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My noble friend Lord Jenkin referred to the remit of Ofgem and suggested how to resolve that issue. The noble Lord, Lord Oxburgh, referred to the need for amendment here in his masterclass, if I may call it that. The noble Lords, Lord Puttnam, Lord Palmer and Lord Whitty, also mentioned the Ofgem remit. Once again, the legislation’s attempt to solve all this addresses only part of the problem. Already, in their draft legislative programme for 2008-09, hidden among an avalanche of additional legislation, the Government say that there is to be a new round of consultation,
- “on the options for increasing the use of renewable energy, in the context of the EU target for 20 per cent ... from renewable sources by 2020”.
Is this the horse wandering after the cart?
Take also, for example, the Government’s plan to promote carbon capture and storage in an attempt to create a new generation of clean-coal power stations, to which the noble Lords, Lord Oxburgh and Lord Truscott, and the right reverend Prelate the Bishop of Chester, among others, referred. The Bill certainly makes provision for the promotion of CCS and creates a licensing regime to certify them. Yet, as my noble friend Lady Wilcox said, it does not address the chance that something might go wrong. It is unclear what, if any, action would be taken against licensees who are responsible for leaks. I think the noble Lord, Lord Hunt of Chesterton, may have referred to that. Does the Minister not think that there needs to be some provision for liability?
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The Government’s energy White Paper vowed to triple the amount of energy we get from renewable sources. We currently get 2 per cent, and my noble friend Lady Carnegy of Lour and the noble Lord, Lord Palmer, both referred to the size of the mountain we have to climb. Like the right reverend Prelate, I would be interested to know if the Minister believes that we will be able to increase our figure substantially in the next decade to meet our target of 20 per cent. In fact, it will need to be more than a 10-fold increase, assuming, as seems certain, that our energy usage continues to rise. Indeed, the Minister confirmed that in his opening remarks.
The noble Lord, Lord Oxburgh, set out his concerns on, among other things, the cost of and the issues related to the necessary upgrading of the national grid. My noble friends Lady Carnegy and the Duke of Montrose spoke of their specific concerns about connecting Scottish renewable energy to its end users.
The Government’s mechanism for increasing investment in renewable energy is the renewables obligation, which gets an overhaul in this legislation. The introduction of banding to the renewables obligation might indeed encourage investment. We support using market mechanisms to encourage growth. The most cost-effective way to reduce emissions should triumph. We must be careful, however, that the bands do not result in skewed markets if the involvement of humans in allocating the banding results in their favourites being picked. Picking favourites will not lay the appropriate foundation for a renewable energy industry or a low-carbon economy.
What assurances can the Minister give that that has not already begun to happen under the renewables obligation? Can he convince your Lordships that the new banding provisions will not skew the market in the future? If he has a genuine belief in the utility of the market, why have his Government resisted feed-in tariffs so adamantly? Does he not consider supporting the microgeneration of renewables to be a priority? Renewable energy tariffs—as the right reverend Prelate, the noble Lord, Lord Birt, and my noble friends the Duke of Montrose and Lord Taylor, among others, said—could substantially improve the status quo. We will seek to pursue these in order to encourage smaller power generators and establish the viable market mechanism needed to tackle climate change and our looming energy capacity gap.
Much of what has been discussed today has, rightly, been about what is in the Bill, yet much of the debate here and in the other place, and virtually all the debate outside Westminster, has been focused on the issues that have been omitted. I notice that even the Government, in the shape of the Secretary of State for Defra, have already admitted that a renewables Bill will still be needed to address the necessary frameworks. In the other place, the Government conceded the principle of rolling out smart meters across the country, but, as the noble Lord, Lord Redesdale, and my noble friend Lord Taylor said, they have not given a timeframe for that.
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Another crucial omission is that of fuel poverty, to which my noble friend Lord Jenkin, the right reverend Prelate and the noble Lords, Lord Palmer and Lord Whitty, among others, have referred. The Minister’s department has set a target to eliminate fuel poverty in vulnerable households, but Ministers have been forced to admit that, largely due to fuel price rises, the total number of vulnerable households in fuel poverty has actually risen in recent years. Smart metering, if rolled out properly, might help address that by making the price of pre-payment meters—to which, among others, the noble Lord, Lord Whitty, referred—more equitable. However, as my noble friend Lord Taylor and the noble Lord, Lord Redesdale, said, still more needs to be done. With the opportunity to address serious problems surrounding energy issues, the Government are in serious danger of missing their chance to help the most vulnerable.
Essentially, the Bill goes halfway very well. We on these Benches do not seek to hold it up unduly. We ask for the co-operation of the Government and the help of your Lordships to finish the task and make certain that it provides real solutions and underpins the affordability, cleanliness and security of our energy supply.
7.16 pm
Lord Jones of Birmingham: My Lords, we have had an interesting and wide-ranging debate. I hope that noble Lords will forgive me if I deal with it in considerable detail. Because I am not troubled by what is going on in Moscow tonight—those of us who support Aston Villa are never troubled—I make no apology for perhaps going past the time for kick-off. Noble Lords might catch the second half if they are lucky.
I assure the noble Lord, Lord Oxburgh, that I personally see this as an urgent matter, and Her Majesty’s Government do the same. I am surprised if the noble Lord, Lord Teverson, thinks that I am not bringing to it my usual degree of enthusiasm in these matters. Perhaps I could take noble Lords back to my time at the CBI when I was director-general. Having listened to the debate today, I give noble Lords on all sides of the House some fabulous qualifications in hindsight. At times, we at the CBI just never saw the initiative and support from either side of the political domain for this enormously important issue. I am new to this House, so I hope noble Lords will forgive me if I am not allowed to say this, but I have heard some things tonight from other Benches that have made me think, “You do have a nerve”.
The delay from both parties on this issue over decades is a reflection of the diverse and complex nature of the issues. The wider energy strategy that we now have to address is, in one way, the product of all that deliberation and consultation, as well as a shift in the political—with a small “p”—feeling in the country about it. Indeed, the noble Lord, Lord Teverson, said that the Bill does not allow us to make
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The breadth of issues we have touched on today is also a reminder of the tensions inherent in how we respond to the challenges we are facing. We have to combine decisive urgent action to cut carbon emissions with cost-effectiveness while maintaining a competitive and growing economy. We have to ensure secure and reliable energy supplies though increasingly we know that we will rely on international markets. I am grateful to the noble Baroness, Lady Wilcox, who marched through the decline of domestic gas and oil reserves. That is a statement of the obvious. An alarmist walk through our history and where we are going will do nothing to instil confidence in people—businesses, overseas investors and the private sector—about investment in the future. It is so very important that as a nation we pull together to deliver a secure and low-carbon solution.
My noble friend Lord Birt, among many others, referred to the concept of this as an international issue. My noble friend Lord Truscott talked about how important oil and water were going to be in the 21st century. I make speeches all over the world talking about how the currency of power has fundamentally changed in the 21st century. Power in the 20th century was determined primarily by who had the biggest guns, the biggest armies and where they went. Power in the 21st century will be about the currency of oil and gas. I would suggest that the currency in 20 or 30 years’ time, and in some very surprising places, will be water. Then, there is the currency of the development, exploitation and transfer of knowledge. This country can succeed in that knowledge, that technological advance in dealing with so many aspects of climate change and security of energy supply.
It is arrogance of the very worst sort if the Americas, the Britains, the Frances, the Germanys and the Japans turn to the Indias, the Chinas, the Brazils and the Vietnams and say, “We got rich by fouling this planet. You can’t”. They will not believe us, for a start. They will ignore us, for the second. But at the end of the day we cannot allow them to be doing that. We must come to them as partners with technological solutions so that they can get wealthier and rich. By the way, that is not rocket science. If they get richer, they will buy our goods and services. But at the same time, we must make sure that we can partner with them and provide them with those technological solutions.
If we can reach some level of the moral high ground by making sure that we can go to those countries and say, “We are doing out best. We are trying very hard here. We even apologise for what we
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Five areas in the Bill are key to that. The first deals with creating a fit-for-purpose licensing regime to allow the private sector to bring forward offshore gas storage and unloading projects. The second deals with plugging the gap in the regulatory framework for carbon capture and storage, creating a licensing regime for the permanent storage of carbon dioxide under the seabed. The third is reform of the renewables obligation that will triple the renewable electricity promoted by the RO by 2015 compared to today. The fourth is putting in place measures to ensure the private sector covers the full costs of decommissioning and a full share of the waste management costs of any new nuclear power stations. The fifth is powers to underpin the roll-out of smart meters to medium-sized business in the first instance, but potentially to all energy consumers. I can assure the noble Lord, Lord Taylor of Holbeach, that the roll-out of smart meters will continue apace. We are going to get medium-sized businesses going by November 2008. We will then roll it out over the next five years, after more consultation, to smaller businesses and then into the private consumer.
It will not happen if we do not get buy-in from all sections of our society and I suggest that that is one of the important aspects of being leaders. It is interesting that the noble Baroness, Lady Carnegy of Lour, mentioned leadership in France—the leadership that I presume shows up so evidently in how they deal with their farmers and students. But the noble Baroness is right; they show distinct leadership in nuclear power and we can learn much from the way that their parties came together to deliver solutions which will endure for decades to come.
I now turn to specific points that have been raised. First, I will deal with one or two issues raised by the noble Baroness, Lady Wilcox. She says that the Bill fails to specify how the long-term liabilities arising in connection with carbon stores will be handled. The enabling provisions are in the Bill. For example, Clause 20(3) allows licences to include conditions on the closure of a store, and provisions about the obligations of the licensee after closure and about the termination of a licence. Clause 30 applies to the decommissioning arrangements that currently apply to offshore oil and gas facilities, to structures used specifically for carbon dioxide storage.
We want to consult on the detailed liability arrangements that will apply. Whatever the detail, these will ensure that the operator will be legally and financially responsible during the period that the store is licensed. The operator will be obliged to seal the store to a specified standard and remove to structures used for storage. Public funds will be protected against risks of the operator failing to meet its obligations through financial guarantee arrangements and the
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The noble Baroness, Lady Wilcox, also asked whether the CCS regime should cover all of those liabilities. It does. Clause 31 relates to the termination of licences at the end of the life of the store. They allow the Secretary of State to make financial arrangements with the licensee in relation to the licensing authority taking on liability for the closed store.
The noble Baroness also asked whether the Government will change safety standards for new nuclear power stations. In the United Kingdom we have strict, independent safety protection regimes for nuclear power and any new station will be subject to safety licensing conditions. They will have to comply with the conditions set by the regulators in connection with their licences and their authorisations. The noble Baroness also asked why the 2050 target is not an 80 per cent reduction in CO2 and only a 60 per cent reduction. The figure is set at 60 per cent because that was what the science recommended at the time. Rather than making up a new figure, we have asked the Committee on Climate Change to assess that figure again in the light of updated scientific information.
The noble Lord, Lord Redesdale, mentioned that the Government should introduce a renewable heat obligation. The Government are focused on heat; the Prime Minister said last November that we will be doing more on the issue. That is why we have had a call for evidence on the subject, which considered a range of issues, including financial support mechanisms and obligation in that respect. The work is feeding into the renewable energy strategy consultation this summer. But heat is complex, as the noble Lord knows, and we need the time to make sure that we get the policy right before thinking about legislation necessary to deliver it.
I was interested to listen to the noble Lord, Lord Redesdale, when he said that it was difficult for companies to factor in CO2. That is not what I hear when I go around the businesses of Britain or inward investors to the country. In a commissioned survey, 50 per cent of respondents said that it was already having a strong, or medium, impact on the decisions to develop innovative technology.
Lord Redesdale: My Lords, I was talking about power companies factoring in legislation about CO2 and their investment in new power-generating plant. They have been lobbying about it for the past five years.
Lord Jones of Birmingham: My Lords, as it is presumably a question of just power generation companies and not companies in general, I will save time and move on.
Many noble Lords mentioned feed-in tariffs. It is true that Germany has been successful in deploying renewables by using a feed-in tariff, but at a very high cost. It cost €68 billion between 2000 and 2012. There are 500 different types of tariff, with 150 added every year. It is a regulatory nightmare, and extremely expensive. And, let us not forget, they have had that
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I am grateful to my noble friend Lord Birt for the geographical context in which he put this situation. He raised a list of issues which will prevent the UK meeting its renewables target, including planning, radar issues and grid updates. On behalf of the Government, I wish to reassure noble Lords that we fully recognise that those are major factors. We are actively working with all the relevant parties to resolve those issues and we are making good progress. The financial framework must be consistent to ensure investor confidence at all times. That is why it is vital that we remain committed to the renewables obligation. Indeed, my noble friend said that the Government need to do more to support renewables. Too true—we have always said that we need to do more. That is why we are bringing forward the renewable energy strategy next spring. But we must implement the important changes to the RO in this Bill now. Indeed, the Bill will make the renewables obligation 30 per cent more effective.
My noble friend also said that we need to do more to support combined heat and power. Renewable CHP is already supported by the RO—the new planning policy statement on climate change will, I hope, help promote that even more. During the coming months, we will be examining how to make further use of combined heat and power, including heat in a carbon context and a greater use of waste heat.
I am very grateful to the noble Lord, Lord Jenkin of Roding, not only for his contribution today but for giving me prior notice of the issue he was going to raise concerning Energy Solutions, Inc. We will take that up over the next two or three days, but I can assure the noble Lord that if its solutions and ideas can be proven to be of use in what we are seeking to achieve, then yes, we are flexible and open to change. I would say that, wouldn’t I? I am one of the most passionate believers in an open market and in the free market working to bring in speedy innovation. I assure the noble Lord that I will get back to him on the specifics of Energy Solutions, Inc.
The noble Lord spoke about energy companies not being able to deal with the vulnerable. He also mentioned fuel poverty, as did so many of your Lordships. I guess that it would be seen as running away scared if I pointed out the obvious—that that is outside the scope of the Bill. If noble Lords wish it to come within the scope of the Bill, I presume that they will put down amendments with the aim of doing so. But the Government are not sitting back and doing nothing. We have spent £680 million more in the current CSR than in the previous one, especially on the initiatives of Warm Front and CERT. I said at the beginning of my remarks that I heard some things from other Benches that made me think, “You have a nerve”. Before 1997, I did not exactly hear the
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I do not believe that there are 6 million people living in fuel poverty. We have got that figure down from 1997—it now stands at 2.5 million but, frankly, that is 2.5 million too many. It is very important not to ignore it, especially at a time of rising energy costs, and given the lack of education and investment there is regarding insulating homes.
Lord Forsyth of Drumlean: My Lords, on the subject of having a nerve and the impact of fuel costs on fuel poverty, is not one of the major contributing factors the level of tax which the Government are adding to the cost of fuel? If the Government are so committed to this policy, why do they not reduce the amount of tax being taken so that they do not actually benefit from the increase in fuel costs?
Lord Jones of Birmingham: My Lords, I am grateful to the noble Lord for raising the issue of taxation. That is a matter for the Treasury; it is a matter of fiscal policy, not a matter for tonight.
My noble friend Lord Puttnam spoke about the public interest test. I welcome his contribution. He gave his apologies as he had to leave to attend an awards ceremony. I would welcome a meeting with him and my officials to see if we can achieve resolution of his justifiable concerns. The Government have recently examined existing powers for dealing with unattractive takeover situations of UK energy assets. We take the view that at the moment the powers in the Enterprise Act 2002 are sufficient.
My noble friends Lord Hunt of Chesterton and Lord Birt asked what the Government are doing to roll out CCS internationally. We are very keen to support the EU’s ambition to have up to 12 demonstration projects operational across Europe by 2015. We intend our demonstration to be operational by 2014. We are the only country in the European Union right now to have one at all—the other two are in Norway and America. But we are working with our G8 counterparts to achieve the ambitious agreement arising from the G8 summit on CCS. We continue to drive that forward.
We have created a North Sea basin task force in order to work closely with Norway to remove barriers to the deployment of CCS. We are looking particularly at storage in the North Sea. My noble friend Lord Hunt also asked who will be monitoring the leaks from any carbon dioxide stores. The operators will be monitoring while they are licensees; they will have the responsibility to monitor as they perform their obligations as licensees. But when the store is delicensed, the state will take it over and carry out any monitoring required.
My noble friend also asked whether there should be an appeals procedure for the approval of any funded decommissioning programmes in nuclear. Our position is that judicial review is the best place to hear an appeal. People who sit on tribunals are used to hearing complex and technical cases.
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