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In renewables, Britain has half the usable tidal energy in Europe. Today I am committing up to £60 million to build our wave and tidal industries for testing new technologies, expanding port access and deployment in key parts of the country. We also need to nurture the offshore wind industry, where we have a unique resource. I am making available up to £120 million to support the growth of a world-leading offshore wind industry in Britain. As well as supporting the demonstration and testing of offshore wind, the money will be used to attract offshore wind manufacturers to
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Climate change is the moral issue of our time. In five months, the world must come together at Copenhagen and follow through on the commitment of world leaders last week to stop dangerous climate change. Today we show how Britain will play its part. Our transition plan is a route map to 2020. It strengthens our energy security. It seeks to be fair in the decisions we make. Above all, it rises to the moral challenge of climate change. This is a transition plan for Britain. I commend it to the House".
My Lords, that concludes the Statement.
3.51 pm
Lord Taylor of Holbeach: My Lords, I thank the Minister for repeating the Statement made in another place earlier today, and for making available an advance copy of this lengthy Statement. It is a challenge to absorb its contents, but noble Lords will have also known much of it from the press coverage over the weekend and throughout the week, as well as the now-obligatory "Today" programme interview.
We welcome the Statement as an important declaration of intent on the Government's part in tackling climate change and carbon emissions, as well as seeking to bring together something that could be tagged as an energy policy. That is long overdue, but when the Government have provided us with 15 Ministers in 12 years, it is not surprising that they have found it difficult to find a coherent voice in this key policy area. Do we not have the lowest percentage of energy generated from renewables within the EU?
We have no argument with the Government in seeking to reduce carbon emissions by 34 per cent by 2020-or, if we take today's figures, by a more modest 18 per cent at current levels. It will be the minimum needed to be on course for the 2050 target of 80 per cent. I note the climate change committee's welcome, but point out that it is seven months since the committee published its report to which this is the Government's response.
It is appropriate that the Statement starts with the Government's own role. The Sustainable Development Commission's 2008 report stated how variable the different departments are in achieving energy efficiency and performing to target. The Government should be taking an exemplary role in this matter, and they need to demonstrate that they are serious in their own endeavour if they expect business, households and consumers to do the same. There are too many areas where the message from the Government is mixed, or where they have failed to develop policies that reinforce this drive. The Minister will remember that, when discussing the climate change legislation, we wanted to include a provision that certain statutory instruments complied with the purposes of the Climate Change Act or furthered its purpose. This move was initially welcomed and accepted, the Minister in this House showing commitment to the cause, only for it later to be disregarded.
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The Statement promised 6 per cent cuts in emissions from agriculture and waste. Can the Minister further elaborate on how this will be done without passing greater burdens on to farmers, to whom we look to provide more of the nation's food? What funding stream do the Government intend to provide for this?
A substantial reduction of 14 per cent in transport emissions is likely to be heavily dependent on government funding. How will this be paid for? The Statement mentions electric cars. This simply illustrates one of the many commitments the Statement contains without declaring how it will be funded. Parliament and people are in the dark on public expenditure as, unprecedentedly, the Autumn Statement will not be delivered this year. It is not unreasonable to ask where the funding is coming from.
I do not doubt the need for the Government to set these targets, but the delivery of any government strategy depends on an accurate assessment of the cost involved within the public sector and from businesses, households and consumers. Without this, the Statement is merely a statement of good intent, rather than a comprehensive programme of action.
Of course, the Government are right to recognise the role of renewable energy. In a pre-Statement interview on the "Today" programme, the Secretary of State emphasised the need for land-based wind generation, and acknowledged that it was not enough simply to rely on offshore generation. How do the Government intend to use the planning system to deliver on this account? It has been estimated that the extra turbines will pass on a possible extra cost of £200 per annum to households. It is also estimated that the current rate of construction of these turbines is one a week. Does the Minister appreciate the physical challenge that this presents? The Statement mentions the Severn tidal schemes. Have the Government worked out how to deliver tidal energy from the Severn estuary without damaging it? How dependent is this programme on the delivery of the strategy?
I hope the noble Lord will get the drift of my argument. Much of what the Statement contains is good and worthy stuff, but without the reassurance that the Government are prepared to deliver, it remains primarily aspirational and lacks the counterbalance of a full financial impact assessment. The Statement talks about building more nuclear power stations. However, we will have to wait until the autumn for the national policy statement on nuclear energy, although it is obviously a key part of the strategy. In the mean time, the Government still have no plan regarding what to do with existing nuclear waste. The strategy announced today can hardly be comprehensive if it does not include this.
The Statement also announces that it will make changes in the energy supplies between now and 2020 to make it easier for investors to turn low-carbon projects into reality. How do the Government plan to do this? Will it involve further financial incentives or is it going to depend on an easing of planning restrictions.
It would not do the Statement any injustice to suggest that it reads like a wish basket. For example, the noble Lord introduced the concept of smart meters into the Energy Act last year and it appears in this
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In short, while we welcome the Statement and the White Paper, for it aspires to be on the side of the angels, such virtue has a price and the Government in the Statement have been coy not only on how big the costs will be but, more critically, on where the funding is coming from and who will end up paying. Despite the Statement promising that there will be no increase in household fuel bills by 2015, I expect most people will be in a family household that will have to pick up the bill.
3.59 pm
Lord Teverson: My Lords, I, too, thank the Minister for repeating this Statement. I know the Government are keen to get on with the legislative programme of the House today, but given the importance of this subject, it was fitting that this Statement was heard, and I thank Ministers and the Official Opposition for allowing it to come forward.
This is an important Statement. It moves from discussions on the Climate Change Bill to statements of intent, targets and ideas about legislation to taking action, although I note that the shortest chapter in the Renewable Energy Strategy is concerned with implementation, so perhaps there is a little more still to do there. Given the shift in thinking from considering carbon dioxide to assessing greenhouse gases as a whole-in my opinion that is a correct shift-it is interesting to note that the 34 per cent reduction comes down to 18 per cent, which is very manageable and is important to achieve, although many of the relevant reductions have already been achieved. In that sense much of the low-hanging fruit has already been taken.
We are looking at this strategy up to 2020 in an environment of very tight public cash availability. Much of the investment will need to be private investment but we are still subject to a low carbon price. I have seen no reference to a carbon price in the documents or in the Statement, but clearly it will be one of the main drivers for the private sector. I do not think there is any real understanding of how we will ensure that those price signals are right to encourage the private sector to make the right decisions in this area. Indeed, I think that the ETS is mentioned in only one box in the accompanying papers.
These Benches welcome much that is in the Statement and the strategy. The feed-in tariffs are to be implemented in April, but what about heat? The Statement mentions the grid in that connection but there is no mention of heat tariffs. I should be interested to hear about that. We welcome the strong focus on Ofgem reducing carbon emissions. However, on first reading the Statement, I was alarmed to note how uncompetitive the Government feel the electricity supply industry is, given that many years' study have been devoted to that matter.
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We also welcome the measures concerning grid access. The fact that it can take 10 years to get connected to the grid, as the Statement says, is clearly unacceptable, and has been for some time. Do we not also need a smart grid to allow access for all the different types of electricity that will be available? What is the Government's view of the European supergrid, which will lead to much greater energy independence not just for us but for our European partners? Do the Government take a more favourable view of that now? I also welcome the introduction of departmental carbon budgets. This may not be the Minister's responsibility but it would be nice to see both Houses having their own carbon budgets. Perhaps that matter should be taken up elsewhere.
However, we have a history of relative failure in this area. Sweden has already achieved a figure of about 30 per cent with regard to renewable energy. The figure for Germany-a large economy-is 10 per cent. We are still at 2 per cent, and are bottom of the league. As regards aspirations for manufacturing, noble Lords around the House agree that we want to stimulate a renewable energy industry in this country. However, we have a track record of recent closures in that regard. In terms of costs to consumers, I am pleased to see that social tariffs, which have worked only partly, will be overhauled. But surely with fuel poverty having gone up substantially and fuel prices going up under this regime, we should introduce something more radical whereby consumers pay less for lower consumption and more for greater consumption-the opposite way round to the normal thinking on this issue.
I have asked the Minister a number of Written Questions on skills needs. I am still unconvinced that we have sufficient staff with the relevant skills in the nuclear or the renewable industries. Smart meters are rather old news but I am glad to see that there is a commitment to implement them by the date set out.
Insulation of the existing property stock clearly must be one of the most important areas. Although I accept that we need a programme that is similar to the North Sea gas conversion programme, the big difference is that households did not have to pay for that. They might have suffered inconvenience when someone changed their fittings or appliances, but they had no upfront costs to meet. Although there are various schemes to avoid cost, it would be dangerous to think that it will be quite as simple as that.
Beyond that, my questions for the Minister are as follows. The airline industry was not mentioned in the Statement, though there is a small reference to it in some of the supporting documentation. Is the airline industry included in these reduction figures? Will the carbon reduction commitment mentioned in the Statement at last discriminate between renewable and non-renewable electricity? Pre-payment meters are one of the greatest scandals of the energy supply industry and fuel poverty in this country, with pre-payment meter payers paying some £95 more per year for their energy bills. Will that be solved more urgently than the smart meter programme? It is clearly an area of major social injustice. From these Benches, we welcome this Statement. It is now all about implementing it and making it happen.
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4.05 pm
Lord Hunt of Kings Heath: My Lords, I thank both noble Lords for their general welcome for the Statement and the various documents that accompany it. The noble Lord, Lord Taylor, said that the Statement was long overdue. However, the Government have made a series of announcements over the last year or two, culminating in the transition plan, which sets out a coherent path for our transition to a low-carbon economy and deals with the critical issues that we face on energy policy. There have been announcements on new nuclear energy, coal CCS, our intention to hit the target on renewables of 15 per cent by 2020 and our focus on energy efficiency. These all represent a coherent approach to energy policy.
The noble Lord, Lord Taylor, and the noble Lord, Lord Teverson, both spoke about where we stand on renewables. It is true that, in comparison with some European countries, our proportion of renewables is low. Much of that can be explained by other countries having made use of the natural resource of hydropower, which they have had for many years. My key point is that noble Lords should look at the increase that we have seen in the last few years. For instance, renewable electricity accounted for 2.3 per cent of electricity generated in 2003; that was up to 5.5 per cent by 2008. That suggests to me that we are making considerable progress, that we have a great deal of momentum in the system and that we can expect to see considerable increases in the future.
The noble Lord, Lord Taylor talked about the variability of departments. I agree that departments need to set an example. He kindly did not mention the energy performance of my department's new building, which he will know is not the highest-or, rather, the lowest. However, it is working with the Carbon Trust and has a commitment to increase its energy efficiency by 10 per cent over the next year. The department accepts the challenge to practise what it preaches. Of course, carbon budgets by themselves are important in driving policy change in different government departments. The noble Lord, Lord Taylor, who knows a great deal about agriculture, asked whether a carbon budget would, as far as Defra is concerned, have a negative impact on agriculture. It need not. When I was at Defra, I took part briefly in discussions between the department and the agriculture and land sector on the best approach to reducing GHG emissions. I was encouraged by the positive view that was taken by people in the farming sector about their ability to do it. Of course, they will need encouragement, advice and support, but so far the discussions have been fruitful.
As for the planning system, it was always disappointing that the noble Lord's party opposed key elements of our reform of the planning system. We think that the reform is very much in the national interest. Noble Lords will know that, historically, there have been delays in the planning system, particularly when it comes to renewables, but the same issues come up with other electricity generators. We will be publishing our national policy statements in the autumn. That was always the timetable. We think that that will be an important step along the way to a much more consistent and coherent planning system.
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As to the supply chain on wind, yes, it is important that we have a good UK supply chain. Alongside this, the low-carbon industrial strategy sets out a range of actions that the Government are taking to support the UK supply chain industry. There is no reason why we cannot use the transition to a low-carbon economy as a way to grow the economy and grow high-quality jobs within the United Kingdom.
As for the Severn, we are announcing the short-listed sites. An important part of the assessment is to deal with the issues that the noble Lord raised about the environmental assessment, the impact on the environment and what has to be made good under European legislation if one of the schemes is selected. We are very focused on those matters.
As far as nuclear power is concerned, yes, it is very important that we make progress on publishing the national policy statement. As the Statement said, it is due to be published in the autumn. We have to get it right, but I understand the need for speed as well.
I was asked about financial incentives in relation to renewables. We will consult on increasing the financial incentives for offshore wind. On wave and tidal energy, we are prepared to look again at financial incentives if we receive evidence that suggests that we ought to do so. That is the basis on which we introduced the ROC banding system, which we debated only about nine months ago.
I welcome the general support of the noble Lord, Lord Teverson, for the Statement. He described what we are doing as moving from a statement of intent to one of action. I am glad to endorse that analysis.
Lord Hunt of Kings Heath: My Lords, the 20 minutes taken do not eat into the 20 minutes for Back-Benchers. As the two noble Lords took 13 or 14 minutes, I think that I am allowed some discretion to answer the points. As I say, the time does not eat into the 20 minutes for Back-Benchers.
The noble Lord, Lord Teverson, talked about tight cash and the scale of investment needed by the private sector. He is absolutely right. The best approach that we can take is to present a cohesive policy and stability and deal with issues of planning and access to the grid. In the White Paper, he will see that there is a chapter looking ahead to 2030 to 2050. We are doing further work analysing scenarios for that period, which we hope to publish next spring. We recognise that it is now and in the next few years that companies will make investment decisions that will impact, for instance, on energy supply going from 2030 to 2050, so I agree with his remarks on that.
I know that companies are concerned about the low carbon price. There is to be a tightening of the EU ETS cap from 2013. I think that it must follow that, if there is a successful conclusion to Copenhagen, the EU will have an opportunity to look at its own targets again and potentially to tighten further the EU ETS cap.
We always said that we thought that it would be 2011 before the renewable heat incentive could be brought in. The noble Lord will recall that this is a completely new policy. We need to get the work right and we hope to consult on it later in the year.
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As for grid access, interim changes have been made introducing a system of connect and manage, which allows early access to the grid, but we must have permanent arrangements. Ofgem and the companies have not been able to reach agreement on this, which is why the Government are going to intervene. We will publish our deliberations in due course.
Finally, I understand the concerns of the noble Lord, Lord Teverson, about ensuring that we have the right skills in nuclear, renewables and, indeed, coal carbon capture and storage. We are very much committed to working with our partners in government and business to make sure that we do. The work of the National Skills Academy is one example of how we intend to do it. I thank both noble Lords for their overall welcome.
4.15 pm
Lord Clark of Windermere: My Lords, I very much welcome this far-sighted announcement by the Minister. The noble Lord has followed the intention to reduce CO2 by the means of emissions and energy distribution. Does he accept that there is another way to reduce CO2, which is to remove it from the atmosphere? Will he confirm that it is the Government's policy to increase the amount of woodland planted in England by 10,000 hectares a year for the next 10 years, thereby reducing the carbon emissions over this country by 50 million tonnes by 2050? I declare an interest as chair of the Forestry Commission.
Lord Hunt of Kings Heath: My Lords, my noble friend speaks with great authority and he is right to point to the positive impact that forestry and woodland can have. I am glad to confirm that the Government very much accept the point that he makes.
Lord Lawson of Blaby: My Lords, is the Minister aware that, whatever view one takes of climate change, to pretend, as this Statement does, that the enforced move from cheaper to dearer energy, greased by lavish bribes at the taxpayer's expense, is economically beneficial displays a level of economic illiteracy that even a first-year student should be ashamed to exhibit? Further, when the Statement boasts that this is the first country in the world to set legally binding carbon budgets-not to mention the departmental budgets-is he aware that that is so only because there is not a single other country in the world that has the slightest intention of pursuing such a foolish and damaging policy?
Lord Hunt of Kings Heath: My Lords, when I saw the noble Lord, Lord Lawson, sitting there, I did not think that he would take a positive approach to this announcement. I certainly have been proved right on that. I do not agree with him at all. It is, in fact, a mistake to think that remaining as a high-carbon-emitting country is somehow an easier and cheaper option; nor do I accept his premise that the UK is alone in understanding that we need to move to a low-carbon world and that, to do so, decisions have to be taken. We believe that carbon budgets are the way in which to ensure that individual government departments develop their policies to ensure that they are consistent with a low-carbon economy. I would just say to the noble Lord that the recent G8 meeting-
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