interests of just one participant. That is not how we should behave. If BP feels that the timetable does not suit its project, that is a commercial matter for it. Welcome to the market.

The noble Baroness, Lady Wilcox, then asked how the Government would ensure that the cost of any nuclear decommissioning would not fall on the taxpayer. The consultation document makes it clear that we would put arrangements in place through legislation to ensure that owners and operators of new nuclear power stations set aside funds in a secure way to cover their full decommissioning costs and their full share of waste management costs. That would be in legislation and would minimise the risk of taxpayers later being called on to cover the costs of decommissioning and waste management. It is important that, in consultation, which is a two-way process, others stated the facts in that regard while not alarming the public.

In response to the noble Lord, Lord Teverson, perhaps I may mention that it was a delight to come down to Cornwall in my former life. I am committed to visiting a region of England or a nation of the United Kingdom at least once a month to understand the issues around inward investment. I look forward to going back to Cornwall as soon as possible.

The noble Lord, too, mentioned BP. It is interesting that one of the advertising slogans it has always used is “beyond petroleum”. It would be na├»ve of us to think that the major corporations in this field would stand still and not form views on where they can invest in tomorrow’s returns. One of those areas will be renewables; another may be—I do not know—nuclear power. What I do know is that energy supply companies definitely hedge their bets for a long-term future.

I also assure the noble Lord, Lord Teverson, that the policies in the White Paper will help us to maximise UK energy resources—that is, oil, gas or coal—and to use our energy more efficiently. For example, gas consumption could be 13 per cent lower in 2020 if we implement our demand-reduction measures. The Government are committed also to energy saving. Full implementation of our measures could reduce CO2 by 7 million to 11.7 million tonnes of carbon, which is up to 36 per cent of all savings. We are not standing still.


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