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The Conservative energy paper goes on to say that the next step is to clarify that no energy subsidy should be permanent and that it should cease when a technology is mature. There is not much danger of that happening to CCS within the lifetime of most of us-the baby is still in the cradle. However, it raises the interesting question of what should happen to wind. Wind is now promised enormous subsidies by the present Government. It is estimated that three quarters of the £200 billion required investment in our energy infrastructure is necessitated by the Government's determination to build 10,000 wind turbines. Is wind power not a mature technology yet? Will it still not be so in 2037? Or does its need for subsidy have nothing to do with its immaturity and everything to do with the fact that its uncontrollability as a power source makes it completely unsuitable for electricity generation in an advanced economy, as has been the case from day one?
All parties seem tempted by the notion that CCS, with these trials for which the Government are organising these subsidies, offers this country a glittering industrial opportunity. Leaving aside the whole question of whether it is desirable for Governments to attempt to pick winners-or losers, more likely, in the field of renewable energy-there is a danger involved in setting out to build an industry in a sector that would not exist without subsidies. Governments eventually abandon policies that turn out to be uneconomic. They even run out of money-if not here, in other countries. Export markets can disappear for that reason. Moreover, the subsidies are a cost that subtracts from purchasing power in an economy and therefore lowers economic activity generally. The jobs gained for wind turbine blade construction in the north-east, say, can be more than offset by jobs lost throughout the economy as a whole as a result of the steep rise in electricity prices produced by the subsidies.
It is likely that the subsidies will create far more jobs overseas than they create here. That may be a reason why China plays along with wind power and other renewable energy technologies. It sees ahead very profitable export prospects. In Germany, feed-in tariffs have produced an exploding demand for photovoltaic installations-a most unsuitable development, one would have thought, in that country of gloomy skies. It has now been found that, although Germany is a manufacturing and exporting powerhouse, half of the demand in recent years has been met by imports from China and Japan. Here I fear that we are all set to let the same thing happen under present policies.
In conclusion, I shall be interested to hear what the fate of this Bill will be with so little of the Parliament left. I imagine that its fate is largely in the hands of the opposition parties. Perhaps the wind-up speakers can enlighten the rest of us about what parts of the Bill they feel inclined to wave through, as I believe they are entitled to under our strange constitutional procedures.
Lord Palmer: My Lords, the noble Lord, Lord Hunt, opened this debate with his usual charm and eloquence, and mentioned climate change. I ought to
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The right reverend Prelate the Bishop of Durham made some very pungent points about coal-all of which I completely concur with. At home, before going green, we used to burn coal which came all the way from China. That was an extraordinary situation to be in, although I now have an air source pump which was also made in China. I agree with the noble Lord, Lord O'Neill, on fuel security, which is why in previous energy Bills I have promoted the use of biofuels. Again, I echo the comments of my noble friend Lord Oxburgh about the future of fossil fuels, albeit that I am married to a Texan fossil-fuel explorator.
It is hard to credit that, yet again, we are tackling another Energy Bill, and I cannot help but think what a waste of time-and, indeed, energy-this debate is. However, I wish to limit my comments to Part 2 of the Bill regarding fuel poverty-a subject that I have often raised in your Lordships' House since 1999. I shall always treasure the memory of my dear friend, the late Lord Ewing of Kirkford, pleading with the then Minister, the noble Baroness, Lady Hollis of Heigham, that because I live in a freezing, 109-room "but and ben" in the Scottish Borders, I ought to be eligible for a cold weather payment. Not unnaturally-albeit that I open my home to the visiting public-the Minister did not think that I would qualify.
Although I am 11 years older and married to a senior citizen, I do not wish to try to persuade the House that I am a deserving case. But I wish to plead the case for those severely disadvantaged people who have to toss a coin to discover whether it is food or fuel that gets their limited budget. My main concern is the geographic differences-a point that I have often raised when fuel poverty has been discussed in your Lordships' House. I accept that it is a very complex issue and that it is expensive to administrate, which is one of the reasons why I have finally, albeit reluctantly, dropped my campaign for payments to be means tested.
I would dearly like to invite the Minister to come to visit me in Scotland on the hottest day of the year. We would take a leisurely stroll around our farm and he would notice smoke coming out of every one of our 54 cottage chimneys. Indeed, I would yet again extend an invitation to the noble Baroness, Lady Wilcox, if it was not for fear of being refused once again.
If I was to accept a similar invitation from the noble Lord, Lord Hunt, to tour the Midlands I would, I am sure, not detect a single whiff of smoke from a residential chimney, and it is a sorry situation that the welfare benefits system in the United Kingdom takes no account whatever of the much higher costs associated with the geographical location of the claimant-even where there may be a considerable disadvantage. For example, it is obvious that the colder the climate, the greater the need for expenditure in order to keep the home warm. Equally, it is clear that where a household lacks access to the most economic source of domestic heating-normally mains gas-and is dependent on more expensive fuels such as LPG, any disadvantage is greatly worsened.
This combination of circumstances is particularly prevalent in rural Scotland and demonstrates a failing of social security policy. There is virtually no recognition that different circumstances call for different levels of support. This is particularly true of energy costs, whereby the local climate can have a major bearing on the required expenditure. The colder the climate, the greater the need for additional heating; and this has clear consequences for household budgets.
If, for example, one takes Bristol as the mean, in Braemar-which is a little further north from me and had a very harsh spell of weather this year-last year the average householder spent 65.2 per cent more on heating costs than a Bristol resident. That is a huge increase. Eligibility for cold weather payments is restricted to the poorest and most disadvantaged households, and rightly so. To qualify for a payment, the household must be on the lowest level of welfare benefit and must be vulnerable as a result of age-they must be over 60 or with a child under five-or disability. A cold weather payment is made only when the average daily temperature over a period of seven consecutive days has been, or is forecast to be, 0 degrees centigrade or less.
The Government have been resistant to the argument that wind chill should be factored in the cold weather payments system. The Government's response can be summarised as: a number of formulae are used to calculate the combined effects of air temperature and wind speed on the human body when in the open air-commonly referred to as wind chill. However, the Building Research Establishment advises us that these formulae are not appropriate when assessing heat loss from buildings, because different heat mechanisms apply. I believe that factoring in wind chill would be of significant benefit to some of the most vulnerable households in the United Kingdom and would cost only £300 million. In relation to running government quangos, which cost £32 billion per annum-I repeat, £32 billion per annum-that measure would surely be just kindling. I hope that the Minister will take this on board. In this day and age, and in this society in which we live, surely it is an absolute scandal that any resident of the United Kingdom is subject to any degree of fuel poverty.
I remind the House that the 2050 target for carbon dioxide emissions for this country is 20 per cent of the 1990 emissions figure. This country passed that limit in about 1850, when the population was about 22.5 million. To achieve that target, therefore, we need nothing short of a revolution in our energy systems. I sympathise with the Minister and indeed understand his anxiety that carbon capture and storage should work. The issue is not whether it will work. We have heard the noble Lord, Lord Oxburgh, and we can be absolutely confident that it will work. The question that we cannot answer, and one of the reasons why we need a heavy subsidy to produce experimental plant, is we do not know what the economic cost of this system will
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I have every sympathy with what my noble friend Lord Reay said on the question of what will work. We do not know the answers. I understand the Government's dilemma in this matter; I merely remind the Minister that if he can remember as far back as last Friday morning there were huge headlines in the national papers about a horse that was bound to win a race in the afternoon, and it did not. I wish he had a little less absolute confidence that carbon capture and storage will work, because if it is uneconomic here it is also likely to be uneconomic, or uncompetitive economically, in other countries as well. Even India and China with their huge populations, energy demand and difficulties in modernising their societies will have to face the hard reality that if CCS is not economically competitive it will not provide a solution-and they will be the first to change their systems.
I come back to the Bill. I have a little difficulty with it because this evening we are having to have in effect not just a Second Reading debate but also a Committee stage and a Report stage. Its next stage is going to be this awful thing called a wash-up when what can be agreed is agreed and what cannot be agreed is passed over; it remains to be seen what will happen at that stage. I would welcome some assurances if the Minister is in a position to give them.
I accept the need to subsidise these experimental installations, but I regret it. It seems that one of the reasons we need this subsidy is the complete failure so far of the European Emissions Trading Scheme to have any real effect on energy markets. If that was working properly, perhaps we would not need this degree of subsidy, at least. I wonder if the Minister will give an assurance that after these installations have been made and the levy has been put in place, the levy and indeed the charge on consumers will only last as long as they are required to pay for those installations.
I have an awful memory of what happened to the Dartford Tunnel tolls. When the latest Dartford Tunnel installation was established-under an Act of Parliament -it was agreed that the tolls would pay all the running and construction costs, a reasonable profit to the developer who undertook the latest bridge installation and so on, and then they would cease. Shortly after
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The second point is that all the powers under this part of the Bill are dealt with by the Minister under regulation. We always have difficulty with regulations. Many of us have spent happy hours on them, and no doubt the Minister has also spent happy hours answering requests for information about how these regulations are to be made and what will happen. One of the requirements in the Bill is that the Minister will consult the regulator, Ofgem, and such other persons as he may choose. I make a plea, which I hope he will answer, that the consultation will be very widespread: it should go across the broad industrial and commercial sector because there are very particular views. He will also have power under the regulations described in the Bill to choose particular sectors that might be affected by or exempt from the levy. Under those which might be exempt, perhaps emissions-free energy should not have to pay the levy: that seems wholly sensible and would also give a little added incentive for people to produce emissions-free energy if that were possible.
I admit that I had a particular plea from a section of the electronics industry: computer centres-perhaps they might be considered for special treatment. I have no interest in this but I was happy to listen to their plea. They made the point that they supply services which are fundamental to the City and so many other aspects of our modern life. It really does not matter to them whether they are in this country or Timbuktu. Nowadays, computer communication is so simple, fast and universal that these services can be provided from anywhere. The particular concern of these companies is to maintain their competitive position in this country so that they can stay here. Those are considerations that it would be entirely proper for the Minister to take into account. I do not say that he necessarily has to accept the argument or the position, but he should look at those aspects in relation to the powers that appear to be given to him by the Bill. I plead with him to give some assurance that his consultation process on that part of the Bill will be sufficiently wide to take account of that sort of thing.
I hope that the Bill will largely survive. Enough political points have been made already, so I will only make one. My comment on the political situation is this: the Government have done enough to lose the election, but it remains to be seen whether the Conservatives, in the judgment of the electorate, have done enough to win it.
Lord Judd: My Lords, without commenting on that last observation, I will simply congratulate the noble Lord on an interesting and reflective speech-the sort of speech we should hear more of in our deliberations in the second Chamber. Perhaps I may tempt him to take his thinking a little further. I frequently find myself considering how far we are prisoners of an assumption that we must have energy at our disposal,
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I firmly welcome the Bill. I will not be alone in saying that it is good to see my noble friend at the helm on these matters. Why do I welcome it? I will summarise what seems to be glaringly obvious. The Bill will provide better protection for consumers. It will ensure environmental benefits. It will assist in achieving sustainable economic development. It strengthens the provisions for meeting the social challenges of fuel poverty. It faces up to the challenge of the opportunity given to generators for exploitation and making excessive profits at the expense of the consumer-an opportunity resulting from insufficient transmission arrangements. As my noble friend rightly emphasised in his introduction, it recognises that long-term solutions will not be found by constraints alone: increased transmission capacity will be essential.
I declare an interest-this is not the first time that I have had to do this-as a vice-president for the Campaign for National Parks, president of the Friends of the Lake District and also, happily, a resident of the Lake District National Park. I am deeply impressed by the way in which Ofgem has welcomed its role of social responsibility in protecting both the environment and the interests and well-being of consumers, not least the vulnerable. Evidently, it takes pride in making this a core aspect of its work-one has only to look at the observations that it recently sent us on the Bill. This leads me to ask my noble friend how the Bill will provide for the protection of consumers during the upgrading of the transmission system. What will be Ofgem's responsibility to protect consumers from the adverse impacts that upgrading the infrastructure and lines will inevitably have? This must be seen in the context of the inevitable upheaval involved in the construction of the huge necessary infrastructure, and the power stations themselves, involved in our renewed commitment to nuclear energy.
Does my noble friend not agree that the Bill could be further strengthened by the addition of clauses spelling out that the costs to consumers and society must be viewed in more than just market-orientated financial terms, and that the precious and priceless character and value of our countryside and scenic inheritance should also be central to Ofgem's duties? In the absence of such clauses, what convincing reassurances can my noble friend give in this respect? As I have argued recently in the Moses Room, my anxiety about the society in which we live is-in the words of the old adage-that we know more and more about the price of everything, and less and less about the value of the things that really matter. For a decent society, we need energy, although I temper that by saying that it is high time we started to think more about how we reduce our dependency on energy generation. We live in very stressful, pressured times; life becomes faster and faster and more and more hectic. For our health and well-being as a society, we desperately need contrast, space and beautiful things
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It would be a major tragedy-I do not apologise for repeating the arguments I used recently in the Moses Room-if in this new commitment to the next generation of energy, we were to commit the mistakes made in the first Industrial Revolution. It is not that we did not need the first Industrial Revolution, but with more thought and care, it could have been done without raping and destroying our countryside, including some of the most beautiful valleys in the nation. If we do that again, we shall never be forgiven. People will say, "How foolish they were; with the evidence of the last Industrial Revolution in front of them and with their preoccupation with how the worst scars should be removed, they did it all again".
From that standpoint, it seems to me that the challenge for all of us, not least for my noble friend, who is always very good when I challenge him-he is a very civilised man and I always think he sympathises with the points I am making-is not to drift into a mindset of either energy or a commitment to our rich inheritance of scenic beauty and so on. The challenge is how we fulfil our obligations to both and how we get our act together. I know that some will say-my noble friend has said to me before in debate-"Hang on a moment, I accept a lot of the strength of that argument, but we also have to consider the economic advantages that come from a new lease of life for energy production and energy provision, which will be advantageous to a lot of people". However, these issues are not simply the preserve of the precious, privileged middle-class or of those who enjoy large estates; they can be much more direct. On the west coast of Cumbria where I live, the paradox is that, against the setting of the unrivalled beauty of the national park, we have some very deprived communities. We have some traditional working-class villages which have nothing to be said for them in aesthetic terms. I have heard people say, "At least we used to have the Solway Firth, the hills of Dumfries beyond and the peninsula out to the far west of Scotland but now we have windmills whirring around, screening the beauty of the view". As the Bill proceeds, we should all face this very big challenge, which I hope we take seriously.
Lord James of Blackheath: My Lords, coming in to bat at the end of a long batting order, one makes a list of all the points one expects to hear and ticks them off and then waits to see whether there is anything left to speak about when one's innings comes. There are four things worth saying and I hope they are all of a practical nature. First, I declare that I have no interests in this area. It is important to say that in the modern climate so that there can be no misinterpretation that anything I say relates to any company with which I might have a relationship.
On the issue of wind, I was a member of the European Union Sub-Committee B on renewable energy, which recommended that wind power would be the answer to the 2020 target. When the committee made a recommendation some 18 months ago, we assumed
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At the moment it still takes about nine weeks to put up a single turbine and costs about £2 million to do so. We suggested that they needed 3,200 to cover the distance from Lowestoft to just north of Aberdeen, and they are building five farms at the moment. Now we see, as we heard in Grand Committee, that the Prime Minister wants to spend £75 billion on wind. If he wanted to do that, he would have to think in terms of extending the line from Lowestoft all the way round the south coast, up the north coast of Cornwall and Devon, way up beyond Blackpool to the Scottish border, because he would not be able to use the deep water or the cliffs which are shielded from wind, and he would have to leave the harbours and the rivers free and open to allow for the normal passage of shipping, so he would have a very poor return for his money. But he could do an awful lot with a very small fraction of the £75 billion that he has talked of. I do not even know that he has got £75 billion at the moment. I would be extremely surprised to hear that he had. When we produced that report we thought that £19 billion would buy 3,400 turbines on the east coast if they were put up at that time.
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