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I have only four topics to cover. First, the ROs must be truly sustainable. We must avoid getting into a muddle like we are with the renewable transport fuel obligation, as mentioned by the noble Duke, particularly with government scientists coming out with conflicting reports. We all agree that cutting down the rainforests of South America to grow sugar, making that into ethanol and then shipping it half way round the world is pure madness. To impose a cap on co-fired ROCs unfairly discriminates against one form of renewables, and surely it would make sense to treat all forms of sustainable renewable energy equally. For fairness, equality and maximising the potential for co-firing and for reducing CO2 emissions, I urge Her Majesty’s Government to drop the proposal for a cap on non-energy crop co-firing.

My second point is about Clause 90 and the idea that electricity safety standards should be transferred to the Health and Safety Executive. I hope that the Minister will be able to explain how this will happen in reality and whether there will be sufficiently qualified personnel to deal with this aspect of the proposed legislation.

My third point returns to renewables, but this time to what is not in the Bill. It is astonishing that the Government know that the Bill will bring only 5 per cent of renewables by 2020. Yet, a year ago, they committed themselves in Europe to at least three times that, so why have they not used the Bill urgently to introduce new measures to which they have committed us? We do not have much time to waste, as

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other noble Lords have mentioned. It must not be forgotten that this House committed in the Climate Change Bill to securing at least 70 per cent of ambitious CO2 cuts at home. Surely it is vital that we match these targets with urgent action.

It does not altogether surprise me that, in the Public Bill Committee, MPs from all parties took an interest in proposed amendments to secure new measures for renewables. The Renewable Energy Association and Friends of the Earth are arguing for a tariff measure that is clearly effective across Europe for smaller scale renewables to work alongside the renewables obligation. The aim is to reach the investors and technologies that the renewables obligation does not reach, with a much more user-friendly support scheme. That means not only domestic microgeneration but community-scaled schemes. There may not be many community schemes in the UK, but in countries with excellent records on renewables, such as Sweden, Denmark and Germany, communities, farmers and individuals are the major investors. I urge the Government to look again at this proposal and its clear merits for making renewable energy accessible to a far wider constituency.

Similarly, I welcomed MPs’ proposals to align the remit of the energy sector regulator, Ofgem, to climate change objectives. Again, it was this House, back in 2004, that gave the regulator a secondary duty to pursue sustainable development. However, we clearly need to go further. More than 10 gigawatts of renewables are currently held up due to a lack of network access, and if we are seriously to encourage local renewables, local distribution networks need to work very differently. Again, targets mean little without confronting the bold and difficult measures needed to deliver them.

Finally, I refer to one of the four main goals:

that magic word “affordably”—“heated”. I have long been extremely concerned about fuel poverty and whether government help is correctly channelled to those who are most in need. I strongly believe that fuel poverty payments, especially to the elderly, ought to be means-tested. I echo much of what the right reverend Prelate the Bishop of Chester said. In fact, it does not take much to see that a fixed tariff for domestic renewables could help us to address some instances of fuel poverty. I understand that Energywatch, which supports the tariff proposal, is talking to the social housing sector about the potential for this.

In this day and age, it is a criminal shame that there are still 4 million fuel-poor households in the United Kingdom. These figures come from a time when fuel costs were relatively stable and do not take into account the different climatic regions in the UK. To give one small example, 23 per cent of households in the north-east are fuel poor, whereas the number of comparable households in London is a mere 9 per cent. This must be grossly unfair. If the Minister were to come to my part of rural Scotland on the hottest day of the year, he would find smoke coming out of every chimney. This would not happen if he focused on an area in the south-east of England.

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Sadly, the UK Fuel Poverty Strategy is in disarray. The positive progress in fuel poverty reduction between 1996 and 2004 has been halted and reversed by domestic energy price increases of more than 90 per cent for gas and 60 per cent for electricity. Further onerous price increases are definitely imminent, as mentioned in all today’s newspapers, which carried horrific headlines such as “Consumers ‘getting it in the neck’”. My major concern is that the political will may diminish as fuel poverty targets, which had once appeared eminently achievable, become even more challenging. There are worrying signs not only that targets will not be met but that the Government are resigned to this position. I hope to table amendments to ensure that this does not happen.

6.15 pm

Lord Whitty: My Lords, much can be welcomed in the Bill but, as I think Ministers and Whips have realised by now, if I speak from these Benches rather than from the Benches behind them, I am not entirely at one with government policy on a number of issues.

After the wide-ranging White Paper and the promise of the Climate Change Bill, to which we are all committed, this Bill is rather disappointing. So far as the climate change targets are concerned, not much in the Bill will bring us any closer to achieving the demanding trajectories which the original Bill set for us and which, as the noble Lord, Lord Hunt of Chesterton, said, may be very conservative.

I put this into a context that is slightly broader even than the one that has already been touched on. Oil prices, at $130 a barrel and rising, will indeed drive energy efficiency and a switch from carbon. However, the effect of that rise, particularly on the poor, to whom the noble Lord, Lord Palmer, has just referred, can be absolutely devastating. Fuel poverty is, as he says, rising inexorably. The Bill does not contribute to resolving that dilemma. The rising cost of energy might be desirable in terms of climate change and for fuel security and a switch from carbon, but it has enormous distribution effects on the poor. Many of the measures which government and the market direct at more environmentally desirable outcomes—such as nuclear power, renewables, green taxes or an alteration of the market structure to provide a higher proportion of green energy—disproportionately hit the poor. There are no off-setting measures. The Bill does not change that, but it and government policy could move a little way towards squaring the circle.

Before I go any further, I had better declare a few interests. I am chair of the National Consumer Council, which will merge very shortly with Energywatch, which has been referred to, and I have a number of interests in fuel poverty and combined heat and power, all of which are recorded. Even when I was in the Government, I had certain misgivings about government policy. Energy policy seems to have two aspects that are contradictory and do not add up to a coherent whole. If I may exaggerate slightly, on the one hand we have a rather Stalinist obsession with grandiose, big-scale projects, and on the other we have an obsession with

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maximising the competition, primarily to ensure that the average price reduces rather than taking into account the distribution effect on the very poor. We therefore have a combination of Stalinist economics and Ronald Reagan economics. This mixture has not delivered on any of the four main targets for energy policy, which include our social duty to reduce fuel poverty, environmental sustainable energy and fuel security.

We need some big projects and I am in favour of the provisions in this Bill for the Government’s commitment to new nuclear build, even though it will not really affect the balance until the 2020s. I am, on balance, against another big project, the Severn barrage, but I am persuadable even on that. But what the Government need to focus on rather more than large-scale power stations and large-scale projects is the area of decentralised energy, distributed energy and local production.

Before I go on to that, my main point relates to fuel poverty, and the noble Lord, Lord Palmer, has spelt out the statistics and the progress which has been so tragically reversed in the past few years as prices have doubled. Government policy has not responded. Indeed, in a sense, it has gone in the opposite direction. The Warm Front programme has been cut; the new version of the EEC, called the CERT, now only has 40 per cent gearing to the poorest rather than 50 per cent, although it is in total an increase; and the increased focus on social tariffs, which I am gratified to see Ofgem is now taking seriously, has yet to produce any results in terms of giving better options to the very poorest, both within companies and by switching between companies. I do not blame the regulator for this. The regulator has probably improved its focus on both the environmental and social outcomes in the past couple of years or so. While I have often criticised Ofgem, I think the real problem is the direction and framework that the Government give to Ofgem. Ofgem’s primary duty is still far too narrow, as others have said, and we need to interpret the sustainable development duty that was given to Ofgem in the 2003 Sustainable Energy Act—and it took a bit of argument with the Minister’s predecessor to get that duty in there in the first place—but it has not really altered the primary focus of Ofgem’s activity because it is not a direct instruction from the Government.

We need a renewed focus on delivering social tariffs; we need extra resources into programmes like Warm Front; and we need social housing expenditure under the successor to Decent Homes to be more focused on energy-efficiency improvements. All these will require changes in the role of Ofgem and in government funding. I am very keen on smart metering, which is referred to in this Bill and which will be delivered, though on a slightly slower timetable than I think is possible and necessary. I also assume that this will subsume progress on the outrageous premium on pre-paid meters which is paid, by and large, by some of the poorest in our society.

As well as ensuring that the social objectives of energy policy are re-emphasised, the environmental ones—particularly the commitment to renewables—also need to be underlined and strengthened. The

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European target, as others have said, looks pretty unattainable on present policies and trends. I am sitting on your Lordships’ Sub-Committee B, which is looking at these matters. I do not want to pre-empt its decision, but it certainly looks at the moment as if that renewables target is not attainable. Indeed, in some ways, we seem to be going slightly backwards when you look at what is in the pipeline. On wind, for example, we have the combination of both government and big business decisions recently. There was the Scottish decision not to back the big wind farm up there, and a major oil company, which I will forbear from mentioning in my proximity to the noble Lord, Lord Oxburgh, has apparently pulled out of the Thames Array. Both those decisions are disappointing.

Of course, the incentive system for renewables depends very heavily on the ROC process. ROCs have had some success and it is an attractive process for the big operators which trade within the ROC market. But we are still at around 2 per cent of renewables. Germany has nearer 20 per cent and Denmark twice that. We have a solely ROC-based incentive; they have feed-in tariffs. I know correlation is not causation, but I think the Government need to have another look at what is being proposed as an equivalent to a feed-in tariff. I appreciate that some other relatively successful countries, like Spain in relation to wind power, have market-based systems. We need to look at the whole picture but, in the area of relatively small-scale companies—not only microgeneration but somewhat bigger than that—which are unlikely to be playing in the ROC market in the long term, the certainty that a feed-in tariff gives is more likely to bring online the kind of technology at a local level that those companies will be most interested in.

All sorts of technology—local wind, solar, anaerobic digestion, farm-based or community-based biogas—can be much more efficiently and certainly delivered in the light of a tariff which is guaranteed for a period of time. The economic and environmental benefit of this can be pretty substantial. We have virtually no market in biogas in this country. Germany has over 3,000 installations and they are locally based. They use feedstock, which is waste locally generated and locally delivered, and even the second-degree waste can be reused as fertiliser or fuel for the vehicles delivering the waste in the first place. So you have a benign cycle which does not impact on the rest of the economy and certainly does not deliver increases in carbon emissions.

We need, in general, to look at more decentralised energy, CHP-based and renewables-based in particular. There are costs to the grid, as the noble Lord, Lord Oxburgh, has said, of connecting all these, and there could be local networks, both in relation to gas and decentralised energy. If we are worried about security of supply—and we must be obsessively worried about the level of carbon emissions—then the role for decentralised energy must be given greater attention by the Government and by the regulatory framework which they impose on the regulator and on the industry.

Although these things are only touched on briefly in the Bill, we ought to be taking the opportunity to develop them further in proceedings on this legislation. I will certainly support or bring forward

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amendments relating both to fuel poverty and to feed-in tariffs for renewable energy, and I would think that around the House there was support for extending the scope of this Bill, many of whose provisions, I now reassure the Minister again, I fully support.

6.27 pm

Lord Taylor of Holbeach: My Lords, I am grateful to my noble friends on the Front Bench for encouraging me to join them in contributing to this debate in order to reinforce the connection with the Climate Change Bill. As the Minister pointed out in his introduction, this Bill is linked both with the Climate Change Bill, which has gone on its way, and the Planning Bill which has yet to come. It also has links, particularly in the field of fuel poverty, with the Housing and Regeneration Bill and, as has been pointed out, with the forthcoming Marine Bill. They share a common agenda and I hope that, as the Bill proceeds through this House, every opportunity will be taken to make clear the obligation this Bill owes to the carbon reduction targets and our climate change targets. I was one of many noble Lords determined to drive the idea of climate change across departments as a necessity, as the noble Lord, Lord Oxburgh, so powerfully pointed out.

Much of what has been presented in the Bill is uncontroversial and, notwithstanding the critique of the noble Lord, Lord Whitty, there has been a general and widespread sympathetic voice across the House during this debate. What, however, have been voiced are widespread concerns at the missing links—those energy-related measures which could, should and will, I expect, if this House has its way, be included in this Bill. The Bill has been long awaited. It comes after much dithering and delay. Of course energy policy has involved difficult decisions, but the Minister knows all about difficult decisions. He comes from business and successful business is dependent on making difficult decisions. I hope that he will bring his decision-making skills to government, who certainly need it. In this matter, time is of the essence, and big decisions will need to be made and made quickly.

Fuel security requires that we construct gas storage. As the noble Lord, Lord Oxburgh, has pointed out, carbon capture and storage is also a prerequisite. On the particulars in the Bill—the licensing procedures and the reporting requirements—I hope that these matters will be addressed in detail in Committee. Underlying Chapter 3 is the acknowledgement that for us to begin undersea carbon storage, there will have to be amendments to existing EU directives. Can the Minister explain what these are, how far discussions have progressed and what remains to be agreed? What linkage exists within the EU jurisdiction on marine matters beyond the six-mile line, the use of submarine storage in general and offshore transmission in particular?

I expect many noble Lords will want to be involved in discussions on renewables. Many different aspects have been raised. Wind power generation has been by far the most visible constituent of the programme to

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date. But co-firing is another key element. However, we see Cinderella is at the ball and if we are to have the decentralised energy policy, we need to look at photovoltaic solar power, wave power and tidal power. Will the variability in funding, to which the Minister referred, be used to encourage investment in these areas?

Part 2 on renewable obligation certificates will no doubt cause its fair share of amendments, probing or otherwise. But at this stage I have only one question for the Minister. What sort of specified case—under Clause 37, which inserts new Section 32C in the Electricity Act 1989—might be wholly or partially free of the requirement for such a certificate?

Like many noble Lords, I look forward to hearing the Government’s objections to a feeder tariff—the renewable energy tariff. The noble Lord, Lord Oxburgh, expressed the view that it was much more effective than the ROCs. The Minister needs to be aware, as he surely must be, that there is widespread support for such a concept—not just at the 50 kilowatt microgeneration level, but for a higher level—if we are to encourage investment in this important area.

So far I have focused, as does the Bill, on energy producers. The greatest missing ingredient is the consumer. The government amendment at Third Reading in another place has provided for the introduction of smart meters, albeit without the direct enthusiasm that their introduction requires. Like the noble Lord, Lord Redesdale, I am seeking a timeframe for their universal introduction to all Britain’s 45 million households. Will the Minister confirm that the mandate for the introduction of smart meters, for which industry has been pressing, will form part of this Bill?

One of the biggest reasons for the use of smart meters is to address fuel poverty. The right reverend Prelate the Bishop of Chester, and the noble Lords, Lord Palmer and Lord Whitty, also spoke on this issue. Many noble Lords have expressed concerns. The House has heard the passion and determination with which my noble friend Lord Jenkin has pursued the issue of the supplier obligations in this matter. The Bill is silent on the social tariff. It fails to address the inconsistent way in which those who have to use a prepayment meter pay more for heat, light and energy, which cannot be right.

This is a useful Bill, but it is surely waiting to be improved. I expect noble Lords will seek to do that and I hope that the Minister will encourage them in that objective.

6.34 pm

Lord O'Neill of Clackmannan: My Lords, I am very pleased to follow the noble Lord, Lord Taylor, who made a most thoughtful speech. He offered a range of options and considerations which were sadly lacking in the two Front Bench speeches so far. It is fashionable to suggest that the Labour Government, after 10 years in office, have run out of ideas and steam. If that is what the Cameron-Clegg axis can provide as alternative solutions to our energy problems, God forbid that Labour loses the next election.

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I am very pleased to participate in this debate. I have interests in energy recorded on the register. A number of the areas that I have advocated for some years are being followed and I am very pleased that there has been this change of recognition by the Government. It can be argued that this is not a lurch; it is certainly a rather slow change. The tanker took a long time to move, but we have had incontrovertible evidence of the need and the urgency from, for example, the Stern report, that a great deal more has to be done and should be done very quickly.

It is certainly the case that we have come to the renewables issue rather later in the day than a lot of countries. We did not have renewables in the 1990s when the Conservatives were in power because we had gas. We not only had gas, we had a dash for gas. A year after the Labour Government came to power, having assessed the situation, they embarked on an embargo on gas power stations. Otherwise we would have had an even greater commitment to them and an even earlier shortfall in our gas supplies. Some Conservative speakers today seem to be incapable of remembering their own political history and the rather cack-handed way in which they went about privatisation, regulation, and, only at the very last gasp, liberalisation. It was such an ill thought through process of liberalisation that we now have no national champions to speak of, apart from National Grid, on energy in this country.

We do not have British-owned companies which could have been capable of defending the national interest in any major way. That is not to disparage Iberdrola, RWE, e.on or EDF. But large foreign companies with deep pockets are able to acquire vulnerable British businesses and the blame lies at the door of the Conservative Party for the way in which they reorganised British energy when it was privatised.

In the first instance, I welcome the commitment to nuclear power, about which I have spoken here. The Government have a realistic programme. More will have to be done on skills. We are moving on at a reasonable pace in respect of the generic design assessment of the new reactors. I am confident that we will be able to see nuclear power being generated within the next 10 to 11 years in this country. I would hope that nuclear power will bring a degree of stability to price, because dependency on gas means that we are thrown to the four winds as far as the vagaries of the international pricing system are concerned.

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